After four years as Nigeria’s minister of state for Petroleum Resources, Ibe Kachikwu is counting among his achievements efforts to revive the country’s failing refineries, bid rounds, local content, relative calm in the Niger Delta and reduction in pipeline vandalism.
The minister, usually at the forefront in local and international meetings representing and speaking on behalf of President Muhammadu Buhari (who doubles as minister of Petroleum Resources), narrated how he was able to achieve results and scale through series of issues or challenges affecting the sector, although admitting that the refineries were one area the administration did not deliver on its mandate.
“On the entire transparency index, this sector has done phenomenally well compared to when we came in 2015. However, there are little areas we need adjustment. We have had transparent contracts and cancelled those which are not well done. We put in place the direct sales, direct purchase (DSDP) contracts which saved a huge amount and opened up competition,” Kachikwu said in an interaction with journalists in Abuja.
In the last four years, Kachikwu explained that the government did not give out any oil blocks or marginal fields, because the president believed there was need to clean up the sector before dishing out political patronage.
“There was a time I issued a warning that unless those concerned went back to their blocks and began to work it, we were going to take back those blocks. Some of them say they have a 20-year timeframe. They are right in one sense, you cannot breach contracts, but when it came to the time for renewal if you are not meeting your work obligation on the block we will take it off you and give it to individuals who would work the field,” Kachikwu said.
At the inception of Buhari’s administration in May 2015, the oil and gas industry was beset with a myriad of challenges ranging from a huge backlog of subsidy payments and cash call arrears to joint venture funding issues, infrastructure deficit, insecurity in the Niger Delta, limited refining capacity, and sharp fall in global oil prices.
In order to vigorously pursue the oil sector reform agenda, President Buhari kept to himself the petroleum minister portfolio and appointed Ibe Kachikwu as minister of state.
To avoid policy summersault and continuity, Kachikwu said his ministry put plans and structures in place to institutionalise policies such as the gas monetisation programme, refinery projects, infrastructural projects, Niger Delta militancy projects and many others.
Concerning the refineries, Kachikwu admitted that the ministry did not meet its mandate despite series of efforts in reviving the refineries to make it produce at least close to 2-3 million barrels per day. He, however, clarified that NNPC owns the refineries and, therefore, the role of the minister is not to head negotiations with investors but to provide policy.
“By December last year, when I got worried we were not meeting the mandate that is expected from the refineries, I then called a meeting and tried to resolve the issues with the investors themselves over the contractual terms and I thought I did eventually. The NNPC still rejected the terms we had agreed on,” Kachikwu explained.
Despite the challenges with public refineries, Kachikwu said the future of refinery was not in public refineries but in private refineries, which was why the government created an enabling environment to support private investment such as Dangote and modular refineries, a concept pushed for to ensure peace in the Niger Delta which is currently working successfully.
“Apart from the Dangote refinery coming with 650,000 barrels per day, there are three modular refineries nearing production points while about seven others are nearing Final Investment Decisions (FIDs),” Kachikwu said.
On a longer-term basis, Kachikwu said the refinery is also an export earner and Nigeria needs to be able to supply product to the rest of West Africa, East Africa and Southern Africa.
“I also made efforts talking to the Gulf countries like Saudi Arabia, Qatar and China trying to see whether they will be interested in coming in both for the purpose of Greenfield refinery building or the Brownfield refinery building which the responses have been positive,” he said.
Kachikwu said Nigeria is almost at the threshold of signing a Memorandum of Understanding (MOU) with South Africa which will not just cover refineries but also cover pipelines and LNG investment which is huge.
In curbing the menace of illegal refineries, Kachikwu said the problem with illegal refineries is not just the quality deficiency of the products but the fact that it’s a stolen material, which is why the ministry is working with the judiciary to fast-track punishment or electronic capturing of offenders.
Kachikwu said Nigeria cannot continue to stay at the sub-base of oil business necessitating the need to domesticate the value chain of oil production through initiatives such as Project 100.
“So in the ministry we are not just interested in policies, we are also considering those things that benefit Nigerians as well. Project 100 is not about 100 companies, it’s about providing opportunities so there is no limit to the other indigenous companies that can benefit from it. In the next 10 years, I will like to see this country boast of its production platform,” Kachikwu said.
STEPHEN ONYEKWELU & DIPO OLADEHINDE
