Abuja – A don, Prof. Wumi Iledare, on Thursday advised the Federal Government to ensure that its energy policy was primarily geared towards economic development and not revenue generation.
Iledare, the President of the Nigerian Association for Energy Economics, gave the advice while addressing State House correspondents after the association paid a courtesy visit to Vice President Yemi Osinbajo.
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He said it was the association’s vision to see how energy development and utilisation could be an important ingredient to re-energise Nigerian economy.
“We shared with him the fact that such policy shift is necessary to reduce resource-cost phenomenon and minimize elite capture and regulatory capture.
“We just believe that energy is an important source of growth that the government must pay attention to.
“Over the years one government after the other tends to look at oil and gas in particular as a source of revenue and to me, I think that is misplaced.
“I believe oil and gas should be looked at more as a source of energy rather than a source of revenue and this is where expertise comes to play.’’
The VP said that certain contracts, the economics that surround energy development may be more important than just getting money. And you could see it.
Iledare, of the Emerald Energy Institute of the University of Port Harcourt, noted that the starting point is governance structure of the energy industry which“ I think the government is committed to do.
“When the governance structure is weak of an energy sector, it translates to what you see is happening today, even including the petroleum subsidy.
“These are aspects that we think economics becomes as important as politics.
Most of the time politics trumps economics but you cannot underestimate the importance of economics as the basis of policy debate and empowerment of the economy.
The don said there was a direct correlation between economic development and energy consumption and “when energy consumption is as low as it is in Nigeria on a per capita basis you can’t expect the economy grow as fast as you want it to develop.’’
He suggested that an independent body should handle the crisis emanating from the nation’s energy tariff regime to make it purposeful.
“You need an independent agency to look at energy first of all to attract investors and the only way an investor will come and attract and develop energy is that they are sure they are going to recover their investment.
“Now if they are going to recover their investment and make sure energies are available there is an optimal price that they need to pay and if they don’t get that optimal price, the normal rate of return that is required will not be accomplished.
“However, the issue becomes with public education as to what is going on.
“It is the same thing that we talk about when we debate the petroleum subsidy.
“You find out that people do not take time to look at the opportunity cost and the welfare losses associated with petroleum subsidy.
“That is why you have black markets, that is why you have queues, and that is why you have `stealing’ in that particular sector because it is an economic good. So it is the same thing with energy.’’
The don said that “you cannot generate enough energy if there is not enough money to
recover the investment, and you cannot recover the investment if you don’t charge the optimal tariff.’’
According to him, government does not have the money to subsidise energy, so people must be prepared.
He compared it with the telecommunication industry “when you allow the market to work you find out that the telecommunication industries are recovering their investment.’’
He said it was the role of the government to provide an enabling environment so that the private sector could thrive noting that the “private sector cannot thrive if the structure of the economy is not well organized’’.
The don said that the international conference by the association holding in Abuja from April 26 to April 26, would dwell on how the nation could use energy to re-energise the economy adding that the economy would not go anywhere if there was no energy to drive it.
On the recent increase in electricity tariff, he said there must be optimal tariff which the regulatory agency will not set unless they did their homework.
He noted that that was why they were autonomous and should be allowed to do their work
“You cannot afford not to develop professionals to be able to properly handle some of these issues and they are going to come and come again and that is why we cannot allow our education system to rot.
“There are so many things that we need to put in place to be able to determine what is the
proper price for electricity.
“The politician cannot wish it; it has to be economically determined and must be such that there is return in investment to be able to generate more electricity.
“That is the only way they can make it. The price must be right.’’ (NAN)