Former minister of state for petroleum resources, Dr. Emmanuel Ibe Kachikwu, has opened up on the vexed issue of oil subsidy, explaining that while removal was inevitable, it was a political and sensitive matter, which only President Muhammadu Buhari could decide.
He also spoke about factors, which must be addressed before Nigerians could be asked to endure higher pump price of petroleum products. In this exclusive interview with The Nigerian Xpress duo of Steve Nwosu and Akanni Alaka, conducted just before the first term of the Buhari administration ended, Kachikwu spoke about his achievements in the oil and gas sector, as minister of state, how he worked with the president, as substantive minister and other matters, relating to the petroleum industry.
We present the concluding part of the exclusive interview with the former minister featured in last week’s edition.
Immediately you came in, you went round the Niger Delta with the Vice President to try to calm restiveness in the oil producing region. The Federal Government also promised a new vision for the Niger Delta, which will involve building of schools, modular refineries and others in the region. How well would you say this vision has been actualised?
Fantastic; I think the fact that you have relative peace in that area says something. Peace just doesn’t come out of nuance. It says what are being done are being appreciated. The deliveries are being appreciated. On modular refineries, we are kicking off on a full steam. The 10 that we basically zeroed down to as the most serious ones, about two or three of them should be into production early next year. The remaining seven are basically close to FIDs.
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They have finished the engineering, technical environmental studies, gotten all the approvals that they need. Some of them are raising finances. These monies are not cheap, but there is a delivery pattern. So, on that, I think we have done well. On the promise of infrastructural support, there was never a promise that says that we are going to start to build hospitals on our own. What we said was that we are going to create enabling environment for the state governments to do it.
There are areas where the state governments interface, areas where the Federal Government interfaces and one of the things we did after that was to start going round to craft MOUs between operational communities, states, the local communities, the leaders of those communities, the oil companies, the people working there, the security apparatus so that there is no misapplication of force. So far, the relationship between the military and the people has been so far sedate and nice.
We have crafted MoUs, I think with about four states. I have signed that, but it is still work in progress. The difficulty with the Niger Delta sometimes is that somebody will come and say ‘I’m from X community. This oil company that is operating here completely neglects me.’ That’s the typical complaint – they don’t give us jobs, they don’t give us contracts, they create environmental hazards. And if you check, the production for that area is 20,000 barrels a day, but the cost of covering the demands from that area is 200,000 barrels a day. So, I’m the first to start saying let’s tie demands to volume and value. So, that’s what the MoU is achieving.
The MoU says this state, what’s your production? You say it is 300,000 barrels a day and 1, 2, 3, 4 oil companies are the ones operating here. These are the component communities. Good, we will first deal with derivative money – how is the state applying it to address these things. Oil companies, Federal Government – what can you bring in to help? Communities, what do you think is the most pertinent concern area that you have? What is that infrastructure? Is it schools? Is it roads? Houses? – whatever.
So, when we put all these together, and everybody is working in tandem, then their expectations can then be cut down to the level that matches, quite frankly, the volumes that you have. Otherwise, if you duplicate that demand times the number of the host communities, even the Saudi Arabia 12 million barrels a day will not be enough for us to cater for those needs.
So, that’s what we are trying to do. We then brought in other agencies under the supervision of the vice president. We brought in all the agencies that have intervention money –NDDC, oil companies – everybody, who has some modicum of money into that area, the Amnesty group all those. And when we put that together, we were amazed by the amount of resource, not even including the derivation, that have been focused into those areas.
When we look at these problems, which this poor community has just raised, How much of the state government’s derivative money is going in there? What is the specific oil company doing? Amnesty – if you came in here, how many people did you train? NDDC, with the money that you have – why has no road passed through the community?
So, that was the focus and it was in trillions, but more work needs to be done on this. We are still at the preparatory stage. But we need to bring these agencies for a wholesome intervention so that the pot is bigger for each community and then, it will make sense. That’s what we are doing.
You are able to help Nigeria solve the problem of joint venture cash call. But is there a sustainable plan to ensure that the problem did not re-occur?
Yes, there is. It was approved by the Federal Executive Council. NNPC is executing, because that is the main joint venture partner. We are hoping that it will be better fine-tuned; they’ve not gotten 100 per cent of what we want because it should be a static order – produce a barrel that is 10 dollars, two dollars is the royalty, one dollar is the expense of production, this is for tax.
You don’t have to take the 10 dollar first back to the government and say the government, ‘please, give me the one dollar that was used for this’, which will now take about 10 years, which was what was happening. They have gotten out of that. They are much more current on cash flows. But they are still on a cash call demand and pay basis.
That’s not what that memo prescribes. That memo prescribes a deduction at source. So, because there is a bit of tightness of fiscal conditions, we are managing that. NNPC has done a good job of managing that in fairness to them. But remember that we got nearly $2 billion written off after that negotiation. That was a huge success for the government. It brought our side then from about $6.9 billion to about $5 billion and that was spread to a period of about five or six years to be paid for by incremental production.
That means go find the oil, let me give you more money to pay this. In fact, it was one of the agreements that we have done that has won international awards. Nobody has been able to put together before. Again, those are the kinds of things we need to be doing for some of the areas – whether it is refining, whether it is incremental volume concept, whether it is infrastructure in the industry, whether it is tariffing.
What I do pray is that as the president goes forward, the system is able to allow robust handling of issues in a manner that benefits Nigerians appropriately, and especially that areas that have to do with our income stream are taken away from the political arena and we just work. If we focus on these issues for five, 10-year period, you will see a new resurgent Nigeria.
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You will see us being able to handle our resources, being able to get good returns. We are dealing with PSC, we are dealing with negotiations, re-negotiations, because there are a lot of things that have happened over the decades that were not focused on properly. Look at the $20 rule where they said $22, the government should go and negotiate a new sharing pattern. But it was never done. So, we lost a lot of money through that.
