Nigerians abroad plan mega firm to run refineries, power plants
From Laolu Akande (New York) and Yakubu Lawal (Lagos)
NIGERIAN professionals abroad have offered to work with the Federal Government to realise its goal of a viable oil and gas and energy sector. For a start, they have proposed to float a public quoted company with global outreach to set up 24 refineries and generate 50,000 megawatts into the national grid
The professionals, who operate under Nigerians for Super Energy based in Houston, United States (U.S.) said that the country needed about $29 billion to have a functioning energy sector. They suggested that the government should provide $15 billion of the funds while Super Energy and its partners would source for the balance. In a statement released in Houston and signed by the group's co-ordinator, Mr. Joe Inyang, they said that similar efforts in Venezuela and Brazil had helped to reposition their energy sector. Apart from working with the government to realise the twin-goals, the experts are collaborating with the National Union of Petrol and Natural Gas Workers (NUPENG) to ensure that the local people fully participate in the project. Meanwhile, three oil firms' chiefs have expressed different views on the sweeping reforms the government effected in the oil and gas sector on Wednesday. While some called for caution, others canvassed adherence to due process, particularly in the scrapping of the Nigerian National Petroleum Corporation (NNPC).
The Nigerian experts defined their plan to build 24 refineries with a global reach around what obtained in Venezuela, where there was a similar reform of its energy sector. Inyang, said that "due to the policies of Venezuelan oil company, PDVSA, the Venezuelans are able to enjoy $0.19 per gallon or N6.12." The statement said theVenezuelan oil firm, focussed not just on the crude oil export business but on the global petroleum and chemical sector. The statement recalled how the Venezuelans invested in refining and retail business in their country and almost all their export markets, adding that "today PDVSA processes 3.3 million barrels daily through 24 refineries: six complexes in Venezuela, one in the Caribbean, eight in the U.S. and nine in Europe."
Nigerians for Super Energy also noted a similar plan carried out by the Brazilian oil company, Petrobras They recommended three strategic steps to revolutionise the Nigerian oil sector. They are:
- NNPC now National Oil Company (NOC) should become a government/public firm with its shares allocated to Nigerians. This will provide the company with a new direction and ownership need for the global challenges;
- NNPC should with the aid of government funds buy (outright or major) shares in refineries in Africa, China and U.S.; and
- Build four refineries and retail outlets to take care of the local demand as estimated for 2010 to put to rest the fuel challenges in the nation.
For the electric plan, the U.S.-based Nigerians said 50,000 megawatts in a well-planned power grid was what the country needed. Inyang said that given the Nigerian population, "the goals (15,000MW, 20,000MW, and 30,000MW) currently proposed in different political and business circles will not take care of latent electrical demand." Continuing, the group said: "In 1999, we estimated a goal of 4,000MW and 5,600MW, we have reached those goals but still not able to survive disruptions to the power grid. South Africa with a population of 47 million generates 36,000MW, Brazil with a population of 188 million generates 90,000MW and South Korea, which has a population 49 million generates 43,833MW. Nigeria with a population of 140 million will need to generate 67,021MW to be at par with Brazil, the lowest per capita among the three countries." According to their plan, based on the current estimates of 10,000mw, Nigeria would need 40, 000MW meaning 1,100MW per state and Abuja.
The group said even though some states might not be able to generate this amount due to logistics or cost, they could join with others to meet their goal, while some states like Lagos would need to double or triple that amount. They also proposed that part of excess crude funds should be invested in power generation and transmission, while all states, Abuja and local councils contribute a percentage of their net worth to the projects. In addition, land for projects should be provided by states and local councils. Similarly, banks should be encouraged to invest a percentage of their net worth, while corporations and individual investors stake their resources in the projects with a strong push for public stock participation.
In a written support to the plan of the Nigerian experts, Mr. Peter Akpatason, President of NUPENG, said the union "welcomes the ideas of Nigerians for Super Energy. Sincerely speaking, I think those of us at home should appreciate it more than Nigerians in Diaspora." The NUPENG chief added that due to the "inexplicable" low level of energy generation and supply, the cost of doing business in Nigeria had become so prohibitive that potential investors were scared of coming to the country while others were reducing their work force or quitting business outright. NUPENG, however, insisted in its own contribution to the campaign that some practical solutions must be tabled to manage what is called "the problems of NNPC before using it as a vehicle to deliver the policy of 24 refineries with active participation of the state."
The three operators, who spoke with The Guardian on the matter yesterday, believed that NNPC could only be scrapped through legislative process as it was established through an Act in 1977. Those, who spoke on the reforms with The Guardian were the Chief Executive of International Energy Services Limited, Dr. Oladiran Fawibe, former Group Executive Director of NNPC and senior executive, Capital Alliance, Mr. Oladele Afolabi and the Managing Director of Platform Petroleum Nigeria Limited and former President, Nigerian Association of Petroleum Explorationists (NAPE), Mr. Austin Avuru. While Avuru believed that the exercise would take Nigeria nowhere because it would worsen the bureaucratic process in the industry, Afolabi urged patience. "This is creating more bureaucratic processes, restructuring the 11 subsidiaries of NNPC to three and creating two layers of bureaucracy," he said.
Afolabi wanted analysts to exercise caution, pointing out that government, which started the process knew what it wanted for the country. Fawibe believed that government had taken the right step in the right direction, considering the process through which the reform emerged. Avuru asked whether the new focus would ensure that the refineries and petro-chemical plants work efficiently. Rather than carrying out this holistic reform, Avuru said the government should focus on replicating the kind of arrangement that now runs in the upstream sector, where the government and the foreign oil firms' operators collaborate.
Avuru said the government must first prepare a bill to the National Assembly to wind up NNPC and prepare it for the emerging firms. On his part, Fawibe said without a proper legislative process, no company within and outside the country, would do business with the NNPC or the successor firms. Fawibe however, commended the autonomy granted the Department of Petroleum Resources (DPR) to operate as Petroleum Inspectorate Commission (PIC).
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