The President of Nigerian Stock Exchange (NSE), Mr. Aigboje Aig-Imoukhuede has insisted that a reform should be carried out in Nigeria’s oil and gas sector in order to curb sharp practices and encourage development that will incentivise investors to set up refineries, and create new technologies for production and employment of hundreds of thousands of jobs through the value chain.
Speaking at the 2016 Petroleum Club Annual Guarantors’ Dinner held recently in Lagos, Imoukhuede, who is also the chairman of WAPIC Insurance, stated that the oil and gas sector encourages wealth through arbitrary means.
In his presentation titled: “A new role for petroleum industry in the Nigerian Economy”, he argued that “in 2011, Nigeria paid over two trillion naira in fuel subsidy and alleged that “over one trillion naira of this payment was fraudulent”.
“Let us assume we mobilised 300 oil and gas entrepreneurs and gave them that one trillion naira to develop the sector and pay back, I cannot imagine what the developmental impact it would have made. In the interest of this nation, we have to get government out of operating in the oil and gas sector,” he explained.
“Sustained economic development is premised on the country’s ability to channel investment and entrepreneurial development into sectors where operators create values by producing goods and services at a cost that consumers are prepared to pay for, but more importantly at a cost lower than their counterparts in foreign countries. Nigeria will never see development if this continues,” Imoukhuede said.
Speaking on the way forward, Imoukhuede recommended that the first step is to drastically reduce corruption in the oil and gas sector, adding that the perception in the industry is that operators perennially have to contend with corruption.
According to him, the industry requires a paradigm shift.
“We want a sustainable oil and gas sector founded on a system whereby great men and women can run great companies like anywhere in the developed world. A few of you need to step forward and lead this process. The goal is not to eliminate corruption, but to reduce it. You can make the sector to have standards that will determine how it would be run. It may sound tough and some of you may even have to take risk,” he said.
“Another issue is improving the quality of regulation and policy. Petroleum Industry bill is important here. If it is passed, it will enhance the deregulation and privatisation of the oil and gas sector. The reason why Nigerian banks are doing well is because the industry was reformed. It introduced competition and level the playing field. For instance, Access Bank today has branches in China and Dubai. Industrialisation through local participation is also fundamental. No nation industrializes because foreign nations choose to do so,” he added.
He argued that nations industrialise when its citizens are empowered to make decisions which is difficult for a non-citizens to take.
Earlier in his speech, the Chairman of the Petroleum Club, Dr. GS Ihetu acknowledged that 2016 has been a difficult year for the petroleum industry. “First, due to the fall in the price of crude oil below the 2015 levels, revenues of the oil asset owners have declined. To make matters worse, the activities of the Niger Delta Agitators have further disrupted oil and gas production and export with devastating effect. This of course has had a knock on effect on all those who provide services to the industry,” he said.
According to him, all the members have therefore been affected by the double shock in one way or the other.
Ihetu, however, added that despite the challenges, the Petroleum Club had spoken out against the attempt by the House Committee on Petroleum to amend the NLNG Act.
“The Club also made a press statement stressing the need for peace in the Niger Delta so that the oil industry, in particular, and the Nigerian economy in general, can thrive once again,” Ihetu added.