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Uyi Ojo: Transitional justice and Nigeria beyond oil

In an address delivered on Tuesday, August 10, 2021, during the Climate Justice Conference held in Port Harcourt, River State, Dr Godwin Uyi Ojo, Executive Director, Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN), he stressed that, with the imminent decline of oil and gas, the nation should urgently come up with alternatives

ERA/FoEN
Dr Godwin Uyi Ojo, Executive Director, Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN) (front, middle), with participants at the event

This conference is holding on the heels of the Intergovernmental Panel on Climate Change (IPCC, August 9, 2021) reports that the world has warmed faster at 1.1 degrees Celsius than previously thought making it hard to keep global temperatures at 1.5 degrees Celsius and well below 2 degrees Celsius development trajectory. This means that there will be much more catastrophic events and pandemics in frequency and intensity than previously thought leading to loss and damage and death.

On a global level, countries are making comprehensive plans to transit from fossil fuels to renewable energy sources and cleaner technologies by 2030 in line with the Paris Agreement of 2015. By 2025, some European countries have committed to end production of petrol-diesel cars and fully embrace renewable energy. Already, there are trade-in schemes to get rid of petrol-diesel cars in place of the emerging and fast spreading electric cars in developed countries.

In Africa, there is the genuine fear of energy Colonialism if all the disused and obsolete energy systems and petrol engines and vehicles are shipped to Africa as Greek gifts or even for sale. This means that third world countries will be a dumping ground which will have serious impact on the environment, health and general wellbeing of the people. How will Africa react to this pending crisis waiting to happen, and how will rich countries respond to this during the CoP26 coming up in Glasgow later in the year?

The General Assembly of the Environmental Rights Action/Friends of the Earth and its allies of civil society groups, community-based organisations, community representatives across Nigeria calls for urgent energy transition from fossils to renewable energy sources. Nigeria beyond oil is feasible and has several benefits. That climate change is real is no longer a subject for discussion as its catastrophic impacts are manifesting daily. Climate justice is required to ensure restoration of the ecosystems and protection of rural livelihoods. Climate justice requires that rich nations take on more ambitions in addressing climate change, loss and damage, and providing the resources required to leapfrog from fossil fuel dependence to renewable energy sources.

At the national level, Nigeria’s dependence on oil and gas accounting for about 89% of foreign exchange receipts makes any meaningful transition challenging.  While it is making efforts in renewable energy drive through Green Bonds, this is highly restricted to entrepreneurs and leaving out civil society groups and community energy cooperatives in the allocation of the resources for renewable energy. The federal government is still neck deep in seeking investments for oil prospecting especially in the Gongola/Chad Basins and has committed billions of dollars to the expansion of Nigeria’s oil and gas reserves. Is this the right move for Nigeria? This shows that Nigeria is not ready for a post petroleum economy.

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A just transition and a post petroleum economy for Nigeria is feasible if its so-called stranded assets are modified or paid for to change the modes of production and consumption that are based mainly on carbonized economy. There is the need for national environmental emergency and conduct environmental and social audits to account for loss and damage due to the impacts of climate change and oil and gas dependence.

Concept of Transitional Justice

Transitional justice concept is applied to national and global contexts to address climate justice issues. According to the United Nations, transitional justice is “the full range of processes and mechanisms associated with a society’s attempt to come to terms with a legacy of largescale past abuses, in order to ensure accountability, serve justice and achieve reconciliation.”

The aim is to build momentum to combat climate change through reduction of carbon emissions, protecting the environment, loss and damage, and creating a fairer and more equitable society.

In the contest of environmental degradation and climate justice for Nigeria, transitional justice means:

