Renewable Energy & Energy Efficiency Partnership (REEEP)

Nigeria will use Brazilian blueprint to found its new biofuels industry

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Brazil’s successful development of an ethanol-based biofuels sector since the 1980s, hardly noticed at first, has been the envy of other countries more dependent on oil imports.The government had the foresight to notice, long before the oil paradigm started to shift towards peak production, that its vast hectares of sugar cane could be put to good use as an ethanol source. Hence, it granted heavy subsidies to agricultural and related industries to alter the source of transport fuels.

Years later, many of those other countries are jumping on the biofuels bandwagon in an era where energy security has risen up the agenda – even the oil-rich country of Nigeria. “Nigeria would be $150 million (about N21bn) annually richer when she adopts the development and application of biofuel as an alternative energy source to crude oil,” states Funsho Kupolokun, group managing director of the NigerianNational Petroleum Corporation (NNPC), which has been given the task of creating the new alternative industry.

It might seem surprising that the oil industry itself in this country has taken the job on board. In many nations, oil companies sign contracts with the emerging biofuels suppliers in deals based either on mandated biofuels content or tax incentives.However, in this case, the national oil company has been instructed by the government to develop the potential within cassava and sugarcane crops, both of which are plentiful in Nigeria.

National statistics suggest that more than 400,000 hectares of land could support high yield sugarcane operations, for instance.At the same time, Nigeria is a leading cassava producer. The crops would be used in the first instance to create a 10% biofuel-90% fossil fuel blend.

“Two potential crops have been identified for the fuel ethanol initiative in Nigeria: sugarcane and cassava. Nigeria is currently reputed to be the leading producer of cassava in the world of about 30 million tons annually,” states Onochie Anyaoku, group general manager of NNPC’s Renewables Division. “The potential must be seen against the background that the average yield in Nigeria is put at about 15 tons/hectare as compared to 25-30 tons/hectare obtainable in other countries. Moreover, cassava is most perceived as a food crop in Nigeria and not as an industrial crop, part of which the bio-fuel program is expected to radically change.”A step-by-step approach is being followed with cassava to ensure that all technical and market issues are addressed comprehensively.

The plans will be supported by REEEP, a public-private clean energy partnership established at the World Summit for Sustainable Development.REEEP is providing part of the funds for detailed feasibility studies to establish the supply chain for several new ethanol production plants.

The second proposed crop is sugarcane. Though the cultivation of industrial sugarcane suffered a serious setback due to the poor performance of the government-owned sugar companies (now privatised), there is no doubt about the huge potential for growing sugarcane on a large scale in Nigeria, particularly along the entire length and breadth of the rivers Niger and Benue.The states of Jigawa (northern Nigeria), Benue and Taraba (middle belt region of Nigeria) are targets for further agricultural development, and further feasibility studies are planned for individual locations within each state.

Key Objectives of the Nigerian Fuel Ethanol Industry

Kupolokun recently met with the Benue state governor George Akume to discuss how NNPC could work to secure land and kick off initial partnerships in the region to generate a programme which would “improve automotive exhaust emissions in the country, reduce domestic use of petrol, free up more crude for export and position Nigeria for development of the green fuel.”

He said the company had identified locations in several states suitable for cassava and sugar cane plantations, adding that memoranda of understanding with the government would be signed as soon as agreements had been reached. Akume in his turn said the NNPC’s ethanol project crystallised local development efforts and provided employment opportunities to local people, adding that the programme might also halt the scourge of petroleum product pipeline vandalisation.

Cooperative agreements are on the table between the Renewable Energy Division of NNPC and the International Institute of Tropical Agriculture (a leading research institute for cassava production) as well as the Nigerian Cereals Research Institute (a national research institute with mandate for research on sugarcane). These agreements will focus on the low yield problems typical of many varieties of both sugar cane and cassava in Nigeria.

Once the agreement is signed, researchers will investigate how to produce and multiply cassava and sugarcane seedling varieties showing improved productivity and the higher yields necessary for sound profitability.NNPC is also looking to create commercial partnerships with local businesses so that negative impacts on food markets are minimised, while also building local support for the long term development of this new industry.

The REEEP-funded pilot project will generate a business model for the establishment and cultivation of the plantations themselves – in particular a 10-20,000 hectare sugarcane plantation fitted with an ethanol production unit making 70-80 million litres annually, as well as an 5-10,000 hectare cassava plantation fitted with an ethanol production unit capable of producing 50-60 million litres each year.

Like Brazil, Nigeria is taking a more top-down supply-led approach than has perhaps been evident in other countries, many of whose policies are more market-driven.But the government is not just looking to Brazil for information; it also plans to start the industry up using a Brazilian import partnership. Brazil is to initially supply Nigeria with fuel ethanol in order to develop the market and fuel supply infrastructure and test out the ground. Both countries signed a memorandum of understanding in 2005.

The import reception facilities at Atlas Cove and Mosimi areas are already being modified in preparation for the distribution of the biofuel. The REEEP project, which started this April, will develop just as imports arrive from Brazil, allowing the plantations to grow within a rapidly developing market environment.

The events are taking place within a non-consolidated governmental policy framework, though there are campaigns to change this situation. “The policy environment has always been a challenge in Nigeria, and the biofuel industry is no exception. No current policy framework exists that directly addresses the challenges and peculiarities of a biofuel industry in Nigeria, however, a process for putting such a policy is currently in progress,” states Kupolokun.

New policy developments will involve all the ministries and governmental offices necessary, so that they take into account all the issues related to the various links in the value chain.At this stage, the policy emphasis is to stimulate the emergence of integrated operations showing the most potential for good economic performance. At the same time the policy will aim to set out the best conditions for the development of an outgrower scheme (a scheme that will involve the direct participation of local communities in the production of feed stock for the industry). It will also address access to the best international industry skills and financing available to underpin the sustained growth of the industry.

The new industry will radically change the agricultural sector in Nigeria, which is currently dedicated only to food production, and will create thousands of new jobs asAfrica gears up for what is probably one of its first biofuel and certainly one of its many desperately needed agrarian revolutions. Commenting on the impact of the venture, Kupolokun said the entire process is capable of creating over 200,000 jobs, empowering rural farmers by generating greater earnings.

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