The Impacts of Insecurity in the Nigerian Energy Sector

Nigeria, known for its vast oil reserves, has the potential to become a leading player in the global energy market. However, the country’s energy sector has been severely impacted by its prevailing insecurity, impeding its development. Therefore, assessing the impacts of insecurity in the Nigerian energy sector to proffer solutions is crucial.

The Institute for Peace and Economics, global terrorism index report, 2023, ranks Nigeria as the eighth most insecure country in the world. Proof of these statistics is the Boko Haram insurgents ravaging the country’s northern region, a high rate of kidnapping in other regions, the IPOB conflict in the east, the constant cases of robbery, and the constant herders and farmers clashes. Not forgetting the Niger Delta region, which house’s the oil and gas reserves, has been the epicenter of insecurity in Nigeria, with militant groups disrupting oil production and exportation, resulting in the loss of billions of dollars in revenue.

Furthermore, insecurity has also impeded the growth of the renewable energy sector in Nigeria. Although Nigeria has significant potential for renewable energy development, with abundant solar radiation, wind resources, and hydropower potential, the insecurity situation in Nigeria has caused a decline in the development of these renewable energy sources. For example, in 2021, a France Engr working for Vergnet to build Nigeria’s first wind farm in Katsina State was kidnapped. As a result, many viable sites have been excluded from possible development to the high incidence of insecurity, particularly in the Northern parts of the country.

Recently, newly installed solar panels in the FCT were vandalized. These incidences deter foreign and local investment as no one is willing to invest in a volatile and hostile environment. Another impact of insecurity in the Nigerian energy sector is increasing energy costs, forcing companies to invest in security measures to protect their facilities and personnel. These security costs are often passed on to consumers, resulting in high energy prices that limit access to energy for low-income households and small businesses. The high energy costs also discourage investors as they are concerned about the profitability of their investments in a high-cost environment.

Additionally, reports show that several developers in Nigeria have recorded a revenue drop of up to 30 per cent,  primarily because their sites being located in high-risk zones leads to delays in project development and the inability to close financial rounds at deployed sites

In addressing the impacts of insecurity in the Nigerian energy sector, the government needs to take urgent measures to improve the security situation in the country. These measures include investing in security infrastructure, such as surveillance systems, drones, and security personnel, to protect energy facilities and personnel. Round-table discussions should be held between relevant stakeholders and all parties involved on providing meaningful assistance to energy developers facing challenges due to insecurity

Finally, the government should strengthen law enforcement agencies to combat banditry, vandalism, kidnapping, and terrorism, which affect the energy sector and other sectors of the economy, while creating awareness programs that urge Nigerians to protect public facilities in place for their benefit. The impact of insecurity in the Nigerian energy sector is significant, with dire consequences. Hence, if Nigeria hopes to achieve its Net Zero commitments and attain energy access for all, insecurity in the country must be urgently contained.