Adejoke Akinbode, the extracts lead in the civic organization, Budgit Nigeria, has said that the proposed $1.9 trillion budget for the implementation of Nigeria’s energy transition plan (ETP) is faulty.
She said this exclusively to Nairametrics in a statement on November 4. According to her, the proposed budget is not only unrealistic, but it also does not reflect the current state of the economy.
- Akinbode said: “The government has yet to develop a funding mechanism for this project because oil and gas revenues are dwindling, and using them to fund the ETP implementation is no longer feasible.
- “According to the government, the non-oil sector generated the most revenue in 2021. Although the mineral sector has potential, not enough investment is being made to generate sufficient profits to make this a viable option.”
The optics: According to Budgit, the federal government, in its 2023 budget fiscal assumptions, projects an oil production of 1.69 million barrels per day at $70 per barrel. The projected gross domestic product (GDP) growth will be at 3.75% with an exchange rate of N435.57/$ and an inflation rate of 17.16%. However, Nigeria currently struggles with an inflation rate of 20.77%, and crude oil theft has prevented the country from benefitting from high crude prices due to strong global demand.
Nigeria’s mineral sector realities: Nairametrics earlier reported that Nigeria’s mining sector lacks adequate investors, mostly because the sector has no reliable data and this discourages investments. This challenge hampers Nigeria’s chances of being an essential contributor to the global energy transition. This is because these mineral resources are used in manufacturing renewable energy technologies and electric vehicles (EVs), which are in high demand. In the November 2022 Mission Critical Report from the Extractives Industries Transparency Initiative (EITI), it is highlighted that transparent information can improve terms of contracts, facilitate mine planning, and ensure that all stakeholders are well informed.
Akinbode told Nairametrics that for Nigeria to maximize its critical mineral resources, there needs to be less dependence on oil.
Strategies to help improve mining in Nigeria: The government needs to invest in strategic minerals that are likely to make great returns, such as gold. If properly invested, the transition to renewable energy could be financed.
According to Akinbode, the government needs to develop a transparent policy that promotes the development of the mining industry and supports its growth.
Also, the mining industry should be encouraged to conduct proper explorations and issue mining licenses rather than engage in artisanal mining.
For the record: During an October 2022 dialogue featuring Budgit Nigeria, the Nigerian Extractives Industry Transparency Initiative (NEITI) and the Natural Resource Governance Institute (NGRI), stakeholders said the non-alignment of the Nigerian energy transition plan (ETP) with the national development plan and Medium-Term Expenditure Framework (MTEF), could pose an impediment to its implementation.
- Stakeholders also noted that the ETP does not correlate with the local realities and experiences of Nigerians.
- It was earlier revealed during its launch in August 2022, that the ETP implementation will cost $1.9 trillion between now and 2060.
