Nigeria’s oil future anchored on market driven economy

To counteract the deleterious effect of poor governance and weak fiscal system that led to wastage of billions of dollars of oil revenue, Nigeria is advised to focus on a market driven economy as the anticipated oil price rebound may take longer than expected.
This view of oil industry stakeholders is predicated upon the fact that a weak fiscal and regulatory regime controlled by the government has not delivered the best value for Nigerians despite the fact that they live in a land with rich commercially viable mineral resources.
This was a key message in a panel session on the future of Nigeria’s oil and gas industry in 2017 at the 40th edition of the Society of Petroleum Engineers, Nigeria Annual International Conference & Exhibition (NAICE 2016), held in Lagos between August 2 – 4.
Tim Okon, chief executive officer of International Institute of Petroleum Energy and Policy, in his presentation, said that markets play three crucial roles: encourage investments leading to economic efficiency, guarantee economic freedom and economic growth.
“We need to rely on markets not on government intervention. It is important that the role of the state is not to bring commerce but to regulate it.
“Markets are sensitive to social needs, so the government should distinguish between social programs and market realities. We fail woefully in Nigeria because there is no allocative efficiency mechanism and that is why markets will deliver the best value, not the government.”
“The cost is too high, bureaucracy, criminality and hostile environment for business. We need to reduce the participation of the state from the commanding heights of the economy. That is the future of Nigeria’s oil in 2017, to survive this low oil price environment.
“The age of oil is ending, unfortunately, Nigeria has missed it. We missed it on subsidising petrol, if we had put in renewable energy, it would matter more. Either we begin to open ourselves to market based approach to solving problems or 2017 will be no difference.”
Jude Amaefule, in his lead paper presentation, harped on the need to diversify Nigeria’s economy with focus on agriculture and agro-related industries, increasing refining capacity and focusing on value added petrochemical.
“Government should focus on being competitive in the global market by improving fiscal and regulatory framework to encourage investments and capital flow. Attention should be paid to improve security and also improve industry efficiency and transparency,” said Amaefule.

 

ISAAC ANYAOGU