The Nation Newspaper

Tag: oil sector

  • ‘Oil sector boosts domestic capital inflow’

    The Vice President and Head, Energy and Natural Resources at FBN Capital Limited, Rolake Akinkugbe, has said that local sources of finance have risen over the past decade because of improved capitalization among African banks.

    She spoke at the 2015 Oil Council Africa Assembly which held in Paris. She said the lenders will take advantage of new opportunities in the oil and gas sector.

     She emphasised that the new oil price environment has had an impact on the terms and structure of funding that have become available to oil and gas companies and projects.

    According to her, “The price shift is forcing renewed policy focus on those parts of the oil and gas value-chain that creating the greatest dividends in terms of contribution to economic growth. The implementation of such policies would have to be balanced with the need to keep Direct Foreign Investors (DFI) incentivised.”

    Highlighting the challenges with achieving this balance from a sector finance perspective, she said “sector exposure limits and tight regulation, as well as challenging oil price environment, have ushered in a more moderate risk appetite within Africa’s banking community. Often, their foreign counterparts try to offer more competitive rates for deals. In response however, local African banks are collaborating much more in order to build their pool of funds and match value so as not to lose too much market share to foreign banks”.

    She stated that emphasis on the value-add benefit of oil and gas projects goes hand in hand with governments’ push to demonstrate the benefits of the energy sector to the broader economy. In any case the capital requirements of such infrastructure-related projects are often more than local banks can handle by themselves.

  • Oil Sector: Whither the way forward?

    With the identified shortfalls in the oil and gas industry over the years, it has become so obvious that the virtual appointment of people that lack necessary technical know-how to oversee the nation’s oil and gas industry is largely responsible for the abysmal performance recorded in the sector.

    Over the years, the oil and gas sector has performed below average, impacting negatively on the economy. According to available statistics, taking a 10-year reading, the sector grew at the rate of 3.3 per cent in 2004; 0.5 per cent in 2005, and then a downturn of -4.5 per cent for 2006 and 2007; -6.2 per cent for 2008 and -1.3 per cent in 2009. The years 2010 through to 2014 did not fair better, either. Over these same years, comparatively, the growth rate in the non-oil sector is generally and consistently more stable than that of  the oil and gas industry.

    Furthermore, due to the lack of proper supervision and coordination, foreign trade has continued to play a significant role in the Nigerian economy. The argument that Nigeria is the 10th largest oil producer in the world with proven oil reserve of about 36 billion barrels; and gas reserve of about 185 Trillion Cubit Feet (TCF) among others, is given prominence more on paper and abject environmental degradation than inidentifiable dividends. This is a far cry from what is obtainable in other nations of the worldwith even lesser oil deposits. The reality on ground does not in any way correspond with the nation’s over 50 years of oil exploration vis-à-vis its attendant turnover.

    This, no doubt, raises a lot of questions about the competence of those who have at one time or the other called the shots over the sector. Nigeria has witnessed managers of the industry become so powerful with so much over-bearing influence within a short period of appointment, whereas the related institutions are pathetically weak, practically rendered inactive and ineffective. The sector’s statutory obligations are conducted in utmost secrecy akin to what obtains in privately-owned entities.

    This development is contrary to the letter and spirit of transparency and accountability as espoused by the Nigeria Extractive Industries Transparency Initiative Act 2007 also known as The NEITI Act, which (provides for the establishment of NEITI, and is charged (among other things) with the responsibility for the development of a framework for transparency and accountability in the reporting and disclosure by all extractive industry companies of revenue due to or paid to the Federal Government.

    From the forgoing, it is imperative that the need to secure the services of experts and technocrats who know their onions, and the nitty-gritty of a highly competitive oil and gas industry is more than justifiable. This is especially so at this crucial moment when dictates from the international market is affecting (negatively) the Nigerian economy. Similarly, the decision by the United States to cut further purchase of Nigerian crude oil is not in any way a good omen for the country. These historic and emerging trends, coupled with the present fall in the international prices of crude oil (albeit heart-breaking and detrimental to development) constitute a blessing somewhat. Nigeria has an opportunity to take decisive steps by looking inward with a view to being pro-active, re-strategize, and proffer lasting solutions to the myriads of problems that have stunted the growth of the Nigerian oil industry since inception.

