NNPC’s monopoly debilitating and killing petroleum sector-Chief Odumu Ojobi

Chief Winston Odumu-Ojobi is a business man and the former Deputy National Chairman of the defunct United Nigeria Peoples Party [UNPP]. He was also the Secretary General, Forum of National Chairmen of Registered Political Parties and was a founding member of the All Progressives Congress [APC].

 

Ín this interview with Cyril Mbah in Abuja, the business man dissects the crisis in the nation’s petroleum industry focusing largely on the controversy between the Nigeria National Petroleum Corporation (NNPCL) and Dangote Refineries over the cost of petrol and concluded by calling for the reduction of the monopoly and powers enjoyed by NNPCL in the petroleum industry among others. Excerpts.

 

Sir, you are a stakeholder in the petroleum industry who invested so much in the sector. Your business interests for now is in all aspects of the petroleum business etc. What would you say is responsible for the endless fuel scarcity in the country and why has NNPCL been unable to resolve the situation?

 

I have been a businessman all my life but of course politics was not my profession. It was my way of serving the nation. My business for now is in the oil industry, everything that has to do with oil. You know, the industry was segmented into phases. Upstream and downstream. There’s nothing that limits one to one particular area. We are not in the extractive sector because the extractive sector has been cornered by a clique that made the extractive sector of the oil and gas sector an exclusive reserve.

 

Now sir, I am sure you are following the controversy between Dangote Refinery or

 

Dangote as a businessman and the NNPC Limited, you know, in terms of selling of fuel to NNPC and the rates they have now decided to sell it to Nigerians. What is your take on this?

 

You see first of all the government put in place a law known as the Petroleum Industry Act (PIA) and as beautiful as it is, the implementation has been wrong like every other law in Nigeria. The implementation of the Petroleum Industry Act does not give NNPC the right to regulate.

 

Under the PIA, NNPC Limited was to function as a commercial entity and a competitor ín the petroleum sector not as a regulator. The role of regulation was assigned to distinct regulatory bodies like the NUPRC and the NMDPRA.

The NNPC Limited, having transitioned from a government entity to a commercially-driven company is expected to compete in the market, focusing on profitability and efficiency, while the regulatory bodies should concern themselves with ensuring compliance with the law (PIA) and overseeing activities in the sector.

So, these bodies are the ones that should regulate. Every other person, be it in the trading, extractive or refining, all of the companies either government or private companies must be subjected to the PIA and even this PIA there are bodies that should regulate them. So, first of all, there is no regulatory job given to the NNPC by the government. NNPC is supposed to be a commercial department. They’re supposed to be a government commercial department.

 

We are supposed to follow them and be it as it is these bodies are subjected to National Assembly to regulate them also because if you have a regulator there must be somebody who is regulating the regulator or a body that must regulate to ensure that the right things are done. You can’t just leave them to act on their own.

 

You’re saying in effect that the NNPC is acting beyond its authority?

 

Yes. The NNPCL has been a marketer but now they are acting just like an umpire in a game where they are participants. That’s what they’re doing now. They have not fully grasped that the PIA has reduced their powers and they are refusing to let go of the powers that belongs to other organisations. Previously, the DPR was the department that used to take control in regulating but now the PIA says NNPC Limited is a limited liability company that should go and trade on behalf of government to earn revenue for government.

 

The regulatory part is now the function of an independent body. So, the NNPC is supposed to be subjected to that regulatory body the NMDPRA. Too much power has been exercised by the NNPC.

 

So, you are saying the regulation, regulatory powers, is vested in the N-M-D-P-R-A, the  Nigeria Midstream Regulatory Authority and that NNPC should be called to order.

 

Yes. Let them go and trade and make money for the government and stop the harassment of marketers. Let me give you the history of the successful operations of petroleum operations in Nigeria over the years.

 

When I was growing up, we used to have ESSO and we had Mobile and Texaco. We also had Shell and British Petroleum [BP]. We also had AGIP. There were eight petroleum companies then. These companies operated independently. The British Petroleum became National Oil after former President Obasanjo indigenised them. Each company brings its own oil into the country and distributes it through their various channels, or branded filling stations. Do you understand? So, they had that and they traded freely. There was no queue. The queues came after the creation of NNPC because of monopoly.

