Dr. Ibe Kachikwu, Minister of State for Petroleum.
By Hugo Odiogor
As we wait to see those President Muhammadu Buhari would bring back on board, as members of his second term cabinet, Nigerians would expect him to avoid the mistakes of his first term as much as he can.
The period of selecting the team that would take incoming administration to the Next Level is germane to assess the four-year performance of the Petroluem Resources sector, which is obviously, “the goose that lays the golden egg.”
There is no doubt that the effective management of oil and gas sector, which contributes 90 per cent of our external revenue in global trade and 80% of our GDP would continue to receive total professional attention of the President in terms of the know- how? and know-what?
These are key components of what would be required to stabilise and manage that oil and gas sector successfully at the local and geo-global arena.
In the past four years, President has held tightly to the office of Minister of Petroleum Resources while Dr. Emmanuel Ibe Kachikwu done the yeoman’s job in the sector as the Honourable Minister of State, which diminished his full potentials, to say the least.
Coming from the private sector background, Chairman of ExxonMobile oil giants in Africa and the Middle East, Dr. Ibe Kachikwu had a solid career and professional track record as a technocrat. His academic background was impeccable and confidence inspiring for the President to appoint him to the position of the Group Managing Director of NNPC and was later appointed as the Honourable Minister of State for Petroleum Resources. With President Buhari as the substantive Minister of Petroleum Resources, there were limits to which the Honourable Minister of state could operate without ruffling feathers in this cash cow of the country.
Without prejudices to whatever measures the President may have put in place to manage the oil and gas sector in his second term, the fact remains that the geo-political nature of the petroleum industry requires stability and consistencies in policy formulation and management of such policies. Ironically, this is a sector that is prone to volatility in international political arena.
In the past years, Dr. Ibe Kachikwu has risen to the challenges that accompanied the rapid fall in global oil prices at the inception of the Buhari administration in 2015. He had guided the new government through the sliding of the economy into a recession.
His interactions with ministers of petroleum resources within the OPEC and non OPEC countries have availed him the skills, experiences and exposures required to navigate through the murky terrains of the global oil trade and geo-political arena. These are valuable assets that the Buhari administration needs in the Next Level.
Economy still in Recession
The failing health of the economy means that we must not experiment with it especially, in the petroleum sector.
We saw how wrong headed policy actions in that sector during his first term, precipitated the sliding of the economy into a recession.
“Operation Crocodile Smile” and the Creek war diplomacy
Not many people gave Dr. Kachikwu the chance to douse the fire when he embarked on the Creek war diplomacy to end the hostility created by the launching of “Operation Crocodile Smiles ” to flush out the leaders of militant groups in the South South.
After coming to power, the hawks in the Buhari administration provoked a hostile confrontation with the youths in the oil host communities by launching a scotched earth policy of flushing out the War Lords in the Niger Delta creeks. The response of the latter to the military engagement was to launch attacks on oil installations in the oil host communities. Consequently, the country’s crude oil production capacity was fast becoming redundant. Together with Delta State Governor, Dr. Ifeanyi Arthur Okowa, and Barr. Kingsley Otuaro, the Deputy Governor of the State, Dr. Kachikwu was able to stand down the hostile military engagements in the creeks.
Dr. Kachikwu restored the cancellation of the proposed University for Marine Sciences in Okerenkoko and ensured that the Petroleum Training Institute,(PTI), Effuru, was upgraded to a Federal University of Petroleum Resources, Meanwhile, he has proposed a second refinery in Warri, to boost local capacity to refine crude oil internally, to end the importation of refined oil product and controversies on payment of subsidies.
Bridging the Supply-End Gap
Under his watch, the Federal Government has come up with the idea of engaging more small and medium capacity investors into the business of refining crude oil.
As a result, the so called illegal refineries were being brought into the mainstream by issuing them with licenses to operate Modular refineries.
Already, 10 out of the 40 licensed have hit the ground running by entering into Memorandum of Understanding with the Federal Government on how to access the funds and other incentives granted to them especially, on Foreign Exchange and importation of the equipment required for their take off.
The Peace and Development Paradigm
One of the noticeable impacts of the Modular Refinery policy is the reduction in cases of brazen attack on pipeline by people who want to breach the oil pipelines to steal crude oil for the crude refineries.
