• Thursday, March 28, 2024
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Nigeria needs regulation on how it manages its Excess Crude Account- Abdullahi Haske  

Abdullahi Haske-2

Abdullahi Haske is the founder and Chief Executive Officer of AA&R Investments, an indigenous oil exploration major, credited with finding oil in Bauchi State. He is also involved in marine services, aviation, engineering and agriculture investments.

In this exclusive interview with BusinessDay, he addresses a multitude of concerns: lower excess crude account, impact of lower oil price, looming food crisis, slump in the aviation sector and the biggest of them all, how gas will transform Nigeria. He spoke to Dipo Oladehinde. Excerpts:  

A bleak future without petrodollars is something Nigeria have been warned about for years, yet the day of reckoning has caught the government unprepared. Oil prices have fallen below the budget benchmark. What will be your short and long term pieces of advice to the government?

In all honesty, any person who understands the international oil market trends for the past few years ought to have known that we were heading down this road. Policymakers have not been able to come up with the right policies to curb the situation.

Now to answer your question – in the short term the government must apply effective austerity measures and do away with the excessive and unnecessary recurrent expenditures to reduce the impact of the economic downturn which is inevitable, but with public confidence low, accepting any form of austerity will be difficult but then again it’s the only way out.

For the long term, the government has no choice but to take the issue of diversifying the economy away from oil very seriously by generating revenue from non-oil related sectors of the economy. While doing that, the government should also work on how to become energy independent, adequate food security by investing in the entire agriculture value chain, and building critical infrastructure. Similarly, boost regional and continental trade agreement by exporting minerals and agricultural products.

In essence, the government has to spend more on critical infrastructure but even more importantly is developing and building human capacity, through education and providing an enabling environment for local businesses to thrive.

Nigeria’s Excess Crude Account is currently at $71.81m. What went wrong and how can we boost this account to save for the rainy day?

Poor management of the excess crude account and lack of planning by policymakers not thinking of saving for rainy days.

Now to boost the account we need regulation on how to manage the account, the National Assembly must pass a regulation on how to manage the account and how it is funded. Because the government just deeps their hand at will into excess crude without any checks and balances.

Nigeria is vulnerable to a prolonged period of low oil prices – but some stakeholders have said the country should take the opportunity to deregulate downstream and allow the free market to determine the price of petrol. What’s your take?

I think the government should take its hands off the downstream sector to a very large extent and allow market forces to determine the prices. However, they must play the role of consumer protection through quality control to prevent price exploitation by industry players who might take advantage of the free market policy and hike prices of products which the government cannot afford because it will lead to a cyclical ripple effect where you have prices of food, transport and other basic necessities shooting up. Therefore government must play a critical role of ‘big brother’ but should also allow the market to move freely

What can Nigeria do to attract more investment to its idle oil fields scattered around Nigeria?

Government needs to provide clear cut policies, for example, today we talk of the Petroleum Industry Bill, but we are not sure what will come out from the bill and when it will eventually be passed.

Secondly, the government needs to be transparent concerning taxes and royalties, when is it due, who is paying or who is not paying because now there isn’t transparency with regards to this. We also need to be transparent with regards to knowing our actual daily productions which will go a long way in boosting investor confidence.

Most oil-dependent countries are preparing for life beyond crude oil, some are looking at renewable energy. Where do you see the future for Nigeria?

In my opinion, I see the future in gas, as a matter of fact, I strongly believe that Nigeria is more of a gas nation than an oil nation. Gas can 100percent replace oil and its uses for this country from the automotive industry to manufacturing industries to power generation, Petro-chemicals and even fertilizer production.

Just look at Qatar who left the Organisation of Petroleum Exporting Countries (OPEC) to go and focus on developing its gas sector. You can see that they are doing well as the largest exporter of LNG and it has one of the highest GDP per capita.

Abdullahi Haske

Nigeria is believed to have more potential in gas than in oil, especially if diversity in global energy consumption is considered. The nation’s gas reserves estimated as the largest on the African continent have been assessed at three times the value of her crude oil reserves. How can we transfer this to economic growth?

