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THE NATION
BUSINESS
ENERGY
fects the industry negatively often
has serious impact on the country’s
revenue. Also, all over the world,
electricity drives economic and industrial
activities. But, in the past
few decades, successive administrations
have not been able to fix
the power problem. Will the incoming
Buhari administration get
it right to meet the people’s expectations?
Oil, gas exploration
and production
The government has been aspiring
to attain reserves of 40 billion
barrels and four million. It slated
2010 to achieve these targets, but,
unfortunately, rather than growing
on what has been achieved earlier,
there has been decline. Oil reserves
has fallen over 38 billion
barrels to less than 37 billion barrels
while production has also
dropped from 2.5 million barrels
per day (mbpd) to 2.1 million bpd.
Aside the challenges of oil theft
and pipeline vandalism commonly
known to be the cause of
these setbacks and which the government
always blame, the issue
of undue lengthy contracting cycle
makes operations in Nigeria
expensive by altering the initial
project budget and delivery schedule.
In other oil producing countries,
the period between tender for
a job and commencement of work
on the project, doesn’t exceed six
months, but in Nigeria, it takes
between two and three years often
leading to upward reviews of tenders
at the end of the day.
For instance, the Group Chief
Executive, Oando Plc, Wale
Tinubu, at a global oil and gas forum
in Abuja, stressed the need for
the government to put in place attractive
fiscal policies and incentives.
He also urged the government
to ensure that good governance
and transparency are entrenched,
tackle insecurity, find
alternative to Joint Venture (JV)
funding, reduce or eliminate the
bureaucratic bottleneck that exist
in contracting cycle, improve infrastructure
and give support
where and when necessary to operators.
The President, Nigerian Association
of Petroleum Explorationists
(NAPE), Chinwendu Edoziem, also
expressed concern over the declining
oil reserves and the need for
the government to put in place
policy that would encourage aggressive
exploration to make new
oil discoveries boost reserves and
production.
According to the operators, no
major exploration has taken place
in the country between the last five
and six years, which is not good
for an oil producing country, such
as Nigeria.
Corruption is another major setback.
The sector is riddled with
corruption. The allegation of missing
$20billion in which the Nigerian
National Petroleum Corporation
(NNPC) was fingered has not
fully been resolved despite the
PricewaterhouseCoopers forensic
audit report. There are instances
where government officials allegedly
connive with foreign companies
to inflate the cost of contracts
for projects to get ‘kick-backs.’ In
the downstream, some marketers
were alleged to make claims for
petroleum products not imported
and sometimes full claims for importations
that are far less than
their claims.
A Professor of Energy Economics
and President, Association of
International Energy Economics
(AIEE), Wunmi Iledare, said the
country deserves a more transparent
oil and gas industry especially
the NNPC, which is the national
oil company. He said the new government
must put in place an accounting
process would make the
NNPC more transparent. Iledare
said the sector should be re-jigged
to pave way for meaningful developments,
adding that the only way
to do that is to make people accountable
for money spent in all
oil and gas contracts.
He said the national economy is
largely dependent on oil and gas
TUESDAY, APRIL 28, 2015
E-mail:- energy@thenationonlineng.net
The oil, gas and power sectors are critical to the economy. But, over the years, they have not been doing well. Some of
their problems are oil theft, pipeline vandalism, oil reserves depletion, dwindling production and inadequate gas supply
to thermal power plants. Experts would like President-elect, Munhammadu Buhari to address these challenges, write
EMEKA UGWUANYI & AKINOLA AJIBADE.
Task before Buhari on power, oil and gas
THE oil and gas industry is
Nigeria’s foreign exchange
earner. Anything that af-
•From left: Business Leader, Sahara Power, Rotimi Onanuga; Energy Project Manager, French Agency
Development, Maitane Concellon; Managing Director/CEO, Ikeja Electric, Abiodun Ajifowobaje; and Deputy
Country Director, French Agency Development, Mr. Hugo Pierrel, during a visit to the headquarters of Ikeja
Electric Distribution Plc in Lagos.
and as such, the nation cannot afford
to toy with its major source of
income. He said the country must
put in place policies that are driven
by sense of honesty and commitment
before it can fully realise its
oil potential.
He said: “The administration of
the NNPC and other oil firms must
be structured in such a way that
there would be transparency and
accountability. People must be
made to be accountable for anything
they do. Accountability here
means that people or institutions
in the oil and gas must be answerable
for decision taken, especially
when it comes to fiscal issues. The
Board of the NNPC must not be
personalised. Emphasis must be
placed on achieving the collective
goals of the industry and not on
individuals that are seeking for
their own needs. By this, the institutional
strength should be recognised
and not the personal empowerment
of people at the helm of affairs
of petroleum agencies.”
