Visiting the website of the reputed Imperial College London last week revealed the institution has suspended its Petroleum Geoscience Masters programme and intends to do the same with its Petroleum Engineering Masters programme at the end of the 2021/ 2022 academic year.
For a programme that has been around for longer than Nigeria’s Petroleum Act, the news created a stir in many quarters, but no doubt signaled the end of an era, because if even schools do not teach a thing, then with the absence of scholarship in that area, a dearth of it looms.
This ebbing from oil is not new. Over the course of 2020, major oil companies openly declared net zero targets, indicating how they were taking active steps to reduce their carbon emissions. In March 2020, the French oil company, Total, declared its net zero ambitions and did not mince words about its commitment to the energy transition.
In April of the same year, British-Dutch oil major, Royal Dutch Shell announced its net-zero target for 2050 as well. Only a couple of hours ago, the company again announced that what it is committing to do is not just reduce emissions from its production, but also reduce emissions from the oil and gas produced by others that the company markets through its trading arm.
English oil company, BP had already made a similar commitment in February 2020, setting its net zero targets for 2050 or earlier and outlining ten aims to help itself and the world reach net zero by 2050. Repsol and Equinor, Spanish and Norwegian oil majors respectively have also announced net zero targets by 2050.
While, one cannot speak with absolute certainty about the commitment of all of these majors to their targets, by publicising these targets, they have alerted the market and their shareholders to the trajectory of their business to encourage renewables and expand their focus to the electricity industry.
No doubt, the World Bank’s mandate not to extend any new financing for fossil fuel upstream projects from 2019 as well as the increasing leaning by investors and development finance institutions towards businesses guided by Environmental, Governance, and Social (ESG) norms, have compelled these non-State actors to get in the race to net zero.
In the same vein, 190 countries- including Nigeria- by ratifying the Paris Agreement committed to the ideals of the Agreement and the bid to combat climate change and its effects by reducing emissions and particularly making the transition in the energy sector. In fact, countries like Sweden, Germany, Spain, Australia, Italy, and the UK have adopted a hard-line approach in the transition and the race towards net zero, aiming to keep emissions as low as possible.
In Africa too, we have seen countries like South Africa, Kenya, Ethiopia and Morocco invested in this race. Yet Nigeria remains stuck in the oil. Worse still, it is in the process of passing a bill that is both over two decades old and has oil as its key component, with only a negligible reference to renewable energy. A recent report by the Natural Resource Governance Institute (NGRI) has shown that the Nigerian National Petroleum Company (NNPC) is poised to take heavy losses, particularly with Big Oil lowering their long-term price estimates for oil and intensifying its race for net zero.
Nigeria does not have the relevant legal and policy framework for a transition and not nearly for thriving renewable energy industry. With bits and pieces of dated aspirational documents here and there, populated with missed targets, the country is clearly not in the race for net-zero.
For a country with commitments to reduce its emissions under the Paris Agreement, Nigeria has continued to seek out new fossil fuel projects, even in the dirtiest of energy forms- coal. A 1000MW coal plant was a major highlight of the Abdullahi Sule-led government in Nassarawa State. Nigeria is also mulling plans to construct another 6 coal power plants by 2037.
While Big Oil races for net-zero, Nigeria races for a carbon future, not minding that its population is one of the most vulnerable to the effects of climate change and environmental pollution. The Okobo and Itobe communities in Kogi State present a clear example of a community ravaged by the effects of coal mining- from air pollution to loss of clean water and livelihood.
Nigeria is running on a different track or at best, it is running backward- into the past. The paradox of the country’s fossil fuel dependency is that it is producing more poor people than rich, with corruption as the order of the day. Yet can we avoid the race to net zero for much longer, especially with financing and major stakeholders facing the future of energy?
One year after Nigeria’s index case, what has her energy sector learned?
A critical question is, has the Nigerian energy sector learned anything from the oil shock?
On February 27, Nigeria confirmed its first case of COVID-19 which at the time had infected just about 80, 000 people with a little below 3, 000 dead as a result. Exactly one year later today, with over 113, 000, 000 people infected and over 2, 500, 000 dead globally, the pandemic has radically transformed the way of life of the world. There has been learning across various sectors and a re-imagination of how things are done. A critical question is, has the Nigerian energy sector learned anything?
In early March, only about a week after Nigeria’s index case, the world was greeted by oil shocks resulting from the oil price war between Russia and Saudi Arabia, further aggravated by falling demands resulting from lockdowns, flight restrictions and the general apprehension about movement and the pandemic. Countries dependent on oil exports, like Nigeria, were concerned about the toll it would take on their economy.
Oil went to an all-time low, the lowest it has ever been in 18 years and many economies went into panic mode. It was not long before the Nigerian government removed petroleum subsidies at the tail end of Q1 as it was costing the country up to $2 billion a year. The end to subsidies -or what we assumed was the end, led to market-led pricing for petroleum.
Around the same time, the marginal field bid rounds were launched, with the various fees to be paid by prospective investors rising exponentially from what they were under the last bid rounds, and required to be paid up front. The country also witnessed increased divestment in oil and gas assets by major oil and gas companies. At the start of Q4, the government introduced what it called service-reflective tariffs which were about twice the initial costs previously paid by customers.
