The 2023 general elections are in full swing as political parties have concluded their respective primaries and selected their flag bearers. The standard bearers of these parties wasted no time in unveiling their plans and, above all, the country’s economic agenda. It is important to state that the oil and gas sector is the most profitable sector in Nigeria.
Over the years, the sector has been Nigeria’s mainstay in terms of exports and the main source of income. According to the National Bureau of Statistics (NBS), Nigeria exported goods worth 7.1 trillion naira in the first quarter of 2022, crude oil exports were 5.62 trillion naira representing 79.16% of total exports. The oil and gas sector is crucial to the success of the next Nigerian president and this article seeks to explore what the next president must do to ensure the sustainability and efficiency of the sector.
The Nigeria National Petroleum Corporation (NNPC) was founded in 1977 and it is a state-owned company owned by the Federal Government of Nigeria, it is the company through which the government controls and participates in petroleum activities such as exploration , production, refining, among others in the country. It is a member of the Organization of the Petroleum Exporting Countries (OPEC). Over the years, the company has been mired in a series of crises and problems.
The “shady” nature of the society has raised eyebrows over the years. In 2020, the NNPC released its first audited financial documents, the first in 43 years. Additionally, according to reports, 107 million barrels that were removed for domestic consumption in 2019 could not be accounted for, and gasoline worth $16.8 million that was pumped to deposits from Ibadan and Aba in 2019, was never received by the deposit.
- A detailed and “easy to read” financial audit report should be issued by NNPC every year. The NNPC started this in 2020, however this should be a constant thing by the NNPC and should be available on its websites and other platforms for easy access.
- The next president should hold NNPC, through its CEO, accountable for all NNPC deposits and every liter sent to each depot. This will ensure accurate numbers from the end of the NNPC and the deposit to avoid discrepancies.
- A survey of the society’s books over the past decade. The NNPC has been criticized as a haven for corruption. All corrupt officials should be made to incur the ire of the law.
Implementation of the PIA
The Petroleum Industry Act (PIA) provides a legal, governance, regulatory and fiscal framework for the Nigerian petroleum industry, host community development and related matters. The first executive bill of the PIA dates back to 2008, and it was under the 6th Assembly, under the government of the late Musa Umaru Yar’adua. Over the years, successive governments and national assemblies ignored passage of the bill. On August 16, 2021, President Buhari endorsed the bill passed 48 days earlier by the National Assembly. The passing of the bill has been hailed by experts and Nigerians alike.
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- Passing the bill is only a first step, the next president should ensure that it does not nestle in the rivers of forgotten waters. Implementation should be done to ensure that all aspects of the bill are not overlooked.
- A periodic review or assessment of the implementation should be carried out to ensure that further problems do not arise. The 3% for host communities and the 30% profit for Frontline Basin Development should be reviewed to ensure they do not escalate into more problems.
Oil theft in Nigeria has continued to grow by leaps and bounds. Nigeria loses about 200,000 barrels of oil every day. With a production of 1.02 mbd which is below the OPEC quota, the theft of oil has generated more problems. Nairametrics earlier reported that Chevron Nigeria/Mid Africa Business Unit Managing Director Richard Kennedy disclosed that oil theft in Nigeria is an organized crime. According to reports, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) revealed that $1 billion was lost due to oil theft in the first quarter of 2022. Additionally, Shell Petroleum, which has already shut down two of its pipelines, revealed that the continued theft of oil could force them out of the country.
- Social facilities should be put in place for host communities. Issues such as degradation and oil spills need to be addressed, this will help improve safety.
- Pipeline safety should be paramount. Investments should be made in terms of equipment to help protect the pipelines.
- Investments should be made in technologies such as trackers on oil wells and pipelines at strategic locations, to monitor the flow of oil.
Over the years, fuel subsidies have proven harmful to the growth of the Nigerian economy. Nairametrics previously reported that the revised 2022 budget saw an increase in the fuel subsidy from N3.557 trillion to N4 trillion. However, the International Monetary Fund (IMF) has warned that the country could see subsidies increase to 6 trillion naira, which will pose a greater risk to the Nigerian economy.
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- The next president must remove fuel subsidies altogether and ensure the funds are used wisely.
- The moribund refineries should be working and plans should be made to expand and build new ones. This will help cushion the effect of the removal of fuel subsidies and end the importation of gasoline.
Investment in the pipeline
Plans are already in place to revive Nigeria sending natural gas to Europe via Algeria and Morocco. The project could see Nigeria send up to 30 billion cubic meters of gas per year to Europe.
- The next president should complete the project as soon as possible and seek fruitful partnerships with European investors.
- Also, it is important to avoid a parasitic relationship like crude oil. Crude oil is Nigeria’s biggest export, in a contrasting line, petroleum is Nigeria’s biggest import.
The oil and gas sector is expected to be the most important sector for the next Nigerian president, stabilizing the sector will help the country boost the economy and foreign exchange reserves among others.