Yet another National Oil Policy
A fortnight ago, the Ministry of Petroleum Resources was reported to have forwarded a draft National Oil Policy to the Federal Executive Council (FEC) so that it could be fine-tuned and sent to the National Assembly for passage into law. The objective of the new policy initiative is to overhaul the entire petroleum industry and […]
A fortnight ago, the Ministry of Petroleum Resources was reported to have forwarded a draft National Oil Policy to the Federal Executive Council (FEC) so that it could be fine-tuned and sent to the National Assembly for passage into law. The objective of the new policy initiative is to overhaul the entire petroleum industry and separate it from the gas sector.
Major changes were advocated In the document, among them renaming the Nigeria National Petroleum Corporation (NNPC) to National Oil Company of Nigeria (NOCN); incorporating NOCN as a limited liability company to be listed on the Nigerian/foreign stock markets in two years’ time; unbundle NNPC into five subsidiaries, each of which will be a holding company in its own right and will be registered with the Corporate Affairs Commission (CAC); and poorly performing units of NOCN will be divested, sold or closed down. The policy also includes appointing a Group Managing Director (GMD) of NOCN on tenure basis for an initial period of four years and renewable, subject to the achievement of targets. The President is to supervise the board.
To many watchers of the sector, the planned National Oil Policy may be confusing at a time when the country is calling for the passage of a well thought-out Petroleum Industry Bill (PIB). Experts have hailed PIB’s contents as capable of solving the fundamental and systemic problems plaguing the sector. It is expected to save us from our day-dreaming about the oil sector. For instance, about a decade ago, the target of increasing the country’s oil reserve base to 40 billion barrels with a daily production of 4.5 million barrels per day was projected to come to pass by the year 2010. Six years after the set timeline the dream was never actualized. Instead of increasing the oil reserve base, we have witnessed vicious cycles of vandalism, massive crude oil theft and unserious direction, to the point that the country exports only about 1.3 million barrels per day, a far cry from our OPEC quota of 2.3 million barrel per day. Worse still, the country remains a net importer of dollar-driven finished products instead of exporting finished products.
The implication of the systemic failure is glaring. While countries such as Norway, Brazil, Saudi Arabia, Kuwait, Qatar and Malaysia have used their oil resources to modernize their infrastructure, health, education and agricultural systems, the story in Nigeria is different. With the slump in international oil prices and reduced earnings from Joint Venture agreements, all tiers of governments in Nigeria are finding it difficult to meet their obligations to the Nigerian people.
We call of the Buhari administration to clearly focus on finding a pragmatic solution to the current problems in the Niger Delta and deal with the corruption in the bureaucracy, instead of this apparent rigmarole about policies, renaming of institutions and talks about unbundling the NNPC. PIB has been debated and worked upon at various levels. Therefore, government should simply summon the political will to ensure it is passed into law in the near future instead of initiating new reform measures. Also, it is advisable to accommodate the new policy within the framework of the PIB to ensure that they are harmonized.
On Tuesday, President Buhari raised the concern that professionals may be involved in the bombing of petroleum infrastructure, pointing to a supposition that the attacks are not carried out by illiterate gangs as Nigerians have been made to believe. Government should investigate and identify some of these highly skilled persons involved in the sabotage, engage them and reach a political settlement in the interest of the economy. There is no gainsaying the fact that unless the oil sector is stabilized, the Nigerian economy may not come out of recession anytime soon. Achieving this objective may require urgent and strategic measures rather than setting up endless committees that produce all sorts of policy documents that may never be implemented.