BY DOMINIC OKONTA

 NIGERIA should end its expensive fuel subsidy regime within three to six months, the World Bank has advised. Reuters reported that the World Bank also advised that the removal of the subsidy must be accompanied by “aggressive reform effort” that “could contribute more to growth than a sustained period of high oil prices.” Africa’s largest economy devotes a huge chunk of its annual spending on subsidy to lower the prices of premium motor spirit or petrol. Removing the costly support has caused a face-off between the government and the labour.

Already, the Federal Government has spent at least $2.1 billion (about ?864 billion at ?410.59 per $) on fuel subsidy in the first nine months of 2021. “Urgent priorities for the next three to six months include reducing inflation, improving exchange-rate management … eliminating the PMS subsidy … and improving infrastructure,” the World Bank said in a report. “The Premium Motor Spirit (PMS) subsidy is eroding Nigeria’s limited fiscal space to provide essential services.” Removal of the subsidy will lead to increment in the prices of the product on which millions of people depend on to power their electricity generators for their homes and businesses because of pervasive erratic power supplies.

The MD/CEO of now-privatised Nigerian National Petroleum Corporation Mele Kyari said in September last year that an increase in the price of fuel at the time would have a direct bearing on the wellbeing of the citizenry and national security. World Bank is the second international lender to advise Nigeria to remove the fuel subsidy in November. International Monetary Fund said last week that Nigeria must remove the subsidy completely. “The complete removal of regressive fuel and electricity subsidies is a near-term priority, combined with adequate compensatory measures for the poor,” IMF said in its preliminary findings at the end of its official staff visit to the country under the Article IV Mission. “The mission stressed the need to fully remove fuel subsidies and move to a market-based pricing mechanism in early 2022 as stipulated in the 2021 Petroleum Industry Act.” Nigeria’s Finance Minister, Zainab Ahmed said last month that fuel and electricity subsidies was not included in the spending plans for 2022.

Like the World Bank and IMF, Ahmed described the subsidies as “retrogressive”, but experts have wondered if Finance Minister, Ahmed, was merely paying lip service to a practice that needs to end as quickly as the two global bodies- World Bank and the IMF has advised. Regardless, she went on to state that, “efforts at addressing revenue leakages include concluding the service-wide implementation of IPPIS; dimensioning cost of tax waivers and promoting policy dialogue and transparency around tax waiver regimes; elimination of regressive subsidies on petrol price and electricity tariffs; a cost-to-income-ratio cap for Government Owned Enterprises (GOEs) with a view to improving remittances to the Federal Government’s coffers,” she said.

Meanwhile, it was observed that litigations against oil companies are threatening stability and inducing uncertainties. Remember that the Managing Director of Total Energies E&P Nigeria Limited, Mr. Mike Sangster, has warned that for the country to unlock and maximise the potential of the Petroleum Industry Act (PIA), the too many litigations against oil companies which threaten operational stability and induce long term uncertainties must be addressed.

Sangster, handed down the warning at the management session of the Nigerian Association of Petroleum Explorationist (NAPE) annual conference with the theme, PIA: Implication for Oil and Gas Industry and Energy Transition in Nigeria held recently in Lagos.

The Total Energies MD listed other threats to unlock and maximize the potential of the PIA to include; political will for a consistent implementation of the provisions of the law, continuous engagement and consultations with all stakeholders for the unflinching support necessary for the success of the law.

Others are that too frequent amendments will foster policy instability and instigate apprehension among investors, insecurity and proper/transparent management of the transition from the now defunct agencies to the new ones.

He added that the PIA is invariably the most significant legislation to impact the oil and gas landscape due to its ramifications on the industry and country at large.

According to him, the Act is expected to eliminate regulatory/legal hurdles, attract critical investments, unlock financial resources, accelerate local content development, and enhance employment, among other opportunities.

He noted that the case for investments envisaged by the PIA still has to be made in view of climate concerns and the attention on energy transition.

He disclosed that the PIA implementation must be accelerated because the window for investments into fossil fuels is narrowing, stressing that very few years would remain for access to urgent funds to develop the Nigerian petroleum industry to launch it into that era of energy transition and prosperity that the world envisions.

‘‘We must appreciate that although fossil fuels will remain the main source of energy for the world for some time to come, the march to renewable energies is irreversible.

