Tuesday, April 26, 2011

Petroleum industry and Jonathan



Stable or uninterrupted supplies of petroleum products (petrol, kerosene, diesel, low pour oil fuel) was all what Nigerians required to justify their ranking as one of the world’s top crude oil producer nations, and that had been lacking in the last 10 years, but in less than 12 months since Goodluck Jonathan assumed the leadership of the country as President/Commander-in-Chief, most Nigerians would agree that that aspiration has been realised.

Indeed, getting Nigerians to walk or drive into filling stations to buy fuel without the long queues occasioned by scarcity and the hoarding of the products was a feat thought impossible to achieve; some even saw it as a jinx. But for a man who listens more and talks less, Jonathan was quick to identify the problems: hire the best hands to confront the cartel responsible for the crisis and then open up the operating environment to allow the participation of more firms.

To the latter, the President found ready-made materials in indigenous petroleum marketers with requisite facilities, who were quickly licenced and deployed to assist in the import and distribution of products to all nooks and crannies of the country. Their entry into the market has closed the gap in demand and supply created largely by the monopoly of major marketers in the import and retail of products. Today, Nigerians drive or walk into filling stations to buy petroleum products without the long torturing queues occasioned by the scarcity of the products.

But it was in Diezani Alison-Madueke, that Jonathan had found the right Petroleum Minister. Her career in Anglo/Dutch multinational Shell had exposed her to the intricacies and dynamics of the industry and with courage and vision, Alison-Madueke in less than a year was able to turn around the fortunes of the industry in line with the aspirations of President Goodluck.

But then boosting the greater participation of local firms in the industry, earlier monopolized by foreign interests, was no easy meat to chew. And that is where even the worst critic of Jonathan acknowledges his sagacity in quickly signing into law on April 22, 2010 the Nigerian Oil and Gas Industry Content Development Bill (2010), popularly known in the industry as the Local Content Act. This bill, for very strange reasons, had been kept in the cool prior to Jonathan’s assumption of office as Nigeria’s Acting President.

Many analysts see this law as the crowning achievement to date of the Petroleum Ministry, under President Jonathan. The law has expanded the local capacity in the industry. In less than a year, the quantum or percentage of locally produced materials, personnel, goods and services rendered to the industry have increased, thereby generating more employment and economic empowerment to thousands of Nigerians.
This law will bring an end to capital flight as some $20 billion dollars that had been going out of Nigeria in the services sector of the oil and gas industry, as at least 50 percent of that money will be coming to local service providers. Industry analysts opined that the law has the potential to generate over 30,000 jobs in the next five years aside the far reaching implications for the issues of technological advancement, long term cost effectiveness, post amnesty programs in the Niger Delta and the improved impact of the Oil & Gas Industry on our National GDP.

In the gas sub-sector, it is worthy of note that the country has witnessed an unparalleled changes within the last 11 months of Jonathan’s regime. Gas-to-Power pricing has been revised to more sustainable commercial levels that now incentivise sustained gas supply development and growth.
In line with the administration’s bid to ensure availability of gas for power generation as well as reposition Nigeria as the regional hub for gas-based industries, President Jonathan about a fortnight ago unveiled an ambitious $10 billion plan to harness the country’s vast gas reserves and develop a petrochemical and fertiliser industry. Jonathan declared that the gas revolution would create up to 500,000 jobs, many of them in agriculture, and will help improve power supply to homes and manufacturing in Nigeria. “The investments agreed today will result in foreign direct investment of about $10 billion over the next three years”, he said, adding that “the economic impact of this agenda will be endless in terms of employment and wealth creation.”

In fact never in the history of the country has it witnessed such a sustained inflow of investment both in the upstream and downstream sectors. The recent interest of investors like the China’s largest engineering company, CCECC, to build three Greenfield refineries and one petro-chemical plant in the country is a testimony in this regard point to these facts. The refineries, which are being constructed in conjunction with the NNPC will increase the nations refining capacity by 750, 000 barrels per day translating to over 45million litres of PMS per day. In the area of job creation, experts forecast that the projects will collectively attract over 20,000 jobs. The quest to also boost crude oil reserves is also being vigorously pursued.

Many who had lost hope that Nigerians could gain from its abundant hydrocarbon deposits are beginning to have a re-think. The pace may be slow, requiring some level of urgency, but the vision, commitment and dedication by President Goodluck Jonathan to realizing set objectives geared at effectively harnessing the benefits of the petroleum industry to the benefits of citizens is one that no one can fault.

Iba writes from Lagos

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