I was dancing on my seat as I read of the new deal recently entered with the International Oil Companies (IOCs) by the federal government that would end the perennially problematic Joint venture (JV) cash calls that have dogged the Nigerian Petroleum industry since I was a cub-economic advocate. From our days at the Enabling Environment Forum (EEF) to the formation of the Nigerian Economic summit Group (NESG) in 1993 until perhaps last week, the problem caused by the inability of the Federal Government of Nigeria to meet its JV cash call obligations has been a recurring decimal, each time the problems of attracting more investment into the upstream oil sector and indeed to the entire economy was being discussed. If you asked any oil major chief, what was his greatest challenge, he would immediately say it was Nigerian Government’s chronic inability or should we say unwillingness to meet its Joint Venture cash calls. I say it could be unwillingness because even in the days of oil boom, Nigeria was never on schedule with its payment obligations, so blaming the decline in oil prices and consequent reduction in national income receipts cannot be a valid reason for this long anti-investment and I might say, irresponsible behaviour of the government.
In essence, government received its share of profit from exploration, drilling and exportation of crude oil but delayed or refused to pay its share of the cost. It caused nightmares for the IOCs, delaying new investments. Even before the current problems in the oil industry, the oil majors had long stopped investing in Nigeria and many had been divesting. Those who invested at all did so only offshore where a different fiscal regime operates. But with this deal pulled off by the dexterity of Ibe Kachikwu and his team, this major irritant and major stumbling block to the growth of the Petroleum sector may have been removed.
I have also been reading of the progress being made with the Petroleum bill (PIB) in the National Assembly. I understand that the PIB has been broken down to subsets to allow quicker passage into laws. I understand that the Petroleum Industry Governance Bill (PIGB), a subset of the PIB may be passed in Q1 next year as legislative work on it has been advanced. This kind of development is what we have been praying and hoping for over seven years but it never came. After the problem with the JV cash calls, the uncertainty with the PIB has been the second most troubling and demoralizing disincentive for investment in Nigeria’s Petroleum industry. But Ibe Kachikwu and his team have worked quietly behind the scenes to plot a way out of the PIB imbroglio, effectively motivating the National Assembly to give expedited attention to this very critical bill.
For several months, crude oil production and export from the Niger Delta was threatened by the activities of the militant group called the Avengers and their several mutants. Nigeria tried to use strong -arm tactics to quell the militancy which at one time brought our national daily production to about 1 million barrels per day. Again Ibe Kachikwu stepped in, first as NNPC GMD, later as Minister of State and has worked with all stakeholders to gradually reduce if not completely eliminate the disruptions to the oil flow. Today Nigeria’s oil output is on the rise again approaching 2.2 million barrels per day. A few days ago, I was very pleased to hear Adio Waziri, the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI) ‘accuse’ NNPC of being unusually transparent. NNPC now publishes its production, costs and revenue records without prompting. What a transformation from opacity to openness. It is gratifying to me that what we pushed for as the pioneer National Stakeholders Working Group (NSWG) of NEITI (2007-2010) has been finally achieved under the superintendency of Kachikwu and the new NNPC Management Team.
This is the third article I am writing on Ibe Kachikwu since President Muhammadu Buhari (PMB) brought him from Exxon Mobil to run the troubled national oil company and later made him a minister. The first I wrote a few months after his appointment in 2015, when I was thrilled by his steady and concrete steps in turning NNPC around. In that article I concluded that If Kachikwu was a foretaste of the kind of appointments PMB was going to be making, then the long wait was worth the while. The second was in July this year when he was stripped of the NNPC GMD position and left only as a ‘junior’ minister. I had then made a plea that PMB should announce him as the substantive Minister of Petroleum because he had shown so much capability. When my unsolicited advice was not taken, I was afraid that Ibe Kachikwu could be demotivated by the apparent ‘demotion’.
How wrong I have been. Because rather than slow down, Ibe has been firing on all barrels, working so hard to bring stability and eventually growth to Nigeria’s most important industry. Without sounding over patronizing, I believe Ibe’s appointment is one of the best things PMB has done. I pray he does more of such good things especially as we head into 2017.
Mazi Sam Ohuabunwa OFR
