Hope rises as PIB gets final push

By Collins Olayinka (Abuja) and Sulaimon Salau (Lagos) on April 16, 2015 •

• ‘Nigeria loses N1.9tr to crude theft’ • Seeks privatisation of refineries

THERE are indications that the Peoples Democratic Party (PDP)-led National Assembly is in talks with the leadership of the Assembly to ensure that the Petroleum Industry Bill (PIB) is passed before June 4, 2015 when a new legislative body will be inaugurated.

This comes as the latest audit report of the Nigeria Extractive Industries Transparency Initiative (NEITI) said Nigeria lost a whopping N1.960,108 trillion to crude oil theft and sabotage in 2012. The Guardian gathered in Abuja yesterday that still smarting from the loss of the presidential election, the ruling party may have launched a last-minute effort at ensuring the passage of the bill as a parting gift to Nigerians.

The party also sees the possibility of the All Progressives Congress (APC), which will assume the majority party in the National Assembly from June 4, passing the bill in record time. Since the PIB is seen as a major revolution of the oil and gas sector, the PDP has reportedly told its members in the Senate to ensure its passage.

While The Guardian could not ascertain the level of the involvement of President Goodluck Jonathan in the renewed efforts, it is gathered that those politicians as well as industry players from the South South are harbouring the fear that the bill may not be passed in its present form which seems to favour host communities.

The thinking is that there may be pressure on the in-coming President Muhammadu Buhari to rejig the bill, which may not be in their interest. Speaking to The Guardian, an industry source said: “You know the bill has been in the making for so long, the thinking was that the National Assembly would be prevailed upon to pass it before this session closes but there was no urgency in that before the election.

With the loss of the election by the PDP which will see President Jonathan make way on May 29, APC not making inroads in the South-South and with a Northerner coming in as President, the feeling within the people from the zone is that it is now time to push for the passage of the PIB before the present administration comes to an end.

Second, the passage of the PIB by the National Assembly that is presently dominated by the PDP will lay a very good groundwork for its coming back to power in 2019. If the PDP allows the APC led government to pass the bill, it will take the glory for all the works the PDP has been doing on the bill in the last 10 years.

This is why the PDP is desperate to have the bill passed within the next few days.” Also, stakeholders in the oil and gas sector have called for the passage of the PIB in the interest of the nation’s economic growth.

In a chat with The Guardian yesterday, some experts in the oil industry said the incoming legislators would need to garner enough political-will towards resolving the controversial aspects of the bill which is the main driver of the reforms, and ensure that the country is rescued from imminent cash crunch. The stakeholders have come up with different figures Nigeria is losing due to the non-passage of the PIB.

For instance, the Nigerian National Petroleum Corporation (NNPC) had disclosed that Nigeria loses over $287 million from the Production Sharing Contracts (PSCs) monthly following the non-passage of the PIB.

However, the International Oil Companies (IOCs) under the aegis of Oil Producers Trade Section said Nigeria risks losing $185 billion within 10 years, as higher taxes proposed by a new law will deter investment in the country. The Managing Director, Danvic Concept, Afe Mayowa believes that since about 25 per cent of the lawmakers are returning to the National Assembly, the new legislators should tap from their wealth of experience to expedite action of the oil sector reforms.

“They should focus more on the contentious areas that have generated concerns, because we really need to move forward with the PIB. There must be a framework for people to put their investment in this country and that is something that must be done quickly by the incoming government, if these incumbent legislators fail to do it.

“There are issues raised by the IOCs and I think what they should do is to listen to them. The NEITI report, which was exclusively obtained by The Guardian in Abuja entitled ‘Financial, Physical and Process Audit: An Independent Report Assessing and Reconciling Financial, Physical and Process Flows within Nigeria’s Oil and Gas Industry – 2012’ found that Nigeria lost 2,842,116 barrels per day valued at N1, 960,607,108 to export crude theft and sabotage. Within the same period, Nigeria also lost around N31,771,108,795 to the nefarious activities of pipeline thieves and vandals.

The report frowned at the NNPC, which acts as agent to and sells crude oil on behalf of the Federation. NNPC is also customer for Nigeria crude oil and sells crude oil for domestic refining to itself through one of its subsidiaries – Petroleum Products Marketing Company (PPMC.) It noted that whereas there are executed Sales and Purchase Agreement (SPAs) between NNPC and other crude oil customers, there is no contract in place for the crude oil sales to NNPC-PPMC for domestic use.

