N.I.E.S 2024: Oilserv boss state measures to achieve diversification of energy mix

Adebayo Obajemu

The Chairman of Oilserv, Engr. Emeka Okwuosa, CON, at the ongoing Nigeria International Energy Summit on Nigerian Market in Abuja, took a critical look at the energy sector, pointed the way forward through a slew of informed analysis on how reposition the sector for efficiency.

Drawing on his years of experience in the sector Okwuosa chipped in key initiatives and dynamics for supporting energy provision.

Top on his agenda is the dire need for diversification of the energy mix, stressing that there could not be better time than now for the country to explore other options and move beyond the over reliance on oil and explore renewable energy sources like gas, solar, Methanol, and hydro.

Okwuosa mentioned specific Oilserv’s projects or initiatives that have highlighted progress in this direction, which can emulated.

According to him, the dynamics of energy mix especially in Nigeria calls for a radical vote for Grid modernization and expansion,l; emphasizing the centrality of upgrading and expanding the national grid to accommodate increased energy generation and ensure stable distribution.

Okwuosa touched on modern innovative solutions like smart grids and mini-grids and highlighted how his company, Oilserv playing a pioneering role in instituting innovative solutions; and positioning itself to play in this sector.

To achieve overall turnaround in the energy sector, he stressed the importance of investment and financing, calling for attractive policies, stable regulations, public private partnerships to woo not only local but foreign investments.

He listed the types of financing available and also how Nigerian companies can leverage on investment opportunities in-country and also on the African Continent. 

The chairman of Oilserv averred that energy efficiency and conservation are a sinequanon. He implored government to encourage initiatives that fosters businesses and households to adopt energy-efficient practices and technologies, such as using CNG as an energy source, conversion of fuel/diesel engines to CNG hybrids for lower costs, conservation and efficiency benefits, adopting mini-grids in clustered populations or industrial estates to reduce the carbon footprint and the associated capex and maintenance costs borne by individual users. 

Not only that, he mentioned sustainability challenges and environmental considerations associated with gas extraction, transportation, and utilization; while suggesting strategies for minimizing methane emissions, promoting energy efficiency, and integrating renewable energy technologies within the gas value chain

Closely allied how to overcome sustainability challenge, the Oilserv boss addressed the need for skills development and capacity building.
According to him, there’s a yawning need to train and upskill the workforce to meet the demands of the evolving energy sector. In this wise, he mentioned the imperative for the harnessing of local content opportunities, while workforce with high potentials should be developed, retained, retrained and challenged with real on-field work.

He also touched on government’s support. In his view, government has done quite a lot in this area, but considering the level of progress required to achieve defined energy sufficiency objectives, ” we solicit more support from the Government in the areas of access to FX availability, a continuously improving regulatory environment, fast-tracked administrative but well-supported approvals, and provision of frameworks for commercially-driven investments.”  

He did not shy away from mentioning the challenges faced by major players and the potential solutions, part of which is Policy and regulatory uncertainty. He stressed the need for clear, consistent, and predictable policies that incentivize investment and long-term planning. He cited example which affects a large pool of players in the industry.

Part of the challenges he said is access to finance, the sore point of which is high-interest rates and limited access to credit, and propose solutions like specialized financing mechanisms and risk-sharing initiatives (Project Financing, JV and Strategic Partnerships, PE Investments, Assets-Based Financing, Vendor Financing, Bond Issuance, Export Credit Agencies, Crowdfunding and P2P Lending, and Government Support Initiatives such as tax breaks, subsidies, grants).

He noted that infrastructure gaps has been a big challenge, stressing the need for investment in generation, transmission and distribution infrastructure (BOO, BOT, contracting models) to address bottlenecks and improve efficiency. He also touched on the need to consider gradual removal of end-user subsidies to reduce the burden on government and promote efficiencies based on demand and supply forces.

On the issue of security, he said it was a big concern. Though Okwuosa acknowledged the impact of security challenges in certain regions and the work the government has done in ensuring safety of lives, property and business; he stressed that businesses and people involved in energy projects still continue to face serious security challenges while on project site, enjoining government to do more in the area of security.

He also said that the great recipe for a better security of the energy sector is for the government and host communities to continue to work together with project owners and contractors to ensure better security “if we are to rapidly develop our energy infrastructure and retain secure/personnel critical to these objectives.”

He stressed the need for a better community engagement, while advocating for transparent and inclusive dialogue with communities affected by energy projects to address concerns and build trust. According to him, ” S.240 of the 2022 PIA has provided a solid framework for host community development and industry players will continue to build on this to improve community relationships and collaboration.”

He also spoke on autogas and CNG in Nigeria. He said there’s need to examine the role of “autogas (LPG) and compressed natural gas (CNG) in Nigeria’s household and transportation sectors, including their potential to reduce carbon emissions, improve air quality, and enhance energy security.”

He said initiatives to promote the adoption of autogas/CNG vehicles, such as infrastructure development, regulatory incentives, and public awareness campaigns must be discussed.

Also to be looked at according to him, are the challenges involved: Huge CAPEX (for NCG plant construction and conversion technology/equipment), Insurance/indemnity cover challenges, possible Warranty loss, adequate know-how, etc)  

To him forward-looking discussions and innovation must involve discussions on the future of gas in Nigeria, including emerging technologies (for pipe-laying and construction to mitigate both security challenges and environmental pollution, auto-welding to ensure pipeline weld integrity, HDD, etc), innovative financing mechanisms, and regulatory frameworks.

He emphasized the need to highlight opportunities for innovation in gas exploration, production, distribution, and utilization, with a focus on enhancing efficiency, reducing costs, and mitigating environmental impacts.

On the opportunities and challenges ahead; he stressed the need to
Identify key opportunities for investment growth, and job creation in Nigeria’s gas sector (Downstream, Midstream), particularly in power generation, infrastructure development, and downstream gas utilization.

He also mentioned the need to address challenges such as policy and regulatory uncertainties: 
a clear regulatory framework for renewable energy (for development, deployment, integration, feed-in-tariffs, grid interconnection, procurement processes and foreign investors’ clawback).
Clarification of the roles and responsibilities of stakeholders, addressing tariff discrepancies, and implementing effective dispute resolution mechanisms (which are crucial to improving investor confidence and attracting private sector investments).
He stressed the imperative of clear policies on gas pricing mechanisms, access to gas infrastructure, and market competition can stimulate investment in gas exploration, production, and infrastructure development while ensuring fair market practices and consumer protection.
With increasing global focus on climate change mitigation, Nigeria needs to develop robust policies and regulations aimed at reducing greenhouse gas emissions across various sectors, including the energy industry.

He talked about cybersecurity and data protection, adding that as “digitalization and technology adoption increase in the energy sector, Nigeria needs robust cybersecurity and data protection regulations to safeguard critical energy infrastructure, prevent cyber threats, encourage/safeguard effective tariff regime and gas metering and ensure the integrity of energy systems.”

He stated that in the area of Local Content Development and Empowerment, a lot has been achieved with Nigeria local content laws in the energy industry and through NCDMB, ” however, we will like to see more. Nigeria should encourage local ownership; and accelerate capacity building, skills transfer, and job creation to empower local communities and enhance our ability to be in control of our energy future. 

“Government should continue to look for ways to address the challenging funding constraints (CAPEX financing, access to FX to service debts and run operations). Failing to achieve our objectives here could derail our energy sufficiency objectives.”