25 November 2014, Lagos – Business mogul Aliko Dangote has suggested ways out of the woods amid declining oil prices.
Speaking during the International Conference & Exhibition of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos, the President, Dangote Group cited some causes of the continued fall in oil price, and suggested how the Federal Government would best deploy proceeds from oil sales in sustainable development.
He said increasing exploitation of shale oil by oil consumer countries, such as the United States, increased exploration and production of oil following high price of crude fuelled by emerging economies in Asia, discoveries of oil in new climes and power play in the global oil business, among others, were responsible for the continued drop in price of oil.
The Dangote chief, however, said proper investment of oil proceeds by the government would cushion the effect of adverse situations, such as periods of poor pricing of crude, which is the mainstay of Nigeria’s economy.
Primary among the options is the diversification of the economy and exiting the mono-economy.
He mentioned some vital decisions to make the petroleum industry have a marked impact on the economy. They include giving attention to the reform of the oil and gas policy and regulatory environment and ensuring that the much anticipated and long awaited Petroleum Industry Bill (PIB) is passed into law.
Dangota said: “This affects the source of the bulk of national foreign exchange earnings. This is critical to the transformation of the sector and its repositioning to play an effective role in the new economy.
“The second critical imperative is the removal of petroleum fuel subsidy. In reality, this subsidy of gasoline fuel benefits the more affluent, but small minority of the population. It has social governance as well as economic development ramifications. The subsidy diverts resources to the well off, while starving much needed funding from the sorely needed infrastructure developments.
“The third policy imperative has to do with Nigeria’s inability to monetise its enormous natural gas resources. This has been a major policy failure in view of the great potential of gas to accelerate economic growth. The huge deficit in our energy consumption especially electricity, which has constrained our economic growth can be easily eliminated. The key is to adopt a pricing regime for gas that will encourage investment in gas infrastructure. Whilst the gas policy and Gas Master Plan have been developed, progress has been limited by inability or unwillingness to implement.
“A fourth imperative is the growing incidence of sea piracy in the Gulf of Guinea, with Nigeria reportedly being the home of most of the pirates. The Gulf of Guinea cannot evolve into a substantial Intercontinental Petroleum Trading Centre, with the threat of piracy looming largely over tankers plying the Gulf on petroleum trading voyages. Nigeria, being the largest trading partner on the Gulf and having the largest Navy must take decisive action to stamp out piracy completely.
“Lastly, indigenous participation in all areas and sectors of the oil and gas industry must continue to attract focused attention and encouragement from the government.”
He said Dangote Group intends to contribute to the economic value chain in the petroleum industry through a Joint Venture (JV) partnership with First Exploration & Production (E&P) in a vehicle called West African E&P (WAEP), which will focus in upstream assets to provide feedstock to the midstream and downstream businesses. In the downstream, the Dangote Group plans to build 500,000 barrels per day oil refinery, largest in sub-Saharan Africa; 750,000 tonnes per annum (TPA) polypropylene petrochemical complex; fertiliser plant; and 2.8 million tons per annum (mtpa) Urea and Ammonia plant. The company plans to build gas infrastructure to support the Federal Government’s Gas Revolution and supplement the Gas Master Plan that delivers gas to the domestic market.
“The Dangote Group and its partners are committed to delivering these projects before the end of this decade. Our decision to embark on these investments is motivated by a strong desire to help transform the industry into a veritable driver of national economic growth and industrialisation. We are confident that public policy will continue to move in the direction that will expand the space for private sector to assume leadership in the economic development arena. Nigeria will be uniquely positioned to begin to exert geopolitical influence in global energy policies and power play if it can strengthen its internal governance structure, carry out long delayed policy and regulatory reforms, address social iniquities, and create a conducive environment for the private sector to play a lead role in our economic transformation journey,” he added.