COVID-19: FG should provide palliatives for indigenous service companies — PETAN Spokesman
In this interview with the Publisher, Nigerian NewsDirect, Dr. Sam Ibiyemi, the Publicity Secretary Petroleum Technology Association of Nigeria (PETAN) Dr Lucky Akhiwu who is also the Vice President, Coalition of the South-South Chambers of Commerce Industry, Mines speaks emphatically on the pressing challenges touching on the Nigerian Oil and Gas sector. According to him, the sector is sitting on a time bomb which demands critical decisions from the part of the Government. He lamented how the governors in the South-South have not been collaborating on the need to use directive funds to develop the region. Among other issues, he stressed on the need for them (Government) to really give palliatives and engage operators in the sector. Excerpts:
Looking at COVID-19, what is the impact of the pandemic on the business of PETAN (Petroleum Technology Association of Nigeria) Members?
It has actually affected a lot of businesses. Most especially, this is the time government needs to give palliative to businesses. A lot of businesses are suffering and at the same time there is a lot of downsizing in the industry. Business is not really as usual. FIDs are not taking major projects like Bonga south-west. Some of the projects are crawling. It’s important that government move very fast especially as the crude oil price has really turned very well. It’s time to make critical decisions in real time to move the industry forward. Achieving two to three million barrels, I do not think it’s feasible. You need at least 100 drilling rigs at a time. Today, we have less than seven rigs, so I do not see how possible that is. Government needs to be proactive; they need to give palliative to businesses so that we do not release a lot of staff as that will result in more hunger and affect more Nigerians.
Is the palliative you are talking about very different from the Nigerian Content Fund that the Bank of Industry (BOI) is handling and what has been the response of BOI to service companies?
BOI is very slow and for me that’s unacceptable. I know that the Executive Director, NCDMB Engr. Simbi Wabote, is working very hard to ensure that things are moving in the right direction. He is doing excellently well but that’s not the palliative I am talking about. The palliative I am talking about is for example if you look at the basket for vessels, it’s close to about $4billion. In the next few years, we have not scratched it. So, if I am going to bring a vessel into Nigeria for example, I will expect that government should give me some level of waivers. That way, it’s easy for me to latch on bringing in vessels rather than making it complex. So, those are the kinds of palliatives I speak of. Government should also sit with industry players collectively to say, we want to make (for example) this fund available in the pool to buy this. For example, cabotage fund, this is the time to release the money. For 14 years the money is kept in the bank; it is our money. We are not asking you to give us the money, but rather let people begin to access that fund now. Those are the kinds of things that will move this industry forward otherwise it’s going to be disastrous. The oil and gas industry is sitting on a time bomb and that is the truth of the matter.
What has been the effect of this on innovation?
Also, the Nigerian National Petroleum Corporation (NNPC) needs to pay cash-call they are not paying cash call. This is a very big catastrophe and if you don’t pay cash call to the IOCs, they will not pay totally. If you are JV partners and you own 40 or 60 percent, the other partner is paying and you are not paying; business is not about friendship. So as it is today, they are not paying cash call. It makes it difficult for Exxon, Chevron, and Shell to pay contractors and that has impact on businesses. So, for me as a responsible Country, we must do what’s responsible enough. I think NNPC really needs to get fast on track so that they can begin to pay cash call.
On these challenges you have just mentioned, and the marginal field programme of the government, what are the responses of indigenous operators and the role of PETAN members?
PETAN members are playing good roles. I know two or three of our members are on board and I think we have gone in the right direction but holistically in the industry. Government really needs to sit and look at the focus. Where do we want to go in the next 5 to 10 years? And this is the time to make critical decisions because it is affecting the whole world globally. So, I think that there is a lot to do but government must make critical decisions, most importantly to be fair and be truthful to Nigerians. It shouldn’t be a case where you tell me you have paid cash call when you have not paid; it doesn’t make sense. It makes us, as a Country, look very irresponsible and this is the way the IOC looks at us. So, I think they need to do something very critical in that direction.
Looking at the chambers of commerce and leaders in the South-South, with the improvement in the gradual rise in global oil price, what are we to expect from businesses in South-south?
My greatest worry is the governors in the South-South. We have engaged some of them but I can see them not collaborating enough. I think by now they would have done so much compared to the 13 percent derivation they have been collecting for the last 30 years. There is nothing to show for it. Today, we are doing Oloibiri lectures but if you go to Olobiri, there is nothing to show for it. So for me, the 13 percent derivation, I think there must be a way constitutionally to track it; that is, development fund. But what we see today is that they are using that fund to do projects; it’s a development fund, they have their constitutionally alloted budget which is theirs. The developmental fund is not for their budget. If you move across Delta and the whole of South-south, it’s a shame. The roads are nothing to write home about, even infrastructure, you can’t find industry left and right. So, I think that, they need to go back to the drawing board to say, let us take this 13 percent of the South-South and put it in the fund managed by the Federal Government so that they can use it as development. That way, the governors will begin to understand that they must think outside the box. What do we need to do? Some governors, like Edo state, are thinking outside the box, seeing how he can make money for the state, bringing projects and all that. But I think some of them are very relaxed on decision. But I think that they should scrap it off and what I mean by scrap is not to do it completely. Rather they should take it off their portfolio. They shouldn’t access those funds as a governor in the South-South and I mean it; take that fund off them and put it in a fund where you manage like NDDC. That is, an administrator to manage the funds to develop the South South; that money is a development fund. I appreciate that they can take it to 30 or 40 percent as the case maybe but this fund should not be with these governors.
But when you are talking of the central you can see the challenges associated with Niger Delta Development Commission (NDDC)?
That we have found ourselves in monkey water does not mean we are not going to drink water. The truth of the matter is that in the last 30 years, trillions of dollars have gone through these governors and there is just nothing to show for it. Well, you can point and not up to five percent and I know what I am talking about. So, there must be a way around it. If we go to Bayelsa, they have the highest gas reserve; when there is rainfall, there is flood everywhere. There is nothing to show not even relief materials. You see them on the road suffering. These are tough times, so government must make very hard decisions to get us to where we are in the South-South. We have engaged them. We are doing an investment forum in November where we want to bring the South-South governors together to sit down to discuss what is the way forward? How can we move this region forward? For me, this is supposed to be like a small London but there is just nothing to show for it. It’s a brain storming session; where we discuss do we want to leave a legacy behind or we just want to eat the money and go? We must make hard decisions. So, that conference is very strategic. It’s going to happen in Akwa-Ibom state where we would bring all the governors together and brainstorm.
