NIGERIA ENERGY POLICY ANALYSIS: Modelling NigeriaÕs Energy Policy Response Dynamics
Walter
G. Ollor*, Peter O. Jack**, Takeshi Utsumi***, Hans
R. Herren****,
19 January 2009
ABSTRACT
Nigeria is a major Oil Producer and member of the Organization of
Petroleum Exporting Countries (OPEC). The countryÕs economy is mostly dependent
on Crude Oil, which is produced in the Niger Delta region. The challenges of
the long term neglect of these Oil Producing Areas, is succinctly reported by
Tom OÕNeill, ÒCurse of the Black Gold: Hope and Betrayal in the Niger Delta,Ó
in the February 2007 edition of National Geographic. 40% of oil produced in the
Niger Delta region is exported to the USA. Again about 40% of the electricity
generated at the U.S. power plants utilizes Oil from Nigeria, because of its
low sulphur content. Former Vice
President and Nobel Peace Laureate, Mr. Al Gore recently proposed to replace
fossil fuel with renewable energy to generate electricity in the USA in ten
years <http://tinyurl.com/66sk9d>.
If Mr. GoreÕs bold scheme were to succeed, most of the developed nations (among
them NigeriaÕs Oil importers) would follow suit thereby leave Nigeria greatly
exposed to the risk of lessening oil revenue. This project is focussed on
modelling NigeriaÕs Energy Policy Response Dynamics, taking into account the
ramifications of Mr. GoreÕs ambitious energy policy proposal; the impacts of
highly unstable world oil prices; as well as the depleting levels of production
as a result of the conflicts in the Niger Delta Region of the country.
*Walter G. Ollor; Ph.D. is Professor of Banking and
Finance; Igbinedion University, Okada, Nigeria.
**Peter O. Jack is a Ph.D. student of the International Information
Technology Policy Program (ITPP) at the Seoul National University, Seoul, South
Korea; Technical Adviser/Consultant, National Information Technology
Development Agency, Nigeria.
*** Takeshi Utsumi; Ph.D., P.E. is Founder and Vice President for
Technology and Coordination of Global University System (GUS); Chairman, GLObal
Systems Analysis and Simulation Association in USA (GLOSAS/USA) in New York.
**** Hans R. Herren, Ph.D. is
President of Millennium Institute in Arlington, VA
Al GoreÕs audacious energy policy proposal implies the proliferation of
wind-, solar- and geothermal energy to replace oil use for power generation.
Since Mr. Gore began his campaign, many global leaders, especially from those
countries with little or no oil reserves but with heavy dependence on it for
their energy requirements, are taking a closer look at their fossil fuel
replacement plans. New energy policies with strategic implementation plans are
being developed more urgently than ever. Indeed, in many parts of USA, Europe
and Asia, many new Wind and Solar Power plants have sprung up and are beginning
to make some noticeable contributions to the national grids.
It is against this backdrop that Nigeria, facing the imminent danger of
gross reduction in income from oil, should for instance emulate the EmiratesÕ
(DubaiÕs) laudable diversification efforts from primary dependence on oil as
the core national revenue source, for example, as making Nigeria as the centre
of Knowledge society of the 21st century in Africa with the use of the
newly launched Nigerian domestic satellite for export of education and
healthcare services to nearby countries.
This work is intended to provide the tools and models for scenario analysis to
aid NigeriaÕs Energy Policy Review, and by extension, to provide a starting
point for architecting an integrated national development planning model.
The situation in the Niger Delta deteriorated to the point where the
present Government in recognition of the need to act timely included the region
for special attention and intervention/development focus. In the event that
sufficient programs of intervention are not put in place to markedly change the
quality of life of the people in the Niger Delta before the oil revenue drops
to levels that would no longer sustain these programs, the consequences may be
disastrous. The people of the Niger Delta, in these circumstances, would remain
Ôup in armsÕ, demanding compensation for the long term neglect.
The heavy dependence on oil as a source of revenue exposes the
vulnerability of the Nigerian economy to global energy dynamics. Before the
discovery of oil, NigeriaÕs economy was sustained by Agriculture (over 70% in
the 1960s and early 1970s). The country is equally blessed with commercial
deposits of several solid minerals. The policy implications of this work should
motivate the government to act early before it is too late to take action to
address these impending risks of exposure. The fact that Nigeria still lacks
the basic infrastructures such as good Roads, Healthcare, Reliable Power, and
Clean water compounds the potential problems.
Threshold 21 (T21) of Millennium Institute (MI) can contribute to this
project in various ways: it can be taught and used at school to comprehend how
to face complex issues. It can be used to promote holistic and comprehensive
thinking (by linking society, economy and environment), etc. T21 is a
comprehensive simulation model, which includes society, economy and
environment. T21 is based on System Dynamics (SD), a practical methodology to
analyze complex systems. The SD makes participants (particularly young would-be
decision-makers) to understand the intricacies of independency of various world
phenomena with cause-and-effect analysis and hence with their manipulation of
simulation models for Òwhat ifÓ experimentation on various policy analysis with
critical thinking.
