A probe of the accounts of Nigeria National Petroleum Corporation, NNPC by PWC, revealed how the Corporation which imports over 50 per cent of the products consumed in the country paid itself over $18.5 billion partly as petrol and kerosene subsidies in 2012 alone. Analysts have argued that with the huge web of fraud around the subsidy of petroleum products in recent years, the country may not have an option, but to deregulate the whole process by allowing marketers to bring in products and sell at their own price, under the close scrutiny of government.

Apart from making funds available for spending on more beneficial projects, ending the subsidy on petroleum products, analysts argue will lead to more investments in the downstream sector of the industry. Tony Blair, former British Prime Minister said last week: “For a country that has extraordinary resources of oil and has this amazing privilege of source of energy, yet power generation was not as good as it should. People having to wait for hours queuing to get fuel and end up buying it elsewhere. I think the resources voted for this subsidy can be better used for other things. I think we need to recapture this oil resource and the revenues put to good use so that it can be invested for the long term good of the country, in infrastructure, human capital development, education system and skill acquisition that people need to work with in the future.”

•Jonathan: Hands over

The ex-British prime minister was represented by Peter Benjamin Mandelson, a former Secretary of State for Trade and Industry at the two-day APC Policy Dialogue in Abuja.

Also, the APC said in its manifesto that it would ensure the speedy passage of Petroleum Industry Bill, PIB that has as one of the key points, complete liberalization of the downstream sector of the oil industry. This, the party said in the manifesto will be part of its plans to make the Nigeria oil and gas industry the leading /cutting edge centers for clean oil and gas technologists, scientists, mega structure installation, drilling, processing, production engineers supported with best services and research facilities.

The party added that it will modernise the NNPC and make it the national energy champion and consider the breaking up of the monolithic entity into more efficient, commercially driven units and strip it of its regulatory powers and enable it tap into international capital market. The APC also said it will fully develop the oil sector’s capacity to absorb more of the nation’s new graduates in the labour market so that it can produce more home-grown world class engineers and scientists, a move which many believe can only be accomplished with attraction of new investments into the sector through complete deregulation of the industry.

Power Supply

The problems created by scarcity of petrol have been compounded for Nigerians in the past few weeks by worsening electricity supply. The PDP led Federal Government has struggled in the past 16 years to tackle the problem of ensuring that Nigerians have access to reliable power supply. But despite the estimated $30 billion spent in the sector in the past 16 years, the country has barely achieved 5000 megawatts of electricity generation. The Jonathan administration’s privatization of the sector in 2013 seemed to have worsened rather than improve electricity supply to Nigerians.

Most of the new owners of the generation and distribution companies have been giving various excuses on why they have not been able to improve power supply over a year after taking over the assets in the sector. Some analysts have advocated that the Buhari administration must revisit the privatization of the power sector over allegations that the companies were sold to cronies who lacked technical competence and financial muscle to turn the sector around.

Indeed, it has been complaints galore from the distribution, generation and the transmission companies carved out of the defunct Power Holding Company of Nigeria. The distribution companies have been complaining of inadequate allocation of power from the generation companies while the generation companies are in turn complaining of lack of gas to fuel their power stations. On the other hand, the Transmission Company has been complaining of the weak grid, which can barely wheel 3000 megawatts to homes and business premises across the country.

The Federal Government said the National Integrated Power Projects (NIPPs) is capable of injecting up to 4,700 megawatts to the national grid while the country can generate up to 6,000MW which will give every part of the country about 22 hours light if there is gas to power the plants. “We got up to 4,500MW at the beginning of April but today, we are operating at 2,200MW. If we get gas, we can generate 6,000MW and every part of the country will have about 22 hours of light, because we discovered that when we hit 4,500MW, many places were having 18 hours supply,” Professor Nedu Nebo, the Minister of Power who added that rampant vandalisation of gas pipelines is also starving the optimised plants of gas fuel said last Tuesday.

Also, Abiodun Ajifowobaje, the Chief Executive Officer of Ikeja Electricity Company lamented that the Egbin Power Station, which has the capacity of generating over 1, 200 megawatts, generates about 300 megawatts due to inadequate gas supply.