The report also found that the Department of Petroleum Resources (DPR) could not provide any data on gas production or gas stock data due to some inherent difficulties associated with gas production and storage, coupled with the lack of proper equipment to handle such problems, that maintenance of accurate gas production and stock figures may only be attainable in the future.

NEITI audit 2012 also discovered that there were no bid rounds in the period covering 2012 under review, saying the examination of the Central Bank of Nigeria (CBN) statements and DPR records did not reveal any payment of Signature Bonus during the period under review. It added that domestic crude oil losses reported by PPMC in its populated templates were 3,045,625 barrels per day with an estimated value of USD$304,562,474.00 in 2012.

The losses are very significant. A few of the companies given approval (out of the 46 marketers) to import PMS in 2012 performed below average while four of them did not import any petroleum products.

The four marketers should be appropriately penalised and blacklisted from future participation in the import process if confirmed to have received foreign exchange for product importation without supplying the products.

PPPRA should further also review the future participation of the companies that performed poorly. While calling on the NNPC to discontinue the Crude Oil – Product SWAP arrangements and concentrate on direct importation of refined products, the report discovered that just as similar to the last audit report, the SWAP transactions also resulted in a net loss/ under-delivery of $500,075,239.29 or N78,761,850,188.18.

“The alternative arrangements with the balance of 78.49 per cent domestic crude allocation are not beneficial to Nigeria as shown in the analysis of Alternative Product Importation Arrangements and also corroborated in the Review of Federation Equity Crude Section of this report. The alternative arrangements should therefore be abolished forthwith while government should export the percentage of crude oil that is unrefined locally and purchase refined products,” it added.

It revealed that the quantity of domestic crude oil allocation processed by the refineries remains low (21.51 per cent) as was recorded in the previous audit cycle where an average of 20 per cent processing was achieved by the refineries over a period of three years (2009-2011). In 2012 out of a total allocation of 162.343 million barrels, only 34.927 million barrels was processed in the country.

It observed that the crude allocation to the NNPC for the refineries should be limited to their current capacity utilisation.

It called on the Federal Government through the appropriate agency to set the agenda for the privatisation of the refineries especially with the poor performance of the old and moribund Port Harcourt Refinery.

Reacting to the findings of the audit report, a collation of more than 100 civil society groups under the auspices of Publish What You Pay Nigeria (PWYP) has called for the urgent passage of the PIB to reposition Nigeria’s oil and gas sector for future challenges.

Its National Coordinator, Faith Nwadishi, said in Abuja that the coalition still believes that the PIB can still be passed before the end of the current National Assembly as a comprehensive framework to remove executive discretion and restoring sanity to the management of the sector especially in view of fast declining oil revenues.

