*Nigeria’s economy at great risk, he warns
With the resurgence of militant activities in the Niger Delta, Minister of State, Petroleum, Dr Ibe Kachikwu has warned that the situation portends a great danger for the country and its economy if not urgently nipped in the bud.
Speaking with Saturday Sun in Abuja, Kachikwu said that Nigeria’s oil output has reduced to about 1.4, 1.5 million barrels per day; a far cry from the 2.2 million barrels per day captured in the 2016 budget.
Kachikwu said in view of this, the Federal Government has no option than to end militant activities in the next one to two months, even as he expressed optimism that government would eventually find a solution to the menace.
“But I think that just for the sake of this country, we must find a solution to this stuff within the next one, to two months frankly because, if we don’t, the sheer effect on our national economy will be devastating”, the minister warned.
Not done with that, Kachikwu said: “progressively, aside the day-to-day losses, is the loss of faith in our contracting delivering capability in the sector. And that is very dangerous for the oil sector, dangerous for investment, for market when you eventually produce and dangerous for the sort of terms that you can even agree on because of the uncertainty. So, the effects are great.
“Different from that, of course, it impacts power, it impacts gas, it impacts Federation Account Allocation Committee (FAAC) and the ability of governors to pay salaries. It is all-mixed anyway. In fact, it impacts our ability to continue to deliver refined petroleum products part of which is imported because you need crude to back those contracts. So, every way in which you look at it, there is calamity looming in the horizon and we need to do something.” He spoke further on this and more with AIDOGHIE PAULINUS.
With the militancy in the Niger Delta region, what is the prospect for peace in the area?
I’m an optimist and I believe that in any problem anybody faces, whether as an individual, or a corporate entity, whether it is national like we have, the best way to approach it is to believe that you will find a solution. I believe that we really do not have an option, but to find a solution to the Niger Delta issue. So, I am optimistic that we would get there. There are a lot of efforts going on by people, in and outside government, by stakeholders, all trying to see how we can have a shaking of hands and bring a permanent solution to this. It has not been easy. Sometimes you would think you have it but it will slip off. Tempers are shut in these things, understandings are not as focussed as it should be, sometimes positions are conflicting; all kinds of things are being thrown at you. But I think that for the sake of this country, we must find a solution to this stuff within the next one, two months frankly because if we don’t, the sheer effect on our national economy may be devastating.
We are down today to abrupt level of about 1.4/1.5 million barrels following the incident of the last 24 hours. It is going to take an average of minimum of two to three months, in some cases, four months to find solutions in terms of fixing the engineering components. If you are losing that much and you are also losing the fact of the world depression of oil prices, we are getting to a point where, really, our ability to meet our national objectives as a nation are very challenged. So, there is an urgency of yesterday like I said and not even an urgency of now in trying to find a solution to the Niger Delta problem. And there are very many components to it. Obviously, if there are criminality elements, we would have to deal with the criminality as a nation because you can’t have a nation become a warlord zone. But if there are issues of philosophy and neglect, we need to put hands around it and find a way of setting out an agenda. Working both with the security narratives on this and individuals who are concerned like I am, on the issue of dialogue and peace, we must find a way of one, getting a meeting of minds so that there is peace; two, sustaining a system of security so that assets and the environment are not continuously challenged; and three, addressing the issues of concern whether they are infrastructural gap or entitlement gap. So, whatever it is, in such a way that there is a natural progressive dialogue to finding solutions. And that is not going to be done in one day. But we cannot hold those conversations in a theatre of war in which we are throwing bullets at each other or destroying things or whatever. So, my message to all the militants is, it is enough! We need to stop!
You mean ceasefire?
We need to stop, we need to give at least, 60 to 90 days and sit down and honestly talk without anybody’s hands tied behind their backs. I know that given the history of dialogues in this country, if we do that, we will find solution. The president is very committed to finding a solution. Most people in government are very committed to find a solution, but certainly not in an environment where there is perpetual threat to do A or B or C or whatever. And like I have always said to co-Niger Deltans, whenever there is destruction in Niger Delta, who gets the worst impact? It is the Niger Delta. So, we’ve got to be careful not to shoot ourselves in the leg in the process of trying to find a solution.
My position is, we’ve got to stop, we’ve got to find solutions, and we’ve got to elevate dialogue. I’m very committed to doing that. For every barrel of oil that is lost in this sector, I lose a percentage of my performance because my duty is to make sure that we are producing at much higher levels. This year, it has been abysmal and it’s got to stop. So, I appeal to everybody, angered, un-angered, please, whatever the reasons are, it is time to stop and let us engage in a very civilise manner to find solutions to the problems in this sector.
There is the allegation that when we have issues like this, community leaders come, collect money but disappear. Taking a look at the cooperation from leaders from the Niger Delta, how is it like?
