A Review of the Nigerian Energy Industry

Oil and Gas issues: Dizeani’s defence

Henry Umoru

17 February 2012, Sweetcrude, ABUJA – The ongoing efforts by the Ministry of Petroleum to reform the operations of the oil and gas sector took centre stage recently at the National Assembly when the Minister, Mrs. Diezani Allison-Madueke, defended the budget of the ministry before a joint hearing of the Senate and House of Representatives Committees on Upstream Petroleum, Downstream Petroleum and Gas.

Given the premium and pivotal role of petroleum products in the lives of Nigerians, it was not strange that the Senators and members of the House of Representatives looked forward with great expectation to the great confrontation with Mrs Diezani Allison- Madueke that Tuesday, February 2, 2012.

The minister’s appearance before the Senate and House joint committees was against mounting revelations of wanton corruption in the sector at the probe of the fuel subsidy regime by both chambers of the National Assembly. The probe by Farouk Lawan-led ad-hoc committee in the House of Representatives was just a fitting background to the distress that many of the legislators expected to challenge the minister during the joint budget defence hearing before the three committees.

Other outstanding issues included the fate of the Petroleum Industry Bill (PIB) and allegations of the shortfall in the transfer of proceeds from the sale of crude oil to the federation account by the Nigerian National Petroleum Corporation (NNPC), which is supervised by Mrs. Allison Madueke’s Ministry of Petroleum, the alleged secrecy in the NNPC’s accounting system among other negative hues that have characterized the operations of the oil sector.

The 2012 budget estimate defence of the ministry, like other defence hearings before it, opened with a floodgate of queries, ranging from the untidiness of accounts to some out-right cases of profligacy. Senators in the joint committee particularly used the opportunity to push the minister to commence what they described as the urgent need to start reforms and total overhauling of the strategic oil and gas sector.

Mrs. Allison-Madueke responded by intimating the lawmakers on the ministry’s efforts at reforming and repositioning the sector, with the aim of making it more responsive, transparent and accountable to the people.

While presenting the budget estimate, the Minister told the lawmakers that the thrusts of 2012 activity plan are to sustain the gains of the past year as well as intensify efforts on the complete transformation of the Petroleum Industry and its parastatals as a whole, even as she presented a budget estimate of N59,664,912,140.00 for the ministry and its agencies, representing an increase of 25% over 2011.

Of this amount, a total sum of N51,324,227,840.00 is earmarked for recurrent expenditure while N8,340,300.00 will be used to complete ongoing capital projects. The minister went out of her way to promise the lawmakers that she would ensure prudence in the implementation of the budget.

Responding specifically to issues of accountability and transparency raised by the Chairman, Senate Committee on Upstream Petroleum, Senator Paulker Emmanuel, Mrs. Allison-Madueke disclosed her plans to carry out the process of reforms in the oil and gas sector.

To the minister, her invitation of the Economic and Financial Crimes Commission (EFCC) to investigate the affairs of the Petroleum Product Pricing Regulatory Agency (PPPRA) and the NNPC was an indication of her commitment towards accountability. While many have doubted her suitability in making the invitations given that she is at the head of the affairs of the two agencies, the minister was unbending in her pledges.

As a case of blowing one’s trumpet, the Minister told the lawmakers that a special PIB Task Force was set up to work with members of the National Assembly for the smooth passage of the PIB; which is the legal teeth to the oil and gas reforms, adding that the Task Force is headed by Senator Udo Udoma.

She further disclosed that as part of moves to sanitise the industry that a “Governance and Controls Task Force” was constituted by her on January 31, 2012 to immediately design a new governance code for the NNPC and other parastatals as well as eliminate rent-seeking opportunities and arbitrage while implementing robust performance management systems and indicators.

She added that a Refineries Task Force has been set up to help accelerate the overhaul and Turn Around Maintenance of existing refineries. The task force is also to design a road map for self sufficiency in petroleum products refining in Nigeria, with a view to bringing down costs of petroleum products.

It would be recalled that the federal government had constituted a 22-man National Refineries Special Task Force. The taskforce was without prejudice to the on-going rehabilitation and Turn Around Maintenance (TAM) of the Port Harcourt, Warri and Kaduna refineries, as well as the building of Greenfield refineries in the country.

The task force, according to the minister, is expected to make recommendations that will lead to the overhaul of refining operations and output in the country. It is being chaired by former Minister of Finance, Dr. Kalu Idika Kalu, while the former Managing Director of the former Unipetrol, Mallam Yusuf Alli, will serve as its alternate chairman.

With representations from critical stakeholders in the industry including labour unions, the task force is to produce a diagnostic report on the operations, finances and efficiency of Nigeria’s four main refineries situated in Port Harcourt, Warri and Kaduna.

This is besides the 21-man Petroleum Revenue Special Task force with former Chairman of the Economic and Financial Crimes Commission (EFCC), Mallam Nuhu Ribadu, as Chairman.

Given the administration’s long agenda Nigerians who have for long paid the price of the inefficiencies and the corruption in the sector, can only but dream for a better day.

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