Forty—eight years after independence, Nigeria still depends on petroleum products as the mainstay of its economy. For analysts, this scenario is no longer news, but they harp on the need to ensure that the sector is transparently organised as a self-sustaining revenue earner.
The Nigerian National Petroleum Corporation (NNPC) which midwives the sector has variously been criticised for-not doing enough to check the activities of its operators.
This fact is attested to by the corporation’s Group Managing Director (GMD), Alhaji Abubakar Yar’Adua.
‘‘Our contemporaries around the world are far more ahead of us because we still rely on the government for cash-call activities.
‘‘we are repositioning the NNPC to compete with operators like other national oil companies (NOCs),’’ he says.
But more than a year into President Umaru Yar’Adua’s administration, analysts wonder if the NNPC has attained the goals encapsulated in the vision of unbundling the corporation.
President Yar’Adua had early in his administration outlined a reform programme to unbundle the corporation into five autonomous entities.
These companies include the National Petroleum Directorate and the National Oil Company.
Others are the Petroleum Inspectorate Commission, National Petroleum Research Centre and the Petroleum Products and Distribution Agency.
The GDM says that the NNPC management has tried to put in its best in the oil and gas industry for the interest of the nation and its people, and will continue to do so. ‘‘we will do our level best to sustain the tempo and not disappoint President Umaru Yar’Adua and the nation,’’ the GMD says.
The NNPC, he says, is striving to leave lasting legacies. Yar’Adua says the corporation has concluded work on an Oil and Gas Implementation Committee (OGIC) programme which has been submitted to Mr. President, and is receiving the attention of the Federal Executive Council.
Emerging from the report, he says, is an Oil Industry omnibus Bill that will soon be forwarded to the National Assembly for consideration and passage.
Apart from other objectives to generally strengthen the industry and provide for the various emerging agencies and stakeholders, Yar’Adua says the OGIC mission aims at making NNPC a truly national oil company and a real business unit.
‘‘NNPC’s offshore activities are driven by NAPIMS. NAPIMS is working on a work plan to move the industry forward on issues of production.
‘‘NNPC has achieved a daily minimum average production of two million barrels per day (bpd) throughout the year.
‘‘We are still making progress. The Mistress Platform, vandalised months ago, has been repaired at a cost of 150 million dollars, and is now producing 800,000 bpd. ‘‘NNPC plans to move from the upstream to downstream operations. ‘‘Transparency is now the vogue in oil blocks allocation and operation. NAPIMS is doing a great job in this regard,’’ Yar’Adua, says., with restiveness among youths of the Niger’ Delta ‘and the consequent disruptions ‘in oil ‘ production activities, stakeholders have called for a shift of attention to other parts of the country.
Yar’Adua feels that oil exploration may have to shift to the Chad Basin area. He says that the Northern part of the country feels marginalised in the area of oil exploration and exploitation, and adds that there is the belief that there is no oil in the North.
‘‘It claims the government does not want to prospect for oil in the North, but I beg to disagree with that. Oil is a precious commodity.
NNPC will soon begin the Benue/Chad Basin oil exploratory activities by next month. ‘‘we are exploring the Bauchi trough using the 3D technique; we used 2D before in the earlier works.
‘‘Oil is central to the energy sector and this is why we are trying the Chad axis for possible finds,’’ he says.
But must the Federal Government continue to finance NNPC operations? Yar’Adua says government has rolled out some challenges to the NNPC, including cash-call obligations and financing of projects with Joint Venture Companies (JVCs).
‘‘Government is tasking us to go to the capital market and source for funds. It has given NNPC the authorisation to sign agreements.
‘By the time the OGIC report is set for full implementation, the JVCs should also be going to the international capital market to source funds.’’
NNPC has maximised government’s sale of crude oil, at less profit tax. Nigeria ‘s crude is one of the best in the world, it is free of sulphur. The GMD says the NNPC is back in business and is coming strong.
‘‘It is producing 85,000 bpd and expects to increase to 150,000 bpd by next year. It has plans to drill more wells to increase crude output,’’ he says.
The over-dependence on oil and the apparent neglect of the gas sector have been a matter of concern to industry watchers, as well as the need for human resource development in oil producing communities.
