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HomeNewsNigerian firms stake $20b amid uncertainties in oil sector

Nigerian firms stake $20b amid uncertainties in oil sector

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• FG admits 40m MSMEs threatened by energy crisis
• House sanctions CBN, NNPC, others over volume of daily fuel consumption
• Gbajabiamila summons CBN, NNPC, others over absence from House probe
​• NLC pushes for automation of fuel imports to avert alleged theft of trillions of naira
• OPEC slams UN stand on energy transition, decries declining investment

It was the same old stories, yesterday, as stakeholders converged on Abuja in search of ways to finance energy projects in Nigeria amid uncertain future and severe energy crisis.

If there were takeaways from the opening session of the ongoing Nigeria Oil and Gas (NOG) conference, it would be the announcement that indigenous oil and gas firms, which are taking over from the list of growing divestment in the sector, have invested over $20 billion in the last 10 years, a development that manifest in current dilemma in the sector.

With years of poor policies and regulations, now manifesting in long queues across fuel stations, subsidy payment hovering around N6 trillion, dismal electricity supply, slow implementation of the Petroleum Industry Act (PIA), soaring diesel and Liquified Petroleum Gas (LPG) prices, as well as, total decline in the nation’s crude oil production and reserves, over 40 million Micro, Small and Medium Enterprises (MSMEs) now face total collapse, the Federal Government said at the event, yesterday.

However, government’s decade of gas policy, attempt to transition the Nigerian National Petroleum Company Limited (NNPC), efforts to reduce gas flaring and ensure support for oil and gas firms were reiterated by the Minister of State for Petroleum, Timipre Sylva and the Group Managing Director of NNPC, Mele Kyari, amid growing insecurity, especially vandalism, theft and weak incentive for investors.

Currently, oil exploration and production activities in Nigeria is at a crossroads, as concerns expressed by oil communities, lax regulations, unhealthy business practices have join forces to hurt all stakeholders – communities, government and private organisations.

In the face of high oil prices, which would have been a plus for Nigeria, the country has struggled to meet quotas set by the Organisation of Petroleum Exporting Countries (OPEC), while current earnings are also being spent on importing petroleum products as the country’s refineries have been mismanaged and are currently shut.

Sylva said the Federal Government is providing enablers, which are needed to realise the full potential of the gas sector, listing initiatives to include, Obiafu-Obrikom-Oben (OB3) Gas Pipeline, Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline and the Nigerian Gas Transportation Network Code (NGTNC).

According to him, PIA provides new and attractive terms for participation in the gas sector, which are capable of eliciting commercial interests and investments in gas utilisation.

“The materialisation and full realisation of this industry’s enormous potentials depend on government’s commitment to policy implementation as well as private sector commitment and support to government in achieving policy agenda,” Sylva said.

Also speaking at the event, Minister of Industry, Trade and Investment, Adeniyi Adebayo, said the increase in prices of petrol and diesel is adversely affecting businesses in Nigeria, stressing that MSMEs, which mainly depend on gasoline and diesel to survive, are threatened.

Adebayo stressed the need for strong strategies and plans that would douse energy crisis and support industrial growth and development in the country.

Adebayo noted that Nigeria’s economy as projected by PWC would, by 2050, represent Gross Domestic Product (GDP) of over $4 trillion, surpassing that of South Korea, Canada and Saudi Arabia.

Outgoing Secretary General of OPEC, Sanusi Barkindo, said efforts to unwisely encourage divestment in the hydrocarbon industries are unfortunately, becoming more pronounced.

“Last month, UN Secretary-General, António Guterres, suggested in remarks at a White House-sponsored event that our industry is ignoring its responsibility to address the climate change challenge and is undermining global climate policies,” Barkindo said.

He noted that such misleading pronouncements are “terribly unfair” to the industry, especially people who have dedicated to work towards inclusive, just and sustainable solutions to the climate challenge.

“Inopportune remarks and efforts to discourage oil exploration and development are bound to sow the seeds of a more pronounced energy crisis and undermine global energy security. Moreover, they jeopardise efforts to achieve universal, reliable and affordable energy access for people across the globe, including those in developing countries,” he said.

For Kyari, he noted that a new NNPC, expected to be unveiled later this month, would become one of the best companies in Africa by operating more like a private sector company.

