Recently, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, reiterated that on account of militancy in the Niger Delta, Nigeria could not earn about $100 billion oil revenue in 10 years as he also opened up on plans to reverse the loss. Chineme Okafor reports
Though not entirely new, Kachikwu in a podcast he released recently stated that between $50 and $100 billion was not earned by Nigeria in 10 years because of frequent attacks on oil and gas infrastructure by the Niger Delta militants.
Kachikwu explained that at the peak of militancy within these periods, oil revenue dropped drastically, and production particularly ebbed from 2.2 million barrels per day (mbpd) to one million barrels per day in 2016
He said: “As at 2016 on the average and looking at it historically that Nigeria was losing $50 to $100 billion as a result of the disruption.”
He specifically added that the country’s oil and gas industry could not earn over $7 billion from January to October 2016, saying that over the last decade spanning through various administrations, the industry suffered critical disruptions to operations resulting in the unearned incomes.
According to Kachikwu, the unearned income also included that which international oil companies (IOCs), independent producers as well the Nigerian National Petroleum Corporation (NNPC) could not take from their operations in the fields.
“This is a problem that has consistently been there even before the government of President Obasanjo, and it went on into other governments. It is a problem that seems to be intractable. So, it is a difficult undertaking to try to embark on trying to resolve it once and for all, but we are very bullish about this,” Kachikwu said to buttress the longstanding existence of militancy and its impacts on Nigeria’s oil production.
Similarly, the Nigerian Petroleum Development Company (NPDC), a subsidiary of NNPC had from February 2015, consistently reported substantial deferred revenue averaging N25 billion per month from the a subsisting force majeure declared by Shell Petroleum Development Company (SPDC) following the destruction of 48-inch Forcados crude oil export line.
Plans to reverse the trend
While the NNPC has repeatedly said in its monthly operations report that comprehensive measures to limit the impacts of oil assets destructions on the financials of the corporation were being initiated but with some success from stopgap approaches, Kachikwu in the podcast disclosed some detailed plans he would adopt to end this.
According to the minister, a 20-point agenda which include periodic engagements with communities and stakeholders in town hall meetings, inter-agency collaboration, ring-fenced state approach to security of oil installations, as well as security hold-hands efforts to guarantee peace and investment on state basis would be adopted.
He also listed focused investments in gas-to-power, incentive for peace scheme, massive revamp of social infrastructure bases of the communities and establishment of a Niger Delta Development Fund Initiative, as the other approaches he hoped would end militancy in the Niger Delta.
Christened “Oil Sector Militancy Challenges…Roadmap to Closure,” Kachikwu explained that the new approach was aimed at instituting permanent peace in the oil-producing region.
According to him, the Niger Delta crisis, coupled with the 45 per cent drop in oil production, worsened the financial challenges of the President Muhammadu Buhari administration. He added that the new measures would address this financial challenge to the government.
Additionally, the minister emphasised that the crisis resulted in attacks on oil and gas facilities and the sub-optimal performance of the country’s refineries. He noted that Nigeria was unable to meet its international obligations as a result of the militancy.
Kachikwu explained that the new measure would build on existing efforts initiated by the government to end the crisis. According to him, a seven-point roadmap that included engaging the oil-producing communities and sustaining the Amnesty Programme for the repentant militants were in existence already.
Insisting that the administration was determined to tackle militancy and achieve peace in the region, Kachikwu noted that it would be bullish in its focus on remedying the environment of the Niger Delta, which he said was also rich enough for aqua tourism for revenue generation.
To clean up the environment, Kachikwu said Buhari would continue to implement the existing seven-point agenda and other behind-the-scenes engagements of relevant stakeholders.
According to him, the first point on the 20-point agenda he plans to launch would be for oil companies to engage the state governments and communities on issues affecting a particular state.
The second point, he noted, would focus on inter-agency collaborations between the Ministries of Petroleum Resources and the Niger Delta, as well as the NDDC on crosscutting development and operational issues of the region. The third point would be a ring-fenced approach to ending the militancy. On this, he stressed that the Federal Government would stop dealing with militancy as a national issue and adopt a state-by-state approach to ending it on the ground that each state in the region appeared to have peculiar challenges that prompt militancy in their areas.
Kachikwu said government would focus on creating 100,000 jobs in each of the oil-producing states in the Niger Delta in the next five years, while the Amnesty Programme would be decentralised because Federal Government can no longer fund the programme alone as a result of dwindling oil revenue.
Another plan under the agenda Kachikwu launched would be to adopt the “Security Hold Hands Approach”, which according to him, was aimed at strengthening security in the region through the collaboration of all the relevant agencies.
He also identified peace and investment initiatives as another focus in the new agenda, and stressed that peace encourages investment while crisis serves as a disincentive to investment. He noted that the agenda would encourage states in the region to continue to pursue peace in exchange for improved investment.
The minister equally added that there would be a core business focus wherein the Federal Government will continue to attract business opportunities to the Niger Delta, stressing that at the core of the militancy was the lack of economic opportunities for inhabitants of the region to earn decent lives for themselves and their families.
He said the setting up of cottage industries and business startups in the region will encourage violent agitators to shun militancy and engage in business activities that will earn them good incomes.
Kachikwu said that oil companies would be encouraged to embark on the revamp of oil and gas infrastructure in the Niger Delta, in addition to focusing on the “clean-up of our mess”. He noted in this respect, that the government had launched the Ogoni clean-up exercise which should restore the environment of Ogoni land.
Other aspects of the 20-point plan included the domestication of oil and gas business opportunities to achieve greater participation of the people of the oil-producing region without excluding other Nigerians.
He said the government would also encourage education programmes in the Niger Delta to make the people embrace education and shun militancy. He stated that the Amnesty Programme would be launched on a state-by-state basis to create opportunities for 5,000 to 10,000 youths in each states of the region.
Further on security and peace, Kachikwu explained that ensuring justice for all the stakeholders in the region would be the major plank of the agenda, while the government would continue to strengthen the military and other security agencies to maintain peace as it would no longer accept instances of militants holding the country to ransom.