A Review of the Nigerian Energy Industry

PIB is dogged by political failure and weak leadership – Comrade Esele

11 March 2013, Sweetcrude, Lagos – COMRADE Peter Esele, is the President of the Trade Union Congress of Nigeria, TUC, he is also the erstwhile president of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN. He has served on several government committees and task forces and is still a member of the Subsidy Re-investment Programme, SURE-P. In this interview with Hector Igbikiowubo, the Editor of SweetcrudeReports, he speaks on a number of burning national issues including the stalled Petroleum Industry Bill, PIB, the activities of SURE-P, petroleum subsidy removal and the power sector, among others.


There’s been a lot of talk out there about some members of the special task force set up to review the Petroleum Industry Bill, PIB, disowning sections of the bill contained in the document before the national assembly. You were a member of the task force, can you address this development?

Yes I was a member of the special task force and we sat and we looked at provisions of the bill, of course we were set up by the executive arm of government. After looking at it we had to pass it on to the executive, but we also heard that we had people behind the scene who also worked on the bill. For me, it is within the right of the executive to do what they like with a bill they want to send to the national assembly. The initial reservation of some members of the task force was that if you had technical people behind the scene looking at the bill, why didn’t they join our committee so that we can all be on the same page, we debate the provisions and move on. But maybe those in power have information that we are not aware of, that is making them go ahead to do what they have to do. But so far, what is happening to the PIB is very worrisome. I say worrisome because, there are some areas that can be settled politically, it happens everywhere in the world, whether you go to the United States of America where you have the Democrats and the Republicans at each other’s throat over a particular bill, they come to a compromise. I think if the president does not do anything about the PIB, it will not be good for his image and it will also not be good for the party. I say the party because the PDP is in control of the Senate and indeed the national assembly. So why can’t the PDP pass the bill? Why can’t the PDP as a party in control not do something about the PIB. There are three things that I see: it’s either, they never really had a plan or they never carried people along to understand why they need to have the bill passed into law, or they just lack the leadership capacity to have this thing sail through and for me that is really troublesome.

And I have always said that even when the PIB becomes law; it is not going to solve all of Nigeria’s problems in the oil and gas sector. But the PIB can serve as a catalyst towards addressing some of the issues. Nigeria has laws, beautiful laws – and you can even pass that PIB today and it remains on the shelf. Our problem has always been enforcement of our laws. While the committee was sitting, it engaged the IOCs, the unions who came to make presentations, the indigenous operators running marginal fields all made presentations. I really wonder when people criticise the bill because even though I was a member of the committee that engaged in the review, I am looking forward to the public hearing. We make a mistake not knowing that it is not a law yet, it is still a bill and some fine tuning can still take place. I don’t want investments to suffer, I don’t want the oil and gas industry to be abandoned, but I still believe that the IOCs and the government must come to an agreement.

Permit the interjection sir; can you give me in specific terms your committee’s point of divergence regarding what was submitted to the executive branch of government and what is currently before the national assembly?

I wouldn’t want to go into that because a similar situation resulted in the case where you had about four different versions of the PIB in circulation not too long ago. As PENGASSAN president I was in the oil and gas implementation committee, OGIC. We want to try as much as possible to avoid that this time around. The PIB task force was set up by the executive and we report to the executive. Whatever the executive now does with the bill that was sent to the national assembly, it is the executive’s business.

Doesn’t it follow then that the special task force was just a window dressing?

