As the world moves towards alternative energy and electric cars which are expected to shrink the global demand for oil, analysts say Nigeria, which has oil as its major foreign exchange revenue earner is not working towards ridding itself of oil dependence.
Presently, crude oil is the major export product of the country, accounting for up to 90 per cent of its foreign exchange income.
However as electric vehicles take up more space on roads particularly in developed countries, there has been increased talks on oil becoming less relevant in the global commodity market.
Chief Energy Economist at Total, one of the world’s biggest oil producers, Joel Couse, earlier in the year had noted that electric vehicles might constitute almost a third of new car sales by the end of the next decade.
With cars and trucks accounting for up to 40 per cent of the worldwide demand for oil, Couse said the surge in battery powered vehicles will cause demand for oil-based fuels to peak in the 2030s.
Electric vehicles, he said, would make up 15 per cent to 30 per cent of new vehicles by 2030, after which fuel “demand will flatten out and maybe even decline.”
As countries prepare for the possibility of a world of low oil value, back home, analysts said the take-over from oil by technology would take Nigeria by surprise despite the fore-warning if the right steps were not taken now.
Managing Director and Chief Executive of Cowry Assets Management limited, Johnson Chwuku, in an interview noted that Nigeria is one of the least ready countries or economies in terms of world without oil.
To him, while the country claims to be working towards diversification, “we are not doing those things that will lead to economic diversification. We are not building infrastructure, we are not improving on the little things that will lead to an economy that can be self-sustaining without oil.”
He added that “It looks like oil of no value will happen to us all of a sudden despite being foretold and foreseen and I cannot see an articulate economic plan that will rid Nigeria of oil dependence in the next 10 years, because I am clear given the advancement in technology, given the policies in several countries to cease the usage of vehicles that use oil.”
Although the government is making efforts at diversifying the economy away from oil, particularly following the recession that hit the country on the back of low oil price, Chukwu believes enough is not been done to wean the country from oil.
“For this economy to thrive without oil, we need to have the infrastructure base that will allow manufacturing sector to prosper. We need build infrastructure, that is not being done. We need to focus on the quality of labour that we are churning out, so that companies from other countries will come here and make use of our labour in terms of quality and cost.
“We need to improve on the little things like power supply. We have been aiming at 4000mw and now we are talking of 10000mw in 2020 when we still cannot generate 4000mw and we don’t even have the capacity to transmit 6000mw. We are also not building new transmission lines.
“We need to increase the number of export product that we have, we need to improve the value chain on those products that we export the raw materials and import the refined products. We need to build world class infrastructure that will support the real sector, we are not doing those things.”
Chukwu’s view was also shared by the Managing Director of Rosabon Financial Services, Chukwuma Ochonogor who believes that while the President Muhammadu Buhari-led government has been working towards diversifying the economy of the country, there is still more work to be done.
He noted that the president had identified mining and agriculture as the ones to bridge the gap “but the reforms that have been going on there has not been as encouraging. Even though output has been rising in agriculture and even in manufacturing as well but they have not been rising to what we should be expecting.”
He said, “In the long term, our dependence on oil and gas, our dependence on a dying market must cease. Before we miss the boat we should equip ourselves for the future and this means that the investment in education so that we are able to have a competent well-educated workforce that are able to compete against their counterparts in other climes. Otherwise what we will have is that we will become a consumer nation and when the oil and gas industry subsides then there will be a lot of strife.”
By 2030, which is less than 13 years from now, it is estimated that annual sales of electric vehicles would have risen to close to 25 million and up to 47 per cent of new cars bought by 2040 will be electric driven according to forecasts.
Electric cars are beginning to compete with gasoline models on both price and performance.
The most expensive part of an electric car is the battery, which can make up half the total cost, according to BNEF.
The first electric cars to be competitive on price have been in the luxury class, led by Tesla Inc.’s Model S, which is now the best-selling large luxury car in the U.S.
Battery prices are dropping by about 20 per cent a year, and automakers have been spending billions to electrify their fleets.
Volkswagen AG is targeting 25 per cent of its sales to be electric by 2025.
Toyota Motor Corp. plans to phase out fossil fuels altogether by 2050.
Asides this, there has been an increasing penetration of alternative and renewable energy sources as the countries strive for a greener world
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