    The nation, at this crucial stage, needs independent-minded technocrats (either as an individual or as a team) who need not to be spoon-fed on how best to marry the well-laid out reforms, supported with proper enabling laws and legislations, backed with the right attitude and the willingness to serve the nation meritoriously – being a complete departure from the self- aggrandizements, a major hallmark of past administrations in the country. In line with the proposition to reposition the sector for better performance, the following points should be considered.

    Firstly, the pursuit of the local content expansion should be embraced as an important national agenda. Government can achieve over 70 percent total contribution of the oil and gas industry to the GDP in the medium term if square pegs are put in square holes.

    There is the need to implement the report of the Oil and Gas Industry Committee (OGIC) on new institutional structures for the sector. This has culminated in the Petroleum Industry Bill (PIB) which was passed by only the House of Representatives of the 7th National Assembly without a concurrent passage by the Senate. Hopefully, the 8th National Assembly would do well to pass the bill with gusto and alacrity. When passed, it will repeal previous oil and gas statutes and related legislations, which certain elements (both locally and internationally) have exploited to deprive the nation huge earnings. The bill appropriately delineates roles among the various institutions in the industry and is comprehensively crafted to engender the much touted overall reforms of the oil and gas sector. It also aims at creating operational autonomy and transparency.

    There is the need to create a vibrant industry where the private sector plays pivotal roles. It is pertinent to note that, without independent-minded technocrat(s) being saddled with the responsibilities of conducting bidding processes for prospective firms, the very idea a performance-driven industry would be lost on the altar of sentimental profligacy. Unnecessary bureaucratic bottlenecks should be eliminated, and undue government interference minimized to guarantee effectiveness and result-oriented performance. The would-be regulators sector must first try to regulate the sector through standardization of all the players and new entrants. It cannot be business as usual. There must be a period of tutelage and cognate experience acquisition.  Human capacity training and development should be encouraged, with stipulated transition period for expatriates to hand over to locals, especially in the low and middle cadres.

    There is the need to unleash the full potential of the Gas Master Plan on the development of the economy. There is need for appropriate assets, policy framework for optimum utilization and value for the vast gas resources. This needs to be done to cater adequately for domestic and international markets. The development of the gas sub-sector in a comprehensive and integrated manner along with its entire value chain can be used as a launch pad to jump-start the economy.

    As a way of curbing the prevalent corruption in the sector, there remains no alternative to outright deregulation of the downstream sector. This, however, unlike the approach of the immediate past administration, should be done systematically in such a way that the resultant impact would not be transferred to the members of the public unnecessarily. Adequate measures should be put in place (before and not after the full-blown deregulation as was done by the out-gone administration) to cushion whatever effect that may arise thereafter. This is one major error committed by the President Jonathan-led administration.

    Efforts should be aimed at ensuring that the established high standards are maintained and sustained in NEITI’s interface with oil and solid mineral sectors, particularly in the discharge of its mandates under the NEITI Acts. This, once more, needs experts’ input. Other statutory regulatory bodies should be prodded to be much more responsive and accountable.

    There is need for a policy framework to address (aggressively) the infrastructural deficit of the Niger-Delta region; and producing companies should be encouraged to be more socially responsible. More importantly, regulatory bodies and management companies should be domiciled in the area where the golden egg is laid. NNPC, like the regulatory and management companies should not be working out of Abuja. Environmental protection should be highlighted, and defaulters must be punished with recourse to relevant legislation.

    The Nigerian Local Content legislationshould be promoted and implemented to the letter. The estimated cumulative worth of the total businesses in the oil and gas sector is about $18 billion US Dollars (N2.7 Trillion). The government wanted to achieve 45 per cent success in 2009 and 70 per cent in 2010, in respect of its local content drive in the oil and gas sector but recorded a paltry 39 per cent success in 2009 and almost the same in 2010. This lack of success was largely due to absence of technocrats at the helm of affairs in the industry to provide quality direction; the lack of enabling legislation and inadequate monitoring/supervision by the NNPC.

    This new dawn of change should herald change in attitude and the thought-process, by first seeing the oil and gas sector as a business that must be cultivated and nurtured to grow. It is not an assignment that any serious government would commit to the hands of career politicians or political jobbers. The new administration must be painstaking in appointing a capable team to oversee the oil and gas industry.