First, the product and sector must be given a priority by the government by ensuring that they provide a favourable commercial term which clearly spells out terms of engagement to develop the gas sector. This will encourage producers (IOCs) and other investors to go into the sector and develop it.

I will give you an example: an International Oil Company working on a field today will come across gas and will not look at it. Instead, they will go to look for crude because there are no government terms or policies on how to invest in gas.

After defining the terms of operations the next step is to make it (gas)  the centre of every government project, basically to allow the utilization or use of gas in all projects – power projects, agriculture infrastructure such as fertilizer production, road construction, manufacturing e.t.c. This will boost the economy and provide a means of generating foreign revenue through LNG, LPG etc

Nigeria’s huge gas finds is at an estimated value of $462.5 billion which have been left trapped and unproductive for decades, on account of lethargy by a government that is unable to create the policy environment to turn this huge resource into a prosperity dividend for the country and its people. What are your recommendations to the government?

The first recommendation as stated earlier is to make it a priority by establishing favourable gas policies for investors and the government, which should serve as a front burner for every government national project.

Nigeria struggles to meet its electricity needs despite having the reputation as owner of the ninth-largest proven gas reserves in the world. How can Nigeria solve its power challenges using gas?

The major challenge in power today is transmission and distribution. Now we have an installed capacity of over 12,000 megawatts. That notwithstanding we have gas power plants but are idle because they don’t get supply of gas to feed these plants largely due to the lack of infrastructure such as pipelines that will connect to the gas plants.

Also, because gas production is mainly in one region of the country (Niger-delta) how do you get the transmission and distribution to other regions of the country? Therefore, the government needs to open the distribution part of the sector to allow for investments in this area. Government also needs to look for additional gas fields in other regions around the Benue trough and other throughs to allow for development of gas facilities in those areas.

The rapid spread of the coronavirus pandemic in the northern parts of the country could trigger scarcity of food in Nigeria, what proactive measures can the government take to mitigate the severity of a looming food crisis?

The first and most important is to ensure they try as much possible to contain the spread of the disease. The second is to ensure they give support to the health care sector and those in the frontline by providing the necessary resources to fight the pandemic

The third is to support the producers (farmers) to increase their production through technical and financial support. This is also the time for the government to invest in other value chains of food production such as storage systems to minimize wastage and effective transportation or distribution channels.

Abdullahi Haske

The International Air Transport Association (IATA) released an updated analysis showing that the COVID-19 crisis will see airline passenger revenues drop by $314 billion in 2020, a 55 percent decline compared to 2019. What can the government do to save the aviation sector from total collapse?

This pandemic is a global crisis, and if it persists, the aviation sector will remain aground. The only thing that can be done is to wait and see the end of the pandemic and how they will pick up from there.

To this end, the government should consider waiving taxes, removing some charges on them and because most airlines are financially exposed and highly geared. Also, the government should look at how they can help restructure their debt services because it a big sector which is critical to the economy not just because it connects people and businesses but it employs thousands of people who are at risk of losing their jobs should the industry collapse.

What are some of the biggest challenges you have faced in the last 10 years as a businessman?

You know we live in a very tough and challenging business environment,  that will test your ability to endure these challenges and honestly, I was ready for anything challenge that would come my way because it is hard establishing a business especially in the oil and gas sector but even much harder is sustaining the business.

So for me, the biggest challenge was convincing business partners and my employees to share in my vision and believe in it. Most people think we are being too ambitious and never believed that we would achieve what we have today, but I knew that if I kept trying and knocking, one the day the doors will open. You see you get turned down or fail a million times in this business, but the one million and one times might be the turning point.

Where should we be expecting from you in the next 10 years?

Continuous expansion of our business interest to become a reputable well-known group of companies that add meaningful value to the country and its people. I have just launched my charity foundation which we hope to use as a medium to help people not just to become better but to reveal to them their true potential. This I hope to achieve in the next 10 years because it is only in this way, we can prove our sincerity to God our creator.