Home / Columns / Planning for days without oil revenue, — By Jerry Uwah

Planning for days without oil revenue, — By Jerry Uwah

Technology is spinning the world out of dependence on commodities at a terrifi c speed.
Th e government of France announced early this year that by 2040, it would phase out vehicles powered by petrol or diesel.
Th e year 2040 is a scant 22 years away and recent developments suggest that it might not take that long to phase out vehicles powered by fossil fuel.
Th ere are strong indications that in the next 15 years the fueling of vehicles with refi ned petroleum products would have reduced so drastically that crude oil might lose 90 per cent of its global relevance.
Investors are already looking in that direction.
Tesla, the American electric car manufacturer built just 80, 000 electric cars in 2016.
Ironically, the company’s share price in the New York Stock Exchange (NYSE) closed last Friday at a stunning $356.88.
On the contrary, General Motors with a workforce of 255, 000, built 10 million vehicles in 2016.
GM’s share price at the NYSE closed last Friday at a trifl ing $44.93.
Th e vast diff erence between the share price of Tesla and that of GM, an industry leader for more than a century, is a clear indication that investors have automatically keyed to the future of vehicles powered by renewable energy which Tesla symbolises.
Even GM is eyeing the electric car market curiously.
Th e message from the auto industry is that the days of oil as a major source of energy is numbered.
Not even gas, a product of the petroleum industry would have a signifi cant place in the future energy industry.
Solar panels, one of the products of Tesla is gradually challenging the gas-powered electricity generating plants.
In the next 20 years, non-grid solar panels would provide electricity in so many homes that the noisy, unwieldy, gasguzzling electricity generating plants would simply give way to tranquil solar panel fi elds.
Th e message from the automobile and energy industries is that Nigeria would lose 90 per cent of its foreign exchange income in the next 15 years.
Crude oil exports account for 90 per cent of Nigeria’s foreign exchange income and 70 per cent of its annual revenue.
About 10 per cent of Nigeria’s foreign exchange income is provided by non-oil revenue which is equally based on commodity exports like cocoa and other raw food items.
Nigeria’s income from manufactured goods is grossly insignifi cant.
Th e manufacturing arm of Nigeria’s economy is so weak that even the refi ned petroleum products used in powering millions of vehicles and plants, is imported.
Nigeria does not add value to anything it exports.
Th e recent foray into agriculture might give the country a measure of relief if the private sector is empowered to drive the revolution.
Besides, there are strong indications that Nigeria might end its shameful dependence on imported refi ned petroleum product by 2019 when the giant refi nery built by Aliko Dangote fi nally comes on stream.
Th e involvement of some state governments and the Dangote Group in rice production might equally end rice imports in less than two years.
Fuel imports currently gulps down 40 per cent of Nigeria’s foreign exchange earnings, while food imports consume another 20 per cent.
By 2019 if fuel and rice are delisted from Nigeria’s import bills, the sum of $20 billion could be saved annually.
Th at sounds like good news from the debit side of the country’s balance sheet.
However, the gains sustained from the debit side of the balance sheet would be wiped out by losses from the income side.
Th e emergence of electric cars and solar panels might wipe out Nigeria’s income from crude oil exports in the next 20 years if it fails to industrialise.
Nigeria’s industrial base is very feeble.
Th at emanates from the fact that Nigeria has no steel industry.
In the last 40 years, more than $5 billion has been squandered in the name of building a steel plant in Ajaokuta, Kogi State.
Th e Ajaokuta steel plant is a colossal failure.
Nigeria needs a steel industry to enable it develop an automobile industry.
Th e new drive into agriculture would be fruitless if all we could do is to export unprocessed farm produce.
Nigeria should be able to add value to what is harvested before they are exported.
Th ere is no way we can add value to farm produce if we do not have a steel industry that would back up the fabrication of equipment for processing plants.
When oil eventually becomes irrelevant and Nigeria diversifi es into agriculture not only for food security but a major source of foreign exchange earnings, then it must be serious with processing what is obtained from the farms into finished products.
Technology is the future of any nation that hopes to live above poverty line.
Commodities lose value as fast as technology changes peoples’ lifestyle.
At the beginning of this century one barrel of crude oil could buy five mobile phones.
Today a barrel of crude oil cannot buy more than one i-phone.
Technology has added so much value to mobile phones that it is out-pricing crude oil as a commodity.
If Nigeria fails to industrialise in the next 10 years, technology would relegate Africa’s largest economy to the position of a 17th century economy.

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