  • ‘Why downstream oil sector must be deregulated’

    ‘Why downstream oil sector must be deregulated’

    At the twilight of former President Goodluck Jonathan’s administration, the economy was virtually grounded by fuel scarcity that held the country down for more than two weeks. Although normalcy may have returned now, the Managing Director and Chief Executive, JKN Limited and Chairman, JAO Investment Company Limited, Dr. John Agboola, in this interview with OKWY IROEGBU-CHIKEZIE, says until the government musters the political will to deregulate the downstream oil sector, Nigerians will continue to experience fuel sacrcity. Odeyemi also speaks on infrastructural deficit in the country, among other issues.

    The recent fuel scarcity and electricity problems in the country caused huge dislocation in the economy. How can such occurrence be prevented in the future?

    My take is that it has not only caused dislocation, but if not checked once for all, it has the potential of collapsing the entire economy. We are at a stage in this country when there are concerns that the economy may collapse. I can confidently tell you that if not managed properly, it is not only the economy that will collapse, but, indeed, the entire system. Today, you cannot put food in your fridge; drive your car as you would wish or power your generator. Fuel sells for N87 per litre, but during the fuel crises, people were buying it for as much as N500 per litre. It was so bad that major players in the economy like telecoms operators, banking sector, all threatened to shut down their operations as a result of the crises because they could no longer operate optimally. To fix this system, we need some realistic visions that can move the nation forward. At the peak of the crisis, I expected the government to make a categorical statement. For instance, to say “this week we are paying the arrears we owe the marketers” or whoever is in the petroleum distribution chain should be discussed with and sorted out in one way or the other.

    There are strong arguments for and against deregulation of the downstream oil sector.  Given reecnt experience, what is the way forward?

    There is no other choice but to do away with this fraud and contraption called fuel subsidy; the sector should be totally deregulated. In fact, I had expected the government to immediately follow up in the spirit of addressing the chaos in the sector with a measured announcement insisting on deregulating the oil sector, so that only those who have the resources should be involved in the importation and the right price fixed. My advice to government is to go back to what it did in the telecommunications sector and apply same in this all-important industry. We should not forget in a hurry that the deregulation of the telecoms sector created competition among the operators, and, subsequently, crashed the price of telephone and also call tariff by different networks. Remember that before the coming of Globacom into the telecoms sector, the early operators, such as MTN and ECONET (as it was known then), had told Nigerians that it was impossible to have per second billing tariff regime. Any right-thinking person will vote for deregulation any day, it makes good economic sense. We should all support deregulation in the petroleum and gas sector, among other things, it would attract genuine investors into the sector. For instance, Dangote Refinery Limited will soon come on stream and we can be sure that a few modular refineries will come up if the sector is open to investors. All these will bring about appropriate pricing of the product.

    What will you say were the consequence(s) of the last fuel crises and the hydra headed problems of electricity in the economy?

    People are already losing their jobs because a lot of people could not go to their offices during that period. If this situation continues to re occur, then many companies will close shop and the workers will stay at home. Companies buy diesel at very exorbitant prices to power their generators; no manufacturer can survive in such situation, made worse with poor electricity supply. There are about two companies that I am involved in and we had between two and three weeks down time; if the scarcity had continued, we would not have had a choice than to lay off staff. The truth is that the cost of petroleum products is not sustainable and there must be a way out. We need to ask ourselves how we got to this point. How is that with all the three refineries in the country, none is working optimally? Economically, it doesn’t make sense to export crude and import finished products at higher rate. Thousands of workers will be out of jobs in no distant time if nothing urgent is done to salvage the situation. This is a test case for the new government and that to me is the best option, that is, removal of subsidy.

    Former Lagos State governor, Mr. Babatunde Fashola once advised that people should think more of development than the debt profile of a state or country. Do you also share this view?

    He is right to a large extent. All over the world, if the development is right and economically viable, if it has social and economic benefits for the advancement of the people, money could be borrowed to make it happen. It is universally true that the most developed countriess are also the largest debtors. We should be concerned more with the viability of projects than the debt incurred in bringing the project into existence. The nation’s debt profile may be bigger than the $60 billion being speculated. There are lending institutions that will lend us over $100 billion if they are convinced of the economic viability and benefits of a particular project. Development is not only about the size of debt a government is owing; the most important thing is for the borrowed money to be put into good use for the benefit of the greater majority and not fritted away into private pockets.The Unites States of America is the most developed economy, the richest and incidentally the largest debtor in the world. This also goes to the richest man in Africa, Alhaji Aliko Dangote, who is indebted to several banks but is making waves in the whole of Africa with his industrialisation policy. My sign-off is that it is acceptable to borrow as long as what you are doing is viable, acceptable and beneficial to the people. The economic benefit must outweigh the cost of borrowing; if development is right, the proceed will bring social and economic benefit to the people.