The national executive of the Trade Union Congress, TUC, had a meeting in Benin where they talked about too much powers being concentrated in the office of the minister of petroleum. Now it is not going to be Peter Esele talking as a member of the committee, it is now Peter Esele, talking as President of the TUC and the decision of the national executive council of the TUC which I must convey. The reason I was made part of the committee was not only because of the office I occupy, but also because of my being part of the OGIC implementation committee.  If there are areas of divergence, the union will now look at those areas where it disagrees with provisions of the PIB and when they now look at those areas, a position will be presented to the national assembly. I don’t want to go back to my job as a member of the task force because that job has ended. When the bill was sent to the national assembly, it went as an executive bill, not which of a special task force. You look at it as an executive bill before the legislature. We as a trade union have areas of disagreement, PENGASSAN has areas of disagreement already – we all now go to the public hearing to say xyz are areas where we don’t agree. There are certain sections contained in the PIB we don’t really agree with, it’s just like setting up the board of the NNPC where you have the minister as the chairman. Where then is the checks and balances? Another area that we are beginning to look at is why would you have the position of CBN governor tenured for 5 years, but why would the office of the GMD of NNPC not be tenured? From 1999 till date we have had 7 GMDs run the NNPC. What serious organisation functions in that manner? In Sweetcrude how many times have you changed your editor? If you change the editor of this paper in that manner, it speaks volumes that the paper is dead already. If I am a GMD of the NNPC, how can I now begin to address policy, or how to drive the NNPC to be on the same footing with its contemporary national oil companies; Statoil in Norway, Petrobras, etc. the only thing that the GMD of NNPC does is to be loyal to the minister of petroleum and the President, and the day he is deemed no longer loyal, he is sacked. But I have always said that this is deliberate, so that he can be at the mercy of those in power.

Is this one of the issues of concern, tenure of the GMD? 

Not quite, but this is one of the issues the TUC will be bringing to the table during the public hearing at the national assembly.

Yesterday at the national assembly when the PIB came up for discussion before the Senate, northern senators noted that the 13% derivation had been misused over the years and they are calling for outright cancellation of the allocation. What is you take on this?

When I watched the debate my conclusion was that those who made those submissions were just being emotional. The fact that people are not doing things right does not mean that the law is not right. We need to ask ourselves, why would that fund be wasted – it is because of you and I, our values. No matter how good your laws are, if your values are the wrong type, you can’t make progress. There are other parts of the world where you have 50% derivation and things are working. There are also other parts of the world where you don’t even have derivation and things are also working. It’s the values in place. The senators who are calling for the scrapping of the 13% derivation, are they saying that northern government officials are not part of the wastages that we have in the system? It is not the law that is bad; it’s those who are operating it that are ruining things. That’s why when we started I said the president has to find a political solution. The guys who are talking about that from the north also have a case. There has got to be give and take, and because they are all from the same political party that is why I am wondering whether it means that the PIB was not a party policy. If it is a party policy, the party queues behind it. Nigeria is the only country where in the national assembly, a PDP bill is even more opposed by the PDP lawmakers than the opposition. If you go to the states houses of assembly, you find out that the states where you have the PDP in power are more cantankerous than the ACN states, which brings party discipline to mind. It’s not that one or two people don’t go offline, which happens even in mature democracies like that of America but majority queue behind the policy of the party. The PIB is not a policy of the party, because if it is a policy of the party, I don’t think we will be having this debate of north/south, east/west.

At the moment, the government has suspended renewal of mining leases and some people out there perceive this to be arm twisting tactics to get the international oil companies to fall in line by supporting passage of the bill. In view of this development and other prevailing realities vis a vis the polarisation of the legislature along geopolitical lines, do you think the government has handled pursuit of passage of the PIB properly?

What I expect the government to do is first of all look at the industry – what do you intend to achieve? I think one of the things government is thinking is okay, ‘how do we get more money out of the industry’? But you need to also ask yourself, do you have the technology to virtually take over the industry? Right now we don’t. Then, are you saying the IOCs should go? I think what government should do is first of all; let’s have a round table with the IOCs. You see there are areas where you can breathe down someone’s neck but we are not being serious. Even if it is our plan, there is also a systemic way to address it. If we want to take over the industry, there is a way to go about it. But at the point where we are now, can we really take over the industry? No! Do we have the technology? No! Then what about the market? These are some of the challenges.

I am aware that Shell has put on hold a $30 billion investment and I think other multinationals are also going to follow the part of Shell. But the multinationals should also know for how long they’ve taken so much and look at what they can also give.

Invariably, you are saying that the success or failure of the PIB is tied to the success or failure of the Nigerian leadership?