There was equally a significant peak in renewable energy projects as many were turning to it for succor due to increased petroleum prices and utility power tariffs. The Federal government also launched its solar power strategy to electrify 5 million homes with solar power. We saw a heightened commitment to gas utilization, with the Central Bank introducing the N250bn intervention facility to stimulate investment in the local gas value chain.
The Minister of Petroleum for State, Chief Timipre Sylva had also promised that gas-powered cars would begin operating in October 2020. In his words “The alternative we are now introducing is gas, which is definitely going to be cheaper than the subsidised rate of PMS”.
He went on to say that Nigerians were urged to convert their cars to dual fuel. Four months later, we are yet to see any auto gas cars ply our roads. There were also very swift moves to pass the Petroleum Industry Bill (PIB) last year, and indeed many stakeholders waited expectantly for it, but the legislature failed to deliver.
Soon, the Federal Government launched the Nigerian Gas Expansion Program at the tail end of Q4, a month after the news of the country officially entering recession broke. The aim of the Program was to increase gas development from three streams- Liquefied Natural gas (LNG,) Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG).
With initial reports of a vaccine rollout, the oil price that had crashed to lower than $30 per barrel last year began a steady and somewhat magical rise and currently has gone as high as $67, with predictions that it could rise to as much as $100, particularly with the release of more vaccines and easing of lockdown.
With things looking good for the country again, we see a return of the petroleum subsidy in the locked pricing of petrol. A return of fuel subsidy means heavily increased subsidy payments for the country and similarly an increased propensity for corruption and misuse of funds which has characterized Nigeria’s subsidy regime for long. We cannot claim to have learned much as a country if we think all is well, and we are out of the woods.
It would be counterintuitive to wait on another oil shock to begin to quickly diversify our portfolio and heavily invest in gas and renewables. Like the Biblical story of Joseph and Pharaoh, we should save during our “seven fat years” for the “seven lean years”.
This is not the time for Nigeria to sit back and gloat in its rising oil fortunes, but a time to invest in improving energy access for its citizens by funding renewable energy research, aggressively supporting a solar drive, entering into public-private partnerships for gas development and providing incentives for businesses working in the energy transition space. Perhaps climate change and the decisions made around it will be the next price cruncher for oil. Whichever way, we cannot afford not to be battle-ready.
5 successful ways to increase profits in your business
Constantly working on these areas of your business, you are more likely to have raised profits.
Most business owners are required to make certain changes to their business operations to achieve more profits. It is a fact that it is not possible to raise the profits directly, therefore, you need to increase them indirectly. It is not going to be possible without having a specific strategy in place. The only thing that is possible is improving the variables of your business and this can lead to an increase in profits and a higher bottom line.
Lead generation and conversion
A process that is used for attracting interested prospects to the business is lead generation. Suppose five people out of the ten coming to your business place end up purchasing the product or services from your business, you can try to raise the number of people coming to the business to fifteen. This allows you to make more money by increasing the profits by 50%. Lead conversion is a process used for converting the leads into paying customers. It is a measure of the effectiveness of your sales efforts. If it is possible to raise the conversion rate from 1 out of 10 to 2 out of 10 it is likely to double the sales figures and get you raised profits. There is no replacement for continuous sales training sessions. It applies to the owner and everyone that speaks to the clients.
The number of independent sales you make to the customers you have acquired can be increased by raising the frequency of the purchases by say ten percent. You will thereby increase the number of sales and also rise profits by the same amount. Think about the things you could do for getting your existing customers to purchase more from your business and also make these purchases frequently. The size of the transaction and the profit you make from every one of them matters as well. You need to be on the lookout for ways of up-selling all the customers so that this person will buy more every time.
Profit margins could be the gross profits you make from all the sales of products or services. By finding out the ways of raising the price or lowering the cost of making the product and services without reducing the quality you will be able to raise the profits per every sale. All the money you save while holding the costing constant flows straight to the business bottom line as profit. Every time you decrease the expenses and at the same time, if you can hold the sales and revenues constant, money is going straight to your pocket as net profit.
Reach a global audience
In the modern scheme of things, all cities are turning into global economies. Therefore language translation services can be used for increasing the profits of any business big or small. It might be a good idea to translate the content on your website to reach a global audience. The global language services industry is rising quickly and can touch a figure of $50 billion by the end of the year. Most of these services these days are used by both private and government sectors alike. With rising globalization, the demand for translation is also increasing.
Customer acquisition costs
Consider the amount of money you have to spend to acquire every paying customer. You need to continuously be on the lookout for creative ways of improving your promotion and advertising so that there is a reduction in the money you have to spend to get a new customer. This will have a positive effect on the profits of your business. You can also try to increase the number of customers that come to you as a result of referrals from your existing satisfied customers. Developing single or multiple referral systems can impact the business positively and in turn, can help in making more money for your business.
When you are constantly working on these areas of your business seeking improvement in all of them, you are more likely to have raised profits. You will make more money and it will contribute to the success of your future financial endeavours.
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