Iledare said accountability and
transparency must follow a topdown
structure to enable the government
know how every kobo is
spent for activities, such as the implementation
of contracts and
other activities needed to move the
industry forward. He said nothing
must be shrouded in secrecy among
the highest and lowest cadre of
workers in the Petroleum Ministry
and its agencies. This would
help the industry attain its
potentials and further enable the
government to get the values
required for growth, he said.
“Given the fact that the nation’s
revenue is fast depleting amid crisis
in the global oil market, there
should be a conscious effort on the
part of the Federal Government to
double crude oil production. To
achieve this, the government must
take proactive measures to tackle
problems such as pipeline vandalism,
crude oil theft and others.
“When local oil production improves
activities in the sector and
the economy would follow similar
trend,” he added.
He said the government and priprogrammes
through which it
provides treatments to
communities in the Niger Delta
region, the people need functional
hospitals.
The passage of the Petroleum Industry
Bill (PIB) is another area
the incoming government should
concentrate energy on. Operators,
including Iledare, urged the National
Assembly to expedite action
on the passage of the bill into law.
They said the PIB would enthrone
transparency and accountability.
The non-passage of the bill has
stalled a lot of activities in exploration
and production as well as
in oil service segment.
The President, Petroleum Technology
•Buhari
Association of Nigeria
(PETAN), Emeke Ene, said local
vate operators should try and improve
production of oil, advising
oil companies to step up exploration.
Iledare advised Buhari to provide
policies that would pave way
for more activities in the industry.
As a result of crude oil theft, Nigeria
has lost over $10 billion in
the past years. Though the Chairman,
Presidential Committee on
Oil Theft Proliferation and Control,
operators needed a vantage position
to participate in the industry,
adding that this will help to
stimulate growth.
He said the Local Content Act
has provided opportunities for domestic
operators to develop. He
urged the in-coming government
to continue to create a conducive
atmosphere for businesses in the
sector.
Governor Emmanuel Ene said oil producing commu-
Uduaghan of Delta State said the
level of stolen crude oil has declined
by 50 per cent to about
50,000 barrels from the initial
100,000 bpd when the activities of
the thieves were at peak, many
operators believe that it is higher
than 50,000 bpd.
At the peak of oil theft in 2012,
nities are by law entitled to get
certain fiscal benefits from the
government. The benefits, he said,
must be promptly paid to those
communities to ensure seamless
oil exploration activities in the
Niger Delta region.
The President, National Union
of Petroleum and Natural Gas
the Minister of Petroleum workers (NUPENG), Igwe Achese,
Resources, Mrs. Diezani Alison- urged the government to
Madueke said Nigeria loses about eradicate issues associated with
$7billion yearly to crude oil theft importation of petroleum
at the rate of 180,000 bpd, adding
that another $5 billion was spent
on repairs of vandalised pipelines
in one year. To stem the tide, a
new industry joint task force (JTF)
was set up. The task force
comprises the Police and the
Armed Forces, in collaboration
with the Ministry of Petroleum
products totally by deregulating
the downstream. He said this can
only be achieved by reviving the
nation’s refineries, while at the
same time building new ones. He
said the issue of workers’ interest
in the industry must be protected
by the government to prevent a
repeat of industrial actions which
Resources, NNPC, as well as paralysed activities in the
multinationals and indigenous
operators. Therefore, crude oil
theft and pipeline vandalism is a
major problem that require due
attention from the incoming government.
The Commander, Joint Task
Force (JTF), Maj.-Gen. Emmanuel
Atewe, said oil theft and pipeline
vandalism are problems for the
government. He urged the government
to tackle these problems.
He said sustained and committed
campaign against oil theft and
pipeline vandalism is what is
needed to eradicate the problem.
He said the fight against crude oil
theft is an on-going activity,
advising incoming governments
to give it the desired attention to
encourage the growth of the
industry.
Atewe said: “Besides, the government
should develop the Niger
Delta region by providing infrastructure
such as hospitals,
schools, and other facilities that
would make life conducive for its
residents. Job creation is another
area which the government must
look into to keep the residents
busy and discourage them from
taking arms, breaking pipelines
among other criminal activities.
Though JTF is organising health
industry in recent past.
“The oil and gas sector can only
reclaim its lost glory when concrete
efforts were made by the
government to revive the four refineries
which have a combined capacity
to refine 450,000 bpd, build
new ones, create avenues for the
resumption of exploration activities,
check crude oil theft and others,”
he said.
The President, Dangote Group,
Aliko Dangote, said: “Nigeria
must increase its local processing
and consumption. This has been a
goal of the Nigerian government
for many years. But progress has
been impeded by lack of investment
in the downstream petroleum
sector as well as a very outdated
policy and regulatory environment
for the oil and gas sector.
The much anticipated and long
awaited Petroleum Industry Bill
needs to be passed as it affects the
source of the bulk of national foreign
exchange earnings. This is
critical to the transformation of the
sector and its repositioning to play
an effective role in the new
economy. The removal of Petroleum
Fuel Subsidy is also critical
because it benefits the more affluent,
which is small minority of the
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