NOTHING so poignantly confirms the open frittering away of Nigeria’s resources than gas non-utilisation and this fact was again underlined when a Senate Committee yesterday disclosed that the country was losing $15 million (N5.8 billion) daily to the flaring of the precious hydrocarbon product.
Also yesterday, the Environment, Housing and Urban Development Minister, Mrs. Halima Tayo Alao, disclosed that between October 2006 and this year, oil companies in Nigeria have recorded 1260 spills.
And as the demons represented by such problems and others continue to gnaw at the country’s kidneys, the Federal Government, in its drive at full deregulation in the downstream sector of the oil and gas industry, has canvassed of the support of stakeholders and other Nigerians to attain sanity and the desired result.
Besides, the presidential panel on oil and gas sector reform has recommended that the Nigerian National Petroleum Corporation (NNPC) be transformed into an “independent hinted liability company.”
The Senate Committee on Gas Resources yesterday vowed to cause the immediate review of the Nigeria Gas Master plan to end the leakages in revenue by the Federal Government as a result of flaring and other related activities in the sector.
Addressing a press conference at the National Assembly, the committee Chairman, Senator Osita Izunaso, said: “Nigeria is so blessed and so rich. Yet people are suffering, we are flaring gas and throwing it away as if it doesn’t have meaning. We are losing approximately, I’m not lying …we are losing over $15 million a day on flaring. When we are giving these people licence why didn’t we insist that there must be no flaring? Other countries have done it.”
Izunaso said the Senate was not comfortable with the master plan proposed by the Minister of Energy (Gas), Mr. Odusina Emmanuel. He said the Senate would soon conduct a public hearing on the master-plan to allow all stakeholders in the gas sector an opportunity to make inputs.
According to him, most of the operators in the gas sector were interested in exportation of the product rather refining it for domestic uses.
He went on: “The Gas master plan as you know is proposing to have three hubs in the entire country. We want to look at the dynamics of having only three hubs and not having more than that. And where and where are all that gas coming from. And what will form the title of the hub. These are some of the issues that we will be looking at when we open up the gas master plan to scrutiny because it is not right for us to attempt a reform that people will sit in the office and write and sell it out without subjecting to proper scrutiny by major stakeholders. It does not belong to only one stakeholder. It has to be all the stakeholders.”
The panel’s boss also disclosed that the Minister of State for Energy in charge of Gas, Mr. Odusina Emmanuel, would be summoned to provide explanations to the committee on the progress made in the Road Show they carried out in London and Singapore to woo investors and businessmen in the sector to Nigeria.
Alao who spoke yesterday in Calabar while delivering a key note address at a three-day stakeholders’ consultative workshop organised by National Oil Spill Detection and Response Agency (NOSDRA) disclosed that the body has certified 327 oil impacted sites since October 2006 when it was established”.
In 2006, the Minister said: “253 oil spill incidents were reported, while in 2007, 588 incidents were reported (and) in the first two quarters of 2008, 419 oil spills have been reported”.
She continued: “The progressing trend of these sad incidents is indicative of the grave dangers ahead of us as a nation, first in terms of polluted environment and its tender poor health index as well as colossal loss of revenue, which is aptly required for economic and physical development.
“This scenario poses a host of challenges to us as a nation especially in terms of clean – up, remediation and rehabilitation”.
She pointed out that the agency was engaged in the monitoring of clean-up of recent spills, a situation that is often recurring due to wanton vandalisation of oil facilities and theft of both crude and petroleum products across the country.
Given the spate of crisis between oil companies and host communities on spill, she said “the agency has also commenced action on the development of a National Oil Spill Compensation Rates (NOSCR).”
These rates would become a guide for oil industry operators in arriving at acceptable and appropriate compensation to host and transit communities whenever the need arises, she said.
The Director-General of NOSDRA, Dr Bamidele Ajakaiye in his welcome address said the main focus of the workshop is to bring together the major stakeholders in the oil and gas sector to explore ways of establishing an enduring mechanism for preventing and responding to spill incidents.
The Cross River State Acting Governor, Mr Francis Adah, while opening the workshop said the problem of oil spill can not be localised due to tidal nature of water in an impacted area.
Represented by the Environment Commissioner, Dr Julius Oputu, he said such disasters need the efforts of all stakeholders to tackle as late response to spill management often creates problems.
The Minister of State for Energy (Petroleum), Odein Ajumogobia (SAN) yesterday restated the Federal Government’s commitment to improve availability of petroleum products but noted that the goal could only be achieved through the co-operation of the stakeholders the specifically the oil marketers, that have been involved in thwarting the full deregulation of the downstream sector by hoarding fuel, creating artificial scarcity and exploiting the citizens.