In the education sector, T21 can speed-up learning
about policy planning and interrelations between social, economic and
environmental issues at the country level. Moreover, SD, by proposing a
framework for understanding complex issues, can enhance the learning process in
policy planning as well as in all related knowledge areas.
In the Government and NGOs sector, T21 represents a
very good tool for understanding the implications of policy planning. It also
helps in analyzing the cause and effect relationship that generates the
outcomes of the simulation, so that negative effects can be reduced while the
positive ones can be amplified through the implementation of an optimized mix
of policies.
Beneficiaries: young people and students. T21 is
transparent, flexible and enhances discussion and confrontation. It is based on
the System Dynamics methodology, which is now used in many Universities and
research institutions to allow students and researchers to fully comprehend
complex issues in various different fields. T21 is also a simplification of the
reality, therefore students and young people can focus on the few mechanisms
that determine the development of the country without being overwhelmed by
complexity. In addition the SD methodology is intuitive, easy to understand and
utilize. Certainly, T21 is not a Òblack box.Ó
Instruments: T21 can be used as a tool for teaching
how to face and therefore understand complex issues. In addition, T21 can also
be a game and it is actually played by the users through policy testing. The
model can be used to teach SD and to train modelers, but at the same time is
also the tool used to practice with the methodology and national issues.
Courses and trainings can be organized for professors or facilitators of the
project (administrators of the shared simulation model over the net) and 2
versions of the model can be created: a simplified learning version and a
complete T21 application.
Supporting objectives: the utilization of T21 can
involve the creation of a regional center for the development of the model and
for continuous training of local experts. The utilization of T21 and of the SD
methodology could also have positive effects on the economy of the
region/country. SD is also used to manage business.
Goals of the
project: T21 with its holistic approach can help identifying interrelated
issues of key importance for the country. The model also suggests ways to solve
those issues by showing which are the main factors affecting each sphere
(society, economy and environment). In addition users will be stimulated to
think about national development issues and therefore globalization.
This project aims at creating knowledge through the
establishment of e-courses based on a network that will link many universities,
health centers, governments and NGOs along with the creation of Global
University System (GUS)/Nigeria. Side objectives on the project include the
enhancement of the economic activity of the region, technical training and
promotion of holistic thinking.
The Nigerian Economy has for long been allowed to be exposed to the
risk of overdependence on a single source of revenue-oil. Al GoreÕs Energy
Policy proposal was a welcome signal to evoke the need to consider the
implications of the global trend towards renewable energy resources, not only
for electricity but indeed more recently, the impact of the oil price spikes
that crippled the major automakers sounded the alarm about vulnerability to
Oil. The Airlines were no lesser victims. Automakers have recently emboldened
their R & D departments to forge ahead with hybrid designs and have gone
ahead to launch albeit partially complete models into the market under the
pressure of oil price uncertainty.
The time is now for Nigeria to act.
The potential benefits of this project also lie in the development of a
policy framework for managing the conflicts in the Niger Delta region. In
particular, by providing the tools for assessing the impacts of policy changes
on the reduction of conflicts among local stakeholders in the Niger Delta
region, the project will be beneficial to the government authorities for
Strategic planning and implementation of intervention programs.
Reference:
Tom OÕNeill, (2007) ÒCurse of the Black Gold: Hope and Betrayal in
the Niger Delta,Ó `National Geographic, February 2007
Utsumi, T.; Varis, T.;
and Klemm, W. R.; (2003), ÒCreating Global University System,Ó Global Peace Through The Global University
System, University of Tampere Press, Tampere, Finland <http://tinyurl.com/sfgm7>
Utsumi, T.; (2003) ÒGlobally
Collaborative Environmental Peace Gaming,Ó Global Peace Through The Global
University System, University of Tampere Press, Tampere, Finland
Utsumi, T.; and Charles U. Eke;
(2004), GUS-Nigeria Report-v3.doc, June.
<http://www.friends-partners.org/GLOSAS/Global_University/Global
University System/List Distributions/2007/MTI1841_07-27-07/GUS-Nigeria June2004
report-v3[1].pdf>
Utsumi, T.; (2007) ÒMOU between
Polytechnic University and GLOSAS/USA,Ó <http://tinyurl.com/ysw4gb>
Varis, T.; Utsumi, T.;
and Klemm, W. R; (Eds.) (2003), Global
Peace Through The Global University System, University of Tampere Press,
Tampere, Finland, November, (ISBN 951-44-5695-5)