Buhari’s govt struggles with oil industry promises 5 years after
The government of President Muhammadu Buhari may be struggling to fulfill the various promises it made for the petroleum industry since 2015. President Buhari won the presidential election under the All Progressives Congress (APC) on March 28 and stayed for another eight weeks until he took over from Goodluck Jonathan on May 29, 2015. Thousands […]
Buhari’s govt struggles with oil industry promises 5 years after
The government of President Muhammadu Buhari may be struggling to fulfill the various promises it made for the petroleum industry since 2015.
President Buhari won the presidential election under the All Progressives Congress (APC) on March 28 and stayed for another eight weeks until he took over from Goodluck Jonathan on May 29, 2015.
These promises were collated from the APC policy document and manifesto, Buhari’s 100 days covenant, speeches at campaign rallies and town hall meetings nationwide in a runoff to the 2015 election.
Addressing the challenges formed the bedrock of a road map for the industry called the “7 Big Wins” which was launched by the president in October 2016.
The campaigns then were based on the ‘Change’ mantra. However, even on the ‘Next Level’ agenda which is already more than one year, the administration is still grappling to fulfill these promises.
The 7 Big Wins are Policy & Regulation, Business Environment & Investment Drive, Gas Revolution, Refineries and Local Production Capacity, Niger Delta & Security, Transparency & Efficiency, and Stakeholder Management and International Coordination.
Observations by our reporters indicate that while two out of the seven Big Wins – Niger Delta Security and Gas Revolution – are getting government attention, the other five are crying for attention.
Ending fuel importation, subsidy
Buhari was concerned with the corruption claims around the fuel importation and fuel subsidy regime. He had promised that in his tenure of four years, these would be fixed.
However, this is the second term, with a year already spent and counting, yet Nigerians have not seen these promises fulfilled.
NNPC had announced the deregulation of the downstream petroleum sector in 2020 when it said it would no longer subsidise petrol, causing the price to rise from about N120 per litre to N147 and then to N160 now.
Two ministers have served under Buhari as the ministers of state for petroleum resources while the president himself remained the minister. Dr Ibe Kachikwu, an oil and gas expert, had served in the first term while a former Governor of Bayelsa State and APC chieftain, Timipre Sylva, is the present minister of state.
However, these two ministers had denied subsidising the petrol price until last week when the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, broke the news of spending between N100 billion and N120bn every month to ensure the retail price of petrol does not exit what it is at a price band of N163 and N165 per litre.
His further explanations revealed that NNPC has been the sole importer of petrol unlike before Buhari took over in 2015 when petroleum marketers could import their fuel and retail the product.
As of 2017, NNPC, while highlighting the impact of the work the government was doing, the former minister, Kachikwu, said the refineries would be fixed by 2019 and importation would end.
“We have been able to do a pie chart that shows that by 2019, we should be able to deliver (get the refineries working). Even if in 2019, I don’t achieve the target I still would have been able to reduce importation substantially,” Kachikwu said in an interview in Houston, May, 2017.
However, this promise has not been delivered as the government spends nearly N3 trillion to import petrol yearly, according to data from the National Bureau of Statistics (NBS).
Nigeria spent within the average of about N3tr yearly between 2018 and 2020; it spent N1.97tr on PMS imports in 2017, N1.63tr in 2016 and N1.14tr in 2015.
Currently, it said the landing cost per litre of imported petrol is around N234, and the government would no longer be able to sustain this under-recovery, implying that Nigerians would have to pay over N200 to buy a litre of petrol.
Promise to speedily pass PIB
The Petroleum Industry Bill (PIB) was meant to cater better for host communities and drive more transparent and accountable oil deals, when it becomes a law.
It is the “Big Win 1” of NNPC especially in Buhari’s first tenure that is to provide an enabling environment for sustainable investment and operations in the Nigerian oil and gas industry through policies, legal and regulatory framework to address the shortcomings in existing ones or tackle new challenges.
It is also about opening up the gas sector of the petroleum industry. During their electioneering campaign, the APC and its standard-bearer, Buhari, promised to speedily pass the PIB that has been delayed for over 20 years, and to ensure that local content issues were fully addressed.