  • That impacted communities, those that have been harmed and previously marginalized should be recognized and through inclusive approach help to build a more just, peaceful, and ultimately legitimate institutions based on trust and solidarity.
  • The proper clean up, restitution of the environment, rehabilitation and compensation as well as deterrent mechanism that guarantees non-recurrence.
  • Equitable and inclusive transition from fossil fuels dependence to renewable energy.
  • Nigeria’s stranded economic assets that will become obsolete such as oilwells and rigs in order to transit to renewable energy should be adequately compensated by rich countries to persuade national governments to fast track embracing renewable energy.
  • Halt oil companies’ divestment from onshore facilities without clearing the environmental and human rights abuses in those communities that are host.
  • Embracing energy democracy through decentralised energy systems in standalone, mini-grid and off-grid systems that are required to meet the need of the people. The real measure of development is the extent to which basic human needs are met including food, energy, water, housing, good health, and education necessary for individuals to fulfil their potentials. There is the need for energy democracy in a decentralised energy system such that individual and community energy cooperatives can produce and supply clean energy. This decentralisation will help to improve clean and affordable energy access to all, address poverty through generation of green jobs and MSMES. It is also less destructive to the environment.
  • Financing energy transition requires the divestment of public finance, loans and subsidies from oil and gas and halt the Chad/Gongola Basin oil frontiers exploration and investment in renewable energy.
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Snapshot of the Nigeria’s dependency on fossil fuels

A snapshot of the Nigerian economy built majorly on revenues from oil and gas shows serious financial challenges. As a result of low oil prices in 2015/2016, Nigeria slipped into its first full year recession in 2016 and the collapse of demand for oil because of the covid 19 crisis in 2020 saw the country again slipping into recession.

Nigeria is at the brink of another recession. According to an African Development Bank analysis of Nigeria’s economic outlook for 2020 “Nigeria’s economy entered a recession in 2020, reversing three years of recovery, due to fall in crude oil prices on account of falling global demand and containment measures to fight the spread of COVID-19. Overall real GDP is estimated by the Bank to have shrunk by 3% in 2020.

Continuing the report states that Inflation rose to 12.8% in 2020 from 11.4% in 2019, fueled by higher food prices due to constraints on domestic supplies. The removal of fuel subsidies and an increase in electricity tariffs added further to inflationary pressures. By 2021 inflation had risen to over 18% according to data from the national bureau of statistics.

But on the streets and in the markets around Nigeria people generally felt that inflation in 2021 was around 22% – 24%. The national Bureau of statistics put food inflation at 22% in the second quarter of 2021 which corresponds to the reality on the streets and in our markets.

The fiscal deficit, financed mostly by domestic and foreign borrowing, widened to 5.2% in 2020 from 4.3% in 2019, reflecting pandemic-related spending pressures and revenue shortfalls mainly from reduced receipts from oil. Total public debt stood at $85.9 billion (25% of GDP) on 30 June 2020, 2.4% higher than a year earlier. Domestic debt represented 63% of total debt, and external debt, 37%. High debt service payments, estimated at more than half of federally collected revenues, pose a major fiscal risk to Nigeria. The current account position was expected to remain in deficit at 3.7% of GDP, again weighed down by the fall in oil receipts and weak external financial flows.

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Fragility of an economy built around a single source

The reliance on oil and gas as drivers of growth in Nigeria is fraught with excessive risks. The country should no longer be governed on the basis of boom-and-bust cycles of the oil and gas economy that is clearly unsustainable.

The fragility of any growth prospects that continues to be hinged on receipts from oil and gas is laid bare by reduced production, lowering prices and quota imposition. According to OPEC data, Nigeria has the capacity to produce 1.737 million barrels of crude oil per day but has been restricted to a quota of 1.685 million barrels per day because of slow demands. The recent rise in oil prices hovering around $70-75 over the last four months has not translated to any significant revenue to the nation’s foreign reserves. As a result, the central bank of Nigeria battle to save the naira from its continued slide into obscurity has been very challenging.

With a growing population, that has become totally disillusioned about the governance and the state of development, and the inability of our political leaders to deliver on their promises. There is the therefore the urgent need for political and economic restructuring to meet the yearnings of the ethnic nationalities, address the open calls for secession by different ethnic nationalities because they feel marginalised.

Conclusion

We live in the fossil fuel age but in the scheme of human history the fossil fuel age will be short-lived.  We have already reached peak oil and more than halfway through the age of oil and gas. With the imminent decline of oil and gas the question becomes what are the alternatives?

There is the need for investment in education and skills development that is in consonance with a fossil free development pathway important for driving Nigeria’s economic growth in the long-term, as it could help address issues of employability within a new development paradigm and shift the country’s working population from environmentally damaging and less productive to more productive economic sectors with very minimal environmental impact.

By leveraging on providing better support infrastructure for agriculture and manufacturing and cleaner technologies, there is the need for designing a better pathway out of the boom-and-bust economic cycle that oil dependency causes.

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