    The Federation of Construction Industries (FOCI) accused the past government of owing its members N500 billion leading to job loss.  How can this be checked?

    There is hardly any time that huge sums of money are not owed to contractors. You don’t award contract without making the money available; it is simply not right and not done in advanced economies.  Before you award contracts in developed economies, you first of all bring in necessary professionals to guide in the certification and payment of the particular project- it is the international best practice, which was also observed here before this time. Do we wonder why we have incessant collapse of buildings? This is simply because of poor workmanship and the absence of a proper regulatory frame work in the construction sector. We have lived with the haphazard and lopsided system of doing things in Nigeria since independence. Our professional practice is not well regulated. In other countries and even here in the early 1960s when we were practising the British system, no work is given to a contractor until the funding for it is available-saved, borrowed or syndicated. After that you bring in the professionals in engineering, architecture and quantity surveying etc to guide you through certification and payment as and when due. From the 1970s we stopped the practice and in particular that of signing contracts on before they are awarded. Now, contracts are warded and monies collected before the contracts are executed and certificate given. One can confidently say that we have the fastest growing construction market. Precisely in the last eight years, we were talking about massive construction works in Dubai, India and China etc but we have successfully taken over. You will convince yourself when you move round this country and see the volume of construction work going on in almost every part of the country. Unfortunately, today, our system is such that when contracts are awarded, it takes long before it is signed and sometimes when someone bids for contract, it takes long before the contract is awarded and so is certificate delayed after contract job is completed. All these take months to come. They take unnecessarily long for payments to be made. This practice kills the industry and the contractor.

    How can Nigeria shift focus from a mono-economy driven by oil and gas?

    The shock from oil and gas sector has necessitated the nation shifting focus to mining, extractive and agricultural sector. We are blessed with so much solid minerals that exploiting them will open up the economy and de emphasise the oil economy which off recent has brought so much agony  to Nigerian’s due to the glut and back home here, due the argument on removal or otherwise of fuel subsidy which has lingered, creating scarcity of petroleum products.  The extractive sector is not an all-comers affair, look at the number of lives lost to illegal mining and to lead poising even children are dying in some parts of the country due to their engagement in this illegal trade. The agricultural sector is a key sector that should be encouraged; we can discourage massive food import and rather encourage our local farmers to produce food that will feed the nation. Developing the agricultural sector from its  subsistence level to a mechanised one will also help in securing the land. The young people will be engaged and consequently crime level reduced.

    As a major player in the banking and manufacturing sector, I can only pray and hope that the administration will do the needful and focus on the non-oil sector. They should develop the sector in terms of a robust policy, creating an enabling environment, grooming the right skill and equipment. If we get it right from the rudiments then we can be sure the industry will grow to contribute much to the economy than oil and gas in the near future.

    Infrastructure is vital to the economy. What model should the country adopt to develop its infrastructure needs?

    We know what to do and what is required to be done as a country. As a matter of fact, we have never lacked ideas but implementation is an issue here unfortunately. To underscore the apparent seriousness the previous administration had for the development of our infrastructure they came up with a body known as Infrastructure Concession Regulatory Commission (ICRC). Ourroad infrastructure, for instance, is not enough; besides the inadequate road infrastructure, the roads are not up to specification. The roads that are built for cars are used by trucks, trailers and tankers and when the roads finally break down, nobody maintains them. The scenario is like this – when 10 roads are to be built in a given community, they end up building only eight, remaining two and the government does not make any attempt to designate the roads as to the weight they can carry. The sad thing is that roads are not maintained and when they finally break down, it returns the whole thing to square one where we are saddled and riddled with poor roads all over the country.All over Africa and, particularly West Africa, Nigeria has the highest road network.There are other transportation adjuncts,, such as railways and waterways which are largely undeveloped.

    If a country has efficient and effective rail and water transportation that is good, it creates a balance in the transportation system. Having a developed and multiple means of transportation system will preserve our roads and also make transportation cheaper and easier. Lest we forget, road is not the only infrastructure that we need the government to provide; we also need hospitals, schools, etc.

    What is the way out?

