16 February 2014, Sweetcrude, Lagos –A Frost & Sullivan report revealed that the Nigerian petrochemical market was worth $14.03 billion in 2008 and is likely to be valued at $29.7 billion by 2015. We can infer from this that over $70 billion would be spent on imported goods and finished products that utilize petrochemicals as a component part of production in the next seven years. With Nigeria struggling to deliver 4,200MW of electricity to a population of about 170 million, it is evident why Nigeria has a very immature processing and manufacturing climate and fails to deliver employment, wealth and the type of well-being that one would expect in a hydrocarbon province. An audit of where Nigeria is in terms of her production per capita of processed hydrocarbon is a major embarrassment and cause for concern. Nigeria’s rent seeking approach to resource sharing has resulted in an underdeveloped nation that cannot implement her master plans because of corruption and self-interest.
It is most embarrassing that fuel subsidy in Nigeria is running into the trillion-naira mark and monies which could have better been invested in the development of society, secure pipelines; refineries, petrochemical and gas processing facilities are being paid out to the select few companies that enjoy government patronage. The need to collaborate with proprietors of technology with secured foreign direct investment for national development through value creation is a choice that one would have expected from a people-focused government. The Minister of Petroleum Resources started well by signing the Nigerian Oil and Gas Industry Development (NOGICD) Act upon assumption of her position in 2010. It would be interesting to see how Nigerian Content is tied to the proposed Marginal Field bid round and if first oil and integrated petroleum companies would result from a credible marginal field award process before 2020. The test of value creation and leadership’s choice of those consortiums that have the technical and financial muscle rather than political muscle would reveal how seriously our leadership is about transformation.
Can our leadership take a cue from leaders in the UAE who have leveraged their national assets through strategic alliances with world-renowned companies who are committed to building a transformed economy?. Can we focus on developing our nation so we do not have to escape to Dubai, London, Paris, Rome, New York, Cape Town etc. to enjoy some sanity? When would our system, become meritocratic enough to stimulate positive changes? Can we focus on how to maximize the value created from Nigeria’s hydrocarbon asset through a more holistic than the individualistic strategy? Can we achieve the projected MINT nation status? Is our leadership committed to sustainable development that is in the best interest of 170 million people?
To think that the Federal Government of Nigeria in May 2002 granted preliminary approval and in June 2002 issued License to Establish (LTE) to eighteen private companies for the establishment of private refineries in Nigeria, in February and 2003 awarded marginal fields to 24 indigenous E&P companies after a keenly contested bid process. Today we can count on our finger the producing assets; in October 2004 issued Approval to Construct (ATC) to the licensed companies and 12 years later there has been no significant improvement in our in-country refining, petrochemicals or gas utilisation is such a shame.
Whilst pushing the envelope of R&D in our Universities can stimulate optimization of local resources, the main route that can guarantee us deliverance from dependency of importing finished products is developing meritocratic initiatives, programmes and businesses that engages proven and tested local players collaborating with the proprietors of world-class technologies such as: UOP (Aromatics from Hydrocarbon Mixtures); Phillips Petroleum (Carbon Black); Phillips Petroleum Co (Styrene-Butadiene Rubber, Polyethylene); Zimmer (Nylon 6); Shell Dev. Co (Ethylene Glycols, Ethylene Oxide ); ARCO (Linear Alkyl Benzene) etc. in a credible manner. Until our leaders recognize that strategy is key to nation building Nigeria would continue to suffer from poverty, unemployment and youth restiveness.
The intent of Aliko Dangote to spend $8billion of his own money on a refinery, petrochemical and fertilizer plant in Nigeria’s Atlantic coast may be futile except risks such as (a) the deregulation of the downstream of Nigeria’s petroleum sector (b) the delayed passage of the Petroleum Industry Bill (PIB), (c) pipeline vandalisation (d) poor infrastructure (e) inadequate domestic gas supply (f) leadership issues and (g) power supply are tackled in a timely manner.
*Dr. Ibilola Amao is the Principal Consultant with Lonadek Oil and Gas Consultants Limited, a firm of technical consultants with their core competence in the area of Local Content and Vendor Development. For more information or to reach Dr. Amao you can email her at firstname.lastname@example.org or visit www.lonadek.com.