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Time ticks for Nigeria to diversify from oil or face bleak future

Bleaker days may be ahead for the survival of Nigeria’s oil-dependent economy, as the ban on petrol and diesel cars by European countries is gaining traction.
The trend suggests US shale producers are perhaps less a threat to oil than the gradual shift to electric cars and subsequent ban of petrol cars by some of the world’s largest car markets.
This, industry watchers say, could spell doom for oil-reliant Nigeria if authorities do not act fast to diversify the revenue base of Africa’s largest economy.
The United Kingdom this week became the latest country to announce a ban on petrol and diesel cars by 2040, coming after similar announcements by Sweden, France, and unconfirmed moves by Norway to toe the same path.
Car manufacturer, Volvo, has also said that all new cars launched from 2019 will be partially or completely battery-powered, in what the company describes as a “historic end” to building models that only have an internal combustion engine.
“It is a long-term concern for the oil market, as it will cap oil demand,” said Dolapo Oni, head of energy research at Ecobank Group.
“It sends a signal to oil producers that consumers are thinking ahead, so Nigeria and other producers would also need to rise to the occasion and show they are also planning ahead,” Oni said.
Corroborating on the need to think ahead and plan adequately, Emmanuel Ijewere, vice president, Nigeria AgriBusiness Group, remarked, “Nigeria has a choice as a people whether it wants to go into a future of penury or a future that they will own and control.”
“Unfortunately for Nigeria, we have always adopted the fire brigade approach. It is those countries that have five to 10-year plans ahead of them that will survive. Short-term reviews do not allow seeing into the future and Nigeria needs to adopt the attitude of other countries of the world that are progressing.”
Analysts say these developments reinforce the urgency for Nigeria to commence practical steps to diversify the revenue base of its economy, by actively focusing on other sectors in order to be prepared for a future where oil has very little value.
The plans to phase out petrol and diesel cars are riding on the back of the desire to tackle air pollution problems and limit global warming in the face of climate change.
In order to limit global warming to below 2 degrees Celsius (3.6 degrees Fahrenheit), the target set by the landmark Paris Agreement on climate change; the world will need 600 million electric vehicles by 2040, according to Paris-based International Energy Agency (IEA).
Electric cars are considered a better and greener alternative to fuel-driven cars because, irrespective of the source of their power – solar, hydro, wind, bio-fuel, or even nuclear – they produce zero carbon in operation.
“With more countries stepping up to ban the use of petrol cars within the next 30 to 40 years, Nigeria must see this as a window to diversify its revenue away from oil,” Olutola Mobolurin, chairman of Lagos-based financial advisory firm, Capital Bancorp, said.
“Oil is never going to provide the robust growth the economy thirsts for, and our continued reliance on it will burn our fingers,” Mobolurin said in an earlier comment to BusinessDay.
Over 100,000 plug-in Electric Vehicles (EVs) were on the roads of UK as of March 2017, out of which 4,500 were commercial vans. That is more than 28 times the number they were in 2013, at merely 3,500.
France, on the other hand, became the fifth nation to buy 100,000 plug-in vehicles in 2017, according to the IEA. This number literally tripled from 2014 levels.
Ironically, oil producer and home to the largest sovereign wealth fund – Norway, is championing the use of electric cars and has dedicated bus lanes for EVs, along with recharging stations, privileged parking, and toll-free travel for people driving electric cars.
As of now, Tesla Model S, Nissan Leaf, Mitsubishi Outlander P-HEV, Tesla Model X, and BMW i3 are hot cakes in Norway. The number of electric vehicles rocketed 60 percent to 2 million in 2016, according to Paris-based International Energy Agency.
Despite the rapid growth, however, electric vehicles still represent just 0.2 percent of total light-duty vehicles.
India, the largest destination of Nigerian oil, according to the National Bureau of Statistics (NBS), is also planning for a greener and more environmental friendly future with projected bans on the use of petrol cars.
India plans to replace all petrol- and diesel-fuelled cars with EVs by 2030, although getting the supporting infrastructure may prove to be a herculean task.

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