Nigeria Not ready For Post-oil Economy, Say Fashola, Others

• Nigeria Not ready For Post-oil Economy, Say Fashola, Others

Nigeria has not shown enough readiness to commence the journey into a post-oil economy, the Minister of Power, Works and Housing, Babatunde Fashola, has said.

His view was also shared by the Executive Secretary, Petroleum Technology Development Fund, Aliyu Gusau, and a former Group Managing Director, Nigerian National Petroleum Corporation, Funsho Kupolokun.

This is coming as the former NNPC boss declared that there was still lack of transparency in the country’s oil and gas sector.

Kupolokun, who chaired the 11th Nigerian Association for Energy Economics/International Association for Energy Economics Annual Conference in Abuja on Monday, told local and foreign participants at the event that despite all that had been said about the opaque nature of the petroleum industry for decades, the sector had failed to be transparent.

He said, “Everybody is talking about transparency in the petroleum industry. Everybody is talking about it; what is happening is that we are still not doing it. We keep talking about it.

“In 1999 when I came back into the government system, it was a key issue; a number of bodies were set up by the government; yet today, we are still talking about it.”

He also observed that for over 25 years, operators in the industry had called for the deregulation of the downstream sector, without making meaningful progress. He added that until the downstream sector was deregulated, the problems in that arm of the industry, such as petrol scarcity and subsidy payment, would continue to surface.

Kupolokun stated, “We have been talking about deregulation since 1993. It went up and down with fuel price moving up and down. If we had continued to move gradually that way, we would have finished the liberalisation of the downstream sector. But we reversed ourselves and today, we are in a scenario where we are still talking about deregulation.

“How many years, some 25 years we have been talking of deregulating the downstream sector, yet, it is still undone. I just hope we do it and do it rapidly, because unless and until it is done, we will continue to have the problems that we have in the downstream petroleum sector.”

On his part, Gusau said it was time to focus more on the midstream and downstream arms of the oil industry, as more value and wealth creation were concentrated in them.

He stated, “I believe that oil is still central. The oil industry in Nigeria is the only sector that has the capacity to provide the foundation for the post-oil economy journey. But it cannot be done with the current business model that is focused essentially on the upstream.

“The business of taking oil from the ground and marketing it across the globe has to stop. The only way that the oil and gas industry can provide the foundation for the journey of a post-oil economy is to move from its focus on the upstream, down to the midstream and downstream where value is created.”

Gusau added, “This is the area where value, wealth and jobs will be created. This is the area that will create the fertilizer, the electricity and the petrochemicals that we require. This should be, going forward, the norm in the Nigerian oil and gas industry. But what is the strategy to achieve this?

“Unfortunately, I have gone through all the four bills of the petroleum industry waiting to become law. I have seen the fiscal and regulatory provisions about the midstream and the downstream, but I have not seen anything in all the four bills that incentivises value generation. This is the challenge I must put forward, because this is the key in our journey to a post-oil economy in Nigeria.”

In his address, Fashola noted that the oil industry was vital to power generation and stated that the politics and economics of energy was one major reason why the power sector had not delivered optimally.

Fashola, who was represented by the Permanent Secretary in the Ministry of Power, Works and Housing, Louis Edozien, said, “The reason why our industry is not delivering has very little to do with technology; it has to do more with the economics of energy, the politics of energy, the legality of an industry where multiple private and public companies are interacting through contracts.”