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Following the altercation between the Chief Executive, Nigerian Midstream and Downstream Petroleum Regulatory Authority, Farouk Ahmed, and Africa’s richest man, Aliko Dangote, over allegations of substandard products from the Dangote refinery, Professor Dayo Ayoade, University of Lagos, speaks with BIODUN BUSARI on the government’s shortcomings in the energy and power sectors, among other issues
What are your views on the fallout between the NMDPRA and the Dangote refinery?
The oil industry is difficult, especially in Nigeria where everything is opaque. The people who are supposed to help, protect, and work in the national interest are usually working for their selfish interests, and that has always been a problem for us in Nigeria.
When the Dangote refinery was coming onstream and they were talking about helping him, the then Central Bank of Nigeria Governor, Godwin Emefiele, and the government allegedly gave him preferential naira rates. This raised a lot of bitterness among other people, and with this, you can understand where some people are coming from and why the government is giving them special treatment.
When you transparently do things, it is easier to defend. If the government had presented some white paper and said, ‘Every businessman like Dangote interested will be treated equally’, there wouldn’t be an issue.
The government would have told interested people that they were doing this for our national interest; that it would save the forex in the future, aid domestic energy supply security, and help job creation. There are so many industries that we should be thinking about linking up with the Dangote refinery. But none of these is happening because they are fixated on control.
Is the government right about the Dangote refinery monopolistic tendency?
This monopoly is a genuine concern. You can’t have the Nigerian National Petroleum Corporation monopoly destroyed by the same NNPC cabal, and then they want to do a monopoly of import.
They are the ones still importing. Dangote refinery made a statement that the NNPCL has a plant off Malta where they blend products they bring here.
I don’t see average Nigerians asking questions, I don’t see people keen on carrying out investigations. It’s baffling. Is he lying? If he’s lying, then that is a serious matter, and they can sue him for that. But, if he’s not lying, are we not in big trouble? It is a big trouble that all of us are unconcerned that NNPC officials are part of foreign groups turning themselves into monopoly importers to milk Nigerians.
Look at the report of the House of Reps on downstream subsidy scams. How many people are in jail for the subsidy scam that cost us billions of dollars? Not one single soul.
What does that tell you? We are not ready for development because it’s not a new problem. It is ongoing, and Dangote should have known that these people would not go quietly. There is no way they can hand over their monopoly to him. But, even if the Dangote refinery is a monopoly because it is the only one working, why have the NNPC refineries refused to work? Why don’t they sell them off? Why is NNPC employing thousands of people, working and collecting salaries for the last two years and they did not refine anything?
It is because NNPC is a cost centre. It is just there to mop up money and to behave in unethical ways. That’s the sad truth. And now NNPC Limited, how we changed an organisation with the same people is disturbing. There are no external experts brought to the management level to shake things up. So, the parastatal and entitlement mentality continues.
Why is it difficult for the government to run NNPCL in the best Nigerian interest?
The NNPC has always been the cash cow of the Federal Government. If you are the President and you need a quiet $50m to do some shenanigans, who do you go to? Who has that readily available money? The go-to is NNPCL. So, if you get there as a president of the country, are you going to dismantle it or go with the flow? You likely go with the flow because you’re a politician and politicians usually need to push projects with cash. NNPCL is now a state in itself because it funds the government when it needs cash. So, you may decide not to reform the place, you may decide to benefit from it. There is no attempt at true brand reform. The kind of reform that the NNPC needs, I don’t even think the Nigerian government and Nigerians have the appetite for it. You have to utterly disrupt NNPCL. Would you want foreigners to come and run NNPCL? You have to bring someone with a completely different culture. NNPCL culture is that of a parastatal. It is as simple as that. It is not a meritocracy.
How do you think the NNPCL should operate?
If you want to do the kind of reform that the NNPCL will need, it means you want to genuinely de-link NNPCL from the state. Is that easy? You will be shocked by what the NNPCL does in the form of funding little things here and there. You can’t overturn the 50-year cash cow behaviour in one year, or since the 2020 Petroleum Act came into place. There are problems of failure to publish financial statements and complaints about the maintenance of moribund refineries. Nobody is taking responsibility for that. Nobody has ever been sacked. To reform others, you must start with yourself, but the Nigerian government itself has not changed.
Dangote is a member of the Presidential Economic Coordinating Council and said the Nigerian economy could get better in a few months. What could that imply?
If he is trying to allude to the fact that once we start to produce premium motor spirit and flood the Nigerian market, that haemorrhaging of dollars will end, then it was fair enough. But for that to happen, many things must be in place. You know the price of fuel cannot crash suddenly. Nigerian crude oil is not available because the previous administration of former President Muhammadu Buhari has almost sold off all of the Nigerian government’s shares of crude oil. Even the new refineries we are talking about, what are they going to use to process it? Then add crude oil theft to all this mix. If you add all these things together, there is just no crude, whether for the NNPCL refineries or the Dangote refinery. What does that mean? You have to import, which is the biggest tragedy of our nation.
When you import crude oil, you are paying international prices in dollars and that’s why Dangote is afraid of his refinery failing. Because if he goes to bring crude from the United States or the Brazilian crude, paying shipping costs, paying international pricing, paying insurance, then it comes here and there’s is the shipping cost of refining. When you add it all together plus profit, are you telling me that prices will drop? How? It is not possible.
It’s like the government doesn’t seem to understand the crisis we are in. If they did, they would focus on the issue of oil theft. And oil theft has to do with the mafia as well. It is the same cabals that are involved in it. The Federal Government seems to be helpless against its own thing. Even despite that, it is the one controlling the Navy, Army, Department of State Services, Economic and Financial Crimes Commission, and other agencies, and yet it feels helpless.
