The Nation Newspaper

Tag: Unbundling

  • Oil chief backs PIB’s unbundling

    Oil chief backs PIB’s unbundling

    An oil firm’s chief executive, Emeka Eneh, has lent his support to the unbundling of the petroleum industry sector through the passage of the Petroleum Industry Bill (PIB).

    Eneh, who is  Oildata Group Executive Officer and former President, Society of Petroleum Engineers (SPE) , said  the suspension of public hearing on the bill by the Senate, is to make the PIB robust and encompassing to benefit all stakeholders. With the suspension, more talks would be held on it before hearing resumes, and I believe it will come  out a better Act and more beneficial.

    He said the suspension of the hearing on the PIB does not mean that the lawmakers do not have zeal to pass the bill, stressing that the PIB is necessary and everybody recognises it. “What is happening is that democracy works when there is communication. Senate stepped it down for people to do a little bit more of talking on it. I think there is greater alignment across the industry today for the fact that PIB wouldn’t be considered as one omnibus bill, but taken into realistic chunks that will allow it to move forward. I think there is a consensus for people to move forward.

    “This is important because we have to appreciate that today, we are dealing with oil prices at $40 per barrel compared to $100 per barrel a few years ago. So the reality of today is now dawning on people. Therefore, in looking at the PIB, you have to look at it vis-à-vis the current realities and I think that is the cause of the delay in passage of the bill.”

    On low oil price, low production and renewed hostilities in the Niger Delta region, Eneh urged the government to diversify the productive sectors of the economy, engage in aggressive exploration for discovery of new oil fields and seek ways to develop the region, saying the impact of low oil price is being felt so much by Nigeria because of its over-dependence on oil revenues. He said if the activities of people in various sectors are well coordinated, revenues from non-oil activities would be able to sustain the nation.

    “If the activities of people and cluster development are coordinated, the country will certainly move away from over-dependence on oil revenues. Manufacturing, agriculture and trade constitute over 60 per cent of our GDP. We can leverage expertise in the oil industry to be able to push through regional development, industrial parks and free trade zones developments that are emerging across the country in a coordinated manner.

    He said within the oil industry, secondary processing is important, stating that the Niger Delta energy corridor is a concept that is targeted to transform the Niger Delta into a secondary processing zone, where oil is not simply extracted and evacuated from the country, but that it should go through levels of processing.

    The energy corridor will capture over 40 per cent of crude oil value locally. When this project is actualised, the militancy in the Niger Delta will drastically reduce, he said.

    “The oil exploration has to be continuous because we are taking something out of the ground without replacing it. Therefore, the day we start to cut down exploration is the day our reserves will be limited and at some time, we will start to have a decline in our production. If that decline is not today, it will come in future, he said, adding that this is the best time to do exploration.  When the oil price is low and prices of services are low. Therefore, this is the time to encourage exploration.

  • Oil chief backs planned unbundling of PIB

    Oil chief backs planned unbundling of PIB

    Should the National Assembly unbundle the Petroleum Industry Bill (PIB)? Yes, says an oil chief, Emeka Eneh, who described the planned unbundling of the bill as welcome and in the interest of players in the industry.

    Eneh, Oildata Group Executive Officer and former Society of Petroleum Engineers (SPE) president told The Nation.

    “The suspension of public hearing on the bill by the Senate is to make the bill robust and encompassing to benefit all stakeholders. With the suspension, more talks will be held on it before hearing resumes, and I believe it will come  out a better Act and more beneficial.

    Ene went on: “Suspension of hearing on the PIB doesn’t really mean the lawmakers don’t have zeal to pass the bill. PIB is necessary and everybody recognises it. What is happening is that democracy works when there is communication. Senate stepped it down for people to do a little bit more of talking on it. I think there is greater alignment across the industry today for the fact that PIB wouldn’t be considered as one omnibus bill but taken into realistic chunks that will allow it to move forward. I think there is a consensus for people to move forward.

    “This is important because we have to appreciate that today we are dealing with oil prices at $40 per barrel compared to $100 per barrel a few years ago. So the realities of today are now dawning on people. “Therefore, in looking at the PIB, you have to look at it vis-à-vis current realities and I think that is the cause of the delay in passage of the bill.”

