PIB and declining oil revenue

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By Dele Sobowale

“Every great enterprise starts off with enthusiasm for an exalted aim and ends up bugged down in petty politics.” Charles Peguy, 1873-1914.
(VANGUARD BOOK OF QUOTATIONS p 49).

Can you remember when the idea of  privatizing NEPA, NITEL, NNPC, NPA was first eagerly promoted? Well, don’t worry. People like me are here to remind you. It was in the 1980s when the Technical Committee on Privatisation and Commercialisation, TCPC, headed by late Dr Zyyadd was established. For four years, after the proclamation, nothing happened to our biggest public enterprises – despite all the valid reasons advanced for getting governments to relinquish their strangle-holds on businesses which are best left to the private sector.

President Jonathan and Petroleum Minister, Diezani

President Jonathan and Petroleum Minister, Diezani

Then in 1992, when Chief Ernest Shonekan was lured ro resign his appointment as the Chairman/Managing Director of the UAC of Nigeria, Plc, to assume the position of civilian Head of Government under military President Babangida, he quickly orgainsed the first National Economic Summit, NES, whose main recommendation was the need to urgently privatize the nation’s largest parastatals.

That meant that four years, after the initial enthusiasm for privatization, the enterprises were still in public hands. Today, 2014, twenty six years after the idea of privatizing our giant parastatals, only NEPA had been successfully privatized. NITEL and NNPC had remained drain pipes for corrupt public officials. With NITEL we missed a golden chance when the GSM arrived in Nigeria. Typical Nigerian Factor ensured that NITEL was not sold when it could have made good money for Nigeria.

Now, most of the infrastructure has become obsolete and can only be regarded as scrap for which we must pay to get removed. And few people even remember they own a land line anymore. That leaves us with both NITEL and NNPC – which also might be going the way of NITEL. An enterprise which could have been turned over to the private sector, years ago, and, at a good price, might have to be given away very soon – lock, stock and barrel.

The imminent failure of NNPC is inextricably intertwined with the failure to get an agreed PIB signed since the first one was presented in 2010 to the National Assembly. PIB 2, which is about to suffer the same fate as PIB 1, will probably be the last attempt aimed at privatizing NNPC and getting value for money. Events rapidly shaping the future of oil, globally, point increasingly to a world which is becoming less dependent on Nigerian crude oil. With declining crude oil exports, Nigeria’s ability to pay for refined petroleum products will also be reduced and the value of our ageing refineries will head to the basement.

Most knowledgeable people in government, and the National Assembly, as well as the government of oil producing states are aware of this. But, the enthusiasm to do the hard work required to get PIB passed had waned considerably. Instead, politicians, especially those seeking elective office, next year, have collectively directed their attention towards the 2015 elections. PIB 2 is effectively dead and it will become history on May 29, 2015. The question is: will it be followed by PIB 3? The answer is: May be.

Even if Jonathan secures a second term, he will have to present another or the same bill to a different National Assembly. It will be back to step one once again. Furthermore, the most urgent matter on the NASS agenda will not be consideration of a very complex bill. Sorting out the leadership structure of the NASS and establishing power positions will come first. This will be followed by self-interest issues regarding official and unofficial remuneration for the new holders of legislative power. Jonathan will also be concerned about leaving a legacy starting with the selection of a cabinet which will make it possible for him to achieve whatever he assigns to himself as his main objective. And there is no guarantee that the next NASS will be populated by people ready to support the President.

There will certainly be no PIB 3 if a Northerner succeeds Jonathan next year. That possibility constitutes the heart of the tragedy which will befall the oil producing states, which stand to benefit most if PIB 2 is miraculously passed this year. With each passing day, the window of opportunity closes more than before.

Already, the signs of trouble are evident in the creeks and in the deep water blocs. Several oil rigs have shut down production on account of theft, piracy and kidnapping of indispensable foreign technical workers. As other countries, all over the world, open their oil blocs for production, or expand the areas of operations, experienced rig operators are picking up stake in search of safer work places. Most will not return, once they leave, and replacements might be difficult to recruit – as long as there is work elsewhere.

The relentless crude oil export decline, which has already savaged the budgets of Federal, States and Local Governments in 2014, will increase the economic hardship being experienced now and might reduce GDP growth next year. Even at the projected 5.8% for 2014, few new jobs have been generated relative to the volume of job seekers turned out by our schools annually. Slower growth will certainly exacerbate the intractable situation with respect to mass unemployment – particularly among the youths.

The most astonishing thing about PIB 2 is the total lack of interest in it by the oil producing states and their governments. If PIB 2 fails this year, the people of the Niger Delta will have the present Governors, Ministers, legislators at both the Federal and State levels to blame for the tragedy that will befall Nigeria in general and the oil producing states in particular.

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