• Osinbajo: FG considering proposal to support local goods

Ndubuisi Francis in Abuja

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, Tuesday put aside their differences, even if temporarily, and discussed opportunities in the Nigerian petroleum industry and ways to grow the sector.

In a leaked letter to President Muhammadu Buhari, Kachikwu had listed a litany of procedural breaches against Baru, accusing the latter of not only undermining his position as the chairman of the NNPC board but also of awarding contracts totalling $26 billion without recourse to due process.
In response to Kachikwu’s allegations, Baru had said there was no law that stipulates that he should seek the approval of the minister in awarding contracts.

The public spat between the two top officials of the government was however punctuated, even if temporarily at the 23rd Nigeria Economic Summit (NES) 2017 in Abuja Tuesday.
Both men were discussants at the Energy Policy Committee breakout session.
Baru, a lead discussant at one of the sessions, came first to the venue of the programme, while Kachikwu walked in about 15 minutes later.

As soon as Kachikwu arrived, Baru stood up, approached him and exchanged pleasantries.
Kachikwu also offered that he should be represented at the second session of the dialogue by Baru, a request the organisers politely declined because Baru was to chair a session and it would have affected his participation.

However, Kachikwu left before the end of the session and Baru represented him. But the minister returned and joined Baru in chairing the event. After the session, both men engaged in a brief chat before departing.
Kachikwu, who moderated the panel discussion on energy with Baru, said the federal government would develop policies that would ensure that the global decline in fossil energy does not take Nigeria unawares, adding that government was already thinking towards that direction.

He, however, said the federal government was currently dealing with the fundamentals of ensuring that the refineries work and ensure availability of energy sources to meet day-to-day energy needs.
Kachikwu said: “The first thing is to develop the policies and to do that the NNPC would have to take over the commercial aspects because they are going to be the one deploying it.

“As the refineries get kitted up, obviously we would continue to look at new fossils development programmes and will see a need to pump out policies that would enable Nigerians to see the advantages in terms of costs.”
Commenting on the issues raised by the panelists on the upcoming marginal field bid round, Kachikwu said the government was determined to ensure transparency in the bid process so that the public could monitor the process and would know who gets what.

“These are some of the issues the Niger Delta communities are always enquiring about and indeed all Nigerians. The more transparent it is (bid process), the better for us.
“Another key question is regarding ensuring that the local communities in the Niger Delta are carried along.
“We are developing models to ensure better regulations geared towards transparency in the bid process and we would alert Mr. President as soon as we are done,” he explained.

In his opening remarks, Baru expressed concern that only nine out of the 14 firms that won previous bid rounds for the marginal fields were operating, noting that it was not a good development.
In his response, Kachikwu said the Ministry of Petroleum Resources would work closely towards ensuring that concerns and constraints that had hindered the companies which were yet to commence production from their oil acreages are appropriately addressed.

While declaring the summit open, Vice-President Yemi Osinbajo said one of the critical things that the Manufacturers Association of Nigeria (MAN) had proposed to the government in support of the local content initiative was what they have described as margins of preference for locally made goods.
“In other words, what they are saying is if you prefer locally made goods, then you must take care of the problems that local goods have; in other words, they are usually more expensive than the imported goods, so you have to take care of that by what they call margins of preference.

“So we are looking at that proposal and we are looking at the percentage for procurement purposes. But we do agree with the principle that if we are going to promote local goods then we must find ways of preferring them to imported ones and we think that the margins of preference are the sensible way to do so,” he said.

Osinbajo noted that while the federal government was determined to build a modern economy, its ability to do so was hamstrung by the fact that its annual budgeted expenditure of N7 trillion was only a small part of a multi-trillion naira economy.
“The private sector is clearly the bigger contributor to the economy. It thus follows that the private sector must be enabled and encouraged to play a decisive role if our development efforts are to succeed,” he stated.

According to him, the economy has now returned to the path of growth after the precipitous slide from 2014, adding: “As it’s now well known, we exited the recession in the second quarter of 2017 with a GDP growth rate of 0.55 per cent, while inflation has similarly declined continuously from its peak of about 18 per cent in January 2017 to about 16 per cent today.”
He also noted that last year, there were concerns about the availability of foreign exchange and a rapidly deteriorating exchange rate, noting that the situation has been turned around and stabilised.

Osinbajo noted that foreign exchange reserves has risen to about $33 billion and end users have increased access to foreign exchange partly due mainly to increased export earnings and remittances as well as the introduction of a dedicated transparent window for investors and exporters (NAFEX).

He said: “The results have been encouraging as the inflows of capital in the second quarter of 2017 of about $1.8 billion were almost double the amount of $908 million imported in the first quarter of the year.

“Third, another issue of great concern last year that has been resolved was the loss of a significant amount of oil production. At some stage last year, we were losing up to one million barrels a day of crude oil but thanks to the series of engagement we had with stakeholders in the Niger Delta on the new vision for that region, production has been restored to nearly 2 million barrels per day.”
The vice-president, however, pointed out that government was concerned about the very high interest rates, tracing it to government borrowing.

He added that since evidence pointed to a crowding out of the private sector, the federal government was reducing its demand for domestic paper and would seek to refinance maturing domestic debt with longer tenor and cheaper external borrowing.
Earlier in a panel discussion, Osinbajo alongside the Chairman of United Bank for Africa (UBA) Plc, Mr. Tony Elumelu, and an executive of General Electric (GE), Mr. John Price, had assured them that government was determined to address the nation’s socio-economic challenges.

He stated that attention was being refocused from resource-dependency to productivity.
In his opening address, the Chairman of the Board of Directors of the Nigeria Economic Summit Group (NESG), Kyari Bukar, said that at the last summit, the NESG had called for a more pragmatic engagement of the Niger Delta region by the federal government to address the frequent disruption to oil production linked to the vandalism of production and transportation infrastructure.
Kyari said: “We are pleased to note the impact of the engagement of the government and the resultant impact on the broader economy.

“However, growth in the non-oil economy remains low. Nevertheless, we note that the action led by the Central Bank of Nigeria to stabilise the exchange rate and increase dollar supply to the economy also meant that many industries in the non-oil sector were able to turn the corner after a very difficult 2016.
“While the steps taken have been positive for the economy, it is important to note that the cost and supply of dollars remain a challenge for many businesses.

“These and other challenges continue to make Nigeria a tough place to do business. We therefore emphasise again that policy and institutional reforms must continue if we are to realise the potential of the economy.”
Also in his address, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, said the Economic Recovery and Growth Plan (ERGP) of the federal government included the concept of ‘Made in Nigeria’ goods, which is the theme of this year’s summit, noting that it was more than this.

According to him, “It sets out our comprehensive strategy for increasing our national productivity and output, in order to achieve our objective of a prosperous economy providing maximum welfare for all our citizens.
“Our aim simply put, is to achieve a growth rate of 7 per cent by the year 2020, and thereafter continue on a growth trajectory that could reach up to 10 per cent in the succeeding years.
“If sustained, there is no reason why Nigeria cannot become a regional industrial and commercial powerhouse.”