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Black humour in NNPC power transmission plan

By Sonny Atumah

The Group Managing Director, GMD of Nigerian National Petroleum Corporation, NNPC Dr. Maikanti Baru last week unveiled his plan to transform the national oil company into an integrated energy company to invest in power generation and transmission. To Baru, there are lots of opportunities in the power sector that would necessitate investments to bridge the energy gap in the Nigerian market.

Indeed in homes, offices, and micro-small-medium enterprises Nigerians spend reasonable sums and under excruciating pains in generating power. Many manufacturers run their daily production streams using independent power with imported petroleum products bought at unbearable rates. Lack of electric power forced many enterprises to shut down with others relocating elsewhere. The non-reliability of the state owned Power Holding Company of Nigeria, PHCN necessitated its privatization by the Federal Government a few years ago. The problem lingers even after privatization with the government’s generous incentives including cash support and continual increment in tariffs.

From our checkered past in power generation, transmission and distribution Baru’s ingenuousness probably would deserve accolades from the high and dry. He might have made a good discovery that his corporation should diversify into the power sector. He must have had a few choruses of hoorays but many may have pondered whether his intent was not funny and macabre.

For now the NNPC has all the potentials to concentrate on investments in the upstream, midstream and downstream petroleum sectors and transform into a profitable integrated oil company. Since the NNOC was renamed NNPC on the 1st of April 1977 by the General Olusegun Obasanjo military administration the integrated oil company’s mandate like over 50 of its peers globally has been expanded to refine, treat, process and generally engage in the handling of petroleum for the manufacture and production of petroleum products and derivatives. These the NNPC has not achieved to change to power generation and transmission.

We spend a lot of money importing all petroleum products including asphalt used to pave our roads and airports when we can get it at nothing locally. The Federal Government is spending over N5 billion to rehabilitate the Abuja International Airport. Nigeria spent about US$12 billion importing these products and petroleum based raw materials that are in 2016. That investment idea of power generation and transmission in the midst of about 6000 byproducts and derivatives if we refine a barrel of crude oil is throwing in his hand. It is an idea that smacked of failure by the NNPC.

NNPC’s diversification strategy should be in the area of fuels, synthetic fertilizers and pesticides for agriculture Other direct linkages are lubricants, medicines, plastics, synthetic fabrics, asphalt, synthetic rubber, cosmetics among others where Nigeria has comparative and competitive advantages. The benefits of local refining are that we have many products, diversify the economy along vertical linkages, create wealth, induce savings and investments, create employment, increased GDP and increased revenue. Value additions in the industry are strategic for energy, technology and skills.

We are still cap in hands for oil super majors’ assistance for foreign exchange to pay for petroleum products import. Debate is on whether the pump price of imported PMS increment from N87 to N145 the May 11, 2016 is sustainable.  The increment of bridging allowance from N6.20 to N7.20 for petrol tanker drivers to suspend their strike early this week is tending towards an increment to be passed on to Nigerians soon.

Scottish- born U.S. industrialist and philanthropist, Andrew Carnegie wise counsel may suffice for Baru: “Concentrate your energy, thought and capital exclusively upon the business in which you are engaged… ‘Don’t put all your eggs in one basket’ is all wrong. I tell you ‘put all your eggs in one basket, and then watch that basket.” Let Baru indeed watch his big basketful of eggs and become a bid time downstream investor. The NNPC wants to invest in power when it is importing refined products from net importer consuming nations in north Western Europe.  The main problems are that our four refineries in Port Harcourt, Warri and Kaduna for over 20 years are in oblivion. The 22 depots (storage facilities) and 5001 kilometres of pipelines (for crude and multi-products) vanished into nothing. The national oil company has been reduced to a marketing company importing and distributing petroleum products by road from the ports to the hinterland.

Power generation and distribution have been deregulated for private investors to come in. The NNPC as an integrated company should provide uninterrupted supplies of gas to generating companies. A role reversal is not needed otherwise those in the power sector would invest in refineries and petrochemicals since the NNPC cannot refine locally and provide Nigerians with fuels. Chinua Achebe explained it: Let the kite perch, let the eagle perch!

Let the NNPC see the downstream investment opportunities that Dangote saw in 2016 to commence construction of 650,000 barrels per day refinery that would come on stream in 2018. The NNPC should not abandon a population of 340 million in West Africa and wait for alternating currents like Dangote in petroleum products supplies. These are the issues for the NNPC GMD to contend with. An African proverb says that he who paddles two canoes sinks. Baru must not sink!


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