By Clara Nwachukwu

The Nigerian economy is heavily dependent on oil, and the oil industry is driven mainly by the price and the volume of oil being produced. But the government of Muhammadu Buhari is coming at a period of downturn for the industry both locally and internationally.
However, there is a lot of uncertainties within the global industry occasioned by the crash in oil prices at the international oil market, and even worse for Nigeria, which is undergoing political transition and also solely dependent on imported goods and services for its economic survival.

Oil, which accounts for over 80 percent of the country’s revenues, also provides the money that the political class wastes away on frivolities, living large and exotic lifestyle at the expense of the masses. This is why there is so much desperation to get into politics, so as to get a chunk of the oil wealth at every possible level of jurisdiction.

Expectations from Buhari
But while petroleum provides the funds and oils the wheels upon which all other sectors of the economy are driven, there is a high level of disintegration in the industry so much that it contributes less than 30 per cent of Nigeria’s Gross Domestic Product, GDP.
For this reason, there are great expectations from the Buhari’s administration to restructure the industry such that it impacts more on the wellbeing of Nigerians.

Although, Buhari had once headed the petroleum ministry in the past, but it is now a different ball game altogether, as a lot of changes have occurred both in the practice and in the industry, which he must appreciate and align with the needs of Nigerians
To achieve this, operators, organisations and other stakeholders urge the new government to put in place policies and measures that will bring about changes, while also throwing up opportunities for the industry to thrive even within current uncertainties.
Although operators are feeling the pinch differently depending on which side of the divide one is operating from, but the major issues of concern are:

Petroleum Industry Bill
The Petroleum Industry Bill, PIB is all about instituting transparency, due process and accountability for the public and common good.
But varied interests including legislators’ selfishness, the international oil companies, IOCs, nepotism and a host of others contributed in frustrating the passage of the PIB, and have kept the bill at the National Assembly for over 12 years.

However, no matter how much it is stalled, all industry stakeholders are unanimous on the need to have a new piece of legislation that will capture current realities to fast track development in the industry for the benefit of all.

The current drive for transparency, due process and accountability in the Nigerian petroleum industry analysts argued derives mainly from the desire of stakeholders that further exploitation of petroleum resources in the country should maximally benefit the overall population rather than a minority.

According to them, “Because transparency, due process and accountability were hardly of priority concerns in the past, large scale corruption thrived, exacerbating poverty and undermining the development process.
“Notably, transparency, due process and accountability have recently emerged as fundamental principles in ensuring that petroleum resources are efficiently managed and utilised to produce the greatest value for the citizens of newly emerging petroleum producing and exporting developing countries.”          

Against this backdrop, the Chairman, Petroleum Technology Association of Nigeria, PETAN, Mr. Emeka Ene noted, “The PIB needs to be passed, and the full implementation of the Nigerian Content Act strengthened to such an extent that we continue to grow the industry’s capacity beyond mere service contracts to manufacturing and fabrication.”

He also warned that “If the situation is not properly handled, all the gains that have been realised over the past years would be lost, and this will impact directly on all the major projects and investments in the country.”
engaging the different stakeholders in the industry on how to move the industry and economy forward is essential figure a way out of the industry downturn.

To do this, access to long term capital remains critical with the cost of funds still very high and not in sync with the requirements of the industry.

In his contribution, the Managing Director/Chief Executive of Oilserv Limited, Mr. Emeka Okwuosa, argued that “the incoming government needs to appreciate the fact that the governing law for petroleum – exploration and production is outdated, and is not addressing the current challenges. There is a need to have a change – call it PIB or call it whatever you want to call it; it is overdue, and there is indeed a need to look at the best practice in the industry as far as international standards are concerned.”

Downstream deregulation

For years, Nigerians have come to accept fuel scarcity as a way of life, especially since the advent of the subsidy regime. Even Mr. President’s inauguration would have been marred, but for the last minute intervention by concerned parties.
But it is high time Nigerians accepted the fact that there is no alternative to downstream deregulation, as the downstream is the mirror for assessing the success of the upstream.

Indeed, it is a national shame that Nigeria, a global top producer of 2.5million barrels daily crude production, with four national refineries, still imports refined petroleum products to meet domestic need of just about 40 million litres daily.
Those feeding fat on the sporadic fuel shortages, the cabals or whatever they are referred to will ensure that the country remained an importer of products. They include the briefcase companies, supposedly involved in the importation, who are mere fronts for other political interests and will do everything to ensure the refineries do not work.