I haven’t had any incidence of a community leader coming to me to ask for money. Frankly! It hasn’t happened with my own engagement, I don’t know what other peoples’ engagements are. And it couldn’t happen. You can’t throw money at this problem. You got to throw ideas at them. And everybody that I have engaged have been very forthcoming. Some have been helpless, but willing. So, it is not from want of trying. But I think what we need to do is move the dialogue to an upper level. A dialogue at just the militants who are at aggrieved level, is good, but that is not the total infrastructure of humanity in the Niger Delta. We need to elevate that. We need to be able to talk to kings, opinion leaders, top stakeholders, top business people, top community leaders and state governments. You need to take it to a point where they can at least, take responsibility for agreeing to a mode of behaviour in the area and forcing their children who are also part of this meeting, the younger ones, to abide by those. Every society has ethos and those ethos are led by elders. So, they need to begin to take responsibility for trying to force an alignment in those areas.
All the ones I have talked about are very cooperative. We need to have more dialogue and beginning to up the speed on that very feverishly. State governments are involved in most of these dialogues and mostly, they have been very cooperative. The meetings that have held, they provided the platforms, they provided their time. But over and above that, at the end of the road, I would like to see a very periodically static timeframes for dialogue. It is not just that we have a dialogue, resolve the issues; everybody goes back into their huts. Once every quarter, you need to have these dialogues attended by governors, community leaders so that we can have a forum to engage before tempers rise. And tempers are very short term in those corridors. Those are some of the things I am trying to put in place.
You said oil output has decreased to 1.4 million?
It is in the range of 1.4, 1.5.
What are the other adverse effects on our economy?
I think it is clear. I don’t think it requires a lot of analytical order. If you laid your budget on the basis of 2.2 million barrels and you are having 1.4/1.5, it means you are losing about 700,000 to 800,000 barrels already per day. That translated, it is almost 30 to 40 percent of what your projections were and happening at a time when the oil prices haven’t exactly behaved very nicely. I think today, we are down to forty-something dollar a barrel. Yes, it is over and above the 38 that we projected for the budget, but still not the buoyant numbers that we would have loved to see. So, you are hit by price, and you are hit by the uncertainty of production and in worse case situation, you are also hit by acceptance because when your oil does not have a certainty of delivery, then you begin to lose your market. People go elsewhere to make their long-term plan. Nobody buys oil on the spot. It takes strategic term contract. If you give me a contract that you perpetually keep throwing force majeure on me that you can’t deliver, why would I as a nation plan with you in mind? I’ll go to other markets.
So, progressively, different from the day-to-day losses, is the loss of faith in our contracting delivering capability in the sector. And that is very dangerous for the oil sector, for investment, dangerous for market when you eventually produce and dangerous for the sort of terms that you can even agree on because owing to uncertainty. So, the effects are great.
Different from that, of course, it impacts power, it impacts gas, and the Federation Account Allocation Committee (FAAC) and the ability of the governors to pay salaries. It is all mixed anyway. In fact, it impacts our ability to continue to deliver the refined petroleum products part of which is imported because you need crude to back those contracts. So, every way in which way you look, there is calamity looming in the horizon and we need to do something.
What is the lasting solution to the problem?
There are lots of agencies involved in this: the Ministry of Niger Delta Affairs, Niger Delta Development Commission (NDDC), and Derivation Fund that have gone to the governors. There are many hands on top of this solution pie and all of us need to work collaboratively. But the bottom line is, we also got to sit back and say, over a period of ten years, if you look at all that has gone out of NDDC, the Derivation Fund, from state government investment, oil sector investment; we’ll be talking about over $40 billion. And when you look at the infrastructure on ground, it’s nothing near there. So, one of the things that we need to be doing now, I think the Niger Delta Ministry is doing that, is a study on how is this money being utilized, how can we tie specific projects? We can’t find one descent coastal road that links all these oil producing companies over a period of ten years with all the money that went in there. Then, something is obviously wrong. So, a lot of money is also going out from the federal government, but we do need to sit down and say how was that utilised.
Are you saying that you have personal reservation about the East-West road?
No, no, no. I am saying that the fact that you can’t have that already existing and it ought to have been funded. If you spend $40 billion, let’s see one major infrastructure because part of the complaints in the Niger Delta is infrastructure. And I am saying when you look at the amount of money already thrown in, you can’t find a real, basic thing. It is not one big refinery that the South South built that is helping them. It is not one major road, it is not one major rail line. So, much has been complained about the fact of neglect and all that and that is there. But even the funds that have been put into this sector for the last ten years, you just have a deep question mark in terms of how well they have been utilized. So, we need to, as a community in the Niger Delta, be asking ourselves how do we make sure, how do we deepen the engagement on how to utilize the things that come to us? How do we make sure a lot of that money is focussed on the areas that are actually oil-producing whilst you are on the other page obviously fighting for a lot more opportunities.
The bottom line is; a whole lot of ministries are going to be involved in this. If we can achieve the peace, then there is a huge amount of work that needs to be done at various levels in terms of dealing with some of these issues and putting together, processes that would ensure a lot, more transparent utilization of the funds that we will even get and the engagement of our people.