U.S.-Nigeria Binational Commission Convenes Energy and Investment Working Group

Posted by David L. Goldwyn
June 25, 2010
Youth Walks on Oil Pipeline in Nigeria

About the Author: David L. Goldwyn serves as the Coordinator for International Energy Affairs.

I have a long experience working in Nigeria on energy and governance issues, dating back to 1998. This is why I was so pleased to host the first meeting of the Energy and Investment Working Group of the U.S.-Nigeria Binational Commission on June 10-11 with my co-chair Permanent Secretary of the Federal Ministry of Petroleum Resources of Nigeria Elizabeth Emuren. We had a great team of officials from both the Nigerian and U.S. sides from various ministries and departments covering energy, petroleum, investment, transparency, and power issues. We also invited private sector companies to some sessions so they could provide their perspective on the challenges of investing and operating in Nigeria. We tackled some tough issues -- the best way to reform the power sector, reforms needed to attract investment, pending legislation that would overhaul the country's petroleum sector, and the need to foster transparency and governance. We didn't always see eye-to-eye on everything, but we were able to establish a good basis for further discussions on these and other energy issues.

Nigeria has come a long way since 1998, especially in the power sector. They now have a functioning regulator, allow independent power producers (IPPs) and have unbundled the electricity sector. These reforms are important, but hard decisions still lie ahead. The first is subsidies. It's never easy for a country to remove subsidies, but many Nigerians currently pay a hidden tax -- in the form of private generators to make up for brownouts and blackouts or, even worse, a total lack of access to electricity. The key to reforming subsidies is allowing those who can pay market rates for power to do so (never popular), while providing subsidies for the poorest sectors of society. Second, we want to engage further on gas flaring. Burning gas (flaring) that is a byproduct of oil extraction is an incredible waste of a valuable resource and bad for the climate. Flared gas is an obvious potential source of fuel for Nigeria's power sector. The key to both subsidies and gas flaring is getting the price right so that companies will invest in both of these sectors and help the country rebuild its national power grid. In addition to the power sector, we focused on the petroleum sector -- the key to economic development for Nigeria. The government is currently debating legislation that will overhaul this sector. We discussed ways that Nigeria can balance the need for change while providing sufficient time to transition to new systems. We also urged them not to take actions that would undermine the security of investment in this crucial sector and to be open to industry feedback on the impact of the legislation.

Transparency and governance are two issues that I've worked a lot on over my career. During the course of these two days, we underlined the need for Nigeria to focus on promoting these core values in all areas of its economy and society. I really hope to see Nigeria revive its Extractive Industries' Transparency Initiative (EITI) program. I worked on EITI in my former life and really believe in its core values. Nigeria's EITI program needs fresh energy and sustained government support to restore its gold standard standing. Doing so would send a strong message to the private sector and civil society that Nigeria is serious about fighting corruption. Despite the challenges, I am also optimistic. One of the areas that I am most excited about is the potential for renewable energy in Nigeria. Department of Energy Assistant Secretary Kristina Johnson gave an excellent presentation on the potential for renewable energy and promised to follow up with a trip to Nigeria for further discussions. USTDA also signed a grant agreement with Nigeria to provide technical assistance on the proposed Renewable Energy Independent Power Producer Framework.

The two days of meetings highlighted our interest in helping Nigeria address its needs on energy poverty, transparency, and reform of its petroleum sector. They also reinforced the great affection I have for both the country and its people. I'll make sure we continue to follow up on the discussions both in Washington and Nigeria.

Related Entry: U.S., Nigeria Launch Binational Commission

Comments

Comments

Femi O.
|
Florida, USA
June 28, 2010

Femi O. in Florida writes:

Great! However, Govt. over the years had numerous commisions and reform agenda, all to no avail. What is the difference now?

john
|
Pennsylvania, USA
August 1, 2010

John in Pennsylvania writes:

This is a wonderful effort in tackling the dominant problems of underdevelopment in potentially great countries like Nigeria who is greatly endowed with abundant natural resources which are however badly tapped and managed. This commission should focus on how the energy problems of Nigeria can be solved. That sector is a bundle of problem for Nigeria but at the same time it will be a wonderful catalyst in solving Nigeria's other numerous problems like governance, corruption etc.

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