Can’t the government solve all these problems by privatising the oil sector?
Well, I think each of the problems should be studied and I can tell you that we have a recipe of solutions for these problems. It is being documented, put together. The president will have it; so, let me not just do an ombudsman, ‘go and sell’. The thing I love about Nigeria and Nigerians is that every issue can be controversial. But the controversies are borne out of good conscience.
When a man said ‘why are you selling our refineries?’ he is saying it because he thinks this is our resource, what’s next? It is not with bad motive. It is emotive. And that’s what the president said that as he takes on each of those problems, he is going to look at public concerns. I have told you about the refineries, that we are not thinking of selling.
We are thinking of repairing it through PPP model. We are thinking that once we did that, we will address the subsidy issue. And then, at some point, you are going to look at whether it is efficient for you really to be keeping it or to sell. But sell to who? NNPC is a private public owned company. So, if you get to a point that you decoupled it sufficiently and it is taking responsibility, you will take a decision on whether to sell or whether to keep.
You will simply be looking at the ownership of the refineries from the bottom line. If the bottom line shows that the refineries are dragging you down, you yank them off. It is not a government policy issue; it is a corporate policy issue, dependent on their board and on their bottom line. There are too many things that are hanging on government heads, which really shouldn’t be and we need to decouple them so that the company and the environment can breathe.
(Saudi) Aramco made $200 billion last year. It didn’t make it by being around government. It made it by being an independent company run with limited level of interference. So, those are some of the things that we need to do.
After serving as the minister, what‘s next for you?
My future is bright. It’s always been bright. We’ve finished with the valedictory, the president will appoint his cabinet and we take it up from there. I have always believed that God knows my future; God knows my direction; wherever He places me, I am energetic enough to go there.
You said something now about having gone to government to learn politics. As a leader of your party in Delta, how would you rate APC’s performance in the last general elections in the state?
If you said this is Delta six months ago and you say I am the leader, you are going to have an uproar from people, who believe that I am just coming in, how can I be the leader? But obviously, as the most senior government appointee, you are expected to lead or guide the party. Let’s put it that way. APC did very well. Somebody asked me in an interview that a lot of ministers have baggages, they didn’t help the president win. I said no, you are doing a wrong analysis.
You don’t start from zero to hundred. You look at what was the substructure when we came in. When I came in four years ago, APC was in complete crisis; about 15 litigations in court, factions that were not talking to themselves; everybody was at war. It took a lot of dexterity to make them to withdraw those cases, recognise the party machinery that we have and begin to work on it collegiately. I think we must have held over 30 meetings nonstop in this house, not to talk of my village home.
And then, we just have a congress and everything went ‘boom’ because everybody was pursuing a personal ambition. It wasn’t a global APC ambition, it was me and once I project that ambition and I didn’t see me in that end product, there is war. I am probably the only one who was selflessly saying it doesn’t really matter where it lands, let’s just try and work. We started from position where before the last election, the Delta scores for PDP was over one million votes. It was targeted at being able to hold back what was coming from Kano. This time, it was 500,000 and something.
So, what that says is that this time we managed to ensure that the votes were clean and that we protected our territory. That’s a huge volume of work. APC scored less than five per cent versus PDP that scored 97.8 per cent. But this time, we have 33 per cent. So, when somebody says ‘you didn’t win’, was I really meant to win, where is the machinery to win?
We quarreled three, four weeks before the election; we had to fight our way through. But we sustained the mood and a lot of that is due to our integrity and the hard work that we did. In my own zone, for somebody who has never done politics, I got about 35, 36 per cent for the president, for the governorship, I got about 38 per cent score, for the House of Assembly, I won my ward.
So, with no experience, I think I did a lot. The work of a minister is not just restricted to what we did in our states; it is also about what we do globally. I want to believe that the work we have done in the petroleum ministry, the international approvals that we have been getting from everybody in terms of praises also adds to the weight and the value of the president and how he is seen by the electorate.
So, I think we tried. Now is the time, going forward, once we finished all these appointments, we go back to the drawing board and begin to work again. Hopefully, with nothing in sight, we would be able to work more peacefully and try and help the party grow. Obviously, the party chairman, Oshiomhole, did a lot with the energy he threw around everywhere to make sure that there was calm.
As a minister, what is that one thing that you think you didn’t do or will want to do if you have a second opportunity?
One thing? If it is going to be grammatical encapsulation then, I will just say take the petroleum industry to the level where it should be and that covers it all. But if I am going to break it down into specifics, like I said I want to deliver my refineries, I want to stop importation of petroleum products, there is no basis for that. I want to increase the refining capacity of this country to over a million barrels. I want to increase production to, at least, over three million barrels. I want to stop flare within the time frame we set for ourselves.
I want to rebuild our infrastructure because it is dilapidating and we’ve got to be looking at that. The success of this industry is going to depend on the ability of whoever is running it to be able to attract capital in sufficiently, which means that the policies and the laws have to be firm, understandable, solid and predictable.
The personality, who runs it must be seen to be transparent and able to embody the nuances of international investment and the policies down here must be such that he is also able to deal with the Niger Delta confluence of issues in a manner that there is hope in Niger Delta, that things are being done. So, you have the peace to produce. It is a big baggage of responsibility.
What is your take on the fight over deduction of money between NIMASA and the NLNG?
We will resolve it; we are all in the same government, where an income comes from is less important. For me, the NLNG has worked superbly and we must keep that model. Whatever tried as much as punch it with some inconvenience, we are going to fight; it doesn’t matter where it is reported. Nigeria LNG is a huge model for us and it is a model we are hoping to replicate to do refineries and the rest of them, as we go forward.