The Head of Climate Change and Energy, West Africa at the British High Commission, Sean Melbourne has disclosed that the permanent removal of the fuel subsidy regime in Nigeria could save the country at least $2 billion per annum.
The crash in global oil prices earlier this year provided Nigeria, Africa’s largest producer an opportunity to liberalize the sector and end its subsidy regime.
The government had been under pressure to carry out the reform.
Speaking at the Energy Sustainability e-summit 2020 organised by The Energy Intelligence, Sean who gave a Keynote remark added that by closing the demand-supply gap, and facilitating greater economic growth, Nigeria could address the loss of $25bn per year due to inadequate power supply.
According to him, the emergence of Covid-19 and the subsequent hit to oil and gas receipts from the sharp economic slowdown underscore the necessity for many governments around the world to diversify away from a fossil-fuel economy and to ‘build-back better’.
He stated that the climate emergency and an accelerating shift in global finance to low carbon projects underlines the importance of a having a strategy in place to take full advantage of the new clean energy paradigm.
In his words, ‘As the biggest economy in Africa and by far its most populous, the low carbon market opportunities in Nigeria are significant. Nigeria’s economy is expected to undergo massive change over the next two decades.
According to the International Finance Corporation, Nigeria’s estimated climate-smart investment potential is over $104bn through to 2030 in selected sectors.
That’s the big picture. But how do African countries truly unlock their significant clean energy potential?
All face unique challenges and decisions as they embark on their clean energy transitions. In developing new policies, countries will need to decide which sources of energy they wish to utilise and how energy can be consumed in the most efficient way.
Making these decisions can be challenging, but having comprehensive, comparable and timely energy data will significantly help countries access policy options,” he said.
Speaking further, he noted that governments have an important role in creating the right enabling environment for finance to work affectively.
“Key pre-conditions for effective climate finance include:
First, mainstreaming climate change into development planning and policies;
Second, proper co-ordination and clear allocation of responsibilities, with tracking and monitoring systems for climate finance in recipient countries;
Third, readiness and ease of access to climate funds, and genuine engagement with civil society, local government and the private sector.
Government can further facilitate better outcomes from large-scale investment programmes by addressing unnecessary regulatory barriers; raising electricity tariffs so they become costs reflective – it’s possible to do this whilst still protecting the poor – and by removing damaging fossil fuel subsides which increase emissions and exacerbate climate change, as well as causing wider adverse health and environmental impacts, for instance through air pollution,” he stated.
Speaking further, he said that the UK is currently undertaking a study on the consequences of customs tariffs removal expected to be concluded in February 2021, which will help quantify these benefits.
“The UK is also supporting the customs single window process, designed to simplify the customs process for businesses that important and export,” he added.
The recording for the summit can be accessed here.
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