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Reviving Nigeria’s Coal Industry



A major incentive for colonial rule in Nigeria back then were the natural resources, especially the large deposits of solid minerals around the country. Coal was one of the most popular minerals that helped boomed the economy even up to the early 1960s before its fortunes began to dwindle gradually with the discovery of crude oil and the subsequent boom in the new commodity. For years now only students of history may have been hearing about coal in Nigeria.

Coal is a black or brownish-black hard substance within the earth that is used as a fuel. Throughout human history, coal has been used as an energy resource, primarily burned for the production of electricity and heat, and is also used for industrial purposes, such as refining metals. Coal used to be the largest source of energy for the generation of electricity worldwide, as well as one of the largest worldwide anthropogenic sources of carbon dioxide releases. It has been on record that China mines almost half the world’s coal followed by India with about a tenth. Australia accounts for about a third of world coal exports followed by Indonesia and Russia; while the largest importer is Japan.

Coal was first discovered in Nigeria in 1909 at the Udi Ridge in Enugu by a British mines engineer, Albert Kitson. Kitson had been prospecting for silver. By 1914, the year of Nigeria’s amalgamation, the first consignment of coal made its way to the United Kingdom from the newly – created ports at Port Harcourt. By 1916, the Ogbete Mine was in full operation and in that year alone, it yielded 24,511 metric tons of coal. Over time, other mines sprang up in the region which became the modern day Enugu State. Coal production hit an all-time high of 790,030 metric tonnes before it began to face a steady decline mainly due to the reason cited above which resulted in many of the mines being abandoned. Currently Nigeria’s coal deposit is estimated at about 2.8 billion metric tonnes.

To manage the resources produced at the mines then, the Nigeria Coal Corporation was incorporated in 1950. The core domestic market for coal production in Nigeria was its emerging rail system which depended heavily on the produce to power its locomotive engines. But with the sudden discovery of hydrocarbons in the late 1950s, the Nigerian Railway Corporation switched from coal to diesel powered energy.

The Electric Company of Nigeria also converted its power generation from coal to diesel. The loss of these two big clients played a major role in the decline in coal production as the government did not think it possible to continue to heavily invest in the sector. Besides, the recent discovery of crude oil at Oloibiri held the promise of greater revenue through exports for the newly – independent nation. The Coal Corporation survived the onslaught of crude oil especially because it continued to enjoy a national monopoly on coal production.

The Nigerian civil war was another major factor in the decline of the Nigeria Coal Corporation. A number of the coal mines became inaccessible during the period and were abandoned, and most of them were never revived or reclaimed. Interestingly, two mines were commissioned during the civil war: One at Odagbor, which was later known as the Okaba coal mine, located in present day Kogi State, and the Biafra Coal Corporation in Enugu. Both were merged at the end of the war into the Nigeria Coal Corporation. Attempts at mechanising the mines in the late 70s and 80s failed, further plummeting production. Another concern in the 1980s and most of the 1990s was the poor management of the Nigeria Coal Corporation. The then military government had a perchant for randomly appointing personnel with little or no experience in management or without technical knowledge to manage public enterprises. The Nigeria Coal Corporation was no exception. With the appointment of a university professor who had no management experience to head the corporation, its further decline came as no surprise. The final blow was in 1999, when the Nigerian government sought to increase direct foreign investment in the country by privatising the Corporation and opening the nation’s solid mineral market to large private investors. The strategy failed. With the withdrawal of support from the government, the Corporation lost its steam. It however remained in operation till 2002 before eventually shutting down.

Unsuccessful in its privatisation bid, the federal government in 2013 sold off some of the Corporation’s assets to the Enugu State government in order to offset outstanding debts.

However, in what seems like hope being restored in the sector, the Minister of State for Mines and Steel Development, Abubakar Bawa Bwari, inaugurated a Project Delivery Team for the reinvigoration of the coal sector and concessioning of the Nigerian Coal Corporation (NCC)’s remaining coal blocks last week in Abuja.

The minister, who recalled that the National Council on Privatisation approved the use of a project delivery team for the privatisation of the five remaining coal blocks of the NCC at its meeting of April 16, 2015, said the delivery team had to be reconstituted due to some holes discovered in the original one.

“The delivery team originally comprised representatives from the BPE, the Ministry of Mines and Steel Development and its agencies, namely the Mining Cadastre Office and the Nigerian Geological Survey Agency; the Ministry of Power, Works and Housing; and the Ministry of Environment.

“This event is therefore the culmination of the collaborative effort of both the Ministry of Mines and Steel Development and the Bureau of Public Enterprises to ensure that we have a delivery team that is alive to its responsibilities and capable of advancing the coal to power project of the federal government,” he said.

The minister urged the team members to take their mandate seriously and ensure speedy completion.

“I wish  to appeal to members to take this task seriously considering the renewed attention that President Muhammadu Buhari has brought to the sector through his commitment to the diversification of the nation’s economy,” he said.

Top on the terms of reference read out to members of the team, who, according to the minister, were carefully selected across board was the charge that they develop a coal sector roadmap.

Earlier in his address, the director – general, Bureau of Public Enterprises (BPE), Alex Okoh, said the inauguration was a milestone in the implementation of the coal sector reform which, according to him, was aimed at attracting the needed investments for exploration, mines development, healthy development of the coal sector among others.

Okoh, who outlined key reform steps required for a successful concession process urged the team members to collaborate with all stakeholders and even co-opt people where necessary.

The team leader, from the Transaction Management unit of BPE, Yusuf Adamu, who thanked the minister and others who made the day possible on behalf of the team assured that they would do their work expeditiously to finish as promptly as their mandate required, calling for the cooperation of all stakeholders who may be approached in the process.





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