- 74% of capital expenditure (CAPEX) has been lost due to defunding of fossil fuel.
- The direct implication of reducing fossil fuel funding is on production and federal revenue.
The Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe, has said that the global energy transition program would affect Nigeria’s Gross Domestic Product (GDP) due to economic dependence on revenues from the oil sector. Komolafe made this known while delivering his keynote remarks at the 2023 Energy Year Nigeria 2023 annual book launch and award ceremony themed, ‘Innovation in the Nigeria Oil and Gas Upstream Industry: A Catalyst for Growth and Development in Nigeria Economy’ in Lagos.
The NUPRC boss stated that governments and energy companies are supporting major research, development and demonstration projects in critical areas such as low-emission hydrogen-based energy, lithium-ion and lithium-free batteries for electric vehicles, carbon capture utilization and storage and other critical energy technologies, resulting in the defunding of fossil fuels.
Komolafe said, “This global energy transition program would undoubtedly affect Nigeria’s Gross Domestic Product (GDP), which stands at $477.39bn for 2022, because the economy depends largely on the revenues from the oil sector. Between 2014 and 2022, about 74 per cent of CAPEX has been lost due to the defunding of fossil fuel. The defunding of the fossil fuel negatively impacts production with direct implication on the federation revenue for an oil-dependent economy like Nigeria.”
According to him, the expensive and low availability of requisite technology to power the renewable energy system and a lack of consensus on how fast the transition should take place (partly due to its potential economic disruptions) are the challenges posed by energy transition, urging stakeholders in the oil and gas sector to challenge the current thinking and develop innovative measures to mitigate the confounding effect of energy transition.