 

Sir, I wanted you to speak specifically on the controversy between NNPC and Dangote. Should there be any controversy? Why should NNPC complain about Dangote Refineries when it has four refineries that are not working?

 

They are not supposed to complain. The NNPCL is supposed to be trading in the extractive, refining, distribution and marketing sectors on behalf of the government. Do you understand? They are a government marketing company, not a government regulatory company. They should be marketing. They’ve enjoyed too much monopoly.

 

They were the sole importers of petrol for so long. How do you think they will allow Dangote refinery to flourish? That’s the fight Dangote has to take on. But also, the blame is on the two sides. Dangote refinery and the NNPC. I just told you that when the other companies were importing, they all had their branded filling stations all over the nation. For instance, if Mobil imported fuel, Mobile would sell to their distributors. Most of those filling stations were built by those oil companies just like anywhere else in the world and then they supply. Mobil will import, supply to her branded filling stations and their distributors. Do you understand? They pay all the taxes. The NNPC had no business at that time in the petroleum industry. They concentrated solely on the extractive. So, the people were importing, they knew how they were getting their foreign exchange. Irrespective of what they were facing, they had their plans, they were run as a business, and it was successful.

 

Then, the government brought General Muhammadu Buhari then as Petroleum Minister. NNPC now became the overall dragon in the business. Now, those working in NNPC earn huge salaries. Apart from their salaries what do they do? They run the NNPC like civil servants. Do you understand?  And now, you will agree with me that the way  civil service runs is slow. So, they pile things up that are not supposed to be piled up.

 

But is it not wrong, sir, that NNPC should attempt to regulate the cost of Dangote  fuel?

 

It is very very wrong. The petroleum industry law said it’s a free market. It is a liberalized market. What liberalized market means is that it is a free market. So, if a market is free, why should it be regulated? Immediately the PIA came into being, it eradicated the Petroleum Pricing Regulatory Agency, isn’t it? So, why would NNPC still take up that job? A job that the law has said is not there again. It’s a free market. So, where I fault Dangote, is that  Dangote should have directly appointed distributors for their products. They are not subjected to any restrictions, even if they are buying the crude from NNPC that is a different department. It is a different business just like you go to a flour mill and buy flour because you have to bake bread. They cannot say that you must give the bread to the flour mill to be the one who must sell the bread for you. It’s wrong once you’ve gone to buy the flour from the flour mill it ends there. If the flour mill wants bread from you, it’s a different business. You have a right to appoint your bread distributors after obtaining the raw material and having it processed. You should set out sales outlet like any other business.

 

Dangote should appoint its own distributors and he must not appoint those recommended by NNPCL. If I were Dangote, I will appoint my distributors directly and not with the help of any association or govérnment agency because they were holding Nigerians to ransom. Dangote should appoint its own distributors, anybody. The law gives him the authority to appoint his own distributors or his own sales outlet.

 

What do you say about the conduct of independent private marketers in this matter?

 

The private independent marketers should not be blamed. Why I don’t fault them much is because at a time, I attempted to import fuel into this country but I stopped. Why did I stop? I was supposed to go to NMDPRA, process my importation documents, import the fuel, subject the fuel to their own laboratory test and sell to whoever I want. That is it. It is not to import it through NNPC. The monopoly here is Dangote’s type of monopoly and NNPC type of monopoly.

 

Everybody wants monopoly. Now somebody sets up a refinery or is setting up a refinery and he now wants the government to tell him how much to sell his product.

 

It is wrong to advise government to ban the  licensing of other companies to own refineries and you also want them to withdraw licenses from those who already have licenses. That is wrong. Anywhere in the world monopoly and inside trading is a criminal offense. You just saw the judgment against one of the major computer companies. Monopoly and inside trading is a criminal offense everywhere. So, why would they want monopoly and particular people have enjoyed monopoly all this time. Nobody is supposed to enjoy monopoly. The problem we have with long queues and all that is the monopoly given to NNPC to import fuel. There was a time I wanted to import fuel and my fuel would have been sold at the filling station for N300 only. I was asked to go and talk to them in the NNPC and import the fuel through them. You see, the more middlemen you have on the way to doing business, the more expensive your product will become. Now, why is NNPC not going to the open market to buy their own fuel on their own to sell?

