Stakeholders say value creation in Oil/gas sector would drive economic competiveness

Any plan by the Federal Government to fulfill the mandate of being among the top 20 economies of the world by 2020 would only materialise when the oil and gas industry is transformed from being just a key source of fiscal revenue for government to becoming a source of value creation and prosperity to energise the local economy. Operators in the industry have said.

They observed that while other global players in the oil and gas industry reposition themselves in the emerging new energy landscape, Nigeria inevitably must re-strategise her ways to remain a global player and not lag behind in the new dispensation.

Those who know in the industry opine that the oil legacy has also imposed significant costs to the national economy in Nigeria through petroleum and energy price distortions, fraudulent governance practices, institutional inefficiencies, and fiscal instability and irresponsibility.

According to them, “The expansion of the oil and gas industry in Nigeria since the 1970s has produced fundamental changes in the structural configuration and fiscal architecture of the Federation”.

They noted that Nigeria has transformed from a diversified agro-based economy, which it was in the sixties, to the rent seeking and rent sharing mono economy that it is today.

Emmanuel Egbogah, Chairman, Emerald Energy Resources, Lagos Nigeria observed that low oil prices have led to dwindling external reserves for Nigeria because of its huge dependence on oil revenue. Coincidentally, the drop in external foreign reserves has had a direct impact on exchange rates with the weakening of its local currency as against the petrodollar and a surging inflation rate.

Egbogah while speaking at an energy forum in Lagos recently said it is evident the current security challenges within the context of undeniable and abysmal energy consumption and utilisation in Nigeria have led to dwindling government revenue and subsequently, a devastating low economic prosperity.

This he believes makes the transformation of the oil and gas industry in Nigeria within the context of the global oil and gas market dynamics, inevitable.

According to him, “Continual investments, economic and policy incentives were instituted by the Federal Government to increase Nigeria’s proved oil reserves to 40.0 billion barrels and expand production capacity to 4.0 million barrels per day by 2010 from its then 2.5 million barrels per day”.

“This goal by government is yet to be achieved due to insurgency and insecurity in the Niger Delta, declining crude oil price trends and ineffective governance of the industry”

Quoting a World Bank Index report while delivering a key note address on the topic Transforming the Oil and Gas Industry in Nigeria to meet emerging global energy market landscape at NAPE 2017 Pre-Conference Workshop, Emmanuel Egbogah said, “Value creation and addition could have bolstered the economy thereby mitigating the low domestic gas utilisation rate of about 12% in 2015”

“Poor average refining capacity of about 15% in the last 5 years and abysmal per capita electricity consumption at 145 kWh as against world average of about 3,126 kWh and Sub-Sahara Africa (SSA) average of about 480 kWh”.

Ken Abazie, Chairman of the Petroleum Downstream Group of the Lagos Chamber of Commerce and Industry observes 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 in the last 50 years without any significant infrastructural development in the downstream.

Abazie opines that Government as a matter of urgency must declare emergency on the refining of petroleum products in Nigeria and should go out of its way to get investors to invest in refinery in the country. Nigeria should be able to refine all its 45 million litres daily requirement and even export.

Kelechi Ewuzie