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365 days of Buhari: Dashed hopes in energy sector

By Sebastine Obasi

There were high hopes, great expectations and belief that the second coming of President Muhammadu Buhari would bring good tidings to Nigerians. Nigerians had expected to see a country where Naira is at par with the dollar, while petrol would sell at not more than N40/litre, as promised by the now ruling party.

Electricity-newOne year down the line, Nigerians appear to have gotten more than they bargained for as dollar currently exchanges for about N350, making it difficult for petroleum marketers to source enough foreign exchange to import petrol at the new pump price of N145/L.

As such the promise to end power and petroleum products availability crises in the country have been dashed, as situations in the energy sector are significantly worse now than ever before.

‘Govt has no bearing’

Assessing the Buhari government, an economist and former Executive Secretary of the African Petroleum Producers’ Association, APPA, Mr. Dave Liaji, said the government is yet to find its bearing since coming into power on May 29, 2015.

He said: “As far as I can see, there is no reason to believe that this administration has got its bearing right in the management of petroleum sector policies and it’s not for want of brilliant minds within its ranks.

Buhari 1year“My fear is that if the President insists on running Nigeria’s oil and gas sector with the paradigms of the late 1970s or of the mid-1980s when he held the positions of federal (military) Commissioner for Petroleum Resources, and (military) Head of State, respectively, he may not achieve the intended/desired results. In the former periods, the preferred route was for the public sector (i.e. government) to occupy the “commanding heights” of the national economy (“crowding out” the private sector).

As already noted, buying (importing) and selling petroleum products is a purely commercial activity that should be administered by the ministry in charge of commerce and jointly regulated with the Department of Petroleum Resources, DPR, for the technical side of the business. Unfortunately, the buying and selling of petroleum products is considered in Nigeria as a petroleum sector activity. This is so much that the Nigerian National Petroleum Corporation, NNPC, whose mission is to “add value to the nation’s hydrocarbon resources for the benefit of all Nigerians and other stakeholders,” is now more than anything else saddled with the burden of importing fuel for Nigerians.

“With time, every manner of middlemen and moonlighting buyers and resellers of petroleum products also became known as oil and gas sector operators. Surely, by this logic, the kerosene hawker is also an oil and gas operator,”  Liaji noted

Concrete energy policy

The Executive Secretary, Major Marketers Association of Nigeria, MOMAN, Mr. Obafemi Olawore, urged the government to move away from mere rhetoric to policy actions that will impact positively on the oil and gas sector.

As far as he is concerned, “My expectation is, I want to see written documents for policies in vital sectors like oil and gas, power sector. As we speak, we have been hearing statements here and there. We need a document that will tell us where we are and how to get to where we are going.”

He however argued, “Sometimes when you are building a house in a muddy or swampy area with clay, the foundation takes a long time. It is when the super structure comes up that you start seeing and appreciating the efforts made. On the whole plan to deregulate the downstream sector, our objective is to go into full blown deregulation. We are waiting for the roadmap that will eventually lead us to deregulation,” he said.

Rough ride

Similarly, the General Secretary, National Union of Petroleum and Natural Gas Workers, NUPENG, Mr. Joseph Ogbebor, believes the last one year has been rough for Nigerians.

“Nigerians have had it rough in the last one year. The government should take the bull by the horn by making necessary reforms in the oil and gas sector. Deregulation has just taken place. However, the deregulation we are asking for should not be import driven. The refineries should be put to optimal use. No turn around maintenance has been done in the last 10 years. Government should fix them and compel investors, especially the international oil companies, IOCs, to build new ones.

“Government should set up pipeline protection agency so as to curtail vandalism. The last one year has not been good at all. We hope the government would get its acts together to see that things are properly done to benefit Nigerians,” he said.

Power became powerless

As regards electricity supply, Nigerians have not had it so bad in the last one year. According to the Director General, Lagos Chamber of Commerce and Industry, LCCI, Mr. Muda Yusuf, the power situation has gone from bad to worse.

“The power situation has been very bad in the last one year. The reform of the present administration has not delivered anything meaningful in the power sector as expected. In fact, the situation is worse than before. There is a need to do more. The model adopted by government has not done much for the economy.

“Industries, large and small scale, as well as the citizenry are still groaning under the energy sector. The government should take another look at the energy mix and rely less on pipeline gas distribution. Power is a critical aspect that drives the economy of a nation,” he said.

Yusuf further urged the government to get the energy infrastructure right, so as to improve supply in the country.

“Given the critical role of adequate electricity supply to the development of nations, the abysmal situation of energy infrastructure (electricity, premium motor spirit, PMS or petrol and natural gas) in the country is of great concern. For instance, the current state of electricity generation, transmission and distribution calls for serious attention.

“The damning situation of electricity supply is traceable to epileptic performance of most key power plants in the country and the security challenge in the Niger Delta region. Hence, there is a need for government to get it right with respect to energy infrastructure and power/electricity situation in the country,” he added.

The LCCI boss, no doubt may have been speaking the minds of Nigerians. Electricity supply in the country has never been as bad as in the last one year. For the first time, power generation was completely grounded to zero megawatt, MW, on March 31st, before it was restored to 1,400MW.

Making bad situation worse

Painting a bleak picture of the economy,  Bloomberg, a popular American Business magazine reported that Nigeria is heading for a full blown economic crisis due to lower oil prices and the government’s foreign exchange, FX, and price control policies.

According to  Bloomberg, economists expected Nigeria to grow by 1.8 percent year-over-year, but now analysts aren’t feeling too good about the situation going forward.

“We have long warned of a slow-burning crisis in Nigeria,” Capital Economics’ Africa economist, Mr. John Ashbourne said. “It now seems that this view was too optimistic: the country is headed into a full-blown economic crisis.”

As such, Nigeria continues to suffer from numerous economic headaches, on account of current unpopular policies. “This is very bad news for Nigeria’s government, which has justified the current FX system as a method of promoting non-oil industries,” Ashbourne said. “It is now clear that these policies have, as we’d long argued, made a bad situation worse.”

He also noted that the scariest thing about the latest gross-domestic-product, GDP number is that it doesn’t factor in any of the debilitating problems Nigeria had seen in the second quarter, including but not limited to the fuel-shortage crisis, and some of the oil-production disruptions by the Niger Delta Avengers, NDA.


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