The Centre for the Promotion of Private Enterprise (CPPE) has identified policy fragmentation, governance inefficiencies, weak institutional coordination and distorted market incentives as major constraints undermining the enormous potential of Nigeria’s oil and gas sector.
Founder of the CPPE, Dr. Muda Yusuf, disclosed this in a note to Vanguard, stating that “Nigeria’s energy challenge is no longer fundamentally about resource scarcity. It is increasingly about the failure to convert resource abundance into domestic prosperity, industrial competitiveness, energy security and sustainable economic transformation.”
According to him, “This paradox is both troubling and unacceptable for a country with one of the largest hydrocarbon endowments in Africa.”
Yusuf noted that despite Nigeria’s huge crude oil and gas reserves, the country continues to grapple with energy insecurity, high production costs, weak refining capacity and severe industrial energy deficits.
He said: “Nigeria remains abundantly endowed with crude oil and gas resources. Yet the economy continues to grapple with energy insecurity, high production costs, weak refining capacity and severe industrial energy deficits.”
Speaking on the nation’s gas potential, Yusuf said Nigeria has failed to strategically position gas as the backbone of industrialisation, power generation, petrochemical development and export competitiveness despite reserves estimated to last almost a century at current production levels.
According to him, this is largely due to “fragmented policy frameworks, inadequate infrastructure, weak fiscal incentives and insufficient commitment to the development of Non-Associated Gas (NAG).”
He added: “Gas should ordinarily be Nigeria’s industrialisation fuel. It should power factories, support fertiliser production, deepen petrochemical value chains, strengthen electricity generation and reinforce export earnings. Instead, vast opportunities remain trapped beneath the ground because of policy inertia and structural inefficiencies.”
On domestic refining, Yusuf said distortions within Nigeria’s crude supply architecture continue to undermine local refining optimisation.
He identified legacy crude swap arrangements, forward-sale financing structures, opaque allocation systems and pricing misalignments as factors weakening feedstock availability for domestic refineries.
“A major crude oil producer should not remain excessively vulnerable to imported fuel inflation, foreign exchange shocks and external supply disruptions,” he stated.
Yusuf said the continued disconnect between crude production and domestic refining represents “one of the costliest structural inefficiencies within the Nigerian economy.”
He therefore advocated “a transparent, market-aligned and refinery-prioritised crude allocation framework” capable of guaranteeing predictable feedstock supply to domestic refineries.
On the power sector, Yusuf warned that the persistent liquidity crisis within the electricity value chain continues to threaten gas investments and broader energy sustainability.
According to him, “Payment defaults across the electricity value chain have weakened investor confidence in gas-to-power projects and constrained fresh investments in critical energy infrastructure.”
He added: “No serious investor will commit long-term capital into an environment where contractual obligations are weakly enforced and payment discipline remains uncertain.”
The CPPE boss also expressed concern over continued crude oil theft, pipeline vandalism and weak hydrocarbon accounting systems, saying they have continued to weaken transparency, production accountability and investor confidence.
According to him, “The country cannot sustainably optimise its hydrocarbon assets with analogue governance systems in a digital energy era.”
He therefore called for the deployment of “advanced metering infrastructure, digital tracking systems, real-time reconciliation mechanisms and stronger inter-agency coordination.”
Commenting on the divestment of several International Oil Companies (IOCs), Yusuf said the trend reflects “deeper structural concerns around insecurity, operational risks, regulatory uncertainty and investment climate vulnerabilities.”
He stated that “capital naturally gravitates towards environments where policies are stable, contracts are respected, infrastructure is secure and governance systems are predictable.”
Yusuf urged the government to strengthen pipeline security architecture, improve community engagement frameworks and deepen investor confidence through consistent policy implementation.
On energy transition, he maintained that Nigeria’s transition pathway must reflect the country’s economic realities and developmental priorities.
According to him, “Nigeria’s economic realities are fundamentally different from those of advanced economies championing aggressive decarbonisation policies.”
He noted that millions of Nigerians still lack reliable electricity access, while industries remain heavily energy-constrained and fiscal revenues continue to depend significantly on hydrocarbons.
“The country therefore cannot afford an energy transition strategy that undermines industrialisation, weakens fiscal stability or compromises energy security,” he said.
Yusuf further observed that although Nigeria has recorded progress in local content development, domestic technical capability remains inadequate relative to the scale of opportunities within the sector.
He noted that the country still depends heavily on imported equipment, foreign technical services and external engineering expertise.
According to him, “Nigeria must now move beyond symbolic local content compliance towards genuine technological capability, domestic manufacturing strength and indigenous innovation.”
He added that the future of the energy sector would increasingly be driven by technology, digitalisation and innovation, stressing the need for investments in carbon capture systems, hydrogen technologies, digital oilfields and advanced gas processing.
Yusuf concluded that Nigeria’s hydrocarbon wealth should become “a catalyst for national transformation — not merely a source of export receipts.”
He added that the future of the sector “should not merely be about pumping more crude oil” but about creating value, deepening industrialisation, strengthening energy security and improving the quality of life of Nigerians.
