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Nigeria not yet ready for post-oil economy say Fashola, Kupolokun, PTDF boss

By Michael Eboh
Minister of Power, Works and Housing, Mr. Babatunde Fashola, Executive Secretary of the Petroleum Technology Development Fund, PTDF, Mr. Aliyu Gusau and a former Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Mr. Funsho Kupolokun, Monday, disclosed that Nigeria is not yet ready for the journey to a post-oil economy.

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Fashola, Gusau and Kupolokun, who stated this in Abuja, at the 11th annual international conference of the Nigerian Association for Energy Economics, NAEE, were also unanimous in their views that the current structure of the power and petroleum industry, the country’s energy sector was not yet on the right path to thrive in the changing global energy landscape.

The Minister of Power, Works and Housing, Babatunde Fashola, who was represented by the Permanent Secretary of the Ministry, Mr. Louis Edozien, stated that the rate at which issues of energy bothering on economics, politics and legal are addressed would determine how quickly stakeholders deliver the sort of electrical industry that the country wants and needs.

Technology not power industry’s problem

He said, “The technicalities of the power industry are pretty straightforward. The technology to produce electricity from various energy sources is over 100 years old. The technicalities of the industry are very straightforward. Many new technologies are emerging; the price of renewables, solar is dropping. The infusion of information technology into the electrical industry is revolutionizing metering, the ability to do distributed energy and others.

“The technology is not the problem. The reason our electrical industry is not delivering has very little to do with technology, it has to do more with the economics of energy, the politics of energy, the legalistic of an industry where multiple private and public companies are interacting through contracts.”

Oil industry business model faulty

Speaking in the same vein, Aliyu Gusau, Executive Secretary of the PTDF, stated that the current business model in the Nigerian petroleum industry, which is focused on the upstream sector, would not provide the needed foundation for the country’s journey to a post-oil economy.

Furthermore, Gusau lamented that having gone through all the four petroleum industry bills soon to become law, he discovered that the bills did not emphasis issues of value creation.

He said, “Unfortunately, I have gone through all the four Bills of the petroleum industry waiting to become law; I have seen fiscal and regulatory provision about the mid-stream and the downstream; but I have not seen anything in all the four bills that incentivizes value generation. This is the challenge I must put forward, because this is the key in our journey to a post-oil economy in Nigeria.

Post-oil economy transition critical

He argued that happenings in the global oil and gas landscape, such as the shale phenomenon, would certainly impact Nigeria and had brought to the fore, the need for the country to begin the transition to a post-oil economy.

He said, “What is not certain is whether we are ready for that. For me, there are great opportunities in this journey. We must seize these opportunities to commence the journey of a post-oil economy.

“I still believe that oil is still central. The oil industry in Nigeria is the only sector that has the capacity to provide the foundation for that journey. But it cannot be done with the current business model that is focused essentially on the upstream.

“The business of taking oil from the ground and marketing it across the globe has to stop. The only way that the oil and gas industry can provide the foundation for the journey of a post-oil economy is to move from its focus on the upstream, down to the mid-stream and downstream where value is created.

“This is the area where value, wealth and jobs would be created. This is the area that would create the fertilizer, the electricity; and the petrochemicals that we require would all come into play. This should be, going forward, the norm in the Nigerian oil and gas industry.”

25 years after, deregulation talks still ongoing

In his own remarks, Funsho Kupolokun lamented that 25 years after, the country is still talking about deregulation of the downstream sector, without any significant achievement in that regard.

“I just hope we do it (deregulate) and do it rapidly, because unless and until it is done, we would continue to have the problems that we are having in the downstream petroleum sector,” he argued.

He agreed that efforts must be geared towards moving the country from rent-seeking to value creation in the petroleum industry, while he added that stakeholders must be serious about entrenching transparency in all aspects of the industry.

He said, “Ensuring Nigeria shift from rent-seeking to value creation is also very key. We have to move from where we are now, rent-seeking and think of how we can begin to create value. Unless and until we do that, I am not sure we are getting it right.

“Everybody is talking about transparency in the petroleum industry. Everybody is talking about it, what is happening is that we are still not doing it. We keep talking about it. In 1999 when I came back into the government system, it was a key issue; a number of bodies were set up by the government; yet today, we are still talking about it.”

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