OIL INDUSTRY: Crucial Agenda For Government (1)

UNTIL the discovery of crude oil in commercial quantity in Oloibiri, in 1956, agriculture was the major revenue earner for Nigeria, from where some of the most enduring infrastructure in the country was financed. Because of the diversity of sources of revenue and fiscal federalism in place, Nigeria’s development and growth could not be consigned to the mercy of a particular product like it is now.

The regions then competed against one another in developing agricultural produce, of which they had comparative advantages. For instance, in the South West, there was Cocoa, and revenue from this produce financed the free education the region enjoyed, as well as built roads, including the iconic Cocoa House.

In the South East, it was palm oil, and revenue from this produce went into the development of the region, which then included South South geopolitical region. Today, what are left of the once boisterous Okpara palm estates in the region are dead palm cemeteries.

The North was famous for its groundnut pyramids and other agricultural cash produce from where the region was developed, including the establishment of the Ahmadu Bello University (ABU) and other facilitating infrastructures that still dot the landscape of the North geopolitical zone today.

The discovery of crude oil in commercial quantity has made Nigeria vulnerable to external influences and the antics of ‘oil mafia’. Little wonder, President Muhammadu Buhari has decided to superintend the petroleum ministry, as well as, properly monitor Nigeria’s income and expenditure.

This decision has generated a lot of debate, just as stakeholders in the industry, including oil majors operating in Nigeria, are worried that the government may alter the terms of their production-sharing contracts in order to raise more revenues.

Between July 2014 and September 2015, receipts for the state-owned National Nigerian Petroleum Corporation (NNPC) from selling oil dropped by two-thirds and this has a lot of negative implication for both the Federal and State governments, who now find it difficult to meet their very basic commitment such as, paying their workers and other contingent liabilities.

The Guardian gathered that government is interested in renegotiating contracts with oil majors, especially, those whose contracts date back to the 1990s. The intention is to tweak the terms in order to boost government’s revenue.

The Lead Director of Centre for Social Justice (CENSOJ), a socio- economic rights organisation, Mr. Eze Onyekpere, however, believes that rather than being minister of petroleum, President Buhari should have declared an emergency in the agriculture sector.

“Why should the President not take charge of the Agriculture or ICT ministries, which have been identified as the economic pathway to the future? Essentially, the President should back off handling the Petroleum Ministry,” Onyekpere asked. “With the duties of the President to superintend over the affairs of all sectors of the country, pinning him down to a particular sector will be counterproductive and will not give him ample space to attend to other sectors.”

According to him, the fallout of this arrangement is that “legislative oversight will be more difficult to exercise. Ministers can be summoned at will to make explanations to NASS, but that will not be the case with the President as a minister. This may likely lead to political tension and unnecessary friction between the executive and legislative arms of government.”

He insisted that there are better options of checking corruption, which has allegedly become endemic, particularly at the NNPC than Mr. President taking over supervisory roles there.

For him, Buhari should introduce greater accountability and transparency in the procurement process of the Petroleum Industry.

“The Petroleum Ministry is in dire need of structured and institutional reforms which goes deep into the systems, ways and means of doing things in the industry. This is where the PIB should appropriately come in to introduce more transparency, accountability and good and fit practices in the sector. Apparently, the sector is the headquarters of corruption in Nigeria considering its rentier status. A sector that consumes up to 40 per cent of its income as operating costs is in need of a value for money approach to its operations.”

But a Development Economist and Financial Strategist, Mr. Odilim Eweagbara, says nothing is wrong with the president taking over the petroleum ministry.

He said, “as President of Nigeria, Buhari is the chief executive officer of Nigeria. And as the chief executive officer, he is the overall boss of the nation’s economy, the same way as the commander-in-chief of the armed forces he is the nation’s security officer, along with being Nigeria’s chief diplomat and cultural spokes-chief, especially because as an executive president he doubles as the head of state and head of government. Being the head of the executive branch, President Buhari is, undoubtedly, the overall boss and chief supervisor of all federal ministries, departments, and agencies.”

Eweagbara continued: “As an executive president, he takes all the credits and discredits for all good and bad decisions made by his government.”

He said that with Buhari’s kind of industry experience, he could kick-start the needed sector reform — Buhari was the petroleum commissioner (now minister) and chairman of the NNPC from 1976 to 1979, during which Nigeria built most of its current refineries and petroleum pipelines across the nation, and was also the Petroleum Trustfund chairman during the Gen Sani Abacha military regime.

He pointed at the mind-boggling looting that took place in the former administration, from fuel subsidy scam, involving round-tripping, fuel smuggling, and politicians and political parties all helping themselves in sabotaging the economy, and the military taskforces set up to crackdown on oil smuggling becoming themselves the new smugglers, for which a person as Buhari becomes relevant.

“We shouldn’t also quickly forget how governments over the years used fuel subsidy to enrich the boys and powerful party members, to the tune of over $60 billion during the last 16 years. Also let us not forget how as a result of lack of transparency in the country’s oil industry and the NNPC, both local oil companies and IOCs in collusion with top NNPC officials used so-called joint ventures cash calls to loot the NNPC through the inflation of costs to as high as 1000 per cent. In fact, the level of fraud and looting went as far as NNPC refusing to remit any revenues to the treasury, which between 2007 and 2014 was as high as $40bn,” he said.