    There are policies and blue prints on the right thing to do to grow our infrastructure, but oftentimes they end up on radio and television announcements. Most times, when money is appropriated, not much is disbursed and this does not help the growth we want in this sector. We have to adopt world class approach of infrastructure development by making funds available for projects. The rule in advanced countries is that before a government or an individual gets planning approval, they have to be sure how the project is to be funded, appointed the contractor and determined the construction period. Here what we do is to award contracts for political patronage and other considerations before thinking of where to get the money to fund it and no project is done on ad hoc basis. Projects are executed based on well taught out long terms needs and noticeable gaps devoid of mundane considerations.

    I advise the new administration to do things differently from what was obtained in the past. They should move away from the past; do what is right as it is done in other climes. Road projects or any other infrastructure provision projects for instance, should  be based on felt need and contributions to the overall economy rather than being based on political considerations.

     

  • Manufacturers seek deregulation of oil sector

    Manufacturers seek deregulation of oil sector

    Manufacturers warned at the weekend that the economy would die, if the crippling fuel scarcity continues.

    The Lagos Chambers of Commerce and Industries (LCCI) called for a drastic response to the situation which, it said has a risk of social unrest.

    A faction of the Nigeria Labour Congress (NLC) is threatening a strike over the crisis.

    The scarcity has virtually crippled the economy, with telecom firms warning that they could scale down their services for lack of diesel to power their base stations.

    Air travel has been hit as flights have been either cancelled on the domestic routes or the frequency substantially slashed.

    Food prices have risen steeply in many parts of the country due to the cost of transportation.

    LCCI  President Remi Bello,  in a statement, said most economic and social activities had been paralysed, with the danger of an imminent shutdown of the entire economy. “There is no evidence of active engagement with stakeholders in the petroleum industry to bring an end to the crisis.  The government needs to demonstrate accountability to the people,” he said, adding:

    “The impression should not be created that governance has been abandoned.  The administration has responsibility for the management of government business till the very last day of its tenure. The country and the economy should not be allowed to continue to drift as if there is no one in charge

    “The power sector has practically collapsed, with power generation slightly above 1000 megawatts.”

    Bello warned that the option of alternative power generation, which the private sector has resorted to, “ is fizzling out, with the acute shortage of petroleum products”.

    He said: “Economic activities across virtually all sectors are progressively grounding to a halt, communication services are on the verge of being shut down as telecommunication companies have given indication of imminent shutdown of their base stations.

    “We call for an urgent intervention by President Goodluck Jonathan  to bring a halt to the imminent collapse of economic and social life in the country. There should be an immediate engagement of stakeholders in the petroleum industry to discuss the outstanding issues of indebtedness and related labour matters, in the interest of the economy and the citizens. The situation should not be allowed to degenerate any further

    “It is in the overriding interest of the economy and the citizens to quickly deregulate the sector.”

    Mobile giant MTN said it urgently needed diesel to prevent shutting down services.

    MTN Nigeria posted a message on Twitter, saying most of its base stations and switches are powered by generators. The company, with 50 million subscribers, said it might be compelled to suspend service if it does not receive significant amount of fuel in the next 24 hours.

    Another leading telecom company, Airtel Networks Limited, in a statement, said “the prevailing situation in the country regarding the scarcity of diesel and other petroleum products is at present impacting negatively our commitments to delivering best-in-class quality of service and seamless telephony experience to all Nigerians.

    “While we are currently doing everything within our means as well as going the extra mile to ensure that all our base stations and switches are up and running, it is sad to note that it is becoming increasingly difficult to replenish current stock of diesel due to the lingering scarcity of the products.

    “We are also concerned that, if the situation persists, it may have adverse effects on our network, impacting both voice and data services.”

    Arik Air, the biggest airline operator, yesterday operated only one-third of its schedule. It cancelled all domestic flights on Saturday as the fuel shortage worsened. Spokesman of the airline Banji Ola said: “We’re operating just a few flights today, maybe 30 per cent of our normal operations. We could not operate domestic flights yesterday.”

    Arik Air, with 26 aircraft, cut two-thirds of its 120 daily flights. That included flights to London’s Heathrow and New York needing to stop over for fuel in Kano, about 1,000 kilometers (620 miles) north of Lagos, Banji said.

    Aero Contractors Ltd., Nigeria’s second-largest carrier, said on its website that “all our flights will not operate regularly as scheduled” due to fuel scarcity.