Yar’Adua acknowledges this, saying that the Nigerian Gas Company (NGC) is doing well, even as it suffers greatly from pipeline vandalism.
For him also, the hydrocarbon deposits in Bayelsa and Delta have yet to be vigorously pursued.
He says there is a need to develop the human capital potential in order for it to contribute to the development of oil and gas.
The GMD calls on the oil producing states to utilise funds from their 13 per cent oil derivation allocations to pursue aggressive but phased human capital development programmes for their people.
Each of the states, he says, should plan to send about 100 students abroad yearly to study geo-sciences and oil-related courses.
He says that ‘the NNPC is ready to partner with the states ‘in this direction to provide scholarships to the people.
The Local Content Division of NNPC, he says, provides youths the opportunity to train in the construction of platforms, pumps and the fabrication of equipment.
‘‘For instance, you make a N12 billion project and only about N2 billion is downloaded locally. We need to begin to fabricate the machinery and instruments used in mud drilling as well as build local capacities.
‘‘Some companies are coming in to establish fabrication plants here. Local content input in the industry has moved from about 7 per cent to 35 per cent. we still need to move ahead,’’ he says.
Yar’Adua hints that many countries are now engaging in sustainable strategic planning ahead of global energy crisis ‘by establishing: LNG plants in Nigeria ‘‘Today, gas is money and there is no more flaring, no more relaxed fiscal regimes for those coming to invest in the LNG.” ‘As the price of gas goes up in the international market., so shall we be changing our strategies. They have been trying to manoeuvre to get the” best terms but we stick to the rules.
‘‘The Gas Master Plan (GMP) was developed by the NNPC in collaboration with the Federal Ministry of Energy and consultants. The plan has been approved and is ready for implementation,’ he says.
He says the GMP encompasses all LNG plants, methanol projects, independent power plants and the gas pipelines.
A gas pipeline is being constructed from the South-East to Calabar, where there is a giant gas plant, Yar’Adua says, noting that the project will be completed in 15 months. Another gas line, he says, is the Calabar-Enugu-Makurdi-Abuja-Kano project which, he points out, will put an end to the nation’s gas supply crisis on its completion.
‘‘Energy is the most critical factor in production,’’ he remarks, hinting that NNPC will soon embark on massive importation of diesel and kerosene.
‘‘We sell kerosene at N50 per litre, marketers buy it up and resell at a much higher price.
Some buy and adulterate the commodity with diesel and sell. This is the type that knocks down vehicle engines.
‘‘NNPC imports at the global market price and yet sells at N50 per litre. We have more than
N48 billion out there in imported products and the government is not paying us any subsidy.
‘‘We are subsidising the product for the whole country, and some people are milking Nigeria from there. But that cannot be. ‘‘We cannot continue the subsidy or else we will collapse. Something has to be done; we have told Mr. President,’’ he says.
On the nation’s power generation situation, Yar’Adua says it is still below the minimum national demand.
‘‘We are still generating less than 3,000 megawatts of electricity.
‘‘We are doing our best to produce gas to supply the various independent power plants.
We are considering some tariff regimes depending on the class of manufacturing concerns and their capacity to pay,’’ he says.
Yar’Adua says the Warri Refining and Petrochemical company (WRPC) and the Kaduna Refining and Petrochemical company (KRPC) have come on stream. The WRPC, he says, is running at 100 per cent capacity even with the constraint of product evacuation, while the KRPC is running at 80 percent.
‘‘The Port Harcourt Refinery is also operating at 70 percent capacity. ‘‘If you want the refineries to make money, then give them the autonomy to perform, to go to the capital market to source funds, make profits and pay dividends.’’ He says that NNPC is looking beyond the national frontiers for more markets.
‘‘We want to go beyond establishing mega stations in the state capitals to the West African sub-region to sell the NNPC logo.
‘‘This will check product smuggling across the borders, promote regional trade and promote NNPC,’’ Yar’Adua says.
To whom much is given, much is also expected, observers say.
For the NNPC, therefore, the challenge of meeting the country’s energy needs and providing the necessary pivot for accelerated economic growth is daunting. Analysts expect the corporation to streamline its operations to meet Nigeria ‘s aspiration of being among the world’s top 20 economies by 2020.
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