FG calls for increased investment in Nigeria’s energy sector

By Kunle Sanni

The Special Adviser to the President on Energy, Olu Verheijen, has called on investors to explore new opportunities in Nigeria’s energy sector, emphasizing its untapped potential and recent reforms aimed at attracting capital.

Addressing a diverse audience at the ongoing African Energy Week in Cape Town, South Africa, Verheijen highlighted both the sector’s vast potential and the recent reforms under President Bola Tinubu’s administration designed to foster investment.

She drew a comparison to Brazil, which, with only 30% of Nigeria’s oil reserves, produces 131% more than Nigeria, attributing this disparity largely to Nigeria’s under-investment.

“Despite our abundant endowments, we have underperformed against our potential,” she said. “Brazil holds only 30% of Nigeria’s oil reserves but produces 131% more. This is largely due to under-investment.”

Since 2016, Nigeria has attracted just 4% of African oil and gas investments, while other, less resource-rich countries in Africa have garnered a larger share.

“Between 2013, when Nigeria’s last deepwater project reached FID, and now, IOCs operating in Nigeria have committed more than $82 billion in deepwater investments in other countries that they have deemed more attractive for their capital,” she noted.

Recognizing this trend, Verheijen outlined the Tinubu administration’s efforts to reshape Nigeria’s investment landscape. Among these initiatives, she highlighted new fiscal incentives specifically targeting deep offshore and non-associated gas projects. “This marks the first time Nigeria has outlined a fiscal framework for deepwater gas,” she added.

To bolster the upstream oil and gas sector, her office has worked closely with the National Security Adviser’s office to develop Security Directives based on insights from on-ground operators.

Verheijen also emphasized steps taken to streamline regulatory processes by clearly defining the scopes of various regulatory agencies. This initiative, she explained, aims to reduce the lengthy project timelines and high operating costs that have historically impacted Nigeria’s energy sector.

“Our target is to shorten contracting timelines from 38 months to just 135 days and eliminate the 40% cost premium currently associated with operating in Nigeria’s petroleum industry,” she stated.

Verheijen further detailed the administration’s fiscal incentives for midstream and downstream sectors, focusing on investments in Compressed Natural Gas (CNG), Liquefied Petroleum Gas (LPG), and electric vehicles as part of the Presidential Gas for Growth Initiative.

“These incentives align with the broader initiative to displace petrol and diesel usage in heavy transport, decentralized power generation, and cooking, while also stimulating demand for electric vehicles,” she explained.

She revealed that the government has unlocked over $1 billion across the energy value chain, with expectations for two additional major investment projects by mid-2025.

“We are facilitating the transfer of onshore and shallow water assets to local companies with the capacity to grow production, while supporting IOCs with resilient capital to transition into deep offshore and integrated gas,” Verheijen said.

“By mid-2025, we anticipate FID on two more projects, including a multibillion-dollar deepwater exploration project, the first of its kind in over a decade.”

Turning to the power sector, Verheijen shared plans to provide more reliable electricity access to the 86 million Nigerians currently underserved. Key measures include addressing legacy debt, deploying seven million smart meters to curb losses, and expanding off-grid solutions for remote communities.

According to her, by 2027, Nigeria aims to ensure 20 hours of electricity daily for consumers in urban areas and industrial hubs.

Highlighting recent macroeconomic reforms like the removal of the petrol subsidy and foreign exchange liberalization, Verheijen expressed confidence in Nigeria’s trajectory toward unprecedented growth.

“Under President Tinubu’s leadership, Nigeria is championing reforms to unlock its vast economic potential and create jobs,” she concluded, inviting foreign partners to join Nigeria’s next chapter of growth.