Last Saturday, we served you the interview with Olisa Agbakoba, SAN, where he dwelled on civil rights activism in Nigeria, saying that a few of civil rights groups are now politically affiliated, re-titled as “The Changing Face of Civil Rights Activism in Nigeria, Olisa Agbakoba speaks”; this week, the concluding part of the interview dwells on concerns about the state of Nigeria’s oil and gas sector, highlighting the troubling dynamics that have allowed International Oil Companies (IOCs) to dominate the industry. He says despite Nigeria being the sixth-largest oil producer in the world, the majority of its oil resources are controlled by a handful of IOCs, leaving Nigerians largely disenfranchised in a sector that should benefit them.
He also examines the complexities that surround the NNPCL, calling for its transition into a fully private entity to foster competition and drive down fuel prices.
The discussion also underlines the pressing need for the President to delegate the role of Minister of Petroleum to a technical expert, suggesting that the current consolidation of powers under the presidency hinders effective governance of the vital sector. Read on.
The back-and-forth blame game between NNPCL and Dangote, along with the existing arrangement, is leaving Nigerians to pay more for locally refined PMS. What are your thoughts?
There are so many challenging issues. It is difficult to know where to start. But the starting point was when President Tinubu announced a revolutionary restructuring of the oil and gas sector by stating that the oil subsidy was gone. By that declaration, I take it that he meant that the government would no longer be a player in the oil and gas sector. I applauded him for making the statement, which was very controversial at that time, as a matter of policy, the subsidy was leading to terrible abuse and corruption in the system. It would be better to provide health and education subsidies than fuel subsidies, which benefit people who do not need subsidies in the first place. For those reasons, I felt President Tinubu’s policy statement on subsidy was correct. The problem has been how it has been implemented and the consequential legislative work that has gone on until today. I would have thought that NNPCL would have been completely private. In theory, it is private because it is no longer the government organization driving oil and gas policy. The big challenge is that NNPCL pretends to be a private organization, but it is not. That is the irony. NNPCL cannot claim to be a private company while also dictating the price of fuel and performing the role of the government. The problem in the oil and gas sector is that there is no competition.
The second problem is that the government has not really stepped back. Remember, I said that Tinubu’s “no more subsidy” policy meant that the government is no longer part of the oil and gas market and that it would be organized by the private sector. So anyone who qualifies to have a refinery or import fuel will be allowed to do so, and there would be competition. The prices may go up initially, but with competition, they will eventually drop. However, when Dangote has a 650,000-barrel refinery lying idle, dictated by NNPCL, it is unfortunate. IPMAN made a statement that we are the largest consumers of PMS, so why do we need to go through NNPCL to buy Dangote’s product? Why don’t we just go directly to Dangote to buy it? That would make things easier. That is the problem. If NNPC were set aside and became another Dangote, then it would be thinking of importing fuel or building a refinery. NNPCL’s policy of being both a regulator and the seller of Dangote’s products has strangled the market of competition, thereby creating scarcity, and in scarcity, prices go up. The solution is simple: let NNPCL get out of Dangote’s products. It should seek its own PMS and allow Dangote, as a private sector entity, to fix its own price. Let Dangote set its price; eventually, market forces will determine the real price. The main culprit in Nigeria’s PMS issue is NNPCL.
But the government is so armstrong in dealing with that?
That is why I said the President of Nigeria, since the year 1999, made a strategic error in keeping the Ministry of Petroleum under the Presidency. The Ministry of Petroleum is too big, and the President is too busy to monitor what goes on in that sector. It needs a very active person who understands the dynamics of the oil sector. As we speak, the international oil companies control Nigeria, and they don’t want us to have refineries to produce PMS; they want the status quo to continue, whereby we produce crude oil, take it abroad, refine it, and they make huge profits.
Another thing is that the government needs to look at Section 44 of the constitution, which states that all the natural resources in this country—not just crude oil— belong to Nigerians; and that it is for us as Nigerians through our government to be the owners. What has happened now is that the government has abdicated its role as the sole owner and has, by default, appointed these oil companies as part owners. That is why we have production sharing contracts and another arrangement called joint ventures. What happens with these two schemes is that the IOC brings the money to produce, and the government does not contribute anything. IOC will produce the oil, and everything surrounding the oil will be controlled by the IOC. IOC will appoint the drillers and those who transport it, as well as the shippers. They have taken control of everything. It is a big misnomer to think that Nigerians control their oil resources. We don’t. I have spoken about this several times. How can we say we are the sixth-largest producers of oil in the world, yet about four or five IOCs actually control and own the oil? We have allowed the IOCs to dominate us. So, the way forward is clear: NNPCL must go public fully. Second, the roles of the IOCs must be clearly defined as service providers. If we need the IOCs, we must not make them co-owners. When we make them co-owners, we become absentee landlords in the business of oil, and whatever the IOCs say, the government accepts. That has to change; we must be in charge of our crude oil. The IOCs should be our servants, not our masters.
You said the President is too busy to monitor what goes on in the petroleum sector. Would it be better for the President to give up the position of Minister of Petroleum and appoint an expert to oversee the sector?
Yes, he is too busy to monitor the sector properly, but he inherited what President Obasanjo started. Every president ( except Jonathan) since then has assumed the role of Minister of Petroleum. I think the sector is so vital that it needs a highly technical person to run the ministry for the benefit of Nigeria. That is the third problem. The first, as I said earlier, is that NNPC should just go public and list on the stock exchange to compete with other oil companies. The second problem is the IOCs, and the third is that a Minister of Petroleum should be appointed if we want to turn around the issues in the oil and gas sector.