    In a statement, Aero said:” Due to the general scarcity of aviation fuel (Jet A1) in the country, the airline will not be able to operate over 80 per cent of her domestic flights as scheduled.

    “In the last few weeks, the supply of aviation fuel has been very irregular, which has compelled the airline to cancel some flights. We apologise to our esteemed customers for the inconvenience they may have been experiencing due to flight delays and cancellations caused by the scarcity of aviation fuel.

    “We urge our customers to always check our website at www.flyaero.com or contact the call centre agent to affirm if their scheduled flight will operate. Aero regrets any inconvenience the changes will cause. All measures are being made to ameliorate the situation and revert to her regular flight schedule. We hope that the situation improves very soon.”

    But Air Peace said it was not affected by the scarcity of aviation  fuel.

    An official of the airline said operations had been running unhindered

    Medview Airlines, DANA Air and AZMAN Air are also running normal flights.

    The Comrade Joe Ajaero-led faction of the NLC has described the chronic fuel scarcity as a war against the citizens and a deliberate attempt to subject 170 million Nigerians to economic suicide.

    The faction’s deputy President Comrade Issa Aremu, in a statement, said:

    “Nigeria is the only country on earth which unacceptably and criminally denies its citizens basic sources of energy; fuel and electricity?’.

    “After several weeks of deliberate deprivation of petroleum products by both the government and marketers alike with all the associated hardship, it is time all Nigerians stop agonising and rise in unison against this (Nigeria’s) agony capitalism.

    “With petroleum products’ prices as high as N350 per litre (far above N87 per litre!) claims and counter-claims between Finance Minister Ngozi Okonjo-Iweala and marketers over so-called  N159bn subsidy payments and all state actors looking indifferent, Nigeria is the only country on earth  which unacceptably and criminally denies its citizens basic sources of energy; fuel and electricity.

    “What is happening in Nigeria amounts to economicide which is a conscious subjugation of 170 million people to economic suicide and economic ruination through unsustainable petroleum import-based racket that denies petroleum products needed for mass movement of goods and services, enriches few cabal, puts pressure on foreign exchange, fuels products hoarding and promotes sheer price robbery of the already impoverished citizens.

    “This is an unofficial declaration of war against the citizens by combined forces of irresponsible ruling elite and business crooks. Economicide, just like genocide, is a deliberate and indiscriminate policy violence against a group of people with the intent to destroy the entire group physically and economically”.?

  • President vows to end graft in oil sector in four years

    President Goodluck Jonathan on Sunday night vowed to sanitise and end corruption in the nation’s oil sector in the next four years, if re-elected.

    He spoke at Eko Hotel and Suites, Lagos during an interactive session with young professionals in Nigeria and abroad.

    The event, tagged: “An unimaginable feat in sports”, showcased President Jonathan’s achievements in the sports sector.

    Among those who attended the event, which ended in the early hours of yesterday, were young professionals, sports men and women, and beneficiaries of the Federal Government’s scholarship programmes.

    The president said his administration had succeeded in using technology to reduce corruption in many areas, including fertiliser distribution and procurement, contract inflation and salary payment.

    According to him, he will do the same in the oil industry.

    He said: “We are going into the oil sector. People talk about the oil industry because that is an industry with a lot of people and a lot of money is involved.

    “But I promise you that in the next four years, we will sanitise the oil sector.”

    Jonathan promised to end the stigmatisation of Nigerians in the international community as a result of corruption.

    He noted that the issue of corruption was being over-celebrated in a way that showed that the whole country was corrupt.

    He harped on the need for the citizenry to work together to end the stigmatisation.

    The president promised to work with the youth because of his conviction that parents who did not encourage the young ones were preparing their families for extinction.

    He said that he would give more youths under the age of 40 years more opportunities to serve as ministers and heads of government parastatals, if re-elected.

    He noted that the former Minister of State II, Foreign Affairs, Nuhu Mohammed, before going to contest as deputy governor in Jigawa State was appointed below 40 years of age.

    On Mohammed’s replacement, he said: “Last week, we swore in the youngest female minister. She is also about 40 years old.

    “Apart from cabinet positions for under 40s, we are also appointing young people as heads of parastatals.

    “We want to continue to encourage those in youth-dominated sectors such as business, sports and entertainment industries too.

    “I can assure you that we shall not go below what we are currently doing. I know you want more, vote for us and you will get it.”

    Jonathan said the country’s poverty rate was 33.1 per cent and not over 60 per cent that was reported.

