From Uche Usim, Abuja
Sixty-three years after independence, Nigerians are still suffering from energy poverty with no end in sight. Homes are dark and businesses are in ruins.
Worse, access to affordable fossil fuel, non-fossil fuel and renewable energy is very narrow due to ravaging economic hostilities.
While many uninformed citizens may not appreciate the dark cloud of misery hanging over the country, experts have advised that urgent steps must be taken by the government to rescue the economy that has manifested convincing signs of anaemia and haemorrhage.
Social commentators say it is beyond comprehension that an oil-rich nation like Nigeria would have over 133 million (out of a population of 200 million) wallowing in multi-dimensional poverty.
Crude oil, Nigeria’s principal revenue earner, was first discovered in Oloibiri (in today’s Bayelsa State) in 1956.
Production of crude oil began in 1957, and in 1960, a total of 847,000 tons of crude oil was exported. Towards the end of the 1950s, non-British firms were granted licenses to explore for oil: Mobil in 1955, Tenneco in 1960, Gulf Oil, later Chevron in 1961, Agip in 1962, and Elf in 1962.
According to the Organization of Petroleum Exporting Countries (OPEC), Nigeria currently has the world’s tenth largest crude oil reserves and is the world’s thirteenth-largest producer of crude oil, but the country is the poverty capital of the world.
OPEC added that Nigeria’s oil production declined in July 2023, making the country the third largest oil producer in Africa.
Nigeria’s crude oil production level (including condensate) is currently at 1.67 million barrels per day (bpd), according to the Group Chief Executive Officer (GCEO) of NNPC, Mr Mele Kyari.
He said the country would focus heavily on gas as its transition fuel to tackle the energy poverty menace.
Decree 33 of 1977 merged the Ministry of Petroleum Resources and the Nigerian National Oil Corporation (NNOC) to form the Nigerian National Petroleum Corporation (NNPC), in order to conserve the then scarce manpower in the oil industry. The decree also created the Petroleum Inspectorate as an integral part of the NNPC, and entrusted it with the regulation of the petroleum industry.
As development gained traction in the oil industry, other agencies like the Petroleum Products Pricing and Regulatory Authority (PPPRA), Petroleum Technology Development Fund (PTDF), Department of Petroleum Resources (DPR), Petroleum Equalisation Fund (PEF) joined the NNPC. But the industry for decades, operated with obsolete laws and standards.
This amplified the call for a new operational document to reflect current realities and on August 16, 2021, the Petroleum Industry Act (PIA) was signed by former President Muhammadu Buhari.
It has redesigned the petroleum sector ecosystem by giving agencies new names and streamlined responsibilities; just as idle ones were scrapped.
Today, two principal agencies regulating the industry are the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA).
NNPC morphed into NNPC Limited in 2021 having completed its incorporation at the Corporate Affairs Commission as enshrined in the Petroleum Industry Act 2021.
Thereafter, it was floated with an initial capital of N200 billion, the highest share capital by any government company in the country.
Regardless of all these evolutions, the sad reality in Nigeria today is that inflation rate is 27 per cent, $1 is officially N1,050, £1 is N1,200, a litre of diesel is N1,050, 1kg cooking gas is N850, subsidized petrol is N620 per litre while minimum wage remains at N30,000, yet many workers are owed.
There is a gloomier picture. With about N87 trillion debt overhang amid low productivity; a profligate civil service design, ballooning debt servicing, unbridled corruption, weak export, high unemployment rate, weakened private sector, decayed infrastructure and blooming insurgency, analysts say the challenges have reached a stage where pragmatic steps must be taken or the nation becomes another Venezuela that is oil rich, but economically grounded.
The above catastrophic numbers could be traced back to the oil boom of the 1970s which ushered in the legacy of profligacy.
Oil revenues were looted instead of diversifying the economy.
