Subsidy removal challenging but necessary for long-term prosperity, says Tinubu

The decision to remove the subsidy on Premium Motor Spirit (PMS) was challenging but premised on the need to ensure Nigeria’s long-term energy security and economic prosperity, President Bola Ahmed Tinubu has said.

President Tinubu stated this on Tuesday in his keynote address at the opening of the 7th Nigerian International Energy Summit (NIES) at the Banquet Hall of the Presidential Villa, Abuja.

Represented by the Minister of Information and National Orientation, Alhaji Mohammed Idris, President Tinubu noted that the petroleum subsidy had, over the years, strained the economic resources of the country, leading to inefficiencies and, most importantly, hindering the ability to invest in critical areas of energy security. 

Tinubu admitted that the decision to remove the petroleum subsidy was challenging but stressed that it was a step that must be taken to secure the energy future and foster the economic growth of Nigeria.

He added that with the removal of the subsidy: “We are creating a more transparent and accountable energy sector. The funds previously allocated to subsidizing petroleum products are now redirected towards developing and upgrading our energy and other social infrastructure.

“While we are immersed in energy security, let us not forget that Energy Transition is another key aspect of our discussions. We stand on the brink of a new era where traditional energy sources are being complemented and, in some cases, replaced by cleaner and more sustainable alternatives. This transition is not only an environmental necessity but also an economic opportunity. We must leverage innovation and collaboration to ensure a smooth and just transition that will leave no one behind,” the President stated 

Highlighting some of the gains of the removal of the subsidy, the President said the private sector is being encouraged to participate in the energy industry with the potential of attracting more local and international investors, fostering innovation and competition that will drive down costs and improve the overall efficiency of our energy sector.

The Minister of State for Petroleum Resources (Gas), Rt. Hon. Ekperikpe Ekpo, in his address, advocated for a shift towards the vast potential in Nigeria’s gas sector. He emphasized that the shift towards gas was not merely an option but necessary for economic resilience. He added that the gas industry presents a unique opportunity to diversify revenue streams, reduce dependence on oil, and create a more robust and sustainable economic foundation. 

Ekpo noted that the theme of NIES 2024, “Navigating the new energy world order: Security, Transition, and Finance,” underscored the challenges and opportunities that define our times. 

“The theme resonates deeply with the path that the gas industry must tread to ensure economic transformation,” he asserted. 

The Minister posited that the theme of the summit synergized with Nigeria’s gas industry’s transformative potential. 

He informed that energy security extends beyond geopolitical stability to include energy infrastructure’s resilience, diversity, and reliability, noting that: “the gas industry, with abundant proven gas reserves of more than 208 trillion cubic feet (TCF) and further exploration potential, is crucial for enhancing energy security. 

“In light of the above, Nigeria has no business with energy poverty,” he said.

On the energy transition

Ekpo reiterated that: “Nigeria has chosen gas as our transition fuel, facilitating the shift from more conventional to new and renewable energy sources. With its lower carbon footprint and versatility, natural gas aligns with global climate objectives while providing a reliable solution for our energy needs. Nigeria, with significant gas reserves, should leverage this advantage to become a key player in the global energy transition and a regional powerhouse for gas processing and industrialization.”

On finance

The Minister revealed that gas was attracting domestic and foreign investments crucial to unlocking the full potential of our gas resources. He further announced that significant progress has been made to realize the ‘Decade of Gas’ vision as the official secretariat is now operational and fully functional.

The Minister of State for Petroleum Resources (Oil), Senator Heineken Lokpobiri, said that despite the abundant oil and gas reserves in the country, Nigeria suffers from energy poverty as the reserves have not translated to economic prosperity as against what happens in the Middle East. 

He implored the summit to unravel what other oil-producing countries were doing to bring economic prosperity to their countries that Nigeria had not done.

He noted that the task of exploring oil reserves should be given to those who have proven financial and technical capacity to explore oil and gas reserves for the benefit of Nigerians and the global energy landscape, adding that the easiest way to guarantee energy security in Nigeria was to get the right investment.

He also noted that, in exploration, the target should be to explore these resources in more environmentally friendly and sustainable ways.

Lokpobiri charged the delegates at the summit to generate brilliant ideas that could ensure energy security in Nigeria and ramp up production. 

The Secretary-General of the Organization of Petroleum Exporting Countries (OPEC), H.E. Haitham Al Ghais said Nigeria’s role in OPEC’s past and present was a tremendous source of pride. 

He added that OPEC was also acutely conscious of Nigeria and Africa’s critical role in the future of our organization and the energy industry more broadly. 

He acknowledged the contributions of successive generations of Nigerian public servants and captains of industry in making the OPEC-Nigerian relationship a success.

The Secretary-General of the African Petroleum Producers Organization (APPO), Dr Omar Farouk Ibrahim, in his message, said the decision on the siting of the proposed African Energy Bank will be taken by the end of the first quarter of 2024, adding that seven countries including Nigeria are jostling for it.

He further noted that the bank is expected to take off at the end of the first half of 2024.