Energy and its Role in Sustainable Development
Dr Edmund M. Daukoru Al-Hayat - 12/06/06//
Today we live in a world where energy and sustainable development must go hand in hand. This statement was never more evident than at the World Summit on Sustainable Development in Johannesburg in 2002, which stressed that access to energy is a key component in the goal of poverty alleviation.
In fact, the United Nations (UN) Development Programme states that none of the Millennium Development Goals that came out of the Johannesburg Conference can be met without major improvements in the quality and quantity of energy services in developing countries. Given that 1.6 billion people have no access to modern energy services, that a quarter of the world's population lives without electricity, and 90 per cent of rural households rely on traditional energy sources for cooking and heating, it is easy to see why.
Yet the interconnection between energy and sustainable development goes much deeper, as OPEC Member Countries only know too well themselves. Revenues oil-producing developing countries receive from petroleum sales are essential in the financing of their sustainable economic and social development programmes. Crude oil is a finite resource and these countries must do all they can to diversify their economies and develop the appropriate supporting infrastructure, while they still have viable reserves of crude. And with this background and understanding, OPEC also appreciates the benefits these resources and revenues can bring to other developing countries.
OPEC, whose membership comes from the developing world, places a high priority on easing the plight of impoverished nations, in particular by helping them pursue the goals of sustainable development. At the First OPEC Summit in Algiers in 1975, the Sovereigns and Heads of State of our Member Countries, in a Solemn Declaration, reaffirmed "the natural solidarity which unites their countries with the other developing countries in their struggle to overcome under-development."
The First Summit also resulted in the establishment, the following year, of the 'OPEC Fund for International Development', which was set up to promote South-South solidarity through cooperation between OPEC Member Countries and other developing countries, primarily by helping provide the financial resources those countries need to realise their economic and social development goals.
Since its formation 30 years ago, the Fund as an independent entity has made great strides. It played a significant role in the establishment of the International Fund for Agricultural Development (IFAD), channeling $861 million in contributions from Member Countries towards the agency's initial capital and first replenishment, and its spectrum of projects continually broadens: from sugar plantations in Sudan to syringe factories in Vietnam; from fighting HIV/AIDS to enhancing literacy levels. At the end of January this year, the Fund's total approved commitments stood at almost US$8 billion.
Let me take this opportunity to explore some of the Fund's projects in more detail and especially in light of some of the UN Millennium Development Goals that are the focus of the international community out to 2015 and beyond. For example, Goal 8 refers specifically to debt relief, trade and technology transfer as a means to strengthen the global development partnership. With regards to debt relief, the OPEC Fund has shown strong commitment to the debt relief programme for Heavily Indebted Poor Countries (HIPC) initiated by the IMF and the World Bank in 1996 and also supports the enhanced HIPC Initiative which is designed to bring about faster, deeper and broader debt relief.
In terms of trade, the Fund has continued to collaborate closely with its partners to help ensure that recent World Trade Organisation (WTO) breakthroughs in making developing country exports duty- and quota-free by 2008 are realised. As for technology transfer - an absolute prerequisite for successful economic development - this has long been a cornerstone of OPEC, the OPEC Fund and its Member Countries.
One noteworthy clause of the Solemn Declaration of 1975 focused on this area could so easily have been crafted today - the "acceleration of the development processes of the developing countries, particularly through the adequate and timely transfer of modern technology and the removal of the obstacles that slow the utilisation and integration of such technology in the economies of the developing countries." Today, the Fund stresses that it will continue to make substantial investments, particularly in the area of information and communications technologies, in order to close the technology gap.
In health, the Fund is combating the destructive impact of HIV/AIDS on development. It launched a Special Account in this area in 2001 and the facility is now worth $50 million. The money is helping to combat the effects of the disease in more than 90 countries in all developing regions of the world. And in water, an essential commodity for any sustainable development activity, the Fund has expressed that it will be giving water conservation issues a much higher priority in the coming decades.
The OPEC Fund, moreover, is just one of many multilateral and bilateral institutions, such as the Abu Dhabi Fund, the Kuwait Fund, The Saudi Fund and The Arab Authority for Agricultural Investment and Development, which are supported by OPEC Member Countries as a means of providing aid to developing countries. It is part of our continuing commitment to help meet the pressing needs of other developing countries when it comes to sustainable economic and social development.
Today, certain facts cannot be ignored, facts that clearly show how much good OPEC Members did - and continue to do - for the world's least fortunate; even though they are developing countries themselves with many development challenges, often requiring vast amounts of money. For example, the average gross domestic product per capita of OPEC's Member Countries stood at just $2,000 in 2004. This amount was one-seventeenth that of the US and one-thirteenth that of the average of the EU states in the same year.
In fact, relative to their per capita income, OPEC Member Countries have done a lot more to alleviate poverty in poorer developing countries than the richer nations of the world. For example, Saudi Arabia has consistently earmarked a near four per cent of its annual budget for the purpose of aid, which it makes through bilateral and multilateral channels.
To complete the picture I feel I should also underline the importance energy security plays in sustainable development. OPEC and its Member Countries endeavour to maintain stable market conditions and to tend to the future welfare of the oil market, with developing nations very much in mind. Oil is the world's leading energy source and, as such, has a significant impact on the health of the global economy and, in turn, on the economic prospects of all nations, including the more vulnerable developing ones.
OPEC is very conscious of the value of market stability at fair prices for all, as well the importance of future oil supplies for the sustainable development of currently impoverished nations. We are unswerving in our commitment to these two issues, though it needs to be noted that many factors are at play. For example, geopolitical tensions play a significant role and the lack of refining investment and in turn capacity, as well as speculative futures markets, continues to have a pronounced effect on prices.
It is well documented how oil played a major role in the previous century's socio-economic development of today's industrialised world. Today, OPEC Member Countries and the OPEC Fund continue to strive to ensure that the very same oil that contributed to this advancement - and its associated benefits - is made available to developing countries so they too can achieve similar advancements. The focus is on energy, social and economic security as a means for achieving sustainable development.
Biography:
Dr Edmund M. Daukoru, OPEC President
A Nigerian, Dr Edmund Maduabebe Daukoru obtained his PhD in Geology from the Imperial College of Science & Technology, University of London in 1970. Professionally he began as Team Geologist with Shell where he rose to General Manager. Working both nationally and internationally, he served in the private sector with Shell International Petroleum. In 1992 he was appointed Group Managing Director and CEO of the Nigerian National Petroleum Corporation (NNPC). From 2003 to 2005 he served as Special Adviser to the Nigerian President and from 2005 to date has been Nigeria's Minister of State for Petroleum Resources. He assumed the position of President of the OPEC Conference and Secretary General on 1 January 2006.
* Dr Edmund M. Daukoru is President of the OPEC Conference
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