 

Don’t you think sir that if government can give more license to importers and investors to produce fuel that the problem of scarcity will be solved?

 

That is the only way out for this modular refinery to take off. It would be better and let no man enjoy monopoly.

 

Let Dangote export fuel to Niger, to Chad or Benin Republic, where the government is saying that the smugglers are taking fuel to. Now, do you know how many functional refineries are in America? There are many smaller countries than us that have so many refineries. They don’t even have oil. But it’s the business that brings their country foreign exchange.

 

The process of getting a license for anything in Nigeria is what is killing businesses in Nigeria.  The process is so tedious, unnecessarily tedious. That’s number one. Number two, the civil service procedures of carrying one file from one table to the other is also tedious.  In most countries when you apply for license you don’t even go to the offices. You apply on line; submit all your documents online. They will look at it and then they give the approval. When you get the approval, there’s a period of time if you have not done what you say you want to do, you come and reapply but here, you apply and you will be expected to go to their offices. It’s not only in the petroleum industry.

 

If you want to generate power today, you must go through the same process. You apply and move from one place to the other and you keep moving from one place to the other. You visit government offices and that’s where the corruption comes in.

 

In three sentences sir, what should be done to stop fuel scarcity in Nigeria and to stop the high cost of fuel, because in spite of the high cost, there is still fuel scarcity and long queues?

 

What is happening shows that the stories we have been told all this while are not correct. When they said if we liberalize the market and stop the subsidy there will be no queues or scarcity of fuel. Yes, subsidy is said to have been removed.

 

This story of a company creating employment, when our product is superior and it’s cheap people from outside the country will come and buy. Yes, I say that Nigeria’s crude is the best.

 

Now, if we look at all the stories they are telling us then we begin to ask questions. We are not going to want the government to subsidize when the government is subsidizing it means a lot.

 

The government should rather subsidize Dangote’s refinery not the petroleum product. That’s the mistake that has brought corruption in the subsidy of the oil industry. Government should subsidize the refinery as it is done elsewhere. There is subsidy in the oil industry in America. There is subsidy in the farm or agricultural industry in America and there is subsidy in the transportation sector in America but who are the government subsidizing? Remember when Bill Clinton became President, the auto industries were closed but he went to Detroit and met them. He did not send anybody, he didn’t call them to dinner and didn’t call them to lunch. He went there to meet them as the president because it’s his job to make things work, to make every department of the United States economy that will bring succour and happiness to the people to work. His job is to make it work and he went there and met them and he asked them to think things out  and each company was given money to kick-start. Today, all the auto industries in the USA are back. Here in Nigeria, the government has the Bank of Industry, the Bank of Agriculture among others including the Bank of Infrastructural Development.  Go and apply to them for any funding or loan and see if you get it. But then, they have people they regularly give loan to and these monies don’t come back to the banks because the people they give loans to are not the people who should get the loans.

 

Now sir, there has been this call that the four moribund refineries should be sold to Dangote. What’s your take on the suggestion?

 

That the refineries should be sold to Dangote is wrong. You see, I am one of those who believe that our privatisation has been handled wrongly.

 

Monopoly is a criminal offence. It’s a criminal offence and the government should lay  emphasis on this that it is a criminal offence. If the government wants to sell its refinery, everybody should go to the stock exchange. They should go to the stock exchange and bid. Look at all the things that we sold in the past. So far government properties have been sold to their cronies. Has it worked and they mismanaged it.

