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Ethanol Mandate Revisited: A Practical Path to Curbing Inflation through Fuel Price Relief

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Ethanol

Ethanol mandate Nigeria could reduce petrol costs, create jobs, and boost energy security as global oil prices surge again

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On August 29, 2023, at the height of the fuel subsidy removal crisis in Nigeria, I published an article in The Nation Newspaper titled “Achieving Pump Price Relief Through Ethanol Mandate.”

Also readDangote Refinery Boosts Petrol Prices to N874, Pump Costs May Hit N1,000

In that piece, I argued that Nigeria should begin exploring ethanol as an alternative fuel option to cushion the effects of rising gasoline prices on ordinary citizens. Recent global developments make it necessary to revisit that argument.

Across the world, the price of petroleum products has surged once again, partly due to geopolitical tensions involving Iran and the growing risks to maritime shipping routes in critical oil transit corridors.

Whenever crude oil prices rise, gasoline prices inevitably follow. Transportation costs increase almost immediately, triggering a ripple effect that spreads through the entire economy.

Nigeria, unfortunately, remains extremely vulnerable to these shocks. When fuel prices increase, transportation costs rise sharply. Food prices soon follow.

The cost of essential goods escalates, and inflation deepens the economic hardship faced by millions of Nigerians. This cycle has become painfully familiar in recent years.

Nigeria today is undergoing a difficult but necessary phase of economic reform under President Bola Ahmed Tinubu.

Policies such as the removal of fuel subsidies and the equalization of the foreign change rates were intended to correct long-standing distortions in the economy and restore fiscal sustainability.

While these reforms are necessary for long-term economic stability, their short-term effects have placed significant pressure on households.

Thus providing relief without increasing the deficit or defeating the purposes of the reforms make adoption of ethanol an indispensable option.

The dividends of reform will take time to materialize. In the meantime, policymakers must urgently consider practical strategies that can provide relief to Nigerians while supporting broader economic transformation.

One such strategy is the adoption of ethanol as a national fuel alternative.

 

Learning from Global Examples

Many countries already blend ethanol with gasoline to reduce fuel costs and strengthen energy security.

In the United States, gasoline typically contains around 10 percent ethanol, a policy that has helped reduce petroleum dependence while supporting domestic agriculture.

An even more striking example is Brazil. Despite being a major oil producer, Brazil began reforming its fuel system in the 1970s to incorporate ethanol derived primarily from sugarcane.

Today, most Brazilian vehicles are designed as flex-fuel engines, capable of running on gasoline, ethanol, or a mixture of both. In many cases, vehicles run entirely on ethanol. Nigeria can pursue a similar path.

 

Why Ethanol Makes Sense for Nigeria

Nigeria sits on vast crude oil reserves, yet paradoxically struggles with high fuel prices due to limited refining capacity and heavy reliance on imported refined products.

Ethanol blending offers an opportunity to reduce this dependency while simultaneously creating economic opportunities at home. Ethanol can be produced from crops that Nigeria already grows in abundance, including:
• Cassava
• Sugarcane
• Corn

These crops could become the foundation of a thriving biofuel industry capable of supplying domestic fuel demand while creating new markets for Nigerian farmers.

 

A Catalyst for Job Creation

The economic impact of a national ethanol program could be profound.

Unlike crude oil extraction, which is capital-intensive and geographically concentrated, ethanol production spreads economic activity across multiple sectors and regions. A robust ethanol industry would generate employment in:
• Farming and crop cultivation
• Agricultural supply chains
• Biofuel processing plants
• Logistics and transportation
• Commodity brokerage and trading

At a time when youth unemployment remains a major challenge, the ethanol value chain could provide meaningful opportunities for thousands of young Nigerians—particularly graduates seeking productive engagement in agriculture and agribusiness.

 

Complementing Existing Energy Policies

The federal government has recently introduced initiatives to promote Compressed Natural Gas (CNG) as an alternative fuel for vehicles.

This effort is commendable and represents an important step toward diversifying Nigeria’s energy mix. However, CNG alone cannot address Nigeria’s fuel challenges.

Ethanol offers an additional pathway that complements existing initiatives. While CNG focuses on natural gas resources, ethanol builds an entirely new economic ecosystem rooted in agriculture and manufacturing.

The two policies can work together to gradually reduce Nigeria’s dependence on gasoline.

 

A Policy Proposal

To begin this transition, the federal government should consider introducing legislation that mandates a 10–20 percent ethanol blend in gasoline.

Such a mandate would create immediate demand for ethanol production while allowing the automotive industry and fuel distribution networks time to adjust.

In addition, government policy should include:
• Incentives for investors to build ethanol refineries
• Financial support for farmers cultivating ethanol feedstock crops
• Regulatory frameworks for fuel blending and distribution
• Partnerships between government, agribusiness, and the private sector

With the right policy framework, Nigeria could build a thriving biofuel industry within a decade.