    He noted that the issue was not about the percentage, but about the commitment of his government to impact more on the lives of the people.

    Recalling the successes recorded against Ebola Virus Disease and in other aspects of the health sector, he promised to do more, if re-elected.

  • OPS seeks deregulation of downstream oil sector

    OPS seeks deregulation of downstream oil sector

    Memebers of the organised private sector (OPS) have renewed the call for the deregulation of the downstream oil sector. The Director-General, Lagos Chamber of Commerce and Industry (LCCI), Mr. Muda Yusuf said the need to deregulate the downstream sector had become imperative in view of the wastage arising from fuel subsidy.

    Mr. Yusuf, who spoke at a forum organised by the petroleum downstream sector of the LCCI with the theme, ‘Removing Subsidy: The Implications on Banks, Downstream and Upstream Sector, Government and the Populace’, said that while countries in the Middle East and other Arab nations have been able to manage their oil resources and use the revenue from the oil sector to develop the critical sectors of their economies and lifted the standard of living of their citizenry, this has not been the case for Nigeria.

    “Unfortunately in our country, the potential of the sector has not been developed or optimised due to fraud, leakages and over regulation. As stakeholders we believe that except the subsidy regime is removed the nation cannot be moved forward,” he argued.

    Mr. Yusuf said: “The same vested interest that has stalled the passage of the Petroleum Industry Bill (PIB) is also the same cabal behind the whole subsidy set-up.” While arguing that the rich consume fuel more, he said the poor have nothing to lose but all to gain if the sector is deregulated and fuel subsidy removed. “The monies saved through the subsidy regime will benefit the poor better if it is channelled into strategic infrastructure provision such as good roads, hospitals, schools and so on,” he said.

    Underscoring the need to deregulate, Former President, Nigeria Economic Summit Group, Mazi Sam Ohuabunwa said that Nigerians have an example of the benefit of deregulation with the telecommunications industry. According to him, the Nigerian Telecommunications Limited (NITEL) after more than 45 years of operation was only able to offer 400,000 lines with inefficient services, but with deregulation of the industry, in just five years, there were over 100 million lines at a very competitive rate coupled with effective services.

    Ohuabunwa, who is also a member of   board of the Subsidy Reinvestment and Empowerment Programme (SURE-P), said deregulating the sector would check lending by banks to speculators and those who do round tripping and collect money and payments from the government without offering services to the people.

    He said the savings from the partial subsidy removal revealed that since its creation in 2012, the programme has spent N280 billion on intervention projects nationwide. He said the money was spent on road and railway constructions among others. He said while the sum of N360 billion was allocated to the programme last year, N80 billion was rolled over from last year’s allocation.

    According to him: “it is important to know that in two years of our existence, we have spent less than N300 billion. Out of the N360billion that was allocated to us, we rolled over N80billion; so we spent about N280billion. That’s what we used to get the East-West Road to where it is, the rail line running from Kano to Lagos, and all the works that have been done. “So you can imagine if the over N1trillion that was spent on subsidy is released for infrastructure development,” he stated.

  • ‘How to curb corruption in oil sector’

    ‘How to curb corruption in oil sector’

    A renowned economist, Adekunle Disu has expressed optimism that Nigeria can be salvaged from the scourge of corruption, particularly in the oil and gas industry which has metamorphosed into a hydra-headed cankerworm. in recent times. Industry sources estimate that over $680billion is lost to corruption annually in the sector due to sharp practices in which the new petroleum industry bill (PIB) seeks to address.

    Disu, who is also the Chief Executive Officer (CEO) of BOK Development Limited, while speaking on the topic; “Corruption in the oil industry” at the just concluded 2013 annual conference of the Nigerian Bar Association (NBA), Lagos branch, is optimistic that this colossal loss could be effectively checkmated if government will key his recommendations.

    They include strong political will to deal with corruption, transparency in the activities of the Nigerian National Petroleum Company (NNPC) and amendment of some sections of the PIB, particularly as it concerns the powers of the minister of petroleum.

    “To reduce the rot in the oil industry, there must be a strong political will to deal with the issue of corruption in our society. The corruption in the oil sector will only be a thing of the past if the political classes sincerely confront it strongly with every sense of altruism”

    “There must be a truly transparent and competitive process in the bidding process for oil blocs and oil related contracts with strict adherence to rules that govern international best practices. There must be dichotomy between the regulatory authority (NNPC) and the prospective bidders”

    “There must be adequate cost control and accounting procedures. Periodic accounting and audit by the NNPC and external audit firm will guarantee transparency and quality accountability,” Disu recommends.