    On low oil price, low production and renewed hostilities in the Niger Delta region, Eneh advised the government to diversify, engage in aggressive exploration for discovery of new oil fields and ways to develop the region.

    According to him, the impact of low oil price is being felt so much by Nigeria because of its over-dependence on oil revenues for survival. He said if the activities of people in various sectors are well coordinated, revenues from non-oil activities would be able to sustain the nation.

    “If the activities of people and cluster development are coordinated, the country will certainly move away from over-dependence on oil revenues. Manufacturing, agriculture and trade constitute over 60 per cent of our GDP. We can leverage expertise in the oil industry to be able to push through regional development, industrial parks and free trade zones developments that are emerging across the country in a coordinated manner.

    “Within the oil industry, secondary processing is important. The Niger Delta energy corridor is a concept that is targeted to transform the Niger Delta into a secondary processing zone where oil is not simply extracted and evacuated from the country but it goes through levels of processing. The energy corridor will capture over 40 per cent of crude oil value locally. When this project is actualised, the militancy in the Niger Delta will drastically reduce.

    “The oil industry exploration has to be continuous because we are taking something out of the ground without replacing it. Therefore, the day we start to cut down exploration is the day our reserves will be limited and at some time we will start to have a decline in our production. If that decline is not today, it will come in future.

    “This is the best time to do exploration.  When the oil price is low and prices of services are low. Therefore, this is the time to encourage exploration.

  • Unbundling: Oil workers shut down NNPC, operations

    Unbundling: Oil workers shut down NNPC, operations

    • Fuel scarcity looms 

    Nigerian oil workers have shut down the operations of the Nigerian National Petroleum Corporation (NNPC) nationwide and its corporate headquarters in Abuja called the NNPC Towers to protest Tuesday’s unbundling of the Corporation by the Federal Government.

    The protesting oil workers, including the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) and the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG), barricaded the entrances into the NNPC Towers thereby preventing access into the complex

    It directed its members to down tool with immediate effect. With this directive, members of the Petroleum Tanker Drivers (PTD), an arm of NUPENG, have stopped lifting fuel from both government and privately owned fuel depots.

    Owing to the directive there has been resurgence of long fuel queues in retail outlets that sold petrol, and hawkers were seen in most Lagos roads selling fuel at  prices, ranging from N2500 to N3000 for the 10litre keg

    The oil workers said they are opposed to the government’s decision to unbundle the Corporation. The Nation learnt, that the Minister of State for Petroleum Resources and the Group Managing Director of NNPC, Dr Ibe Kachikwu, did not take into confidence  the management of the Corporation and the representatives of the oil workers’  unions. The Corporation’s management and the oil workers said they got the Tuesday’s NNPC unbundling announcement by Kachikwu as a shock.

    The  unions expressed concern that the unbundling of the Corporation will lead to job losses.

    The Nation learnt that the Group Executive Committee (GEC) of NUPENG and PENGASSAN convened an emergency meeting at 10pm on Tuesday to discuss the development.

    In a statement signed by the Acting General-Secretary, PENGASSAN, Comrade Lumumba Okugbawa, the union  described the plan as an arbitrariness of the executive power by the Minister, adding that the Minister unilaterally declared the unbundling of the NNPC without consultation with other critical stakeholders, including PENGASSAN and NUPENG.

    They alleged that all attempts to ensure that the Minister attend to their concerns on labour issues proved abortive as he refused to meet with the workers. Okugbawa said  the move by the government will be tantamount to policy summersault on the part of the government.

    He said the unbundling plan will stave off investors from the nation’s oil and gas industry at this time when the nation needs foreign investment most to grow the industry, which currently is the mainstay of the economy.

    He explained that the government did not take into consideration the existing law that established the NNPC before planning to unbundle the corporation.

    He said, “There is an existing NNPC Act of 1977 that set up the NNPC. This Act has many provisions that deal with structure and operations of the corporation. There are many issues such as pensions and transfer of the employees, which are provided for in the NNPC Act of 1977. What will happen to all these provisions of the law?