The clash with the national security agencies in the maritime domain has reduced. There is also a reduction in wastages in revenue arising from these clashes, increase our capacity on domestic supply gap and cut down on the endemic problem of payment of subsidy on imported petroleum products.
The Ogoni Clean up
The clean up of Ogoni land as directed by the UNEPA, in 2007 ought to be off the drawing board in President Buhari’s second term. The President needs a brilliant mind like Dr. Kachikwu to move these programmes without provoking crisis.
Supervision of PIA take off
The Petroleum Industry Bill has become an Act, the President needs a minister like Dr. Kachikwu to ensure a smooth take-off for the PIA in such a way that the stakeholders are not made to become antagonistic to the Act and that the host communities are well guided in the new dispensation. The PIB has been in the legal chamber for too long that we need an industry person, with private sector orientation and a four full year in the Cabinet to know which copy is the correct version. Of course, he happens to be a legal luminary who has worked with the IOCs.
The intricate mix of oil and global politics makes imperative for President Buhari to keep a technocrat Dr. Kachikwu on his job and upgrade his responsibility to that of a full minister, to ensure consistency and stability in policy formulation and implementation..
This is important especially as the Trump administration is ruffling feathers in the Middle East region. The global price of crude oil has notched up to $75 per barrel in the international market which is slightly comfortable for the Buhari administration, but the realisation that the country wastes trillions of its earnings of subsidies paid on importation of refined petroleum products whittles down the expected benefits from this end.
It is also challenging to have an energetic full minister of petroleum resources at this point when the US has stopped buying crude oil from Nigeria. We ought to be on the driver’s seat cutting our own deals with countries that recognise our sovereignty and where the interest of Nigeria comes first.
Nigeria is blessed to have huge gas reserves as well. As the global energy needs tilts towards more consumption of gas, the experience and brilliance of Dr. Ibe Kachikwu are surely great assets to the Buhari administration.
Bridging the Supply Side deficiency
Industry watchers have argued that “Most of these industries are still in the formative stages but Dr. Kachikwu was up beat when he was quoted as saying that by the end of 2019, “we are assured that three private modular refineries would come on stream.”
By the end of 2019, “we are assured that three private modular refineries would come on stream,” We should not waste time to do the right thing.
The much celebrated Dangote’s 650,000BPD refinery is expected to come on stream by 2020. This is part of the the setting up of the Greenfield and collocated refineries, to boost petroleum product supply sufficiency.
Meanwhile, the NNPC is negotiating for partnership with JIL- Amber Consortium, for the construction of a collocation of a 100,000bpd refinery in Port Harcourt Refining Company. On its part, Agip is working towards setting a 150,000bpd capacity refinery in Warri.
Benchmarking Kachikwu’s sterling performance in the Petroluem the sector.
Not many Nigerians are aware of these sterling contributions that Dr. Ibe Kachikwu has made in the petroleum sector which justifies any argument that he should stay on to see to the realisation of his vision..
- Repositioning of operational direction of NNPC during his 11-month tenure as NNPC GMD which enhanced corporate governance strategies aimed at tackling poor profitability index, loss of business transparency and eliminating poor perception.
2..Deregulation of the downstream petroleum sector for operational effectiveness and efficiency. With this, NNPC was able to cut operational cost by 30 per cent.
- Initiated creative means of meeting NNPC Joint Venture (JV) commitments – a situation that had earned NNPC strong negative perception. The oil sector now has a funding scheme that enables the downstream to adequately fund itself.
- Eliminated problematic process of meeting NNPC’s statutory payments to the Federation Account which promoted transparency and allowed FAAC and other stakeholders see situations as they really are.
- Under Kachikwu, NNPC recorded a profit of N270 million in May, 2016 for the first time in many years.
- Kachikwu succeeded in reducing the upstream contracting period from the average of between two and half years to between six and nine months.
- Initiated robust collaboration between NNPC and the Nigerian Content Development Board (NCDMB) towards local capacity input among oil and gas operators. This led to the expansion of operators’ compliance and enforcement framework to cover marginal field operators, midstream and downstream sectors.
- Under Kachikwu watch, NNPC secured sustained industrial harmony with oil/gas workers which resulted in the organised labour’s robust support to Government policies, especially during the fuel subsidy removal in May 2016 that would have resulted to nationwide protests.
To achieve these feats would be a worthy legacy that President Buhari would like to leave behind for posterity sake and he needs a well focused mind like Dr. Ibe Kachikwu to crack this.