Nigeria’s Energy Sector Transformation: A Review of Tinubu’s 2024 Energy Strategies

By Engr. Adéṣẹ́gun Olútáyọ̀ Adéolú Ọṣìbánjọ

President Bola Ahmed Adekunle Akanbi Tinubu GCFR stayed true to his promise, hitting the ground running on day one with a bold move in the energy sector. During his inauguration speech, he made headlines with his decisive declaration: “Fuel subsidy is gone.” This move sent shockwaves throughout the nation, triggering a ripple effect that resonated across all spheres of Nigerian life.

Economically the removal of fuel subsidies triggered a chain reaction, affecting inflation rates, currency valuation, and the overall cost of living. Economists predicted that this move would have both short-term and long-term effects on the economy. Politically, the decision sparked intense debate among politicians and pundits. Proponents hailed it as a courageous step towards economic reform, while critics argued it would worsen poverty and inequality. Socially, Nigerians from all walks of life felt the impact of increased fuel prices, which affected transportation costs, food prices, and the overall standard of living. The most vulnerable populations, including the poor and elderly, were disproportionately affected.

Resistance from the Hawks

A powerful group of entrenched interests, known as the Hawks, pushed back against President Tinubu’s policy. They had grown accustomed to profiting from the fuel subsidy regime and saw the policy change as a threat to their livelihood. The Hawks allegedly manipulated fuel distribution networks, exploited loopholes, and sponsored protests and unrest to undermine the government’s efforts. The Hawks’ actions had severe consequences for Nigerians, including:

• Prolonged fuel shortages: This leads to increased transportation costs, disrupted economic activities, and hardship for many.
• Escalating prices: The Hawks manipulated the market to maintain their profits, further exacerbating the economic burden on Nigerians.
• Eroding trust in government: The perceived inability of the government to implement its policies and protect citizens’ interests led to widespread disillusionment.

President Tinubu’s administration faced significant challenges in overcoming the Hawks’ resistance and ensuring a smooth transition to the new energy policy. To address these challenges, President Tinubu introduced several executive orders aimed at reforming the Oil and Gas sector. These orders included Tax incentives for Gas production, streamlined Contracting processes, and Local content compliance requirements. Additionally, President Tinubu implemented a Naira-for-Crude deal to stabilize fuel prices and the exchange rate.

Gains of Tinubu’s Energy Strategies: Petroleum

The Resurgence of Local Age-long Ailing Refineries

Like President Tinubu or hate him, he has dared where the Eagles could not dare. There is no President in Nigeria’s history who has been as AUDACIOUS, BOLD & DARING as Tinubu. The intentionally grounded Refineries that some powerful group of entrenched interests (Hawks) including a former President say that NNPCL lacks the capacity to run efficiently are gradually coming on stream. These powerful Interests will never forgive Tinubu for proving them wrong. This was further reinforced by the conferment of “Man of the Year 2024” on President Tinubu by ThisDay publications, one of the most vociferous critics of his administration.

Despite this opposition and years of neglect, President Tinubu’s administration has achieved a significant milestone in the Energy sector with the successful revitalization of Nigeria’s Refineries. After decades of disrepair and numerous failed attempts by previous governments, which squandered billions of dollars, the Refineries are now producing fuel for domestic consumption.

Key Highlights

• Port Harcourt Refinery (210,000 bpd Capacity): After seven failed attempts, the refinery is now fully operational and produces 60,000 barrels of fuel per day.
• Warri Refinery: The refinery has been revamped and now produces 30,000 barrels of fuel daily.
• Warri Refinery (125,000 bpd Capacity): The refinery has commenced production, although not yet at full capacity.
• Kaduna Refinery (110,000 bpd Capacity): Although still undergoing rehabilitation, the refinery is expected to come online soon, further increasing domestic fuel production.
• Reduced Fuel Imports: With local refineries producing fuel, Nigeria’s reliance on imported fuel has decreased significantly.
• Lower Fuel Prices: Increased domestic fuel production has led to a marginal reduction in fuel prices, providing relief to Nigerians.
• Job Creation: The revitalization of the refineries has created thousands of jobs, both directly and indirectly, contributing to the country’s economic growth.
• Economic Growth: The resurgence of the refineries is expected to contribute significantly to Nigeria’s economic growth, as the country becomes less reliant on imported fuel.

Revolutionizing Oil and Gas Management: NNPC’s Remote Monitoring System

The NNPC remote monitoring system is a game-changer for Nigeria’s Oil and Gas sector. This innovative technology enables real-time monitoring of Crude oil facilities across the Niger Delta region from a centralized Computer monitoring situation room. Although this technology has been available for a while, previous administrations never had the will to implement it. However, the current administration has taken bold steps to harness its potential. With this system, Nigeria can now:

• Track Bunkering Activities: Monitor and trace all bunkering activities to prevent illegal oil theft and sabotage.
• Protect Pipelines: Discourage pipeline vandalism and sabotage by keeping a close eye on pipeline activities.
• Boost Crude Oil Exports: The system has contributed to an increase in crude oil exports from 900,000 barrels to 2 million barrels, a significant achievement.

The NNPC remote monitoring system is a key factor in Nigeria’s success in reducing Crude oil theft. The Country’s security forces also deserve credit for securing and protecting national assets and Crude oil facilities. This technology demonstrates Nigeria’s commitment to building a strong and solid foundation for future success and progress.