 

Addressing Structural Inefficiencies

At the same time, Nigeria must confront persistent inefficiencies in its petroleum sector.

For decades, state-owned refineries under the Nigerian National Petroleum Company Limited have absorbed enormous public resources while producing little output.

These facilities have failed to function effectively and should be privatized, restructured, or decommissioned if credible investors cannot be found.

No nation can afford to sustain public institutions that consume resources without delivering results.

 

A Strategic Opportunity

Nigeria’s economic reforms are both necessary and inevitable. But reform must also be accompanied by innovation and forward-looking policies that expand opportunity.

Ethanol represents more than just an alternative fuel. It is a strategic economic opportunity, one capable of lowering fuel costs, strengthening energy security, revitalizing agriculture, and creating jobs.

At this critical moment in Nigeria’s economic journey, embracing ethanol could provide a pathway not only to energy diversification but also to broader national development.

Also read: Dangote Refinery Boosts Petrol Prices to N874, Pump Costs May Hit N1,000

The time has come for Nigeria to seriously consider an ethanol mandate as part of its long-term energy strategy.

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FG Halts Controversial WAEC, NECO Fee Hike Review

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WAEC NECO fee hike review has been suspended by FG after public concerns, with consultations planned before any final decision on exam costs (more…)

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Governor Dauda Lawal Commissions ZAM Lithium Processing Plant, Targets 2,000 Jobs, Local Value Addition

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In a bold move to industrialise Zamfara State and unlock its vast mineral wealth, Governor Dr Dauda Lawal has officially commissioned a multi-billion-naira lithium mining and processing plant located in Boko village, within the Moriki Emirate of Kaura Namonda Local Government Area. The state-of-the-art facility, which represents an investment of over 200 million US dollars, marks a historic turning point in the state’s quest to move beyond raw mineral exportation and embrace full-scale local processing, value addition and industrial development.

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The commissioning ceremony drew a large gathering of traditional rulers, government officials, investors, community leaders and mining industry stakeholders who came to witness what the governor described as the dawn of a new era for Zamfara’s solid minerals sector.

The lithium processing plant is a flagship initiative under Governor Lawal’s broader economic diversification agenda, designed to ensure that Zamfara’s abundant natural resources are not only extracted but also processed and utilised in a manner that generates substantial revenue for the state, creates employment opportunities and stimulates homegrown industrial growth. By establishing local processing capacity, the plant will significantly reduce the export of raw lithium and other minerals, thereby retaining more value within the state and the nation at large. This strategic shift is expected to improve local utilisation of lithium and its entire value chain, positioning Zamfara as a key player in the global renewable energy and technology-driven economy, where lithium is increasingly in high demand for electric vehicle batteries, modern electronics and industrial applications.

The ZAM Processing Plant is a joint venture involving Zam Mining Coal Limited in collaboration with the Zamfara State Government, Bima Mines and Jinlide Mining Co. Ltd. This partnership has further demonstrated Governor Lawal’s unwavering commitment to restoring investor confidence and signalling that Zamfara State is fully open for business and ready to collaborate with credible investors in developing critical aspects of its economic infrastructure.

The plant will explore, mine, process and utilise the state’s rich mineral endowments, which include not only lithium but also gold, copper, and iron ore, thereby creating a comprehensive mining value chain that spans extraction, processing and industrial application. The facility is equipped with the best advanced technological processing machines available globally, enabling it to scale up production to an impressive 6,000 tons of raw materials daily and over 2,000,000 tons annually. This massive output is expected to significantly boost Nigeria’s total mineral production and strengthen the country’s competitive position in the global mineral market.

Beyond its production capacity, the processing plant is designed to enhance mineral recovery rates, maximise value addition and promote technology transfer to local engineers, technicians and entrepreneurs. The facility is expected to stimulate the growth of industries, including machinery manufacturing, transportation, logistics and maintenance services, thereby creating a ripple effect that will benefit the broader economy.

In terms of employment, the project is set to generate approximately 2,000 direct and indirect jobs, with priority given to qualified workers and residents from the host communities in Zamfara State. The company has also committed to providing comprehensive vocational and technological training programmes to build local skills and expertise, enabling residents to build sustainable careers in the mining industry and contribute to long-term community development.

As part of its corporate social responsibility, the company will undertake a series of community development projects designed to improve the quality of life for host communities. These initiatives include the renovation, construction and upgrade of primary and secondary health centres to ensure access to quality healthcare; the drilling of boreholes to provide portable drinking water and the installation of solar-powered electricity systems to address energy needs in rural areas. The company has also pledged to uphold the highest standards of environmental protection, ensuring operational transparency, responsible mining practices and the mitigation of any adverse ecological impacts. These commitments reflect a deliberate effort to ensure that host communities are genuine partners in progress and direct beneficiaries of the resources found in their environment.