He pledged support to industry players, stating that oil and gas would remain for long despite the current push away from fossil fuels.

MEANWHILE, the Speaker of the House of Representatives, Femi Gbajabiamila, on Tuesday, summoned the Minister of State for Petroleum Resources, Governor of Central Bank of Nigeria (CBN), and Group Managing Director of NNPC following their refusal to attend the investigative hearing into the actual daily consumption of Premium Motor Spirit (PMS) in Nigeria.

Gbajabiamila read the riot act during the flag-off of the investigative hearing to ‘ascertain the actual daily consumption of PMS in Nigeria’, chaired by Abdulkadir Abdullahi.

The Speaker, who was represented by the Deputy Majority Leader, Peter Akpatason, observed that the House also mandated the committee not to restrict its findings to NNPC records alone, but to liaise with experts in the industry, transport workers and all other stakeholders to determine an independent finding for the benefit of Nigerians.

Other government agencies the lawmakers sanctioned are Federal Inland Revenue Service (FIRS), Petroleum Technology Development Fund (PTDF), Pipeline Products Marketing Company (PPMC) and the Accountant-General of the Federation (AGF).

The attention of the House was drawn to incidences of fuel scarcity causing significant loss of man-hour and untold hardship suffered by Nigerians; controversies and concerns generated over the huge sums of money being paid as oil subsidies and the inaccuracy of data required for effective planning, supply and distribution of PMS.

“Only last week, news was awash with the trading of blames between NMDPRA and IPMAN over bridging gap as a result of the rising cost of IPMAN’s operations, reportedly to the tune of over N70 billion in the interim, to address the lingering fuel scarcity.

“The National Assembly in the repeal and re-enactment of the Year 2022 Appropriation Act has projected the cost of subsidy for Premium Motor Spirit (PMS) to be over N4 trillion.”

While noting that the amount being expended on fuel subsidy as reeled out by the apex bank and NNPC is doubtful and contested by concerned stakeholders, the Speaker frowned on the failure of all the accounting officers to honour the invitation of the ad-hoc committee.

THE Nigeria Labour Congress (NLC) has, however, called for the automation of the process of fuel importation, storage, haulage and dispensing in the country.

NLC’s President, Ayuba Wabba, who spoke while testifying before the Abdulkadir-led House of Representatives ad-hoc committee probing into the volume of fuel consumed daily in the country, remarked that it would be foolhardy to rely on dealers in the petroleum industry to disclose the exact volume of fuel consumed in the country.

Represented by Benson Upah, he expressed the readiness of NLC to introduce a firm to the authorities to achieve the goal.

He expressed surprise that those tasked with the mandate to oversee the petroleum sector have not been forthcoming on the issue at a time the operations of key sectors, such as Customs, Nigerian Ports Authority and a few others are being automated with appreciable results.

The labour chief maintained that the volume of fuel claimed to be imported into the country is much higher than what is actually imported and by extension much bigger than the national consumption capacity. This, he claimed is done through over-invoicing or other processes of criminality at a huge cost to Nigeria and its people.

He noted: “This criminal enterprise is perpetrated by a tiny privileged clique accustomed to circumventing the rules. The cost implications of this criminal enterprise are not limited to making the country pay for the non-existent difference, it extends to the percentage that is sold across the border.

“There are secondary or collateral damage to the economy in several unimaginable ways including huge illicit financial flows out of the country. In our view, it is the activities of this criminal gang, clearly above the law, that are responsible for the costs associated with PMS, the costs passed off as subsidy.”

Decrying the appalling level of high cost of living and poverty among Nigerians, he cautioned against the removal of subsidy on fuel since it would worsen the situation.

National President Independent Petroleum marketers of association of Nigeria (IPMAN), Chinedu Okoronkwo, who offered to assist in determining the exact volume of fuel consumed in the country, urged the lawmakers to empower his outfit by amending the extant legislation regulating the petroleum industry in the country.

Claiming that his group accounts for the distribution of at least 70 per cent fuel in the country, he promised to offer the services of a well-trained consultant that can put to use relevant technology to track the exact volume of fuel imports into the country.

A member of the committee, Uzoma Nkem-Abonta, who expressed satisfaction over the offer by IPMAN, believed that it would be easier to trace the remaining 20 per cent volume of fuel imported into the country if the IPMAN boss lives up to expectations.

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