 

Let me tell you something about the power industry. The electricity industry would have been better but corruption has not allowed it to work. I want the National Assembly to call for the list of all those who are behind the power generation and power distribution in Nigeria. The list should be made public, let us know them and their capacity before they were given that which they were given. Many of them did not have the capacity to perform or deliver and this is why every day we hear that government borrowed money from a bank and put in the power sector and the light condition is not improving,

 

This is because those who got the license do not have the capacity to deliver. If this is not true, why is the government subsidizing the power sector. The power sector is like a bus that has collapsed and then people came and said we can make it work perfectly and the government allowed the people to take the bus but then when they want battery for the bus they go to the government, when they want tire for the bus they go to the government who gives them the money. Government borrows money and gives them and the bus is not carrying any passengers like it should. So. the bus is just a consuming fire. Do you understand this. They go to the government they say we need to change engine oil and the government will give them the money. They go to the government again because they need to buy fuel for the bus and the government will give. So, the government keeps borrowing money and then the World Bank and the IMF will never do anything good for any African country. How many countries of the world go to the IMF and the World Bank to borrow money? These agencies are slave drivers. They keep lending you money that you cannot pay back because they know that the same money will end up in their banks in Europe,  or in the Bahamas. That is what is happening.

 

I believe that the cost of licensíng for the modular refinery is expensive and should be reduced. We are talking about the cost of the preliminary license. It is too expensive. The government should make the application for the license one thousand dollars and the processing fee one thousand dollars.  The application for establishment of a refinery should not exceed 25 000 dollars.  When you get that license there are other licenses that you must get such as a license to build a refinery, a license to operate, and so on.  These licenses should be graded accordingly but when you make the license so expensive, getting the license becomes a huge problem. The way the government has designed these licenses are wrong.

 

You see when you ask somebody to pay for a license and he pays through his nose he will not have the financial capability to do what he wants to do. A lot of people are carrying licenses but the finance is not there to start but if the government makes the licensing process cheaper and simpler, when you get the license you are bringing foreign exchange into the country  and you are bringing industrialization to the country. We cannot compete with nuclear nations. We cannot compete with their ICT. The only thing we have to compete with are things naturally given by God. It is the only industry and at this stage every country is coming up with crude oil. Thank God that ours is a special type. So, what we need to do is to refine oil locally and export the refined product. Why are we so interested in exporting raw materials and then they process and bring it back and sell it to us three times or four times the cost? In order to gain the cost of that raw material and profit, what the government should do is to make the process of license simpler, reduce the cost. Of course since the license is divided into four segments, when you get the license to establish, everybody should be allowed to establish.

 

America has 153 active refineries irrespective of their sizes, they are there. So, the license should be slimmer and then let the Petroleum Industry Act be properly implemented. The government should criminalize monopoly and inside trading.

 

The government should criminalize monopoly and inside trading because they are baking the bread we don’t want.

 

Secondly, our power industry should be improved upon. You cannot talk about the petroleum industry and not talk about power sector because most of the fuel we import to this country is not used by cars alone but also by generators.

 

If power was there we would depend less on generators which consumes more than 60 percent of our PMS. Go to any shopping complex anywhere in Nigeria or any house or saloons you will see tiny generators. My research shows that generators consume more than 60 percent of what we require.

 

It is not the number of cars on the roads alone that cause high fuel consumption. How many Nigerians can afford cars now? It is generators. They buy five liter, four liter, ten liters. This is what is consuming the fuel.

 

Sorry, what the government needs to do is to power the power industry. How do you power the power industry?  One. When I was growing up, there was the Electricity Corporation of Nigeria, (ECN) then. There was a power station in my town, that uses coal, Oji River Power Plant also uses coal. The one in my town is still there till tomorrow.

 

Nigerians believe too much in English grammar. A lot of Nigerians believe in the civil servants. They go to foreign country’s conferences and they don’t attend the conference proper. They go for shopping and that’s why anything they write, they sign.

 

Let me tell you, today, the coal in Nigeria is being mined by the Chinese who take it to China. Russia still uses coal to power its system. Poland, Portugal etc still use coal. South Africa, they use coal. So, places like Kogi, Benue and Enugu states where coal is abundant, why don’t they set up coal-powered industries?

 

We are more mindful of climate change than even the USA and the US is not a signatory to the international climate change agreement.

 

Every state, every local government should be empowered by the law to generate it’s own electricity. The law was passed by the former National Assembly but former President Muhammadu Buhari, I understand  did not sign it. I am begging the president to sign the Bill into law to empower states and local governments to generate their own electricity.

 

 

For a better society

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