- The bill to develop biofuels would mark a crucial step in Nigeria’s efforts to combat climate change and diversify its domestic economy.
- The biofuel industry remains nascent despite Nigeria’s potential in the biofuels sector and a target demand of 5.14 billion litres annually due to a lack of regulatory framework.
The House of Representatives has passed for Second reading a Bill for an Act to provide a policy framework to develop the Biofuels Energy Industry in Nigeria. This move is significant towards Nigeria’s greener and more sustainable energy future. The bill, sponsored by Hon. Benjamin Okezie Kalu, Hon. Khadija Bukar Ibrahim, and Hon. Babajimi Benson, aims to establish the Biofuels Energy Regulatory Commission and the Bio-Fuels Research Agency. This would mark a crucial step in Nigeria’s efforts to combat climate change and diversify its domestic economy.
In his debate, Hon Kalu, the deputy speaker of the house, said the biofuel policy initially introduced by Nigeria in 2007 addresses climate change concerns, reduces dependence on fossil fuels, and promotes economic diversification. He explained that the policy aimed to incentivise the production of bio-ethanol and bio-diesel for blending with fossil fuels. The deputy speaker, however, expressed concern that after 16 years, progress has been limited, with only a few Memoranda of Understanding (MoUs) in place.
According to the International Energy Agency (IEA), global biofuel demand will increase significantly in the coming years. Kalu observed that the industry remains nascent despite Nigeria’s potential in the biofuels sector and a target demand of 5.14 billion litres annually. He identified one of the primary challenges hindering the development of the bio-fuel industry in Nigeria as the absence of a regulatory framework. Despite a biofuel policy in existence, the lack of a legal and institutional foundation has impeded its effectiveness.
According to him, this bill aims to rectify this gap and provide the necessary framework for growth, stressing that to encourage investment in the sector, the policy offers incentives such as exemptions on Withholding Tax, waivers on Value Added Tax (VAT), and waivers on Import and Customs Duties. The deputy speaker highlighted the numerous advantages of developing the biofuels energy sector, including Improved Petroleum Product Quality. This is because biofuels would enhance the quality of petroleum products and equally address the current limitations of fossil-based fuels.