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PIB can End Stagnancy in Oil Industry if Passed ―Prof Iledare

Wumi Iledare is a distinguished professor of Petroleum Economics and Policy Research with over 35 years of technical, professional and academic experience in global oil and gas industry. He currently serves as Ghana National Petroleum Corporation Chair in Oil and Gas Studies at the University of Cape Coast’s Oil and Gas Institute, Ghana. An Emeritus Professor of Petroleum Economics at Louisiana State University, Energy Studies, USA and Director, SPE Africa Region, 2019-Present. He is a distinguished fellow and immediate past president of Nigeria Association for Energy Economics (NAEE, 2015-2019); a Senior Fellow and the 2008 President of United States Association for Energy Economics (USAEE); and the 2014 President of the International Association for Energy Economics (IAEE). Prof. Illedare served on the Nigeria National Assembly Technical Advisory Team on Petroleum Industry Reform Bills (2016-2019). In this interview, he speaks on what the government can do to put teeth to its desire to reform the industry and potentially redeem the current stagnancy in the industry. He also shares his thoughts on Nigerian media reportage of the petroleum industry compared to decades ago as wel as the challenges faced by the media and way forward

What do you make of the oil sector in the last five years with regards to the ongoing reform like amendment of the deep offshore act, plans to pass the PIB, stoppage of subsidy, among other reforms?

Many thanks for the invitation to review the oil and gas sector over the last five years with respect to some important industry performance indicators. Certainly, things have not been pretty because of the collapse in oil prices in 2014/2015 and as the industry and Nigeria economy was rebounding COVID-19 came unannounced and things went further south with the exception of gas production and gas reserves, nearly every other indicators in the industry such as oil production, oil reserves, number of wells drilled, number of wells completed, number of rigs operating, investment flow into E&P (didn’t do well). These declining trends in industry performance indicators make industry reform inevitable now. Optically speaking the Offshore Deepwater and Inland Basin Act show some promise but detail analysis shows fiscal regimes in Nigeria is not as competitive and attractive as several competing basins in the Gulf of Guinea, Angola and Brazil, especially the PSC deepwater arrangements. The desire to liberalize the downstream is commendable. But the opportunity to do it with legislative stroke was missed by the refusal of the executive to sign the PIGB. The new attitude of NNPC to adopt transparency and accountability as an important core value is admirable by the publication of its books. I am a little surprised that more than one year into the new government, the PIB is not close to being concluded. The above stagnation notwithstanding, the state of current apparent stagnancy in the industry remains potentially redeemable if the PIB is passed before the end of the month as this would put teeth to government desire to reform the industry.

The competition for investment in the global oil sector is a lot keener now than before. Do you think Nigeria is prepared to reap from these investments?

I do not see why Nigeria would not be favoured for investment. Nigeria ranked very high with respect to geologic prolificity, abundance of gas resources and with the transition fuel the whole world is gunning after Nigeria because it is an environmentally friendly fuel. Technical competence is in abundance too and such availability speaks volumes in terms of workforce readiness for new investors in the midstream and downstream. Of course, one is not unmindful of the work needed to improve public perception of oil and gas fiscal policy that needs to embrace mutuality of interests in order to be more attractive than it is, currently.

What do you consider as the urgent issues that need to be resolved in the country’s petroleum sector?

The first and most pressing is the petroleum industry reform bill that began nearly 20 years ago. I understand the new bill has four parts to it, which is a versal to the four bills presented to the 8th Assembly. To me, Nigeria needs a governance structure that separates institutional responsibilities clearly into regulatory policy, and commercial. What Nigeria had now is too amorphous to guarantee sustainable petroleum resource development for economic expansion hence industry reform is critical going forward.

How would you describe Nigerian media reportage of the petroleum industry now compared to decades ago?

I would want to say Nigeria has improved greatly in this regard. The industry is also more willing to make information available to journalists and technology makes access to information a lot easier. Of course, I hate to state unequivocally, that journalists in Nigeria do not get good enough living wage to deliver news as expected in comparison with the old-time journalists.

What do you think are the challenges facing the media in terms of accurate coverage/reportage of the petroleum sector?

Self-discipline and inadequate reward system. Of course, Nigeria does not have institution that specializes in sectoral journalism. This is also my problem with the law profession. Efforts must be put in place to expose journalists to the language of the industry and provide understanding of the structure and governance of the industry in a dynamic sense. For example, I often wonder why journalists nonchalantly attribute every decision to the president making him look more like a dictator than a civilian president. Perhaps this is cultural. for example, if NNPC management decides to promote its staff, it must be the president that approves it not NNPC board of directors. Such reporting is not good for history in my opinion. But like I said earlier, perhaps the culture demands it.

How can the media overcome these challenges?

Self-discipline, hard work and proper education.

The effect of COVID-19 is potential economic recession in Nigeria. What should the country be doing?

Government must palliate the economic hardship resulting from COVID-19. I did suggest waving VAT at the pump for six months, revisit the idea of Petroleum Equalisation Fund and avoid transfer payment. It is better to give hooks for fishing than giving fish for a meal and then what happened? perhaps this where loans in whatever form are for infrastructure development under the circumstances than concurrent expenditures.

If you are to advise the president of this country on the issue of oil and gas industry, what advice would you give him?

Avoid the Venezuela experience by allowing the governance of the oil and gas industry to be apolitical. I will tell him without mincing words that the best he can do for the industry is to ensure the reform bill has posterity context to it in terms of intergenerational implications of oil and gas production. Finally, I would tell him plainly that he needs to let go of as Minister of Petroleum Resources! I stand corrected, but one can argue that the cost of having the president as the Minister of Petroleum Resources is significantly higher than the benefits to the Nigeria project! I do agree all my opinions as expressed are conjectural.