By Afeez Olawoyin
As Nigeria celebrates its 58 years independence anniversary today, two sectors where successive administrations have failed to make impressionable achievement happens to be the oil and power sectors.
With a population of over 170 million people, the country is still battling with less than 7,000 megawatts, leading to massive power shortages that have affected industrial development and job creation.
Despite being Africa’s largest economy, Nigeria still lags behind South Africa that generating over 40,000 megawatts.
More worrisome were the high hopes raised during former President Goodluck’s Jonathan era when it opted to privatise the distribution and generation arms of the power sector value chain in a bid to deliver a reliable and steady power supply.
But, five years after the unbundling of the Power Holding Company of Nigeria (PHCN), the situation has gone from bad to worse with the power investors threatening to dump the asset should government fail to address some of the issues plaguing the sector.
The investors have continued to canvass for the implementation of a cost-reflective tariff, which they said has had a negative toll on their business and has hindered them from carrying out a comprehensive overhaul of obsolete equipment.
Recently, the Minister of Power Works and Housing, Mr. Babatunde Fashola, told the power investors to deliver electricity or be ready to quit.
But the power investors, represented by the Executive Director, Research and Advocacy, Association of Electricity Distributors (ANED), Mr. Sunday Oduntan, fired back saying the Federal Government on its part has reneged on its promises in the agreement it signed with the power investors, saying the investors are equally willing to surrender the assets for a refund of their monies.
In all of these, the consumers and manufacturers have been the ones to bear the brunt of the inefficient state of the power sector as they are made to cough out about N3 billion monthly in estimated billing.
Electricity consumers had in the past staged protests at the offices of the various Discos all in a bid to compel them to provide prepaid meters. The appeal seems not to have yielded the expected results as they continue to groan under huge electricity bills.
Fashola had recently shocked Nigerians when he said the 11 Discos would need about N220 billion to provide prepaid meters for consumers.
The situation in the oil sector is not different from what obtains in the power as Nigerians have failed to reap the benefits of this natural resource.
Since oil was discovered in commercial quantity in Oloibiri, present-day Bayelsa State, in 1956 and exports commencing in 1958, it has been from one trouble to another, including host community issues and environmental degradation.
One major obstacle that has continued to plague the oil sector since independence is the battle for transparency in the management and distribution of oil resources.
Nigeria, over the last seventeen years, has recorded huge earnings from the petroleum industry, amounting to N77.348 trillion but had been unable to utilize the funds to improve the lives of its citizens, nor has the country used it to develop the economy.
Specifically, data compiled from the Central Bank of Nigeria, CBN, showed that Nigeria earned N77.348 trillion from the oil and gas industry from 1999 to 2016.
Analysis of the various oil and gas earnings showed that the country recorded gross oil revenue of N77.348 trillion over the 17-year period (1999 to 2016) while after various deductions, net oil revenue over the same period stood at N41.038 trillion.
A breakdown of the earnings showed that from 1999 to 2003, the country’s gross earnings stood at N7.329 trillion, while net oil revenue stood at N4.713 trillion; gross oil revenue and net oil revenue from 2004 to 2007 stood at N17.868 trillion and N9.561 trillion respectively.
From 2008 to 2011, the country recorded gross and net oil revenue of N23.998 trillion and N13.152 billion respectively, while from 2012 to 2016, N28.153 trillion and N13.612 trillion were recorded as gross oil revenue and net oil revenue respectively.
Ironically, despite the huge resources earned from petroleum, the country has nothing concrete to show. Nigeria is still besieged with inadequate infrastructure, epileptic power situation, low foreign exchange reserves, low savings, and an abysmally low standard of living. The country’s currency is currently exchanged at about N360 to a dollar.
In December last year, the Nigeria Extractive Industries Transparency Initiative (NEITI) in its 2015 Oil & Gas Industry Audit Report, said Nigeria lost over $723 million (about N221.5 billion, at N306.3 to $1) through the Offshore Processing Arrangement, OPA adopted by the Federal Government in 2015 to supply refined petroleum products in the country.
The controversial arrangement was introduced by the Nigerian National Petroleum Corporation under the supervision of the then Minister of Petroleum Resources, Diezani Alison-Madueke, and was quite popular during the Goodluck Jonathan administration.
It was an arrangement that involved the allocation of Nigeria’s crude oil to select indigenous and foreign oil traders under agreed swap contract terms, in exchange for refined products for local consumption.
Considered an alternative arrangement for the country’s four dysfunctional refineries in Port Harcourt, Warri and Kaduna, the OPA was criticized by Nigerians as a channel for corruption and waste of the country’s crude oil resources.
Apart from the difficulty in getting the commensurate value of petroleum products for the volume of crude oil allocated for refining, the arrangement was identified as one of the ways corrupt government officials funneled the country’s crude oil abroad for their selfish benefits.
The Buhari administration in November 2015 jettisoned the OPA for being “uneconomical and wasteful.”
In its place, the government opted for the Direct Sale-Direct Purchase, DSDP arrangement “to enthrone transparency and eliminate the activities of middlemen in the crude oil exchange for product matrix.”
Under the DSDP option, the NNPC directly sold crude oil and directly purchased refined petroleum products from international refineries.
The NEITI audit report published on Friday in Abuja revealed that under OPA, the value of refined petroleum products the country received was lower by $723 million than the value of the crude oil allocated to various oil trading firms for refining abroad.
The report noted that the huge loss was sustained even after allowances had been made for costs of crude and transportation as well as margins to the traders.