In his remarks at the commissioning ceremony, Governor Lawal delivered an impassioned address in which he described the event as a symbol of a new beginning and a testament to the potential of responsible investment in the solid minerals sector. He emphasised that Zamfara is a haven of vast mineral deposits and that the state government has a moral and economic obligation to harness these God-given resources in a manner that improves the lives of its people.

He recalled that since the commencement of his administration, his government had made a firm commitment to change the narrative of the solid minerals sector, transitioning from informal, unregulated mining to a structured, organised and law-abiding industry that operates within the framework of national and international best practices. He reiterated that his government will continue to provide an enabling environment for investors to operate responsibly, with continued support for reforms aimed at promoting lawful activities, attracting credible investors and strengthening partnerships with the Federal Government to contribute meaningfully to the economic growth and development of the state.

The Governor further noted that the global economy is changing rapidly, driven by the future of renewable energy, electric vehicles, modern technology and industrial transformation and that Zamfara must position itself to become an active participant in this global shift. With its vast deposits of raw materials and minerals, the state must not only extract but also explore the entire value chain, from mining to processing and manufacturing. He stressed that the establishment of the ZAM Processing Plant is entirely consistent with this vision of moving towards local processing, value addition, skill development and industrial growth. He also commended the company for its meaningful corporate social responsibility commitments, which ensure that host communities remain partners in progress and beneficiaries of the development of resources found in their environment.

Governor Lawal concluded by expressing his profound gratitude to the President of the Federal Republic of Nigeria, President Bola Ahmed Tinubu, for his renewed commitment to positioning the solid mineral sector as a driver of national economic growth, investment, industrialisation and economic transformation, which aligns strongly with Zamfara’s vision to better opportunities and expand its revenue base. The commissioning was widely hailed by community leaders, Emirat and stakeholders as a monumental achievement that will transform the economic landscape of Zamfara State for generations to come.

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Prof. Kareem Urges Efficient Resource Management for Nigeria’s Development

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By Daniel Oluwatobiloba Popoola

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Professor Rasaki Olufemi Kareem has identified efficient management of resources, rather than their abundance, as the key to Nigeria’s economic transformation and sustainable development.

Speaking at the first ever Inaugural Lecture of the Crescent University, Abeokuta,  titled, “Resource Efficiency Vs. Economic Development: Whither Nigeria”, the renowned economist argued that although Nigeria is richly endowed with oil, gas, solid minerals, fertile land and a rapidly growing population, millions of citizens still live in poverty because resources have not been effectively managed and deployed.

Professor Kareem, also the Deputy Vice Chancellor of the University, explained that while Resource Economics focuses on the efficient and sustainable use of scarce resources, Development Economics seeks to improve living standards, reduce poverty and promote economic growth.

According to him, resource efficiency enhances productivity, lowers production costs, stimulates innovation, protects the environment and lays the foundation for long-term development.

Professor Kareem also highlighted the phenomenon known as the Dutch Disease or Resource Curse, noting that countries blessed with abundant natural resources often fail to attain corresponding economic progress because of poor governance, corruption, weak institutions and excessive dependence on resource revenues.

“Nigeria’s challenge is not the absence of resources, but the inefficient management and utilisation of those resources,” he said.

The Professor maintained that sustainable development in Nigeria would depend largely on effective resource management, strong institutions, sound governance, investment in infrastructure, technology and human capital, consistent development policies and active community participation.

Drawing from decades of research in fisheries, agriculture, economic growth, poverty, governance, food security and climate change, Professor Kareem demonstrated that efficient resource use has a direct impact on productivity, economic growth and citizens’ welfare.

He stressed that transparency and responsibility remain indispensable to sustainable development.

“Sustainable economic development can only be achieved when resources are utilised efficiently, transparently and responsibly,” he stated.

The scholar added that resource efficiency is critical to poverty reduction, food security, job creation and the attainment of the Sustainable Development Goals.

As part of measures to reposition the economy, he recommended diversification beyond oil, stronger institutions, improved governance and a more robust anti-corruption framework.

He also advocated increased investment in agriculture and food security, greater support for research, innovation and technology, adoption of sustainable resource management practices and enhanced public awareness on the importance of resource efficiency.

Professor Kareem summed up his message with a call for a paradigm shift in the country’s development strategy.

“Nigeria’s future prosperity depends not on the abundance of its resources, but on how effectively and efficiently those resources are managed for the benefit of all citizens,” he declared.

He urged policymakers and stakeholders to embrace resource efficiency as a pathway to inclusive growth, poverty reduction, food security and sustainable national development.

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