As Nigerians are becoming more concerned that the country may be heading for further crises in the petroleum sector, unless urgent steps are taken to address some of the burning issues plaguing it, recent changes in the commanding heights of the petroleum industry, indeed stand as indications of government’s lofty plans to turn things around for good.
Just last Wednesday, President Muhammadu Buhari, announced he was retaining the portfolio of Minister of Petroleum Resources.
However, since that inauguration, some stakeholders have argued the the President’s retention of the strategic office may be another huge setback for the industry, given that his stint in the sector in the last four years was quite uneventful.
But how far can Nigeria’s new Minister of State for Petroleum Resources in the person of Timipre Sylva, go considering the challenges and the enormity of responsibility awaiting him. There concerns however that despite coming from the Niger Delta region, the new minister of state may not have had the cognate experience to play in the intricate web of international oil politics especially now that the country ‘s economy is struggling to sustain its fragile growth.
Despite all the talk about agriculture and non oil export development, crude oil remains the mainstay of Nigeria’s economy accounting for over 70 per cent of its current revenue.
However, with the recent threat that Ghana, Angola and Senegal, pose as crude oil producers, industry watchers argue its time for Nigeria’s petroleum Resources Minister to rise to these challenges to stave off another possible slip into recession.
Indeed, some of the stakeholders’ expressed worries that Buhari for the second term is retaining the Minister of Petroleum Resources.
They however, tasked Buhari to address issues around reforms of the sector, subsidy, refineries and transparency issues that have gone a long way to contribute to the opaqueness in the sector.
They contended that the continued importation of petroleum products and payment of fuel subsidy which currently stands at N1. 2 trillion for a country that is a leading oil and gas nation was unacceptable and longer sustainable.
They, however, called on the new Minister to be courageous and confront the cabals that make making progress in the sector unachievable, saying only such political will stand in out.
SPE, dons task new Minister
President, Society of Petroleum Engineers, Mr. Abiodun Fagbami, said government being a continuum, the new Minister should continue with the 7Big Agenda of the erstwhile Minister of Petroleum Resources, Mr. Ibe Kachikwu, which seeks to open up the sector to more investments.
Also he said the Nigerian Gas Flare Commercialisation Programme (NGFCP) must be pursued with more vigor and passion, including the involvement of all stakeholders from upstream to downstream sector, so that Nigerians can benefit from it. The NGFCP is a special programme domiciled in the Minister of State for Petroleum. It was established to implement the National Gas Policy commitment for stricter regulation of flaring, the “7 Big Wins” (www.7bigwins.com) and a pathway to ultimate flare-out.
He advised that all players in the industry, particularly the indigenous operators and service providers must be incorporated and given a level playing field, saying such will engender healthy competition and some incentives to enable them contribute their quota towards the development of Nigerian content.
He said a situation where foreign firms come in to take jobs in quantity that negates the vision of the local content, enabling them to ferry all the resources made over time to their home countries was capable of creating a setback for the sector.
Fagbami, said the current licensing structure for gas investors must be looked into by the new minister because the financial requirement to secure same was on the upscale, saying there must be some palliatives or incentives to remove some barriers in their businesses.
For his part, Director, Center for Energy and Petroleum Economics, Prof. Adeola Adenikinju, said the reforms around the sector, especially as it relates to Governance and social restructuring is very paramount to sector and must be looked at by the new Minister.
He noted that, that was what the PIGB and other components of the PIB were meant to address but unfortunately it could not be achieved under the last administration.
He said the lack of a fiscal regime that led to some many uncertainties in the sector, forcing investors to either sit on the fence and watch situations unfold, while some have resorted to taken their funds and expertise to other investment haven where the atmosphere was conducive and safe for business.
The petroleum economist also lamented the state of the downstream sector as the inability of the country to have functional refineries was a setback to Nigeria that prides itself as the largest oil producer in Africa.
He said the new minister must address the huge level of petroleum product imports to enable the country meet domestic demand; saying, that has a lot of implication for fiscal sustainability because the huge number of product imports has a corresponding factor to what we incur as subsidy payment.
Corroborating Adenikinju, a Professor of Petroleum Economics and Policy Research, Wunmi IIedare, said the number one priority is petroleum industry reform, which was started in 2000. He must own it and not reinvent the wheel.
‘‘Second, he must bring and use the professionals in the Ministry divisions. Must let professionals head the upstream, midstream, and gas and downstream. He needs to find a way to create a reward system for professionals in the ministry outside the civil service structure. The ministry is not the regulator and he must concentrate on policy development and analysis.
The Minister though Chairman of NNPC, must not get involved in the day to day running of NNPC. NNPC must be allowed under him to function as a purely commercial business with less Agency role.
Also commenting, Partner, Bloomfield Law Practice, Dr. Ayodele Oni, he believes Buhari, should push more for the passage of the PIB or effectively push that same be suspended indefinitely such that investors know the fiscal climate under which they will be investing and recovering their investment.
He argued that Buhari, should also promote transparency in the dealings of the government whilst also ensuring that the push for gas led industrialization continues.