Questions are mounting over Nigeria’s ability to mobilise and deploy the estimated $400 billion in additional investment required to achieve its 2060 net-zero target.
For years, the national debate on energy transition has largely centred on the balance between continued exploitation of oil and gas and a rapid shift towards renewable energy.
While some stakeholders argue that Nigeria should maximise its vast hydrocarbon resources and retain a strong role in the global energy market, others insist that the country must accelerate the adoption of renewables to meet its future energy needs.
An emerging view, however, is that the debate risks missing the central challenge: finance.
Stakeholders who spoke to Daily Trust said the success of Nigeria’s energy transition would ultimately depend on where capital comes from, how it is deployed, the risks investors are expected to assume and the economic returns generated.
One source said Nigeria’s energy transition was “ultimately a question of money,” arguing that energy was not simply about generating electricity or producing fuel but about determining the cost of doing business, industrial competitiveness, investment flows, currency strength and living standards.
The Funding Challenge
Nigeria has substantial oil, gas and renewable energy resources, but observers say the country has struggled to convert those resources into reliable, affordable and investable energy infrastructure.
Business and Energy Analyst, Kunle Odusola-Stevenson, said Nigeria’s experience demonstrated the difference between possessing resources and turning them into productive economic assets.
He noted that Nigeria had oil but spent decades importing refined petroleum products, while its significant gas reserves had not prevented persistent shortages affecting industries and power generation. Similarly, abundant solar resources have coexisted with inadequate electricity access for millions of Nigerians.
“The problem, therefore, is not simply what is beneath the ground or above our heads. The problem is converting resources into productive economic assets. And conversion requires capital,” he said.
According to Stevenson, Nigeria has no shortage of energy policies, transition plans, master plans, licensing rounds and investment announcements. However, investors require bankable projects with credible revenue streams, manageable risks, enforceable contracts and reasonable prospects of returns.
He said Nigeria should therefore move from an “announcement culture” to a “bankability culture”, noting that different projects require different financing structures.
“A transmission project, a gas pipeline, a refinery, a solar mini-grid and an offshore oil development cannot be financed in exactly the same way,” he said.
Oil still matters
Stevenson cautioned against treating oil as an obsolete economic asset. He said hydrocarbons remained important to Nigeria’s fiscal position, exports and industrial economy, even though dependence on crude oil revenues could not continue indefinitely.
Rather than simply using oil revenue to fund government expenditure, he said Nigeria should increasingly deploy the remaining value of its hydrocarbon resources to build infrastructure, industrial capacity, human capital, gas projects, refineries and petrochemical industries.
“Oil should increasingly be treated as a source of capital for economic transformation—not merely as a source of government revenue,” he said.
Minister of State for Petroleum Resources (Gas), Dr. Ekperikpe Ekpo, similarly argued that Nigeria and Africa could not pursue decarbonisation at the expense of economic development.
He said Nigeria must be allowed to use its resources responsibly to strengthen energy security, drive industrialisation and support sustainable growth, adding that gas remained important for power generation, industry, transportation and clean cooking.
President Bola Tinubu also urged investors not to abandon fossil fuels, arguing that developing economies still require reliable energy to support growth.
$400bn investment requirement
Former Vice President Yemi Osinbajo previously highlighted the scale of the financial challenge, stating that Nigeria would require about $400 billion in new investment above business-as-usual spending to achieve its net-zero commitment.
That translates to roughly $10 billion annually over two decades.
Osinbajo also noted that Africa’s renewable energy investment levels remained far below what would be required, saying average annual investment of about $3 billion across the continent was insufficient.
The challenge, therefore, extends beyond attracting capital to ensuring that the right types of capital are available for projects capable of generating sustainable economic returns.
Citizens at the Centre
Climate officials have also stressed that the transition must ultimately deliver tangible benefits to Nigerians.
Dr. Tenioye Majekodunmi, Director-General of the National Council on Climate Change, said the success of the transition should be measured by whether it expands energy access, creates jobs, attracts investment and improves living conditions.
She said a transition could not be considered just if emissions declined while inequality increased.
Majekodunmi called for a combination of concessional climate finance, development finance, private capital, blended-finance instruments, technology transfer and stronger institutional capacity, noting that public resources alone could not finance the required transformation.
Research and Policy Officer at the Africa Policy Research Institute, Olumide Onitekun, warned that Nigeria could reproduce inequalities associated with the fossil-fuel era unless justice was deliberately incorporated into emerging energy programmes.
He identified distributive, recognition, procedural and restorative justice as key dimensions of a fair transition.
Renewable Energy Debate
Environmental campaigner Nnimmo Bassey, of the Health of Mother Earth Foundation, rejected the description of gas as a transition fuel, arguing that it remains a fossil fuel that could lock Nigeria into decades of emissions.
He advocated a faster shift towards renewable energy to reduce the risk of stranded fossil-fuel assets.
Akinwole Fatusi of Sustainable Energy for All also argued for greater investment in distributed solar, saying continued reliance on oil revenues to finance energy development would leave millions of Nigerians without reliable electricity.
SOURCE: Daily Trust