Other added gains, includes:

• Economic benefits: Reduced government expenditure, increased revenue, and improved fiscal discipline.
• Energy sector reforms: Increased investment in renewable energy, improved energy efficiency, and diversification of energy sources.
• Social benefits: Reduced fuel smuggling, improved fuel Supply chain, and job creation.
• Environmental benefits: Reduced greenhouse gas emissions, improved air quality, and conservation of natural resources.

Gains of Tinubu’s Energy Strategies: Electric Power

President Tinubu’s administration has made significant strides in the electricity sector. One major gain is the signing of the Electricity Act 2023, which revolutionizes the sector breaks the federal government’s monopoly and decentralizes the electricity supply. This move aims to transform Nigeria’s power sector into an efficient and competitive industry.

Another notable achievement is the increase in electricity supply stability. According to the Minister of Power, Chief Bayo Adelabu, this improvement is a direct result of the Government’s commitment to revolutionizing the energy sector, which is part of President Tinubu’s “Renewed Hope” agenda. Additionally, the government has taken steps to address the challenges facing the electricity sector, including:

• Addressing Electricity Value-Chain Imbalance: The administration is working to upgrade and expand the Transmission (Siemens Contract) and Distribution (Elsewedy & Power China Contract) infrastructure to match the installed Generation capacity.
• Reducing Payment Collection Loss and Energy Theft: The Government plans to roll out electricity meters nationwide to address payment collection loss and energy theft. Notably, MaakBeat Transnational Ltd has offered to assist the Tinubu Administration in implementing a methodological mass deployment of Smart Prepaid meters, utilizing their full technological capabilities, but to no avail.
• Increasing Revenue: The administration has implemented a new tariff system to shore up revenue and reflect the true cost of supplying electricity. However, it is not sure how well this increase has solved the Liquidity challenge of the sector.

Overall, President Tinubu’s administration has demonstrated a commitment to improving the Electricity sector, and these gains are expected to drive economic growth and increase Energy access for Nigerians.

Priority Actions for Nigeria’s Energy Sector Transformation in 2025

Cleansing of Nigeria’s Four (4) Augean Stables

The cleansing of the “Augean stables” – critical institutions and sectors that profoundly impact Nigeria’s economy and citizens’ well-being – is imperative for meaningful transformation.

1. Nigerian National Petroleum Company Limited (NNPCL): The NNPCL is the root cause of Nigeria’s economic woes.  The National Economic Council’s (NEC) reconstitution of the committee to probe crude oil theft and management is unnecessary. An outright probe and audit of the NNPCL is the appropriate path to proceed. If probed, the rot that will be uncovered in NNPCL will make the issues at the Central Bank of Nigeria (CBN) look minor.
2. Central Bank of Nigeria (CBN): Significant progress has been made in reforming CBN, which has undergone cleansing and reorganization and has commenced re-engineering its fiscal and monetary functions, setting a positive tone for the nation’s economic transformation.
3. Nigeria’s Electricity Value Chain: A shocking exposé has revealed the devastating impact of National greed on Nigeria’s electricity supply. The nation’s Power grid has been plagued by repeated collapses, largely due to corruption and vested interests. A recent investigation, documented by Suyi Ayodele in Tribune Newspaper, uncovered a brazen instance of national greed. A government-owned power plant in Ihovbor Community, Benin City, was found to be shutting down its turbines to enable a neighbouring private plant to operate. In a staggering twist, the private plant gets paid a whopping sum of $30 million for megawatts that are generated but not transmitted, while utilizing facilities belonging to the Government-owned NDPHC plant. This egregious example is merely one of many instances of national greed afflicting the Generation value chain. Confronting the scourge of the national greed head-on to prevent further collapses of the national grid and electricity supply has become overwhelming for the Power Minister, Bayo Adelabu believed to be treading cautiously drawing learnings from the experience of a former Power Minister, the Cicero, Chief Bola Ige who was murdered in mysterious circumstances. What the Hawks in Nigeria cannot do does not exist. He requires Presidential intervention to step up improvements and make further progress.
4. Solid Minerals Sector: The Government must regain full control of this sector, which powerful individuals and foreign nationals have overtaken. Over the years, these actors have used insecurity and other criminal activities to shield and divert attention from their nefarious activities. Regaining control will enable the government to transition from a monoculture economy to a diversified one. Notably, President Tinubu has initiated moves to recover the Solid Minerals Sector, signing a Mining Agreement with France during his recent state visit. This agreement aims to develop joint projects, promote critical minerals, and remediate over 2,000 abandoned Mining pits in Nigeria. This partnership is expected to boost Nigeria’s solid minerals sector, making it more competitive internationally.

Other Priority Actions

To revolutionize the energy sector in 2025, it is essential to:

1. Enhance the Crude oil Supply chain for local Refineries
2. Prohibit the Importation of Crude oil for Local Consumption
3. Meeting Nigeria’s Energy Needs
4. Building Strategic Reserves
5. Confront the scourge of national Greed collapsing our national Grid and Electricity supply, and
6. The Setup of an Inter-Ministerial Cross-functional Committee to harness our abundant human capital and natural resources to drive Nigeria’s energy sector reforms and further grow the economy, boosting GDP, has become expedient. These initiatives and other Priority actions for 2025, codenamed Project Energize Nigeria, are detailed in MaakBeat’s 2025 Four-Point Energy Strategy.

Engr. Adéṣẹ́gun Olútáyọ̀ Adéolú Ọṣìbánjọ BENG, MBA, MNSE, MNIEE, MCIPSMN is the Lead Consultant, MaakBeat Transnational Ltd, Lagos.

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