To ensure this worked, the government split the PIB into four sections and enacted the Petroleum Industry Government Bill (PIGB) in 2018. However, the main PIB is being deliberated upon by the National Assembly, with a promise that it would be passed this year.
This means six years after this promise, the government has only achieved 25 percent of that promise as it enacted only one aspect of the PIB.
Reviving efforts for minimally performing refineries drag
Buhari had promised to ensure the three refineries in Kaduna, Warri and Port Harcourt are working. The refineries have been at their worst states, working in an epileptic manner when Buhari assumed duty.
By 2017, the refineries were shut down after performing below 30 percent of their installed capacity. Several timelines had been given by Buhari’s officials on getting the refineries to work with one being 2019, but nothing happened. Worst still, they were turned off completely in 2019 for total overhaul.
Six years after this promise, the federal government just recently approved $1.5 billion for the rehabilitation of the Port Harcourt refinery which it said would start producing after the next 18 months. That will be likely in 2023, when Buhari would have spent eight years as Nigeria’s president.
There is yet to be kick-off for this project, while those for Warri and Kaduna refineries are still at paperwork stages.
Ending gas flaring, promoting domestic gas use?
More gas is still being flared in Nigeria, with reports that the oil companies do not even honour the payment of fines for this. This promise has failed.
However, another aspect of this which is promoting domestic gas use may be in a mixed average. Reports by NBS show that although the cost of Liquefied Petroleum Gas (LPG) has risen beyond what it was in 2015, more Nigerians have turned to using it, partly because of the rising cost and non-availability of kerosene as the main cooking energy source.
The government in late 2020 rolled out the gas-to-fuel policy, with plans to ensure over a million vehicles are converted to begin to use LPG or Liquefied Natural Gas (LNG) as alternative to petrol. That has not happened after the fame that followed the announcement.
Oil bid rounds linger
In 2017, the federal government, through the Department of Petroleum Resources (DPR), set guidelines for the marginal oil field bid round which was scheduled to take place later that year or early 2018.
“My understanding is that by the end of May (2017) we should have all the data that we need. We have identified about 40 to 45 marginal fields, we will go forward to a bidding process,” Kachikwu said when asked when bids for the marginal bids would be done.
However, that timeline failed. DPR in January 2021 shortlisted over 100 firms for the next stage of bidding but it has not reached a conclusion.
Ending oil sector corruption working
There were rampant claims that NNPC and the oil industry was corruption-infested which Buhari promised to tackle when he became president. To a large extent, some strategies adopted by NNPC show that the government could be getting it right.
First, is that NNPC now publishes its monthly activities and transactions, being the first transparent move.
From the former GMD, Maikanti Baru, to current Mele Kyari, the corporation has published 65 editions of the NNPC Monthly Financial and Operations Report (MFOR). The latest edition published last Thursday for December 2020 showed that NNPC sold at least N288 billions of petroleum products higher than the N226bn sales recorded in November 2020.
NNPC is now also a core participating member of the Extractive Industry Transparency Initiative (EITI), which seeks to promote transparency and accountability culture of operations in the oil, gas and mining sector.
Another strategy is that NNPC is the sole importer of petroleum products which has largely cut down middlemen that had resulted in the acclaimed import bill inflation among others in the past.
Promise on security in Niger Delta delivered
The lingering unrest and development issues in the Niger Delta were major problems that confronted the Buhari-led administration at its inception in 2015.
As of that time, there were persistent militant attacks that led to a significant reduction in oil production and subsequent crippling of the oil industry which compounded the country’s recession woes.
The federal government immediately unveiled a clearly defined road map that saw to the checking of militancy in the Niger Delta.
The government took three fundamental actions to arrest the situation; beginning with sustained stakeholders and community engagement, environment and tackling security issues in the region.
This has continued to yield relative results in the region with oil exploration going on.
Marketers, experts appraise oil, gas industry performance in 6 years
Daily Trust on Sunday contacted various marketers and experts in the petroleum sector who also gave their appraisal of the performances of the government since mid-2015.
In his comment, the chairman of the Major Oil Marketers Association of Nigeria (MOMAN), Mr Tunji Oyebanji, said he is aware that the PIB is receiving attention of the National Assembly (NASS), adding that it should be passed soon if the lawmakers’ commitment is to be believed.
