4 April 2019

The president’s first term fell short of
the changes needed to modernize
the sector. Can he make headway in
his second?

Muhammadu Buhari, re-elected as president of
Nigeria in February, has a second four-year
term to revive the economy and address the
needs of the country’s ailing oil and gas
sector. But to do so, he will need to push
through complex regulatory reform and take on deeply entrenched vested interests in
politics and industry that have long profited
from the status quo, and have significant
capacity to resist change.

Oil production remains lower than it was 15
years ago. State-owned refineries operate at a
fraction of their capacity, and Nigeria has
struggled to remain competitive in a global
market where heavy crude is driven by US
sanctions and light sweet crude dominated by US shale.

For all the president’s talk of diversification
away from oil and gas in his first term
(2015-19), the sector remains crucial to
Nigeria. It accounts for more than 90% of
foreign exchange earnings and almost half of
federal revenues. Nigeria has enviable oil reserves and much potential to find more, but
without reform, output could start to decline
in 2022 as mature fields deplete. Gas riches
continue languishing in the ground.

President Buhari could have abolished the
petrol subsidy early in his first term when
international prices dropped below the pump
price. Legislation to reform the sector and
improve investment terms was also within
reach, when the Senate took the lead on unbundling the long-stalled PIB.

However, the presidency rejected the first
subsequent piece of legislation, the Petroleum
Industry Governance Bill, that would have
paved the way for the NNPC to divest some of
its stakes in the joint ventures and refineries,
and brought in private investment.

The reasons for such failures lie partly in the
president’s instinctive statism. President
Buhari and his advisers feared that
privatization would put the assets of the NNPC
in the hands of Nigeria’s businessmen, and
instead hoped management changes, a bit of housecleaning and tightening the terms of
crude for product swaps in NNPC’s favour
would suffice to improve performance.
Instead of privatizing the refineries, his team
tried to get oil traders to finance
refurbishment and upgrades with repayment in refinery output.

The approach failed. Buhari’s first-term legacy
was to strengthen NNPC with all its
distortions, leaving much of its corruption
intact. NNPC has meanwhile become less
tolerant of questions and criticism from some
journalists and civil society actors.

Some five different groups are battling to
influence the president. These range from
young reformers in the finance ministry to
older people with nationalist and statist
outlooks in the president’s inner circle. The
reformers hope that the lack of results in the sector during his first term will convince the
president to change direction.

Nigeria’s politics could provide more space for
action. Nigeria’s two-term limit frees him from
the pressure of contesting another election,
and Buhari’s All Progressives Congress party
also won a majority in the Senate and House
of Representatives, which might ease previously tense relations between the
executive and the legislature.

Reformers argue this could pave the way to
more controversial policies, such as removing
the gasoline subsidy, the sale of NNPC’s equity
in some oil fields to free up capital for
investment or the privatization of the
refineries. Privatization would need to be conducted in a professional and transparent
manner on attractive terms to gain public
confidence, attract quality investors and
maximize revenues for the state.

Such measures would require a fresh impetus
on the PIB while amendments to the Deep
Offshore and Inland Basin PSC Act could
address the concerns of potential deepwater
investors.

However, the reformers are struggling to be
heard – while the president’s inner circle has
the upper hand. His advisers have indicated
privately that there is no appetite in the
presidency for the PIB or the privatization of
oil sector assets, and without a radical shift in the balance of power they are likely to prevail.
Nigeria could face another four years of drift.

Christina Katsouris
Associate Fellow, Africa
Programme

https://www.chathamhouse.org/expert/comment/buhari-s-second-chance-oil-and-gas-reform-nigeria

Buhari is a failure and will always be. It is in him to fail and nothing will change that.

Buhari is a failure.. "quote and unquote"

Buhari is an all round certified failure who can't get a single thing right , anything he touches he devalues from economy to human rights and now our electoral process , please tell me one single thing Buhari has done right since he came

A man who has 150 gay cows cannot be productive in anything

There are many options to solving a problem. Each with its pros and cons. Since a problem is meant to be solved. The final choice of an option to be applied to tackle a problem is usually the decision of the one on whose desk the buck stops. If one option doesn't effectively solve the problem, there may be need to choose another option or create a hybrid solution option by combining some features of any the other options.

I always trust President Buhari to do the right thing in the best interest of the nation and with clear conscience.

Buhari does not understand all these grammar. A man that can't give meaningful answers to the simplest of questions cannot offer nigeria or anybody anything except backwardness. Zombies are officially the most stupid people on earth.

In Latin, it is said, "Nemo dat quod non habet".

You just can't give what you dont have no matter the amount of time you are allowed.

If we have boarded an airplane and the pilot unfortunately refuses to show up, then you ask me ( who is probably boarding an airplane for the first time, not talk piloting it) to fly the plane in the pilot's stead, no magic is gonna make that happen even if I'm given 100 years.

Buhari will not perform even if he's allowed to rule for life.

When sensible Nigerians condemn this government, we are seen as haters of APC and Buhari

All because afonjas want to be president in 2023. Political interest need to be redefined to these improperly evolved cowards. Political interest is not about producing president from your tribe.