Why reform must sustain Nigeria’s crude oil net producer, by Ajumogobia
LCCI seeks removal of subsidy
The current reforms in the oil and gas sector that culminated into the passage of Petroleum Industry Governance Bill (PIGB) must sustain Nigeria status lest the country falls into Indonesia experience that led to its exiting Organisation of Petroleum Exporting Countries (OPEC), a former Minister of State for Petroleum Resources, Odein Ajumogobia, has said.
Speaking at a stakeholders’ workshop on “Assessing Petroleum Sector Wealth: NNPC’s contributions to the Economy,” Ajumogobia, who is Chairman of Nigeria Natural Resource Charter (NNRC) expert advisory panel, warned that Nigeria may cease to be a net exporter of crude oil in the next 10 years if real reforms that would engender proper business practices in its oil and gas industry are not implemented soon.
He stated that Nigeria had in the last 20 years continued to aspire to grow her oil reserves to 40 billion barrels, as well as her daily output to four million barrel per day with both plans yet to materialise while her population and energy need continued to rise.
He also warned that the return of subsidy on petrol in any form, either as under-recovery or losses to the Nigerian National Petroleum Corporation (NNPC) was not sustainable and should be done away with.
The former Minister hinted that there was a massive decline in joint venture oil production going by indications that the deep offshore fields, which were developed more than 20 years ago, currently contribute about half of the 2mbpd oil output the country has.
According to him, there was a need to again re-evaluate Nigeria’s aspirations for her oil industry, which he said, was still key to her economic growth and diversification plan.
On the current financial subsidy claimed by the NNPC for importing and supplying petrol, Ajumogobia noted: “We want a higher oil price because it implies huge revenues but it also means higher cost of the derivatives. We can’t eat our cake and have it, it is not possible.
“As long as we do so, the idea that subsidy has been removed is simply not true whether it is paid directly through the PPPRA by the government or by the NNPC through its cost deductions, it is still a subsidy.”
Also, the Director General of the Lagos Chamber of Commerce and Industry (LCCI), Amuda Yusuf, submitted that the current leave of the graveyard in the downstream sector is unsustainable and called for the full deregulation of the sector that will enable business community be able to embark on long-term planning.
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