On the rehabilitation of the refineries, he noted that the Port Harcourt Refinery “has taken a long time but we can see that not everyone agrees that this is the best solution.”
He also mentioned that fuel subsidy removal has remained a contentious issue but noted that it is inevitable.
“It is a very emotional thing but hopefully, those who oppose it will come to realise that the future of the country is at stake and will allow it to go through,
“Nigeria must be the only country in the world where labour that has not invested a kobo determines the price of petrol.”
However, according to Prof. Ndubisi Nwokoma, Director, Centre for Economic Policy Analysis and Research at the University of Lagos, policy inconsistency has been the major problem facing the downstream sector.
He said the many promises made by President Muhammadu Buhari in 2015 were unrealistic, hence the problems have persisted.
According to him, “a wholesome deregulation policy” is required to address the problem in the oil and gas sector.
He said, “I think the promises made during the electioneering campaigns both in 2015 and 2019 were unrealistic. I guess Nigerians were told what they wanted to hear.
“The policy framework for the oil (downstream) sector has been inconsistent in my view; first, no deregulation, then, deregulation. First, revamp the refineries, then sell them off, later revamp PH refinery. The problems in the sector have persisted and are even getting worse.
“Government needs to pursue a wholesome deregulation policy in the sector in order to address the many issues frontally.”
On the way forward, he called for the passage of the Petroleum Industry Bill (PIB), adding that the government must encourage modular refineries.
“Encourage other private investors into the refinery business to compete with Dangote. Get NNPC out of it – it should be involved only in regulation,” he added.
Another oil industry expert, Suraj Oyewale, called on the government to encourage investments in local refining of crude oil.
“If it is not too late a policy, getting the international oil companies to build refineries in Nigeria may also help in solving the problem. The federal government also needs to fully deregulate once and for all,” he said.
We still have space to cover – Buhari
When contacted for comments, the Special Adviser to the President on Media and Publicity, Femi Adesina, directed our reporter to reach out to the Minister of State, Petroleum Resources, Timipre Sylva.
However, on Monday, March 29, 2021, President Muhammadu Buhari admitted that Nigeria still has a lot to cover in the oil and gas sector while speaking virtually at the Nigeria International Petroleum Summit (NIPS) 2021 Pre-Summit Conference and official launch of the Decade of Gas.
President Buhari, while listing what his administration has done to energise the sector, said the development of gas infrastructure has commenced along with the domestic utilisation of LPG and CNG, as well as the process of commercialising gas flares, development of industrial and transport gas markets, and increasing gas to power.
“We also kick-started other policies and projects like the National Gas Expansion Programme, Autogas policy and the construction of the 614km Ajaokuta-Kaduna-Kano gas pipeline.
“After a thorough review of these laudable achievements and successes in the gas space, we acknowledge that Nigeria still has more work to do in the gas space.
“This has led the federal government to begin a more proactive push towards gas development. This initiative will ensure further optimal exploitation and utilisation of the country’s vast gas resources.”
The president told participants at the Pre-Summit that while his administration has prioritised gas development and recorded remarkable progress, it is well known that Nigeria is a gas nation with a little oil, but the country has focused on oil over the years.
“That is the paradox that this administration decided to confront when we declared the year 2020 as “The Year of Gas” in Nigeria.”
Ministry mum on Buhari’s oil, gas promises
The Ministry of Petroleum Resources has failed to respond to Daily Trust on Sunday enquiries on the implementation of its 7 Big Wins, its road map of short and medium-term priorities to grow the Nigerian oil and gas industry.
When Daily Trust on Sunday contacted the spokesman of the Minister of Petroleum Resources, Malam Garbadeen Muhammad, on April 1, 2021, he promised to get back to one of our reporters after the Easter break. But when he was reminded after the break, he did not get back to the reporter.
Several efforts have been made to reach him, but he did not respond to the enquiries.
By Simon E. Sunday, Zakariyya Adaramola, Muideen Olaniyi (Abuja), Christiana T. Alabi & Abdullateef Aliyu (Lagos)