ARCO boss advocates private sector-led investment in refineries, petrochemical policies

Cutting down wasteful spending, elimination of corruption and growing of the non oil sector of the economy by the Federal Government will be the panacea to the current economic uncertainty the country is facing.

This was the advice Alfred Okoigun, group managing director of ARCO Group plc, who also advocated for the formulation of policies that would encourage private sector-led investment in refineries and petrochemicals.

The ARCO Group boss, who advocated these at the recently concluded Nigeria Oil and Gas Conference and Exhibition, held in Abuja, said these were the best options open to the country in the face of dwindling oil revenue, which is taking it toil on the economy.

He urged Nigerians not to resign to fate in the face of the nation’s economic malaise but follow the examples of Malaysia, Singapore, Indonesia, South Korea and India that exploited their difficult situations to grow their economy.

While international oil prices continue to wobble with oil-producing nations lacking definitive solution to the crisis, he said Nigeria could leverage on the situation to attain unprecedented growth in its economy.

He said: “The current situation is, therefore, an opportunity for us as a nation to cut waste in government expenditure; judiciously use the lean revenue accruing from crude oil sales; put in place private sector led investment in refineries and petrochemicals; and focus attention on non-oil sectors of the economy to bolster government revenue.”

According to him, the government must muster the political will to stop the wanton stealing of the country’s crude oil, a matter that has become an international embarrassment for our country.

The government, he said, must learn the habit and discipline of saving for the rainy day when another opportunity presents itself. He however commended the local content policy of the government, which has enable his company witness a significant growth as local player.

Drawing example from Malaysia, which is not a member of the Organisation of Petroleum Exporting Countries, Okoigun said the country attained significant growth in its economy by developing the local capability of its people.

Malaysia, he said, is now one of the largest exporters of skilled engineers and technicians in the oil and gas industry. With the price of crude oil hovering around $60 per barrel, Okoigun said global economic fundamentals were not giving industry watchers the confidence that oil price will rally to the pre-June 2014 benchmark in the foreseeable future.

He was also worried that Nigeria had not sufficiently invested in functional refineries and petrochemical industries, electricity and other infrastructure as well as local capability.

“Nigeria must place great emphasis on building local capabilities. If all the petroleum products consumed in the country were locally refined, we will save huge costs, conserve needed foreign exchange, eliminate the probability of fraud in subsidy payments and maybe, generate additional foreign exchange from the export of refined petroleum products,” he said.

Sharing the experience of his company, he noted that when in 2007 the Niger Delta crisis got to a frightening dimension, the expatriates maintaining gas turbines and compressors for one of the International Oil Companies (IOCs) were evacuated from the site.

“After they left the country, the responsibility to maintain these sophisticated equipment fell on Arco’s engineers and technicians,” he said, saying because his company had sufficiently developed local capabilities through training and capacity building, these young Nigerians kept the plants running in the absence of the expatriate engineers and technicians.

Also during the Niger Delta crisis, he said Nigerian sailors who were highly qualified like their expatriate counterparts, but were hitherto looked down upon, were called in to crew and manage the vessels.

Today, Nigeria has reduced the operational costs of its vessels by over 40 percent because indigenous operators are now playing major roles in the marine sub-sector.

 

Olusola Bello