As the President, Nigerian Association of Petroleum Explorationists, NAPE, Mr. Chikwe Edoziem, told Vanguard, “the refineries will not work because there is subsidy,” adding that now is the time to remove subsidy.

“Instead of exporting all our crude, government should put in place a regulatory framework and infrastructure to add value to the crude by refining to make Nigeria self-sufficient.”         

For this reason, the scribe of the Major Oil Marketers Association of Nigeria, MOMAN, Mr. Obafemi Olawore, insisted that “There is only one solution to fuel shortages, deregulation. There must be deregulation, as no business man will come into the downstream to refine crude with a capped price.”

He was also quick to note that deregulation does not mean “do as you please,” but only to allow market forces to dictate price, while government puts in place the framework for efficient processes.

Products transportation
The transport and logistics sub-sector is also major concern, as it cuts across the upstream where the oil and gas resources are being produced, and the downstream where the products are made available to end users through various forms.

The world over, the best industry practice is to move products, whether crude or refined through dedicated pipelines or through the rails. But vandalism has ensured that most of these products are not just wasted but also stolen, with attendant huge losses to the country, while the railway system has almost been reduced to nothing.

The fact that every tampering of the pipelines, especially of gas, causes shortages in power generation and poor electricity supply to consumers is a pointer to the damage being caused by the vandals.

But the vandals are not working alone; they are working with road transport owners, who own the petroleum trucks used for products haulage. They are working with importers of fuel and generating sets, who are smiling to the banks with enormous profits. They are also working with security operatives who give them cover and protection to damage the pipelines and steel the products therein for profit sharing.
This is why oil theft has gained global prominence to the extent that there are calls to treat such economic saboteurs like those of the blood diamonds, and the world is waiting to see how Buhari handles these.

Gas development
In the past, finding gas in the process of oil exploration was a curse, as there was hardly any need for it. But times have changed and gas is now big business globally.

But as big as it is, there is no concerted effort to explore for gas in Nigeria, and all of the country’s 187 trillion cubic feet of gas reserve are associated gas.

With the fall in oil prices, operators argue that now is the time to refocus on gas development and monetisation to reduce the shocks and effects of the oil price falls on the nation’s revenue and budget implementation.
As the Managing Director/Chief Executive, Frontier Oil Limited, Mr. Dada Thomas, put it, “Gas has done very well for power, agriculture, chemicals and the manufacturing sectors … but government should step up its game on policy in terms of pricing and putting in place long term plans for gas development.”

As a result, he insisted that the new government needs positive continuity of the gas transformation, as an enabler for economic development and ending of gas flaring.                

To this end, the Nigerian Gas Associated, NGA, has expressed willingness to work with the Buhari administration “to improve domestic gas
utilisation, and to leverage on the increased focus on the collective growth and development of the gas industry.”

NGA President, Mr. Bolaji Shosanya, said the association intends to do this “By appropriately framing and driving the government’s gas policies and focusing investors’ interest on key areas. We will harness our vast natural gas resources as the fundamental driver for Nigeria’s industrialisation.”

He, however, called for the upward review of gas-to-power prices, which he said, “remains vital, and will play a significant role in attracting further investment in the upstream gas sector.”
He added that this will “help kick start a proper and deliberate implementation of the infrastructure blueprint, with regards to processing and transportation, of the Nigerian Gas Master Plan.
“Furthermore, we must ascertain the provision of platforms that spur the development of gas fields and reinforce commerciality in market reforms. Indeed, our potential to grow as a gas-driven economy is buoyed by the sector’s long term viability, and President Buhari’s inclination to create an enabling environment across the energy value chain, and for other industries.”
Power
The popular slogan, “Get power right and every other issue becomes powerless,” is one Buhari is encouraged to work seriously with, if his government must succeed and gain wide acceptance.

So far, power appears to have defied all logical solutions, as former President Ibrahim Babangida was quoted to have said of the Nigerian economy, as the more money is pumped into the sector, the less power there is for Nigerians.

Although the sector has been deregulated, analysts urge Buhari to “take a microscopic view of the power issues, from generation, transmission and distribution to determine what the issues are.”

He is also encouraged to look into the issue of pricing, as “Nigerians are being milked by the new owners, who are merely interested in returns on their investments at the expense of the masses.”