The nation cared less about non-oil tax revenues. There was no expansion of the public sector and deterioration in financial discipline and accountability became the rule. In a nutshell, oil dependence exposed Nigeria to oil price volatility which threw the country’s public finance into disarray and has never recovered till date.
Since 1986, Nigeria has undertaken reforms in various sectors of the economy. The reforms have moved the economy forward albeit slowly.
The problems of the petroleum sector are hydra-headed.
Successive civilian administrations and military regimes have allowed institutionalised corruption to define operations in the petroleum industry since inception.
It has been starved of strategic funding, just as crude sales receipts cannot be accounted for.
Nigeria, the only member of the OPEC cartel without a functional refinery, bled over scandalous subsidy payouts that lasted for 46 irretrievable years.
Refineries are dead and have become conduits for endless fraud; oil theft has assumed frightening dimensions; joint venture operations have remained fractured by litigations and fraud; among other blights stunting the growth of the sector.
Dangote Refinery, awaited as the game changer in the sector, has operated more in the political space than in reality, shifting take off dates countless times.
The Executive Secretary, Nigeria Extractive Industries Transparency Initiative (NEITI), Dr Orji Ogbonnaya Orji, recently disclosed that the Federal Government spent N200 billion between 2020 and 2021 on refinery rehabilitation, which was deducted from the federation sales proceeds, but none of the refineries was operational.
He added that the Nigerian National Petroleum Company Limited (NNPCL) and 47 other companies operating in the sector owed the Federal Government $8.265 billion in 2021.
Today, high electricity tariff, expensive petroleum products and generally harsh operating environment have murdered no fewer than 7.8 million small businesses in the last two years; according to the Association of Small Business Owners of Nigeria.
The President, ASBON, Femi Egbesola said: “Today, according to our survey, we have about 39 million existing businesses that are captured by data; 20 per cent of that is gone. If you look at 20 per cent of that is 7.8 million businesses that have gone under.”
Due to the erratic power supply, many people who used to find an alternative in petrol to power their generators cannot do that anymore, no thanks to the spike in price because of the removal of petrol subsidy. Many homes in Nigeria today are in darkness, reminiscent of the dark ages.”
Many believe the largely mono-economy structure Nigeria operates is responsible for most of the economic woes because before the discovery of crude oil in commercial quantities, Nigeria’s economy survived and flourished on agriculture. Records indisputably show that 72 per cent of the total national output of the economy came from agriculture in 1950, as against 1.1 per cent from mining.
But with the discovery of crude oil, agriculture was strangled and buried, making Nigeria a lazy importer of goods that could easily be produced locally.
From raw and processed foods to imported petroleum products, Nigeria flung its gates open for substandard goods to flood the country and ultimately fractured local producers and the economy at large.
With the addiction to crude oil receipts, the country, as a mono-economy, found itself in a ditch as the world preaches energy transition.
With that ugly development, Nigeria has been perennially robbed of handsome foreign exchange that should have been earned from exporting whole and processed agricultural products.
Foreign reserves that should safeguard the naira and grow through organised export became the lifeline of atrocious imports, depleted slowly but steadily.
Analysts infer that the oil boom era (1973-1983) was responsible for the emergence of disorderliness in Nigeria.
Despite the fact that there was a remarkable increase in the foreign exchange earnings during the oil boom era in Nigeria, profligacy rather than frugality became the rule such that Nigeria did not save robustly.
Tony Elumelu, the executive chairman of Transcorp Group and operator of Oil Prospecting Licence (OPL 281), has called for concerted efforts to grow the fortunes of the petroleum industry.
He once complained bitterly about the frightening level of oil theft, saying it was convincing evidence that Nigeria can never meet its OPEC production quota since the bulk of the produced crude is usually stolen.
President Bola Tinubu has promised far-reaching reforms in the petroleum sector to unlock its rich offerings.
How this will play out is what many Nigerians wonder as they agitate for cheaper energy and economic prosperity.
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