”Mixed report card for Nigeria’s oil sector” under Buhari’s administration

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As Buhari marks his first year in office, it is time to take stock but the question is; there is hardly any stock to take in the energy sector. It has been one year of little motion and even less movement with patches of paralysis. The challenge with stocktaking at this time is that the Buhari administration met challenges in the energy sector which preceded it by several administrations gone by and one year may not be enough to make sound judgment.

Dolapo Oni, Head, Energy Research Ecobank Development Company in his own assessment of Buhari’s one year in office said that “it has been a relatively mixed year. The issues with the fuel scarcity were avoidable if the market had been deregulated. Some of the problems with export terminals such as Forcados as well could have been resolved faster with closer attention”.

“However, we have a relatively more transparent NNPC that publishes its accounts monthly. We have reorganization to make the NNPC more profitable. We have also seen adjustment of the pricing template for fuel to reduce subsidies and then the recent move to remove subsidy entirely and deregulate the downstream sector. I think it’s been a mixed year and the government needs more time to perfect its plans for the oil sector”, Oni added.     

Experts and stakeholders expected President Buhari to hit the ground running by taking on the conundrum surrounding the legal and regulatory framework governing the industry that is the livewire of the nation’s economy.

“It took nearly a year for the executive to have an opinion on the petroleum industry institutional and fiscal framework. Such delay seems to have eroded the competitive advantages of Nigeria over other tiny oil producing states around Nigeria”, said Wumi Iledare, a professor of energy economics at Emerald Energy Institute, University of Port Harcourt and President, Nigeria Association for Energy Economics.   

“I expected something on the PIB almost immediately the government inaugurated the National Assembly.  In fact it is shocking to me that the President did not take advantage of the approved special advisers he obtained from the 7th National Assembly to appoint a PIB Czar immediately he assumed office to send a positive signal to the industry on assuming office in May 2015”, Iledare added.

However, assessing the overall performance of the Buhari administration in the oil and gas sector over the one year in office, Iledare is of the opinion that “rather than giving a blanket good, bad or fair report card, a fair assessment should be based on different parameters”.

“In all honesty, the government can be commended for improved transparency in the way business is conducted today than yesterday.  The government should be commended for petroleum revenue management with dedicated desire for transparency and accountability. One can also commend the government at least for now that the irrationality at which the former government disposed of scarce petroleum assets have been reduced drastically”, said Iledare.

The power sector did not fare any better. Despite the increment in tariff of electricity by the electricity distribution companies (Discos), the nation’s power supply has continued to drop in the last one year. President Buhari’s administration met the power sector generating 4,000MW last year, but today, the activities of pipeline vandals have reduced the power generation to less than 1,500MW.

In spite of this problem with generation, the government has not lost sight of the need to attend to the other segments of the value chain which include the transmission and distribution. The transmission for example has legions of problems which have also made it difficult for the power generated to be wheeled out.

Unfortunately this administration has not been able to add one megawatt of electricity in the last one year it has however strived to improve on the other areas of the value chain.

“I think the Buhari administration has done a good job of assessing the critical issues affecting the power sector (cost reflective tariff, disco liquidity, gas supply, transmission etc) and is gradually working its way through the issues. The administration is still largely aligned with the Power Sector Reform Road Map of the past administration and the Minister through his Industry meetings has also been working with stakeholders” said   Dolapo Kukoyi of Details Commercial Solicitors.

However, Babatunde Fashola SAN, minister of power, works and housing, has  assured the nation that incremental, steady and eventual uninterrupted power supply is achievable in the country appealing, however, that it could only happen if the citizenry cooperate with the government by taking ownership of and protecting the various power supply facilities across the country.

Going forward, Iledare suggested that “Nigeria needs a full Minister for the Petroleum Ministry, and a Ccar for industry reform to be achievable within the next 6 months. Buhari needs to constitute the Boards for all petroleum related institutions with mandates to expand the industry impact on the domestic economy as soon as possible”.

Sola Bello

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