Longer-term investment in oil and gas infrastructure to address sector challenges- operators
As the federal government seeks broader economic focused to diversify the economy away from oil and gas, industry experts have urge government to concentrate on attracting the type of investment that seeks to build longer-term in infrastructure and also rehabilitate existing oil and gas assets.
They observed that the oil and gas sector of the Nigeria continues to experience challenges occasioned by the volatility in the crude oil price in the global market in the past months. A cursory look at the gross decadence in infrastructure without doubt points to the fact that it contributes in no small ways to the crises that Nigeria is currently going through.
Ken Abazie, Chairman of the Petroleum Downstream Group of the Lagos Chamber of Commerce and Industry reveals that statistics has shown that proceeds from the crude oil sales contributes in the neighbourhood of about 88 percent of the total revenue accruable to the Federal government of Nigeria. This trend has remained so over five decades without any significant infrastructural development in the downstream.
According to him, the impact of government’ solver interference throughout the value chain brought in a lot distortions in the business space. In the past whereby government wants to be the one to bring in refined products, build retail outlets across the country as well as acquiring several distribution trucks is a wrong business approach.
Industry experts on their part while assessing the current challenges in the oil and gas sector of the economy maintains that the concept in the previous administration whereby the government are the regulators, importers, distributors, marketers have never worked and will not work.
They further maintain that with the partial deregulation that is operational now a level playing ground will be set for genuine investment in the industry to be attracted. This is only the minimum expected to engender growth.
“Government must systematically dis-engage from undue participation and rather strengthen its regulatory function of the business. Government should also encourage investment in the sector through a transparent import financing outlay in conjunction with Nigerian Central Bank”, he said.
Abazie further said that this is the best opportunity that Nigerian Government would have used to completely deregulate the petroleum landscape. “We believe that there could never be again this kind of opportunity in nearest future. The international oil price is plummeting, the dollar exchange is at its highest ever in the history of the country and the government is pretending as if it can carry on as usual”.
Dada Thomas, managing director, Frontier Oil observe the present administration has attempted to initiate reforms in the oil and gas sector. Some of the reforms have been frankly confusing simply because the government isn’t fully communicating its intentions to the public properly.
Analysts are of the view that Government as a matter of urgency must declare emergency on the refining of petroleum products in Nigeria. It is a big shame that after over five decades of the commencement of drilling of crude oil in Nigeria, we don’t have a functional refinery. Government should go out of its way to get investors to invest in refinery in the country. Nigeria should be able to refine all its litres of petrol daily requirement and even export.
Nigeria should strategically expand its petrochemical and fertiliser manufacturing capacity which is directly related to the petroleum sector. This is an area of great growth potential.
Rolake Akinkugbe, an energy expert observes that there has been a greater focus on getting private sector input and expertise in managing the sector.