Fashola says Nigeria has not shown any signs of being ready for a post-oil economy

POWER and works minister Babatunde Fashola has expressed doubts about Nigeria's preparedness for a post-crude oil economy stating that the country is still fixated on living off the proceeds of raw petroleum exports.

Crude oil exports currently account for over 90% of Nigerian government revenue, making the country particularly vulnerable to a collapse in world prices. Aware of the damaging effects such a mono-economy has on the country, the government has sought to diversify the economy, paying particular attention to agriculture and solid minerals.

However, despite this drive, the other sectors of the economy have failed to take off, particularly in the states, where governors are used to living off federal allocation from oil receipts rather than generate money locally. Speaking yesterday at the 11th Nigerian Association for Energy Economics/International Association for Energy Economics Annual Conference in Abuja, Mr Fashola said Nigeria has not shown enough readiness to commence the journey into a post-oil economy.

Mr Fashola said: “The reason why our industry is not delivering has very little to do with technology. It has to do more with the economics of energy, the politics of energy, the legality of an industry where multiple private and public companies are interacting through contracts.”

His view was also shared by the executive secretary of the Petroleum Technology Development Fund, Aliyu Gusau, and a former group managing director of the Nigerian National Petroleum Corporation, Funsho Kupolokun. According to the former NNPC boss, there was still lack of transparency in the country’s oil and gas sector.

Mr Kupolokun said: “Everybody is talking about transparency in the petroleum industry but what is happening is that we are still not doing it.  In 1999 when I came back into the government system, it was a key issue and a number of bodies were set up by the government but yet today, we are still talking about it.”

He also observed that for over 25 years, operators in the industry had called for the deregulation of the downstream sector, without making meaningful progress. Mr Kupolokun added that until the downstream sector was deregulated, the problems in that arm of the industry, such as petrol scarcity and subsidy payment, would continue to surface.

 “We have been talking about deregulation since 1993, it went up and down with fuel price moving up and down. If we had continued to move gradually that way, we would have finished the liberalisation of the downstream sector but we reversed ourselves and today, we are in a scenario where we are still talking about deregulation.

“How many years, some 25 years we have been talking of deregulating the downstream sector, yet, it is still undone. I just hope we do it and do it rapidly because unless and until it is done, we will continue to have the problems that we have in the downstream petroleum sector,” Mr Kupolokun added.

Mr Gusau said it was time to focus more on the midstream and downstream arms of the oil industry, as more value and wealth creation were concentrated in them. He added that the business of taking oil from the ground and marketing it across the globe has to stop, as the only way that the oil and gas industry can provide the foundation for the journey of a post-oil economy is to move from its focus on the upstream, down to the midstream and downstream where value is created.