The solutions to the country’s electricity problems therefore have to encompass all aspects from generation to distribution, transmission and also address the problems of gas supply. Also, there is need for urgent diversification of the sources of power with the development of hydro and renewable energy sources. The APC realized this in its manifesto as it noted that all other indices of development anchor on power and energy and that failure to make power supply efficient has impacted negatively on the economy. But the party said it would continue with the privatization of the sector by devolving much of power and energy to the private sector.

•Prof. Chinedu Nebo- Gas pipelines

But this magazine gathered that the party would change the approach to the issue of privatization by privatizing, deregulating and regionalizing power transmission with more serious efforts to tackle the issues of gas supply to the generation companies. While noting that lack of reliable power supply has made the cost of production and business high and has invariably raised the cost of agricultural produce and other finished goods and services thereby thwarting the growth of the economy, the party promised to generate, transmit and distribute from current 5,000 – 6,000 MW to at least 20,000 MW of electricity within four years. It promised to increase Nigeria power generation to 50,000 MW with a view to achieving uninterrupted power supply within 10 years, whilst simultaneously ensuring development of sustainable/renewable energy; exploiting renewable energy sources, such as coal, solar, hydro, wind and biomass for domestic and industrial use, where possible.

Also, the APC said it will enforce the government master plan for oil companies to end flaring and ensure that they sell at least half of their gas production within Nigeria; a policy which many said will also help the power stations to overcome their power supply problems. One area that public sector employees, especially civil servants across the country will also expect a swift action from the Buhari administration is in the area of the economy.

The economy

Another challenge that the new administration of APC will also need to move in to tackle swiftly is in the area of the economy. With the fall in the price of oil, which provides over 80 per cent of Nigeria foreign earnings, Nigerian economy has been in dire straits with dwindling allocations to states from the centre. For instance, Nigeria’s foreign reserves have gone down to $29.79bn while average crude price is about $62. In the same vein, demand for the crude by the major importers is declining while Nigeria oil production is not increasing.

About 2/3 of Nigeria 36 States are defaulting in payment of monthly wages to their workers while the Minister of Finance recently revealed that the Federal Government has been borrowing to pay its workers. As a result, most states and local governments which depends on the centre for over 70 per cent of their recurrent and capital expenditure have been unable to meet their obligations in terms of salaries and allowances to their workers as well as to contractors.

This has resulted in mass retrenchment in construction companies and strikes across the states. In the same vein, the depletion of Nigeria’s external reserves and the fast decline in the value of the naira have put pressure on businesses and the stock market. The Federal Government had year in, year out continued to allocate the bigger percentage of the national budget to recurrent expenditure to the detriment of capital spending. An analysis of President Jonathan’s budgets revealed that the share of recurrent expenditure as a percentage of the total budget was 74.43 per cent in 2011, but dropped to 71.47 per cent and 67.49 per cent in 2012 and 2013, respectively. However, in the 2014 budget, the share of recurrent expenditure rose up to 74 per cent.

•Okonjo-Iweala: Disputed oil marketers claim

Analysis of the new budget signed by the president last week revealed that recurrent expenditure summed up to N3.97trillion or 91 per cent of the entire 2015 proposal. Indeed, the economy has been so mismanaged in the past four years that the President- elect recently lamented that he will virtually inherit an empty treasury when he assumes office.

“You can imagine what is happening in the high seas where up to 400,000 barrels of crude oil which we rely on is stolen everyday with the full cooperation of those who are supposed to protect it. The price of oil has gone down and 90 per cent of the foreign exchange we rely on comes from that. So, you have to convince your constituencies that we have virtually arrived at the wrong time and that they have to temper their expectation with some justice towards the leadership,” Buhari recently told a delegation from the Northern part of the country, while emphasizing that the situation may affect the promise of his administration in terms of provision of security to the populace, employment for the youth and provision of infrastructure.

Nigeria Bureau of Statistics two weeks ago indicated that the country’s real Gross Domestic Product, GD) growth rate further declined to 3.86 per cent in the first quarter of 2015 compared to 5.94 per cent the previous quarter. NBS also indicated that the Consumer Price Index (CPI) which measures inflation rose further to 8.7 per cent in April compared to 8.5 percent in March while the country’s GDP growth rate was lower by 2.25 per cent points from the preceding quarter and by 1.98 per cent from the corresponding quarter of 2014.