It is because the Federal Government is not ready to tackle them. But if it is ready to tackle them, they will know that the Federal Government has a lot of power.
How can Nigeria meet the oil production quota from the Organisation of Petroleum Exporting Countries?
What is the quota? The quota is the crude oil sales that a country can make. It is the ceiling, which means that you cannot sell more than this to the international market as OPEC is trying to protect international oil from sliding down. If every country, especially OPEC, opens its taps to produce in an unrestrained manner, the prices would go down and there would be no benefit for all these countries.
Now, our challenge is that the Dangote refinery is talking about 650,000 barrels per day at full capacity. And with the NNPCL capacity, that is over a million barrels per day if we can get our acts together internally.
It means that we can put over a million barrels per day into play, including other smaller refineries, though they are negligible. If you put all that down, then we can focus on over a million internally generated chemicals, plastics, fertilisers, and all sorts of things that we can spin off from the industries, including heavy oil. We are not going to produce and consume everything, are we? We are going to export it especially in Africa, and then to the rest of the world, and make a lot of money from it. It is in our interest to quickly get our acts together.
The issue of the power sector has been worrisome. How will the PECC solve that?
It doesn’t work like that. Everything in Nigeria is about magic bullets. We don’t know how to sit down with genuine experts to chart a way forward. We like to flip-flop. Before we even finish what we promise to do, we change the policy midway because someone’s interest seems affected. The power sector issue will not be solved overnight. It is as simple as that. Which foreign investor would come to Nigeria with all this? We keep sending the wrong signals to the world. Imagine the government saying the Dangote refinery products are substandard, that they are rubbish. We are doing a lot of damage to our country with this. Even if it’s a monopolistic issue, what is the job of the Federal Competition and Consumer Protection Commission? There are solutions to the problems. You don’t throw the baby out with the bathwater. How many investments do we have in this country that are up to almost $20bn? However, in my view, I don’t think the refinery is up to $20bn, I’m sorry. Everything is opaque, confusing, and secretive with this issue. So, how do you expect the economy to grow when everything is in confusion? The power sector is not going to change overnight. It is going to take time and considerable effort. The bottom line of the power sector is simple: price-reflective tariff. Can we pay the real money? Can we afford the cost of the power sector? Can we pay the bills monthly? About 80 per cent of our population is very poor. There’s no magic.
Are you saying the majority of Nigerians cannot afford to pay for constant power supply which affects businesses?
Yes. The power supply affects development. It affects productivity, it affects the economy. It affects everything. The money must come from somewhere. If the consumer cannot pay, then who will pay? But, you can’t expect the private sector to subsidise. It is not going to happen. For instance, I looked at the company that bought the Kaduna Electricity Company and I laughed. Is this what we call investors? The matter is you keep selling these companies to your politically connected people. They won’t spend their money to invest in it but will be collecting government subsidies. How many of the distribution companies have replaced the overhead lines in the areas we all live in? Have you seen them changing transformers or investing in other things? You can’t expect something out of nothing. We can’t get it done in one year, and that’s why every successive government keeps making vague promises after 20 years of investing billions of dollars in it.
Is there any solution in sight?
I would rather suggest that the Federal Government invest in economic development. We need industries. When people have jobs, let them go and pay extra money to get solar power or other means to generate electricity. As these industries grow, the economy improves, and you will see that the naira firms up and our purchasing power grows. The issue of tariffs will not be so burdensome for Nigerians. This will change the naira we are earning into dollars. Even professors, how much are we paid? We can’t afford it, not to talk of the people at the lower ends of things. That’s the problem we are facing and we must choose what we want to do. We must set priorities. The government does not have the boldness, and that boldness also requires the government to prune down. This is not the time to be buying a presidential yacht or aircraft.
Speaking on economic development, how can we convert our theories in several conferences, term papers, lectures and presentations to the realities of establishing industries?
Nigeria spends more on talking than acting. The Petroleum Act from infancy to birth took almost 20 years. That was 19 good years. I have never heard of a country where the primary product they all survive on is one industry and it took almost 20 years to reform it.
It is unprecedented in the annals of common sense or humankind. But this is where we see ourselves in Nigeria. We’re so uninterested in genuine development. When we spent those 20 years waiting, many countries caught and surpassed us. Most of the investments have left the shores. We are now scrambling for investments. And, with the little money available, people are killing themselves over it. That’s why we have all these energy thefts. Now, how do we move from a country that talks to a country that acts? You must restructure your leadership. The leaders must show that they are part of these things. But if the leaders are spending as if they are better than those in the developed world, then you can’t expect the citizens to buy into their development talks. Until we have some measure of accountability, we will not be able to capture the development.
Is the campaign about compressed natural gas being 40 per cent cheaper than fuel to power automobiles real?
Honestly, this is a dilemma for me. I’m optimistic that this country will develop by God’s grace if we only get our acts together. But the problem is, what is the purpose of the CNG? What is the government trying to achieve with it? If they are saying to convert your vehicles to CNG-use, who bears the cost? We should ask ourselves if it is another subsidy. Is it not a way for some people to try to make money for themselves? Is it another crooked attempt to rip us off of our collective money? Are you telling me that there will be no shortages in the gas sector? If I convert my car to CNG and have no gas to purchase, is that not a disaster? But if it is petrol, somehow you get a keg to get some into your car.
So, are we putting the cart before the horse again? How can hungry people be talking about greenhouse gases? We should just put our priorities where they should be. I’m even surprised that the NNPCL, which is busy looking for 20 per cent shares of the Dangote refinery, has not said anything about the CNG idea.