    On the power given to the minister of petroleum in the current draft of the PIB, he is recommending a total review so as to avoid misuse of power by the occupants of the position.

    The powers ascribed to the minister of petroleum in the current draft of the bill have been described as ’draconian and omnipotent’ in various quarters which in itself could lead to corruptive practices that the bill seeks to eliminate. Under the current draft, the minister can inter-alia, grant and revoke leases unconditionally, determine royalties, decide the price of gas flaring and recommend members to the board of all the new companies and agencies.

    Other powers that Disu is recommending for a review is the minister’s ability to override the decisions taken by regulatory agencies, and to do all such other things incidental and necessary to the performances of the functions of the minister under the act. More disheartening is that the new PIB does not provide any mechanism to check possible abuse of these powers.

    Disu charged civil society organizations not to relent in their efforts at tackling corruption but to be more conscious not only about issues related to the oil industry but to issues in governance generally.

    “I believe that Nigeria can be salvaged from the scourge of corruption. I believe that the future of our country is bright. But we need to muster the courage at the political level to begin the process of cleansing the Nigerian stable. Only then can our efforts at economic development and social stability begin to yield fruit”, Disu contended.

  • Tax revenues favour oil sector, says FBN Capital

    Tax revenues are heavily skewed towards the oil sector, FBN Capital, an investment and research firm has said.

    In January, the Federal Government earned N599.0 billion from oil receipts, which constituted 77.3 per cent of the total public revenue. The rise in oil receipts was attributed to increase in prices of crude oil in the international market.

    FBN Capital said 75 per cent of registered companies in Nigeria did not feature in the tax records, adding that 85 per cent of registered taxpayers had not filed returns for two years.

    “The weakness is in good part administrative. One reason for the sharp increase in tax collection in South Africa over 15 years has been the introduction and enforcement of a regulation that public contracts can only be awarded to companies, which are current with their tax obligations,”it said.

    Besides, the firm said there is a governance aspect of tax compliance, adding that taxpayers are less likely to meet their obligations if they question how the government deploys its revenues. “Taxation and representation together do not suffice. Taxpayers do have a vote but also have to have some confidence in their government,” it said.

    It said the Federal Government may be expecting a pick-up in total revenues once the petroleum industry bill is passed but the improvement on the non-oil side is set to be gradual.

     

  • Anger over high fees, multiple tax in oil sector

    Anger over high fees, multiple tax in oil sector

    Stakeholders in the oil, gas and health sectors, especially of users radioactive substances and devices for non-destructive testing are unhappy with the Nigerian Nuclear Regulatory Authority over what they called the arbitrary increase in fees and multiple taxes.

    In a letter to the President, copies of which were sent to the National Assembly, the NNPC and major oil firms, the stakeholders said the action of the regulatory agency was a way of killing the Federal Government’s oil industry and the local contents drive.

    In fact, they argued that if the new regime is allowed to stand, there would be job losses in a very high dimension as the affected companies would be forced out of business.

    Among those who signed the letter were: Sir Rowland Nze of Oceaneering, Chief Nnamdi Mbelu of Allied Inspection Services Ltd and Chief Ben Ogwu of Benok Consolidated Ltd.

    Others were: Mr Andrew Emeri of Ozma Inspection Services Ltd, Mr Aroyehun Julius of Batek Nigeria Limited, Andrew Benjamin of SGS Inspection Services Ltd, Nick Azamosa of Blueveld Ltd, Clems Eribo of Advanced Inspection Services Ltd, Harrison Iretor of Neat Inspection Services Ltd.

    The rest inculded: Pius Ajabhu of Arco Pipelines Ltd, Frank Nwanodi of Tracespec Global, Funmilayo Joseph of Funtola Nigeria Ltd, Dagogo Aki of Aftrac Ltd and Sam Onyechi of Inspection and Tests Nigeria Ltd (ITL).

    They said: “It is worthy of note that apart from the International Oil Companies and some international oil and gas service companies that use the high-end sources, over 90 per cent of the users of Iridium 192 sources are local companies just emerging into the oil and gas service industry to render the service of nondestructive testing which hitherto has been the exclusive preserve of foreign expatriate companies.”