Nigeria needs 5.14bn litres biofuel, allied products yearly

The House of Representatives, on Tuesday, passed through Second Reading of a bill seeking the development of biofuels energy industry in Nigeria.

The bill co-sponsored by the Deputy Speaker, Hon. Benjamin Kalu; Hon. Khadija Ibrahim, Hon. Babajimi Benson further seeks to establish biofuels energy regulatory commission as well as Biofuels Research Agency, respectively.

The proposed bill comprises 56 clauses and one schedule, and is divided into 14 parts.

In her lead debate, Hon. Khadija Ibrahim explained that Nigeria had in 2007 introduced and began the implementation of the bio-fuel policy anchored on the need to play her role in the global fight against climate change and the reduction of dependence on fossil fuels and the diversification of the domestic economy.

“The biofuel policy was particularly structured to encourage the production of bio-ethanol and bio-diesel for the purposes of blending with fossil fuel.

“The policy provided several incentives for investors, aimed at creating a conducive environment for bio-fuel production, intended to establish the Bio-fuel Regulatory Commission along with a dedicated Research Centre for the development of the sector.

“However, 16 years after, limited progress has been achieved, with only a few Memoranda of Understanding (MoUs) between Nigerian states like Kebbi, Niger, Ondo, Kogi, and the Nigerian National Petroleum Corporation (NNPC).”

According to the International Energy Agency (IEA), the global demand for biofuels is expected to grow by 41 billion litres between 2021 and 2026. Also, the global bio-fuel market size was estimated at $140.43 billion in 2021.

She however lamented that: “despite Nigeria’s potentials in bio-fuel and allied products and the target demand of about 5.14 billion litres per year, the industry is still at a nascent stage and the opportunities in the industry are not optimized.

“In designing the policy, government took into consideration some of the major challenges of the bio-fuel sector globally which includes the expensive cost of production compared to the fossil-based fuels. For this reason, a range of incentives were offered including exemptions on Withholding Tax, waivers on Value Added Tax (VAT), waivers on Import and Customs Duties, etc.

“One of the main challenges mitigating against the development of the biofuel industry in Nigeria is the lack of a regulatory framework for the industry. The legal framework to facilitate the development of the biofuel sector is lacking, even with the introduction and operationalization of a Biofuel Policy since 2007. The absence of a legal and institutional framework upon which the policy is based undermined the effectiveness of the policy. This bill is therefore structured to fill this gap.”

While speaking on the benefits of the development of biofuels energy sector, Hon. Ibrahim observed that: “the bio-fuel programme constitutes a major and unique attempt to integrate the agricultural sector of the economy with the downstream petroleum sector. The use of bio-fuels in Nigeria is anticipated to make significant impact on petroleum product quality enhancement in view of the current limitations of fossil-based fuels which have not kept pace with the increasing demand for environmentally friendly fuel.

“Other anticipated benefits of bio-fuel programme include the following – additional tax revenue for the government from economic activities attributable to the industry; job creation, increased economic development and empowerment of rural communities; agricultural benefits – improved farming techniques, increased agricultural research, and increased crop demand resulting from activities in the industry; energy benefits – co-generation of electric power, etc.; and environmental benefits – reduction in tailpipe emissions and ozone pollution, reduction in particulate emission, and replacement of toxic octane enhancers in gasoline.”

On the financial implications for the establishment of the Commission, she affirmed that: “the contemplated legislation will require funds to set up the Bio-fuels Energy Regulatory Commission. It is also important to note that in the long run, as a regulator, the Commission will be self-sustaining. The benefits derivable from the implementation of the provisions of this Bill far outweigh the cost to be incurred.

“The development of bio-fuels industry in Nigeria will be of immense benefit to the society, economy, environment and government. Full implementation will definitely lead to huge demands for jathropha, castor and other oil bearing seeds as first-generation feedstock, while also leading to greater demands, as second generation feedstock, for cheaper and more abundant transgenic varieties of the feedstock, which includes waste lignocellulosic materials and under-utilised agricultural and forestry waste materials.

“In effect, the quest to develop the biofuels sector holds dual benefits of fostering economic growth and inclusivity for farmers while addressing the pressing issue of climate change.”

While ruling on the bill, Hon. Kalu who presided over the session referred the bill the House Committee on Science and Research Institute (when constituted) for further legislative action.

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