    “For the government to do anything with the current NNPC, the Act must either be repealed or amended to accommodate the planned restructuring. If not done, it will equal to lack of respect for the rule of law on the part of the government.

    “The Petroleum Industry Bill (PIB) that is expected to be the legal instrument for the ongoing reforms of the Oil and Gas industry will be meaningless if the Government should introduce plans outside the reforms, The PIB is germane to the development of the nation’s Oil and Gas Industry.

    “Above all, the various stakeholders, especially the unions should be involved before any major change is carried out in the organisation and before any unilateral statement capable of heating up the industrial climate is made.”

    Hundreds of the Corporation’s staff besieged the road in the morning causing gridlock on Herbert Macaulay way which houses the NNPC Towers. Union members were in red at the front of the barricaded headquarters, while security agents were on hand to forestall break down of law and order.

    A source at the NNPC told The Nation that efforts are being made to bring the Labour, NNPC management to discussion table with the Minister but the Labour unions are insisting that until Minister reverses unbundling, protest will continue.

  • Unbundling PHCN

    Unbundling PHCN

    IF the deal is successfully consummated, the public till would bulge with N107 billion. That is the cumulative price the five preferred bidders are paying for five (out of 18) electricity generation plants hitherto owned by the Power Holding Company of Nigeria (PHCN), now being unbundled, under the power reforms process.

    The five winning bids and their asking prices are: Transnational Corporation of Nigeria Plc, (Transcorp): Ughelli Thermal Power Plant ($ 300million), Amperion Consortium: Geregu Power Plant ($ 132 million), CMEC/Eurafric: Sapele Thermal Plant ($ 201 million), Mainstream Energy Solutions Limited: Kainji Hydro Plant ($ 50.76 million, which met the reserved yearly rental fee, since the plant would not be sold outright) and North-South Power Company Limited: Shiroro Hydro-power Plant ($23.6 million, annual fee for a 15-year concession).

    So, whereas the thermal plants would be sold outright, provided the preferred bidders came up with the bid price within the stipulated period, winners of the hydro plants bid would be concessioners over a 15-year period. A sixth plant, the Afam Thermal Plant would require fresh bids, as none of the three bidders, said Atedo Peterside, chairman of the National Council on Privatisation (NCP) technical committee who supervised the bid process, could not meet the terms.

    On the face of it, these putative sales are a welcome breakthrough, given the difficulties the power reforms process has passed through, particularly from the labour unions and staff of the PHCN pushing for what they call just disengagement benefits.

    Another thing to cheer is the claim by Mr. Peterside that officials of both the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC) observed the bids and could, according to him, testify to the integrity of the process, since they saw that whoever did not meet the requirements or even made late bids was turned down.

    It is good Mr. Peterside is concerned about the integrity of the process. That is how it should be, for integrity is not only crucial for the successful sale of these plants, it would be key in the sale of the remaining 13 plants; as well as the eventual success of the power privatisation exercise. Perceived high integrity would drive inflow of foreign investment and give the power sector the jab in the arm it needs to power Nigeria into the era of uninterrupted power supply; and the resultant re-industrialisation that would give the Nigerian real sector a rebirth.

    Still, doubts remain. Many a public utility had before been sold with fanfare, only for the preferred bidders to fail to come up with the cash to consummate the deal. A few too have been bought, only for the buyers to strip them of assets and move on. Though for every preferred bidder there is reserved one, what are guarantees that this latest process is free from these previous mishaps?

    This question is pertinent because global players in the power turf, like the US General Electric and others were absent at the bidding, despite its much-vaunted openness and transparency. Which leads to the next bother: the companies that won the bids are linked to the political and economic elite, who have always swirled around the corridors of power, if not as outright politicians but as patrons of the ruling party and friends of the government in power. Are the sales then no more than a transfer of non-performing public utilities to cronies?

    These are disturbing questions. But they can be loudly answered in the negative if the preferred bidders realise that the need for privatisation is the delivery of better services; and go ahead to provide just that. That is the sole way the exercise would turn a success.