Nigeria: Challenges Before Buhari's Administration in Petroleum Industry

By Roseline Okere NIGERIA is the largest oil producer in Africa and is among the world's top five exporters of LNG. Despite the relatively large volume of crude oil reserves, the country's oil production is hampered by instability and supply disruptions, while the natural gas sector is restricted by the lack of infrastructure to monetize natural gas that is currently flared (burned off). The incoming government may have to content with numerous challenges, which are bedeviling the oil and gas sector. Some of the challenges include non-passage of the Petroleum Industry Bill (PIB); gas flaring; crude oil theft and pipeline vandalism; divestment of International Oil Companies (IOCs): local content and human capital deficit. Besides, the incoming administration has to content with maintaining the level of government investment in oil and gas while meeting pressing social needs; funding required to achieve gas flare out is significant and grows with increased oil production. Others are ageing oil production facilities built in the early and mid-seventies requiring modernization; building indigenous technology capability in complex deep water environments; indigenous participation and the pace of human capacity development (Institutional development and organisational strengthening) and crude oil and petroleum product theft. The Petroleum Industry Bill (PIB) The idea of the PIB began in 2007 following the recommendations of a Presidential Committee set up to carry out oil and gas sector reforms in the country. The reforms were expected to form the nucleus of Nigeria's aspiration to become one of the most industrialised nations in the world by the year 2020. The promising yet problematic PIB was first introduced to the National Assembly in 2009. Since then it has suffered a number of setbacks. The delays have been on account of diverse interests scrutinising its provisions. Amongst these are the interests of legislators from the country's North pitted against those of their Southern counterparts. At a point in time, the outgoing administration promised to pass the bill before the end its regime, but was not able to do so. The latest draft of the PIB was submitted to the National Assembly by the Ministry of Petroleum Resources in July 2012. The delay in passing the PIB has resulted in fewer investments in new projects, and there has not been a licensing round since 2007, mainly because of regulatory uncertainty. The regulatory uncertainty has also slowed the development of natural gas projects as the PIB is expected to introduce new fiscal terms to govern the natural gas sector. Gas flaring Despite longstanding laws against gas flaring, the burning of natural gas during oil extraction in Nigeria, and shifting deadlines to end the practice, the activity continues, with serious health consequences for people living nearby. In the Niger Delta, where most of the flaring takes places, residents living near gas flares complain of respiratory problems, skin rashes and eye irritations, as well as damage to agriculture due to acid rain. According to reports, Nigeria lost about $170.166 million, around N27.227 billion to gas flaring in one month, as oil and gas companies flared 39.07 billion Standard Cubic Feet (SCF) of gas in one month in 2014. The Nigerian National Petroleum Corporation, in its recent report on activities in the oil and gas sector, revealed that the oil and gas companies produced a total of 226.255 billion SCF of gas, utilised 187.85 billion SCF and flared 39.070 billion SCF. The Nigerian government has been working to end gas flaring for several years, but the deadline to implement the policies and fine oil companies has been repeatedly postponed. Security, oil theft and pipeline vandalism Security issues, sabotage and crude oil theft continue to present significant challenges in the industry, and adversely impacting on onshore oil and gas production as well as the challenge to deliver same to market. According to the International Energy Administration (IEA), the instability in the Niger Delta has resulted in significant amounts of shut-in production at onshore and shallow offshore fields, forcing companies to frequently declare force majeure on oil shipments. Security concerns have led some oil services firms to pull out of the country and oil workers' unions to threaten strikes over security issues. The instability in the Niger Delta has also resulted in significant amounts of shut-in production at onshore and shallow offshore fields, forcing companies to frequently declare force majeure on oil shipments. IOC Divestments in Nigeria It is estimated that by the end of 2015, the International Oil Companies (IOCs) operating in Nigeria will have sold at least 250,00 barrels per day worth of equity in onshore and shallow water producing assets in the oil producing Niger Delta region. According to Deloitte, it is an open secret that IOCs have been hesitating to make long term capital and technical investment in searching for or developing new offshore fields. The attractiveness of the divestment option was first explored by BG when it withdrew from the Olokonla LNG export development project and disposed its rights in 3 oil prospecting licenses (OPLs) - 284, 286 and 332. Royal Dutch Shell initiated its divestment programme in 2010 and was able to complete the sale of about 8 blocks by the end of 2012. Just last week, Shell, Agip and Total completed their divestment programme from some of their major assets in Nigeria. Though, the Minister of Petroleum Resources, Diezani Alison-Madueke, said the divestment should serve to enhance the profile of indigenous participation in the Nigeria oil and gas industry in the same manner and effect as the marginal oil field programme, industry watchers believed that this should be a source of concern to the incoming government. Low refining capacity of refineries Nigeria has a crude oil distillation capacity of 445,000 bpd. Despite having a refinery nameplate capacity that exceeds domestic demand, the country must import petroleum because refinery utilization rates are low. Nigeria consumed 305,000 bpd of petroleum in 2014. The country has four oil refineries (Port Harcourt I and II, Warri, and Kaduna) with a combined crude oil distillation capacity of 445,000 bpd. The refineries chronically operate below full capacity because of operational failures, fires, and sabotage mainly on the crude pipelines feeding the refineries. The combined refinery utilization rate was 22 per cent in 2013. As a result, the country must import petroleum, although its refinery nameplate capacity exceeds domestic demand. Nigeria imported 164,000 bpd of petroleum products in 2013. For several years, the Nigerian government has planned the construction of new refineries, but the lack of financing and government policies on fuel subsidies have caused delays. Nigerian refineries managed to record an average capacity utilization 4.19 per cent, 19.24 per cent and zero per cent for KRPC, PHRC 1 and PHRC 11 and WRPC respectively in December last year. According to the NNPC report released at the weekend, 1,044 thousand barrels of dry crude oil, condensate and slop was received by the three refineries, KRPC, PHRC 1 and PHRC 11 and WRPC. "With an opening stock of 2,933 thousand barrels, total crude oil available for processing was 3,977 barrels out of which 1,396 thousand barrels was processed. Total national domestic refining produced 165.54 thousand mt of finished and intermediate products. PPMC, which lifts products from the refineries evacuated 126.66 thousand mt of products", it added. It said that altogether 10.63 mt of products was used by the three refineries as fuel and loss, consumption as fuel was 5.81 per cent while loss and flare accounted for 8.59 per cent of production. Nigeria Force Headquarters to Deploy Hundreds of Additional Police Officers to Volatile States Ahead of Saturday's gubernatorial and states Houses of Assembly elections, the Police High Command, yesterday, said that … see more »

