The Managing Director and Chief Executive Officer of Eterna Plc, Olumide Adeosun has highlighted the crucial role of infrastructure, security of investment, technology safety and emerging opportunities in the downstream sector.
He sated these while Speaking at a panel session on Downstream at the just concluded Nigeria International Energy Summit (NIES) in Abuja, Adeosun also underscored the importance of regulatory stability, technological advancements, and alternative energy solutions for the sector’s sustainability.
According to him the Investment in Nigeria’s downstream industry, particularly in refining and fuel distribution, hinges on the assurance of legal and regulatory stability. Adeosun said that without a solid foundation of safety and the rule of law, attracting investors remains a challenge.
“If an investor believes that the rule of law doesn’t apply, or that safety principles in the jurisdiction are compromised, they are unlikely to invest. It’s critical to take this as a foundation before discussing the cost of investment or new opportunities.” the Managing Director of Eterna Plc said.
For years, discussions in the downstream industry revolved around refining as the primary investment opportunity. However, Adeosun who was the former Chairman of the Major Energy Marketers Association of Nigeria (MEMAN) noted that the landscape has shifted, with new opportunities emerging beyond traditional refining.
Shift in Investment Focus
Three years ago, modular refineries were seen as the future of Nigeria’s downstream sector. Adeosun said that in his capacity as a PwC director, had advocated for their development. However, despite the potential benefits, modular refining requires substantial capital investment and a strong risk appetite.
“The refining business is not for the faint-hearted, It takes a very brave investor to commit to such projects.” he said.
With Nigeria’s increasing role as a net exporter of oil and gas and the establishment of a balanced competition in the liquid fuels market, the industry must now focus on future sustainability.
Rise of Alternative Energy: CNG and Solar-Powered Batteries
One of the most promising areas for investment is the transition to alternative fuels, particularly compressed natural gas (CNG) and battery-powered transportation.
“If you speak to people under 40 today, they not only have stars in their eyes but batteries in their minds. Many young people no longer see car ownership as essential. They are thinking about alternative ways to move” he said.
CNG has already started playing a role in Nigeria’s commercial transportation sector. Given its cost-effectiveness compared to diesel, Adeosun who also was the former Chief Executive officer (CEO) of Ardova Plc predicts increased adoption among commercial transport operators.
“It would be unwise to use diesel to transport CNG. This is because CNG itself is a viable option for commercial transportation, and we are seeing growing interest in that space.” he explained.
The Untapped Potential of Battery-Powered Transportation
Despite the excitement around electric vehicles (EVs), Nigeria faces challenges in widespread EV adoption due to power supply limitations. However, research suggests a strong investment opportunity in battery technology, particularly solar-powered charging systems.
“There is a lot to be done in the battery space. Batteries can be charged by solar energy, and globally, there are robots and devices already operating on solar-powered batteries.” the Eterna Plc boss said.
The Nigerian market presents a unique opportunity, particularly in commercial motorcycle and tricycle transportation. With approximately 5,000 registered commercial motorcycles and a daily fuel consumption of 25 million liters, transitioning to battery-powered alternatives could significantly reduce fuel demand.
“My good friend mentioned that petrol consumption was at 49 percent last year and is stabilizing around 50 million liters this year. That tells me there’s a clear investment opportunity in shifting a portion of this consumption to alternative energy sources.” he pointed out.
Investment for Industry Stakeholders
Olumide emphasized that while the investment potential is significant, it should not be a free-for-all. Rather, it should be targeted at existing industry stakeholders who have already invested in infrastructure and market development.
“This is not just any investment opportunity. It should be for those of us who have already invested in the assets, the market, and the core hyper-distributed infrastructure. The opportunity is immense, and we must seize it” he maintained.
Meanwhile, Olumide said that last time he checked, less than 50 percent of Nigeria’s roads were developed. “Out of a 35,000-kilometer road network, many sections are scheduled for upgrades. This presents a major investment opportunity. We see drivers traveling seven or eight days to deliver petrol to filling stations and businesses. It’s a miracle they manage under such conditions” he said.
He urged that addressing these road deficiencies could have a significant impact on the cost and time of energy distribution. Adding that prioritizing road improvements is a critical step in the future of energy delivery.
“If we fix that, we will take a big chunk out of the cost and time of running petrol up and down this great country. A good road can prevent a lot of bad engineering,” the Said.
He concludes that the global energy transition accelerating, Nigeria’s downstream sector must adapt by embracing new investment opportunities in CNG, battery technology, and alternative energy solutions.
As the country seeks to balance economic growth with sustainability, Adeosun calls for strategic investments that will shape the future of Nigeria’s energy sector.
