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Privatise Nigeria’s oil industry? Easier said than done
LAGOS, Jan 21, 2019 (BSS/AFP) – A leading contender in Nigeria’s
presidential election next month has pledged to privatise the country’s oil
industry, but that’s a promise that might prove hard to keep, some observers
say.
Atiku Abubakar, the main opposition party contender, has vowed to break up
the Nigerian National Petroleum Company (NNPC), which he called a “mafia
organisation”.
The NNPC and other state-run organisations have been widely criticised as
becoming slush funds for successive governments, particularly around election
time in the African OPEC state.
Abubakar, who served as vice-president to Olusegun Obasanjo between 1999
and 2007, made his latest remarks at a conference on the economy in Nigeria’s
economic capital Lagos last week.
“I said unless we dismantle these mafia organisations, we cannot progress,
let’s privatise them,” he said.
“I am committed to these privatisations, as I have said. I swear even if
they are going to kill me, I will do it.”
Sitting president, Muhammadu Buhari, who is running for a second term in
office, made the fight against corruption a keystone of his first election
campaign.
His junior minister for oil, Emmanuel Kachikwu, told AFP: “In terms of
corruption, he (Buhari) has done his very best.”
– Climate of fear –
But it was Kachikwu himself who in late 2017 denounced what he called the
“climate of fear” at the heart of the NNPC since the president appointed one
of his close associates, Maikanti Kacalla Baru, as group managing director.
Last April he also spoke out against the state subsidies to cut the cost
of petrol for motorists, saying it cost the government $3.9 billion every
year.
In fact, the NNPC, which has total control of distribution, has been
accused by many campaigners of overestimating the number of litres used by an
exorbitant amount in order to rake back in more money to the government.
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NIGERIA-OIL-PRIVATISATION 2 LAGOS
“(The) NNPC monopoly on fuel distribution is not an ideal situation and
will have to end,” said Kachikwu.
“And then part of the corruption in the area will also end.”
But he warned: “If we are not fixing it, we are going bankrupt.”
Kachikwu reports directly to Buhari, who as well as being head of state
has taken on the oil minister portfolio himself.
Buhari takes much the same line on corruption as his main rival to the
presidency, Abubakar.
At an election campaign meeting Wednesday, Buhari promised an overhaul of
the NNPC to claw back billions of dollars in looted public funds.
Kachikwu came into Buhari’s government as a political novice but as an
expert in the field. He previously served as ExxonMobil’s deputy chief for
Africa.
He reckons that to reinvigorate the country’s oil industry and increase
production to four billion barrels a day it would take between a 25 and 30
billion dollars’ investment.
The only way that is going to happen, he says, is via the privatisation of
the NNPC and the liberalisation of the sector as a whole.
“Nobody needs the government to do their business,” he said. “(The) NNPC
is overseeing the whole chain of production, from the pipelines to the
exportation or distribution.”
It also seems powerful enough to have successfully blocked all political
attempts to reform an organisation which carries about a million barrels a
day — 50 percent of the total volume of oil output in Africa’s top oil
producer.
– Campaign talk –
“To talk of privatising the NNPC is campaign talk directed at foreign
investors,” said Benjamin Auge, an analyst at the French Institute for
International Relations.
But it is not a vote-winner and has no impact of the real root of the
corruption — the allocation of rights to sell petrol, he added.
Every year, the NNPC allocates a series of traders to handle crude oil
exports. And every year, with each successive government, new names or new
companies, sometimes completely unknown, appear on these lists.
This get-rich-quick scheme could be limited with the creation of a new
local refinery, one repeatedly promised by Nigerian billionaire Aliko
Dangote, as that would cut the exports of crude oil.
The refinery, first announced back in 2013, would produce 400,000 barrels
of petrol a day — compared with the 100,000 currently produced.
“But the traders’ lobby is so powerful that one can even doubt that the
project will see the light of day,” said Auge.
That example of the strength of the oil lobby — and the vasts sums of
money at stake — casts doubts on politicians’ claims that the NNPC can be
dismantled quite so easily as they would have voters and investors believe.
BSS/AFP/HR/1020