Ajumogobia stated this while opening the 32nd yearly International Conference and Exhibition of the Society of Petroleum Engineers, Nigeria Council in Abuja.
The minister, who represented the Vice President, Dr. Goodluck Jonathan, said the government was worried about the various mind-games going on in the sector as a result of lack of full deregulation which, according to him, has marred availability of petroleum products especially, the Automotive Gas oil (AGO) otherwise known as diesel and the household kerosene.
Shortly after submitting the report to present Umaru Musa Yar’Adua, the panel’s head and former Petroleum Minister, Alhaji Rilwanu Lukman said: “Our report provides for the incorporation of the Nigerian National Petroleum Company Limited as an independent limited liability company.”
Lukman, who is also energy adviser to Yar’Adua and a former president of the Organisation of Petroleum Exporting Countries (OPEC) said the NNPC in its current form was burdened with responsibilities that are not really the role of a national oil company.
“What we have done in the case of the NNPC is to clearly define what a truly national oil company should do and put it in a way that it can operate as a profitable centre, as a commercial organisation that is designed to make profit like other oil companies,” Lukman said.
He said the panel also recommended the creation of five spin-off institutions to handle some of NNPC’s responsibilities.
He named them as the National Petroleum Directorate, Nigerian Petroleum Inspectorate, Petroleum Products Regulatory Authority, National Petroleum Asset Management Agency and National Petroleum Research Centre.
Yar’Adua said the government would look at the report, which will be presented to the cabinet for adoption next week, and “act on it expeditiously.”
Relatedly, following the technical ouster of the Petroleum and National Gas Senior Staff Association (PENGASSAN) from buying into the 60 per cent interest of Chevron Corporate in Chevron Oil Plc, the the labour union has cautioned government against allowing foreigners to take over the company.
Specifically, PENGASSAN, at a news briefing yesterday, said the indigenous oil firms with technical and financial capability, were well positioned to manage the company.
PENGASSAN’s President, Babatunde Ogun, expressed fear that there have been underhand dealings with some potential buyers, who were allegedly “proving relative financial capability and not minding the managerial and technical competences that shall also serve as key criterion.”
While acknowledging that indigenous oil firms such as Zenon Oil, African Petroleum Plc, Oando Plc, were capable of taking over as core inventor in Chevron Oil Nigeria Plc, given their proven technical, managerial and financial competences, Ogun warned that workers in the sector would not take kindly to any underhand deals that could undermine due process.
He alleged that “BNPARIPAS, Chevron Corporation, Management of Chevron Oil Nigeria Plc as financial consultants, divestor of the 60 per cent equity in transaction, and management of Chevron Oil Nigeria Plc, respectively are criteria to apply irrational and subjective overpricing and ethnic divide criteria rather than commercial responsibility and technical competences as basis to divide the core investor that will take over the 60 per cent interest at stake in Chevron Oil Nigeria Plc as going concern.”
Ogun stressed that the union was confident that the technical and commercial evaluation process in the short-listing of the potential buyers guarantees the selection of the most competent hands to effectively manage the company and thus protect the interest of the employers ‘including our members,’ who have spent most of their productive years in the sevice of Chevron Oil Nigeria Plc.
The PENGASSAN boss expressed worry about the focus being given to potential buyers that bid in excess of 300 per cent over and above the floor trading price, saying it was alarming.
According to him, PENGASSAN as legitimate employees’ representative find this very disturbing, as this clearly implies that the potential buyers are going to incur the incredible bank charges and other related cost of capital to service the loans used to acquire the company.
He noted that what this translated to was that the profitability of the company cannot be sustained amongst its peers within the industry, which will ultimately impair the company’s competitiveness and market shares thereby jeopardizing the interest of the employees (including our members).”
He went on: “We have observed that some of the potential buyers do not have the organizational structure to manage the current caliber of employees and to also support the already existing best-practice corporate governance on which the Chevron Oil Nigeria Plc Workers’ Union prides itself locally and internationally.
“By our statutory responsibility and obligation that is being frustrated by the intrigues in ownership change, the association will expect that all labour related issues are resolved before the ownership change is announced.
” That it is also our obligation to protect the minority interest of our members as shareholders who in view of their vantage position have observed the destrimental effect of the ongoing ownership change process, hence we maintain that the following criteria be used as the parameter for the selection of the eventual potential buyers:
* Benchmark technical and commercial evaluation process that guarantees the selection of the most competent hands to effectively manage the company and thus protect the interest of the employee (including our members) who have spent most of their productive years in the service of Chevron Oil Nigeria Plc.