Nigeria may not have much choice over the speed and velocity of the energy transition. It is therefore very urgent that the country takes maximum advantage of the deregulation of the industry and other welcome provisions of the PIA to exploit her petroleum resources, build critical infrastructure and position competitively in the energy transition,’’

He said President Buhari has outlined Nigeria’s path to net zero in consonance with the goals of the Paris Agreement. He said what this means for TotalEnergies is more energy, less emissions, saying in response to the global climate challenge and the growing demand for more affordable, more accessible, and cleaner energy, the company has adopted the name TotalEnergies to affirm its identity as a broad energy Company and confirm its ambition to be a major player in the energy transition, on the road to net zero by 2050.

‘‘With the new identity, the Company underscored its resolve to produce more energy with less emissions in order to contribute to the planet’s sustainable development and effectively address the issue of climate change. The Company is doing this by re-inventing itself and moving towards new energies, without renouncing its origins in oil and gas, but by decarbonising them as much as possible and growing in renewable electricity, hydrogen, biomass, wind, and solar power.’’

‘‘Our Company’s energy mix will change significantly in the coming years. Currently, our production is about 55 per cent oil, 40 per cent gas, and 5 per cent electricity.

But by 2030, it will be 50 per cent gas; 35 per cent oil; and 15 per cent electricity.

By 2050, the mix is targeted to be 40 per cent renewable power, 40 per cent gas (primarily carbon-free) and 20 per cent liquid products. Out target is to get to Net Zero in all our operations worldwide by 2050. We are committed to this target and working with all our stakeholders, we believe we can deliver cleaner, more affordable, and more available energy to as many people as possible.”

On the companies’ performance, Chevron has announced a giant stride in Nigerian content development. The Nigerian oil and gas industry is strategic to the overall socio-economic development of the country. Nigerian Content (“NC”) development is critical for the nation as it progresses in its quest to acquire oil and gas technology and build indigenous capacity in the oil and gas industry. As an industry that thrives on partnership with key stakeholders, International Oil Companies and indigenous oil companies are expected to play an active role in the industry. Chevron companies in Nigeria had developed and imbibed the Local/Nigerian Content development philosophy well before the April 2010 enactment of the Nigeran Oil and Gas Industry Content Development Act (“NOGICD Act”). Chevron Nigeria Limited (“CNL”), operator of the Nigerian National Petroleum Corporation (“NNPC”)/CNL Joint Venture, is at the fore front of promoting Nigeria’s ideals of Nigerian Content development. Over the years, the company has continued to add value and partner with Nigeria, as it commits itself to the vision of being “the global energy company most admired for its people, partnership and performance”. The overall objective of CNL’s NC policy is to encourage the participation of Nigerian companies in the oil and gas industry through the deliberate creation of business opportunities for Nigerian service providers and suppliers. CNL’s NC policy is driven by the vision to be recognized as the petroleum company that works best to foster competence and competitiveness among Nigerian indigenous contractors and suppliers, by adopting the participatory-partnership model. CNL has unwavering commitment to NC development. Over the years, the company has implemented strategies for training, capacity building and employment of Nigerians, as well as the provision of contracts and procurement opportunities to Nigerians on all projects in our operations. CNL continues to play a leading role in building and sustaining the capacity of indigenous companies and contractors in Nigeria’s oil and gas industry. We consistently demonstrate our commitment to empowering community contractors, service providers and suppliers through developing human and institutional capacity, creating local jobs, developing, and sourcing from local suppliers, employing local workforce, promoting local patronage, and reserving work scope to benefit local community contractors.

Chevron works closely with the Nigerian Content Development and Monitoring Board (“NCDMB”) and the Nigerian National Assembly in advocating NC matters. Chevron has a four-pronged approach to NC, inspired by the commitment to ensure Nigerian entrepreneurs (both at the local community and national levels) acquire the right competencies and capabilities to compete for business opportunities with their contemporaries at regional and international levels. The approach includes selection of qualified local contractors; facilitation of partnerships and alliances between indigenous companies and foreign firms; capacity building; and development of local competencies.