In Nigeria, university degrees can lead to poverty

http://www.thisisafricaonline.com/News/In-Nigeria-university-degrees-can-lead-to-poverty

By MISAN REWANE

Christiana Ubah left school at 17 without prospects for further education, let alone a job. Born in the Lagos slum of Ajegunle, she had completed secondary school but could not afford further studies.

But she was willing to learn; she had enthusiasm and a determined attitude. After a three-week employability skills training programme, she was placed in a retail sales job. She went on to manage the opening of the shoe store and then managed the store full-time. One opportunity led to the next and today she is not only an office manager at a real estate law firm but is studying real estate management part-time.

Unfortunately, this is not the norm in Nigeria, where inflated university degrees are all too often locking disadvantaged young people into cycles of poverty and underemployment.

Christiana’s case demonstrates the adage that a young person with a good attitude can be extremely successful even if they do not have a bachelor’s degree. She was hired for attitude — coachability, motivation, emotional intelligence — and trained for skills.

With over 20 million unemployed youth in Nigeria, young Nigerians are spending an increasing proportion of their twenties pursuing academic qualifications, rather than gaining work skills and experience to make them competitive in the 21st Century global marketplace. They are doing this on the savings of households living on $2-4 per person a day — families who are scrimping and saving and sacrificing so that one person can break out of these economic conditions and land a good job.

Of the 1.5 million who apply to university in Nigeria each year, only 300,000 get admitted. Not all of them graduate and for those that do, it takes them on average five years to get a job.

So what is fuelling this madness? Why are people paying too much for too many certificates that do not add value to their productivity in the workplace?

Employers’ increasing use of academic qualifications as a proxy for skills fuels the false dream that a bachelor’s degree from a broken tertiary education system is a stepping stone to a well-paying job.

Many employers do note that graduates are ill-prepared for the workplace – yet they still insist on a degree as a minimum job requirement. In fact, in some cases, it is the only requirement on job advertisements. This, despite the fact that four years spent in the average Nigerian university does not add many relevant skills for young people.

Beyond Nigeria, this is an African, and even a global problem. Up-credentialing (or credential inflation) locks already disadvantaged people out of economic participation. There is a disconnect between job prospects and academic qualifications, yet those who do not get them are all but guaranteed to be excluded from desirable jobs.

Education reform is necessary to make universities more useful to their graduates. In the meantime, alternate routes to employability could fill the need for both skilled workers and for jobs.

Some best-in-class firms across industries, from airline services to retail banking, have adopted a ‘hire for attitude, train for skill’ approach. This businesses have realised that they can train employees for the skills needed, but that training cannot change attitudes.

Admittedly, it is harder to measure for attitude and other key elements of job success when assessing potential employees. That does not mean we should not look for innovative ways to do so, from interviews to job simulations. For example, behavioural-based interview questions that help decipher how candidates have dealt with situations in the past can be helpful in assessing how they might react to stress or conflict.

There are hundreds of thousands of jobs that require degree-acquired specialist skills at the entry level. However, the millions of jobs created by high-growth industries, such as hospitality and retail, not require the academic content taught in four year degree programs. These are the jobs that will absorb Africa’s 122 million new entrants into the labour force between now and 2020.

We need to start getting young people prepared to excel in these jobs, which still struggle to find skilled matches. If we cannot, the cycle of youth unemployment will only continue.

Young people should not opt out of higher education altogether. However, employers need to acknowledge the unfairness of locking an already marginalised population out of economic opportunities. Across the board, university prerequisites drive millions into the arms of a broken system that essentially sets them up to fail.

Examples such as Christiana’s show the results of innovative approaches to hiring and training, and that the investment pays off. Not only is she now putting herself through higher education, but she is also helping to support her sister’s post-secondary education. She proves that with the right mindset, skills and economic opportunities, Africa’s youth can be demographic dividends, not demographic liabilities.

 Misan Rewane is co-founder and CEO of West Africa Vocational Education (WAVE), whose mission is to increase incomes for unemployed youth in West Africa. She can be found on Twitter @misanrewane or @wavehospitality, and is also an Aspen Institute New Voices Fellow (@AspenNewVoices).