Nigeria: Removing subsidy, a bold decision – Kachikwu

*Dr Ibe Kachikwu, Nigeria's minister of state for Petroleum.

*Dr Ibe Kachikwu, Nigeria’s minister of state for Petroleum.

…Says refineries functioning below 50%
…Insists negotiation with militants “successful”

Oscarline Onwuemenyi

24 June 2016, Sweetcrude, Abuja – The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has praised the courage of President Muhammadu Buhari to remove the subsidy on petrol, even as he said the country would end fuel importation by 2019.

Kachukwu, who was a guest speaker at the 10th Annual Business Law Conference of the Nigerian Bar Association Section on Business Law (NBA-SBL) in Abuja, added that the country requires about $50billion to fill the infrastructural gap in the industry and get it functioning optimally.

He said by 2019, Nigeria expects to become a net exporter of refined products, adding that an investment drive is ongoing to meet the infrastructure requirement.

Kachikwu further noted that reforms in the petroleum industry required “bold thinking to challenge the status quo.”

According to him, it required balancing interests of several groups with conflicting demands, some of which he said appeared valid.

He noted that, “The deregulation was a very bold thinking. Removal of subsidy was a bold thinking. Restructuring (the NNPC) was a bold thinking. We are working on a fairly fast-paced track where every month has a major new issue that we have to deal with.

“We’re looking at a template of two years in which to do so much in terms of changing this industry and recreating the opportunities that are inherent in the system.”

The Minister noted that, “The greatest challenge for someone who is initiating policies is how to satisfy all the interest groups. It was why we couldn’t pass the PIB and in trying to get the militants to back out so we can have some peace in the place.

“Timing of reforms is key and should have been yesterday. In most of the areas we are far behind time and our competitors and that is basically why we’re in a virtual race position today. We need to do all this to be able to get to where we should be.”

Speaking on the sub-theme: Future prospects for the oil and gas industry, the minister said the refineries are currently working at about 40-50 per cent capacity.

He said the aim is to get them working at 90 per cent capacity or more and build the needed infrastructure as investors come in.

On why refineries are working at low capacity, he said: “How does a refineries work if the pipelines supplying them are out most of the year and so they can’t supply crude? You can’t refine an empty space.

“How does it work when you don’t do your turnaround maintenance or if when monies are budgeted for them they are diverted? How does it work if your contracting process is so long that you never meet the turnaround days you’re supposed to? How does it work when you send the wrong set of people with the wrong set of skills to what should have been very important portfolios in the establishment?” he queried.

The minister said engagements with militants in the Niger Delta has been successful, resulting in a ceasefire and rise in crude production.

The militant group, Niger Delta Avengers, however, has denied that it was in discussion with the government, even as it insists that a majority of the oil blocks be ceded to the citizens from the region.

Kachikwu explained that he visited the creeks and met with the local chiefs with a view to finding a short, medium and long term solution to the crisis.

He praised President Muhammadu Buhari for not employing force in solving the problem, adding that when he visited the creeks, the militants “never fired a gun” while he was there.
The minister said oil production has picked up as the Niger Delta crisis is being resolved.

According to him, 1.89 million barrels was produced as at Wednesday. He said he expects it to hit 2.3million barrels by next month.

On how the government is dealing with issue of militancy, Kachikwu said it is deploying a wholistic solution.

“The problem has been that most times when these things (pipeline bombings) happen, we find an interim solution that stabilises production for a while and then we drop off the table and it comes right back.

“There are lots of things that need to be done. In the short term is to stabilise the conversation so that some civility will replace adversarial norms.

“I think we’re getting very close to that. At least parties have pulled back for 30 days for more talks. Those 30 days are going to be a fire-engine type racing to do something.

“We need to set up, for example, a real engagement team that will be able to take up the larger stakeholders – the kings, the community leaders to clearly understand what they want and decide on the minimum standards of what is needed.

“We also need to set up a much more practical team that deals practically with the individuals who are out there exercising the mantra of militancy. We need to set up a body that focuses on the development of the Niger Delta.

“One of the reasons why I took time to fly into some of the creek areas wasn’t for publicity. It was to get a firsthand feel of what it is really like there. Once you get into an area where there are no roads, no light, no water, it’s a different mindset. And you need to spend time to understand that mindset.

“In the three of the locations that I visited, I could relate the villagers who are living there with the militants who are living next door in the forest and who were respectful enough not to fire guns while I was there.

“What it showed, as my father used to say, is that ‘mad men have rules of engagement.’ It doesn’t matter what you think of militants, they do the things they do because hopefully they have burning passions for the positions they take and we need to understand that kind of psychology.”

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