Experts say current oil price slump is a ‘blessing in disguise’

The current slump in oil prices can be a blessing in disguise if Nigeria can take advantage of the opportunity it offers to diversify the economy, improve domestic energy security, expand the frontiers of economic nationalism and develop human capital by investing to create a knowledge economy.

This was the agreement reached by experts at the Phillip Asiodu inaugural lecture held in Lagos on Monday.

Arunma Oteh, vice president/treasurer, World Bank, who gave the inaugural lecture with the theme, “The proper role of oil in the context of accelerating growth and development in Nigeria,” recommended that a knowledge economy should be the end result of the current reform in oil and gas, leading to diversification of the economy.

According to Oteh, “Nigeria needs to invest in human capital. Three components of human capital are critical: education, workforce quality and specialised training for researchers and scientists.”

She identified four pillars of the framework of a knowledge economy namely: economic and institutional regime in the country, providing incentives for the efficient use and creation of knowledge; the education and skills that the workforce needs to create, adapt and utilise knowledge; innovation systems, and ICT infrastructure required for efficient dissemination and processing of knowledge and information.

Phillip Asiodu, former permanent secretary/foremost economist, said the challenges in the oil and gas industry today had been the same since inception, because successive governments had failed to implement national development plans.

Akin Iwayemi, a professor at the University of Ibadan and an expert in energy, environment and infrastructure development, told BusinessDay, “If we begin to develop the value chain of oil not just looking at the revenue that accrue to the government from royalties but what can we get in terms of value added to oil production, in terms of refining, in terms of petrochemicals, fertilizers and linkages with the rest of the economy, then this low oil prices can be a blessing.”

On economic nationalism, Iwayemi said he had a different angle to it.

“I think economic nationalism should be such that Nigerians produce for Nigerian markets, but their products too can be sold outside our borders. So, if you go with that mindset that you are producing not only for local markets but you want to produce products that are competitive, you are going to be more efficient, you are going to use technologies that will help you to be able to achieve best practices,” he said.

Austin Avuru, managing director of Seplat Petroleum Development Company, elaborated on how Nigeria can take advantage of the present situation.

“We are now fortunately beginning to focus on domestic energy security. So, rather than revenue from oil and gas, the only other real use to any nation is to ensure that it grants you domestic energy security, which can then galvanise the rest of the domestic economy.

“What would domestic energy security mean to us? By 2022, we will as a nation be consuming 7bcf of gas a day. Right now, we are approaching 2bcf a day, for electricity alone we are requiring 1.1bcf a day. 7bcf of gas for the domestic market will generate 15 gigawatts of electricity with multiplier effects.

“If we process domestically 1.2 million barrels of our 2.4 million barrels production, which is achievable as Dangote will soon be processing 650,000 barrels a day, and we give away our moribund refineries producing 450,000 barrels, we can process 1.2 million barrels a day by 2020 and turn Nigeria to a crude oil processing hub. That will provide all the products we need domestically and for export,” Avuru said.