Substantially, yes! And even the way the debate is going is also telling you the way the country is. I am sorry to say this, with all due respect, I think we do more talking than any other thing, we are always talking and we do less thinking, and that is why people take advantage. We haven’t asked ourselves, where do we want to take the oil and gas industry? What is the short, medium and long term goal? We’ve had crude oil for over 59 years. In the 1970s and early 1980s our middle man-power was very robust, the PTI was feeding the industry and back then, with a diploma, you could hold your own on anything you are trained for. Who were those managing PTI, the IOCs and the NNPC – without the government. But the minute the government got involved in PTI they started offering all manner of courses from catering to you name it. The PTI used to have specialised courses meant for the oil and gas industry. When you finish your university and you apply to work in an oil company, they say they want you to be a driller, assistant driller, mud-man, they send you to PTI and in three to six months you are good.

Given the convoluted atmosphere that you have painted, that we also allude to, do you see the PIB being passed into law anytime soon?

We’ve been talking about this bill for the past six years or there about, we are talking about it right now and I think what we are doing right now is to exert more pressure. But my fear is that what will finally come out, even if you say you passed this bill today, what are you passing? The government needs to sit up, I am not just talking about the executive alone, and I am talking about the party in power, because from the look of things I can tell that they don’t have any policy for the oil and gas industry. If the party in power cannot queue behind a bill that has been in the national assembly where you have majority and you can’t pass your bill, then of what use are you in power? In the budget, there is a N7 billion provision for sensitisation to pass PIB. I don’t know how you sensitise people with that amount of money. What are they going to do with that amount when members of the same political party cannot find common ground? I think the biggest problem the PIB is facing right know is political failure and weak leadership. Whatever other stakeholders feel they need, it is for the government to get them to a round table to discuss the way forward. Nobody is coming to put in any money in a sector where they do not know the laws governing it. How do you tell me to come and work for Sweetcrude when I don’t have terms of employment? What binds me and you, is the contract and the legal framework of the contract. So, when there is no law, why should I put money there?

The establishment of the Subsidy investment Re-investment Programme, SURE-P, is one of the fall out of the fuel subsidy strike which took place last year. You are a member of that body, can you tell us what you guys have been able to accomplish since it was inaugurated?

The first thing SURE-P has been able to accomplish is that now, you can take a train ride from Kano to Lagos. One thing we may not have done well is that we didn’t talk as much as we should have. We had issues with ministries. Initially, everything that had to do with SURE-P was appropriated by the national assembly, no member of that committee had an input into anything. N15 billion goes into SURE-P account with the Central Bank every month, totalling N180 billion. It was appropriated by the national assembly; it was deployed to certain infrastructural needs without any input from any member of the committee. We are supposed to ensure that the monies deployed were actually put to the use for which it was deployed, we look at the budget and say okay, this is what was appropriated by the national assembly, and we make sure that it is executed. Maybe East West road, one kilometre or two kilometres, if SURE-P fund for that road is maybe N10 billion, and the road requires N300 billion to complete it, the little portion of N10 billion which will not take you far, is SURE-P money and it is there. So, what SURE-P is doing is to ensure that the money so appropriated is actually put to those uses. The other part of it that we are very keen on right now is the vocational training which we think will be good for the youths. Just like I was saying earlier, you can have one editor for Sweetcrude and 100 correspondents. Our intention now is to concentrate on those manpower needs that has capacity to create huge employment. We’ve identified a lot of training schools, shockingly, in some of our ministries we have these training schools that are completely run down. The British High Commission is helping with that, the Canadian High Commission is also helping out.