The Chairman/Managing Director of CNL, Richard Kennedy, explains the company’s stance on Nigerian Content thus: “At Chevron Nigeria Limited, we demonstrate our commitment to the socio-economic development of Nigeria by building mutually-beneficial partnerships and supporting the policies of government on Nigerian Content Development. We have helped in building the capacities of several Nigerian businesses by providing contracts and procurement opportunities to Nigerians on all projects in our operations. Chevron is also helping to grow the Nigerian economy by contributing to the development of communities in the areas of our operation. We do all this, not just because it is required by the law, but because it is the right thing to do.” In the last 10 years, CNL has spent an estimated annual average of $1 billion on Nigerian suppliers and service providers. Chevron provides technical support, support for asset acquisition, and facilitates collaboration on research and development for local community contractors. This has helped Nigerians benefit from the oil and gas industry while developing Nigerian commerce. Chevron completed construction training for 161 Nigerians on welding, fabrication, and craft at the Nigerdock facility, Snake Island, Lagos for its Sonam Development Project. On the Agbami Phase 3 Development Project, Chevron sponsored four Nigerian engineers for subsea engineering training in France, in partnership with NCDMB and Technip Offshore Nigeria Limited. The training also included visits to manufacturing plants in France and Norway. Chevron trained six young Nigerian Engineers in subsea engineering at the FMC Technologies Limited (“FMC”) facility, Federal Ocean Terminal (FOT) Onne, Rivers State. In addition, five Nigerian Engineering graduates sponsored by CNL, completed subsea training at Marine Platforms Limited in Port Harcourt. One of the trainees was offered full-time employment with Marine Platforms Limited (MPL) as a Marine Cadet.

CNL’s accomplishments in human capital development include training 14 earth science graduates in two batches under the 12-month skills acquisition programme initiated by NCDMB. CNL offered scholarships to Nigerian seamen for dynamic positioning training at PEM Offshore Limited, a marine training facility with a contract worth $1 million and collaborated with the NCDMB to assist over 600 community graduates to register in the Nigerian Oil and Gas Industry Content Joint Qualification System. CNL awarded a contract to a local consulting firm, Lonadek Nigeria Limited, to develop and pilot an industry-first capacity building initiative for drilling and completion professionals. Chevron facilitated the assembly by FMC of the first assembled-in-Nigeria Subsea Horizontal Christmas Tree and the fabrication in Nigeria of Agbami production manifolds for the Agbami Phase 3 Project by FMC /Aveon Offshore Nigeria Limited. Chevron ensured the safe, timely and successful installation of subsea equipment like flexible flowlines, umbilicals, and jumpers on the Agbami Phase 3 project by a Nigerian contractor – Marine Platforms Limited. Chevron also recently facilitated the fabrication and assembly of the complicated Single-Point Mooring (“SPM”) buoys structures by Fenog Nigeria Limited (“Fenog”), an indigenous independent engineering company. The two SPM buoys, being delivered by Fenog, are critical components of the Escravos Export System Project (“EESP”) scope, required to improve reliability of current JV offshore crude export facilities.

It is on record that CNL facilitated the fabrication and load out of offshore platform topsides and bridge connection for the Sonam Non-Associated Gas Well Platform (“NWP”) by Nigerdock Plc.; the fabrication and load-out of the Okan PRP topsides; bridge fabrication of Okan PRP jacket by Globestar Company Limited, in partnership with Idmon Engineering and Construction Co. Limited; installation of 32km 24” Sonam to Okan NWP pipeline by West African Ventures Limited; and the coating of the pipes used for the Sonam Development Project and EESP by Pipe Coaters Nigeria Limited. Chevron has a long history of commitment to NC development. The Agbami project set industry standards by fabricating more than 10,000 tonnes of steel with Nigerian fabrication companies, the highest ever recorded in Nigeria. Chevron also trained 105 Nigerian engineers from 21 engineering companies in South Korea. The Escravos Gas Project (EGP) has employed over 1,800 Nigerians and sourced millions of Dollars’ worth of services (engineering, procurement, fabrication, marine, etc.) locally. Also, the Escravos Gas-to-Liquids (EGTL) project provided employment to more than 15,000 Nigerians during the construction phase of the project. In addition, the project awarded huge sub-contracts to local community contractors, sent 234 Nigerians on a 30-month training program in South Africa at the synthetic fuel facilities of Sasol Limited and trained over 7,000 Nigerians in technical skill crafts, plant operation and maintenance, business and project management, logistics and supply chain management, as well as gas tungsten arc welding processes. CNL has demonstrated unprecedented support for the local barite mining industry by donating barite mining equipment worth $1.4 million and training to the Association of Miners and Producers of Barite to boost the supply and quality of local barite, reduce importation of barite and create jobs for the local communities. Chevron will continue to be committed to the NOGICD Act, as part of our support for local capacity building. We will continue to help build Nigerian businesses in general, to support the Nigerian Content policy of the Federal Government. CNL’s Chairman/Managing Director affirmed this when he said that. “We will continue to empower Nigerian service providers and suppliers through human and business capacity development; local patronage and work scope allocation; fostering of business partnerships and sponsorship of research and development programmes to enhance the capacity of indigenous companies to participate in the oil and gas industry.”

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