Wednesday, September 2, 2015

Nigeria Energy Reforms: what other options

I was at the one-day roundtable organised by my organisation, the Africa Network for Environment and Economic Justice, ANEEJ, on oil and gas reforms. I was there as what you might term an insider. The reason for organising that one-dayer was that on looking closely at two reports – the Berne Declaration and the Natural Resource Development Institute Reports - visavis a timeline of activities by the Buhari administration geared towards sanitising the energy sector of our economy, it almost became apparent that Mr. President was moving a colonel here, deploying a major there, and re-assigning that army captain here for the sake of winning a battle rather than a war. These deployments - the new NNPC big man, the shrinking of the departments, the publishing of NNPC accounts and etcetera seemed more administrative than reformative.

According to the Bern and NRDI reports, there is a certain domestic crude allocation to the NNPC, that the NNPC illegally retains revenue accruable to the nation, engages in battering our crude oil for refined products with ubiquitous behemoths at the NNPC, relies on an over-ambudance of middlemen to lift crude, together with a total lack of corporate governance, oversight and transparency which promote corruption in the NNPC. What both the Berne and the NRDI recommended - elimination of the the Direct crude allocation to the NNPC and transparency in payment flows, the development of an explicit revenue collection framework for NNPC, the winding down all OPAs without much ado, the sale of crude to end users only and the strengthening of a program of transparency and accountability reforms for NNPC - all led to vigorous debate at the ANEEJ oil & gas conference.

But I must say very quickly that I was disappointed with certain aspects of what these NRDI and Berne reports did not recemmend, and which stakeholders at the conference seemed to have glossed over as well. What I am sure of is that the strength of the conference was in the debates that the conference stimulated and provoked, and captured in the positions of key stakeholder like the NEITI, EFCC and the NRDI representatives who were present. Take for instance the position of Igwe Uche, from the University of Sussex, whose contention that the NNPC was deliberately set up as an institution to sustain corruption and make corruption conducive in its operations, or that of the NEITI representative, Chinwe Ezeigbo, who urged everyone to focus on how the funds pouring into the NNPC are spent rather than an on what comes in.

It should be to the credit of this conference and indeed to the administration of Muhammed Buhari that less than one week after the ANEEJ conference, the Oil for Swap arrangement between the NNPC and its Swiss middlemen has been scrapped. I cannot say with any element of certainty that the government scrapped this odious deal because of the ANEEJ one-dayer, or that the government already had plans to scrap it before the conference. All that matters for now is that everyone seems to be on the same page with respect to the reformation of the energy sector. I am also at a loss at how the government intends to sustain the scrapping of the oil for product barter deal with the Swiss middlemen. What sustains the deal up till now is that our refineries have never worked at full capacity at least in the past two decades. Therefore, we owe the middlemen who take our oil and give us back fuel a ton of money. The oil that is being enchanged for refined products has as much as six or seven by-products that the NNPC did not take into account when entering this oil trade-by-barter agreement, or which it deliberately chose to ignore for dark personal gains that have left us at the short end of the bargain from dealing with the Swiss middlemen. Therefore, how and why we owe them beats me.
 

The NNPC allocates crude oil to four Nigerian refineries in Warri, PortHarCourt and Kaduna for refining purposes. In 2009 when I visited one of them, all I saw was an edifice of rotting and rotten pipes for which the government regularly paid hansomely to turn around. Now, because these turn around maintenances, TAM, were usually on paper, it was not too difficult to divert crude oil allocated to these dead refineries elsewhere. One would have thought that instead of propagating that more money should be put into these refineries to make them work (that was the position of the NRDI representative), Nigeria should sell them off as scraps, let private people run the old and new refineries and government should concentrate on rebuilding other sources of income from the income being generated from sale of crude.

In today's world, refineries are a nuisance and a threat to the environment. Nobody really wants them – they take up a lot of space, mess up the landscape and are considered harmful to humans. There is evidence that in places where refineries are located, people have breathing problems like asthma, or cancer, and few cases of birth defects have been recorded. July 2015 was the hottest year in years, and scientists have ascribed this to energy processes linked to refineries. Ice glaciers melting in the North Pole, receeding coastlines and the warning recently handed out by the Nigerian Meteorological Agency, to people living along the coastlines to relocate, can be traceable to activities in refineries. But if you consider the fact that refineries contribute more to global warming and climate change than to the protection of the environment, then perhaps we would have appreciated the foresight of Olusegun Obasanjo's decision to sell them off when he did. And so, instead of canvassing to keep maintaining our refineries and making of them our primary revenue source, we should take note that the rest of the world today is shifting ground and dismantling their refineries and investing billions of dollars in renewable energy, RE. Some of us are still thinking, what the hell, the EU is still buying our oil after the United States dumped us and China would continue to continue to guzzle our oil.
 

But the time is coming, and it would not be too far now, when the world would no longer need our oil. There are serious meetings being held today in Europe. Arising from some of those meetings, 'the European Union plans that by 2030 – about 15 years from today – they will cut green house gas, GHG, emissions by at least 40%. They will also boost renewable energy and improve energy efficiency by at least 27%. As we have this discussion, a Southern Gas Corridor intended to develop the establishment of liquid gas hubs with multiple suppliers in Central and Eastern Europe is already being developed. Since most of Europe – the world greatest oil consumer - would soon depend absolutely on renewable energy – solar, biomass, wind and hydro power for their electricity needs, part of the plan of the EU Energy Union includes a full implementation of existing legislation and market rules to integrate these renewable into all European markets, and a promotion of more research into renewable energy production and the decarbonisation of the transport sector'. This is exactly the way I have tried to paint the picture on several national newspapers like ThisDay, The Punch, The Nation and Daily Independent, together with Alltimepost, an online medium. Our mission is to get us to avoid the impending national economic catastrophe waiting to happen. But if stakeholders and government continue to shy from the option of factoring renewable energy plans into whatever reforms the Buhari government is embarking upon in the energy sector then we would suffer in the long run.
 

For government to give strong indication that its reforms in the energy sector is not a veneer or mere administrative reforms, it should consider tinkering with the renewable energy option as part of its effort to diversify our resource base.

Bob MajiriOghene Etemiku is communications manager with the Africa Network for Environment & Economic Justice, ANEEJ, @DsighRobert.