Funding for SURE-P wasn’t released until July last year and if you go to the south east, you find FEMA people working on the roads on account of funding released by the Programme. There are several other roads being constructed and it is being funded by SURE-P. One of the biggest problems that we have in this part of the world is how we budget for things. For instance if I want to construct Lagos – Ibadan expressway and I know that N500 billion is required, yet you go and provide N20 billion in the budget and you start the road. Going by the actual budget required to complete the road, it means that construct work on that road may last for 25 years. Meanwhile every two years, you have to deal with variation; that is why nothing gets done, that is why we kick against many of these things. Being in that committee has also been an eye opener about how government works, and how we may end up constructing one road for 100 years. All the projects that SURE-P is funding, we want to have sign posts indicating that those are SURE-P projects just like we had during the days of PTF. SURE-P is however an improvement of the PTF because we want to have projects domiciled in the ministries through the project Implementation units, PIU. Some of the projects embarked upon by the PTF are wonderful projects, but once that government left and PTF was disbanded, that project died. However if you bring a project, like the Kano-Lagos rail line, and we are going to have another one, the Kano – Port Harcourt line domiciled under the ministry of transport, whether tomorrow SURE-P ceases to exist, there will be people managing the project. The vocational training is going to be domiciled in the ministry of labour and employment, that way, whether Christopher Kolade and his committee goes to blazes tomorrow, that project will continue to run.

 Are you saying that the purpose for which organised labour embarked upon strike action last year has been accomplished?

Yes, to a certain degree! I am not going to tell you it is total, no! It’s not total, there is room for improvement. Firstly, we are not party to what was put in the budget. Perhaps if you ask us for our own input, it is likely that our attention will not be on east west road which requires maybe N300 billion and we know that even if we spend the whole money accruing to SURE-P it will not fix the road. We will rather put our attention on other projects; I don’t mind spending the budget on one project, so long as that project is completed. A reason we have problems is that Mr. A assumes power as president and he says he wants to do Lagos-Ibadan expressway. Tomorrow Mr. B takes over and abandons the road. Our problem is fundamental – it is rooted in our values and how we do things. Sometimes you look at the country and you ask yourself is there something wrong with us?

Look at the power sector, what does it take to generate 10,000 Mw of electricity? From 1999 we determined that we had power supply problems and if we had been generating 1000 Mw every year, from 1999 to 2012, it is 13 years, that translates to over 10,000 Mw. Let’s even say you have been generating 500 Mw each year and power is so easy for you to price. We all know that with $1 million you can generate one megawatt, and before the advent of the Goodluck Jonathan administration we were made to understand that $16 billion had been spent on power generation. If we had spent that amount on power, how much electricity does it translate to? Assuming we had been chasing 500 Mw each year, that translates to $500 million or $5 billion in 10 years.

President Umaru Musa Yar’Adua came into office and suspended the power projects for two years and that is a man from the same political party and the person he succeeded. Now we are back to where we were before. It is my hope and prayer that we get this right – we had started out by building power plants without provision for gas feed stock. A whole lot of these challenges are the things that we face as a people and as a country.

The national assembly is debating a law that will criminalise late payment and non-payment of salaries. What is your impression of this development?

It is a very wonderful law, it is good and I am so happy that they are going to do this. Nigeria works in reverse gear. In other parts of the world, do you know what it means to owe a person one month’s salary? It may surprise you to note that majority of these things happen in media houses where salaries are not paid for 10 months. I think the attempt to criminalise it is good. In places like the US, an employer cannot even contemplate owing salaries, but in Nigeria this is taken for granted, you can do whatever you like. I think the national assembly should be commended for this initiative, as for us in organised labour, we salute them and we encourage them to criminalise it. Even the government is part of the problem. So, when everybody now knows that he or she can go to jail for non-payment of salary, they will be forced to sit up. When you don’t pay salary, you are depriving somebody’s ward from going to school;, you are killing somebody somewhere whose medical bill cannot be paid. So many things can go wrong when one month salary is not paid. In the TUC we pay staff salary every 25th, we know we are above board and that is why we are encouraging the national assembly to go ahead.

I want you to remove your toga as a Labour leader and speak from the perspective of all you have seen so far. Do you still think that petroleum subsidy payment is right?

