The Energy sector in 2017
Nigerians expect a better result and encouraging activities in the Energy Industry this year 2017. Oil and Gas experts who bared their minds on what Nigerians expect in the New Year were precise on what should be done in the sector to better the lives of Nigerians.
The Chairman/CEO, International Energy Services Limited, Dr. Diran Fawibe, told Daily Times on the issue of Federal government target of 7,000 megawatts of electricity generation which was not achievable last year, that one good thing is that we have a proactive Minister of State for Petroleum, Dr Ibe Kachukwu, who is working with the various stakeholders and he has a clear strategy to achieve the government objective of provision of energy.
When you look at the 2017 budget, he said, you will find out that power has the highest allocation in terms of funding which means that government is taking power seriously and it is large because of the potential that electricity has for this country. “In other words, if you want to unlock the potential and the resources of this country like human resources, you provide power and the seriousness of the government in this direction has been indicated in the budget allocation and if we are able to achieve the programmes that have been underlined in the budget, you will then see that there will be improvement.”
“It is unfortunate that Nigerians don’t have enough power supply and people are sabotaging the little available. Instead of progressing, we are retrogressing. A lot will depend on the effort of government in reaching an amicable settlement with the militants in oil producing states. If what is allocated is disbursed and spent wisely, obviously, it will go a long way.”
The chairman, however, stated that the government alone cannot generate enough power required in this country. And that is why the private sector comes in. The privatization of power sector according to him is directed towards encouraging the private sector. “You have the independent power arrangement whereby anybody who gets the license can set up a power plant and starts generating. If the Generating Companies (Gencos) and Distribution Companies (Discos) are doing well, more people will be encouraged to invest in the sector but if they are not doing well, no one will want to Invest in the sector,” he said.
Supporting this view, Dr Ade Afolabi, Chairman/CEO, Dansaki Petroleum Limited, said that there is a noticeable increase in production and reduction in the case of pipeline vandalism. So, he said that the 7, 000 megawatts is achievable come 2017.
“The government should encourage gas to power producers. So that we can generate more power supply, so also the Discos should also improve revenue collection. They should embrace the Information Technology (ICT) being used now. It will help, Eko Disco has embraced the technology and it is working for them”, he said.
Speaking of the debt owed GENCOs and DISCOs by government ministries, departments and agencies, he urged the government to do something with regards to settling the debt owed by its ministries, departments and agencies. “It is very vital if the government wants a turnaround in the industry”.
However, Dr Fawibe said there must be a mechanism for the government to pay for electricity consumed by its ministries, agencies and departments. “We should not allow accumulation of debt and each government department and agency must take responsibility for payment of its bills just like other organizations are paying. The way things are now, it is clear that the private sector has been sustaining the power sector. In other words, if the private sector has not been paying like the government parastatals, then there would have been a complete breakdown in the system.”
“Don’t forget that the government agencies, ministries and departments represent a very sizable market. If they are not paying, how will the generating and distribution companies carry on in their business? They should state at the beginning of every year how they want to pay for electricity supply from their budget. If the GENCOs and DISCOs are going to raise fund, it will be at a high-interest rate and that will add to the cost of power generation,” he stressed.
The IESL boss said whatever should be done to arrest this situation on vandalism of power equipment and energy theft through the bypass of meters and illegal connections must continue to be done and other strategies that can lead to success in this area should also be embarked upon.
However, Afolabi pointed out that the challenge can be overcome through the use of the recent technology in place. “They need to get inspectors to follow through not just relying on information technology and sit back in the office. The inspectors should be going round to check the prepaid meter so that nobody bypasses the meter”, he said.
Speaking of the negative effect of the crash on the global oil price in the country, he said when there is a decline in the price of crude oil, the option is to refine in the country and also promote energy means. “The refineries should be maintained, while new ones should be built.”
But Dr Fawibe said the country should save for the rainy day. Also, those who steal from the government account must be disciplined to stop stealing from the government. “So whatever we have should be used judiciously as there will be another recession in the future.”
On gas development, he said, “the fact that power has the highest allocation in the budget allocation shows seriousness on the part of government on gas to power development and also the total energy needs. The government is also encouraging investment in the renewable energy with regards to energy needs in the country.”
But Dr Afolabi stated that there is an enabling environment in gas production as there is a willing buyer, willing seller. “It is just like crude oil now as we buy at the international market price. If it continues like that, it will encourage production.”
On Scarcity of foreign exchange, the IESL boss said the government through the Ministry of Petroleum, the Central Bank of Nigeria and the marketers should sit down and examine the issue realistically and address it.
The Dansaki boss also said the government should make the marketers and importers confident about the business they are into and also convince the public that it can provide the foreign exchange for their business.
Speaking on 2.2 million barrel projected per day by the Federal Government in the budget, Dr Fawibe said all things being equal, the nation will be producing more than 2.2 million barrels projected per day in 2017. “This is with regards to the Organization of Petroleum Exporting Countries exemption from production cut granted Nigeria and the government’s exit from cash calls obligation. So, the production capacity will increase substantially as there will be resources to operate seamlessly by the companies. All these revolve around peace in the Niger Delta. So hopefully, 2017 will be a better year,” he said.
But Dr Afolabi said the government has to devise a means that will prevent people from going close to the pipelines, using the Nigerian Security and Civil Defense Corps. Anybody who goes close after all these efforts to deter people from going close should be arrested.
On full deregulation of the downstream in 2017, the Dansaki chairman stated that there should be full deregulation of downstream. “Sometime in the past, around September 2015, petrol sold for N87 or N90 per litre without subsidy. The problem started when the issue of vandalism surfaced again”.
Speaking further on divestment he said the International Oil Companies (IOCs) were divesting because of Petroleum Industry Bill (PIB) which is yet to be passed. It keeps lingering at the National Assembly. It is creating uncertainty in the business environment. So also, the vandalism and oil theft contributed to the issues that made IOCs divest. He urged the government to create the enabling environment.
But the IESL Chairman, however, said that one of the major problems of the IOCs is being addressed now by way of exiting from the cash call. If that is done, it means that for 2017, you may not see major divestment because their complaint is now being addressed. This policy according to him is going to stop the tide of divestment by IOCs.
Dr Afolabi said in order to address vandalization of oil pipelines, the government should improve on the preventive mechanism so as to be able to determine the spillage soon enough to be able to stop it. “There are ICT controls that will tell you when you are losing oil from the pipelines”.
Speaking on illegal refineries, he said, there should be public awareness to enlighten people on the need of being abiding. Those involved should be sensitized not engage in illegality because it doesn’t pay to be breaking the law. There are gainful ventures they can go into and they will be earning income from there.