Hector, the TUC still maintains its stand and I think we are the only one with this position. We have been very consistent with where we stand on petroleum subsidy. Our take has always been that we are not against subsidy removal; at no time have we said we are against subsidy removal. What we are against is, when you remove the subsidy where is the fund going to be applied? What are you going to use the fund for? If you now remove the subsidy and your recurrent expenditure remains 70%, how do you expect me to support you? If you remove the subsidy and at the end of the day you increase your allowances, your salary goes to $1 million, how do you expect me to support that subsidy removal? We will support the removal of subsidy on the condition that the funds saved are used on things that will move this country forward, for things that we can see. You can’t tell us to tighten our belt while you loosen yours. That to us as a trade union is unacceptable. We must know what you want to do with that fund. If you want to create a special pool of funds, we’ve even decided to tell them this is what we want. Now let me tell you, on subsidy they claim they are spending N2 trillion per annum, if you tell me that you want to take subsidy away and that you are going to link the entire country by rail and it is clear that the plans are specific, achievable and time bound, then we will come along.

As PENGASSAN helmsman, we signed off on the privatisation of the refineries 51% – 49% equity ratio between the core investor and government. This was some years ago, PENGASSAN at the time determined that the refineries were becoming a pipe dream, that the turn- around-maintenance was now being undertaken by contractors that are not competent. But again the privatisation move never saw the light of day. Our position on this issue has been clear and TUC remains committed to turning things around. You tell me, which company can thrive on a recurrent expenditure in excess of 70%, none! When it concerns the ordinary man on the streets, they tell us privatisation, they tell us global best practices, etc. but when it concerns the elites, they don’t say anything. Go and check how much of the American budget is used for recurrent expenditure; it is less than 10 per cent. President Obama’s entertainment budget per annum is about $19,000, the total package for visitors is about $190,000. His guests must be those that are relevant and even then, they serve you tea and water. Three years ago they had cause to organise a party for one of the friends of Obama’s daughter or something like that and the president was told that he had to use his personal funds because the money for such entertainment had been exhausted. He had to use his money. For your information, for some of the meals he eats, he spends his own money, and during his campaign, if Obama flies Air Force one, he has to pay the equivalent of hiring a Boeing 737 aircraft and that is why he was busy raising money for his campaign. You can then see the difference in our values. You therefore can’t come and tell me that you want to remove subsidy,  when I know you live like kings, queens, prince and princesses. When subsidy is eventually removed there will be backward integration, those who want to invest will do so. The most number of jobs the upstream can create is about 20,000. But in the downstream, refineries will create so much – there is the marketing end, there will be spin-offs like that petrochemicals. Singapore does not have a drop of crude oil but all of the chemicals that we require, that country is the life wire. They have one of the highest refining capacities in the world.

Right now what we are doing is that we export wealth and import poverty because you sell a barrel of crude for $100 and that same barrel of crude you buy back for $500 because of the value added.

What is the TUC’s reaction to the comatose state of Nitel and the seeming cannibalisation of its assets?

When all of this started, what were you all saying? You all said that we should mind our business. That’s what Nigerians were saying, let me tell you how the labour movement operates; we are very democratic and one of the reasons why we are so democratic is that we feel the pulse on the streets to do what we do. Unfortunately, it is the politicians that don’t feel the pulse on the streets. When we came under pressure to leave government alone to do what it wanted with Nitel and nobody wanted to listen to us, we simply changed direction and say let’s just protect the workers, let’s make sure they get their pay and the rest of you guys can stew in your juice.  At the end of the day we are all paying the price for it.

The same thing is going on with the power sector privatisation.  Initially the PHCN workers wanted to go on strike and it was trending on the internet – people were saying they can go on strike, that who knows them, what have they done before, as far as they are concerned, the workers had always been on strike because power was not regular but nobody is asking why power was not regular, nobody is asking how much actually got invested in that sector.  Eskom of south Africa belongs to the South African government, why are they achieving the milestones they have achieved so far, it is not because they privatised anything, once your value is wrong, it is wrong and you can’t get anything right. All the banks in America are in private hands, are they not responsible for the global meltdown? From Europe to America or anywhere for that matter, once your values are wrong, they are wrong and there is a price to pay.

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1 comment

  1. Sweetcrude Reports via Facebook Reply

    We can relate with Comrade Esele’s submissions on the PIB.