By joshua 
*Urges FG to address insecurity, high unemployment rate, inflation
*Says petrol subsidy withdrawal inevitable
*Empathises with Nigerians
*Says current high prices of petrol will reduce
Engineer Pastor Sunday Adebayo Babalola is a former Kwara State governorship aspirant. He is also a retired Director of the now-defunct Department of Petroleum Resources, (DPR); a former acting Managing Director of Belemaoil Nigeria Limited and currently a director, of All Grace Energy. He addresses national issues in this interview with journalists. Ayo Ola was there.
What is your advice to the current administration of President Ahmed Bola Tinubu on appointments and general governance of Nigeria?
I wish them well. I pray they will perform. I pray they will do excellently. They should put square pegs in square holes and round pegs in round holes of the same size. Let us forget ethnic chauvinism. The President should give responsibilities to people who can perform and not because they are from one ethnic group or the other. The idea of choosing people, because they are from a particular area rather than competence, should be jettisoned. Once the government continues doing that, things will not change. But when you pick competent people, irrespective of their political, tribal and religious affiliations, things will change positively in Nigeria. Whether for a minister, ambassador, or heads of parastatals, they should put the right people there.
When you give somebody a job to perform, give the person a time lag, Since you have four years, if within six months you did not see good performance, remove the person and put in another person. There are many people waiting for the job. He should not use emotions, statism, and other primordial instincts. He should use put the right people. You may not get the right people the first time but when the person is delivering, give them the objective and what they should do, and how much you are expecting from them. If after, four months, or six months, you are not seeing the results you desire, remove him and put someone else there. There are many people waiting.
What about on the energy sector?
On the energy sector, President Muhammadu Buhari has approved the amended act of the National Assembly which has made the generation and distribution of energy or power no longer an exclusive list such that states and individuals with competence can now generate, distribute, sell power and make their money. This is very good. There must be allowance for private power and they should be encouraged by making it easy for the sincere ones among them to access finance for them to do the work they planned to do.
The FG should also make sure that gas utilisation is encouraged. Nigeria is said to be a gas province but in reality, there is no direct exploitation for gas because it is not easy to store and it is a contract business. So they should encourage the gas business through the exploration from upstream, midstream to downstream.
In the case of the oil business, the government should encourage more exploration. There are so many fields that have been discovered 30 or 40 years ago which they are giving out in marginal bid rounds in bits and pieces and they are actually messing them up.
The last bid round was a total mess up and it discouraged foreign investors. We should do our business in such a way that it should allow foreign direct investment.
How do you say that the last bid round was messed up?
It was messed up, even some media called it an opaque bid round. It was opaque, the rules were not followed, and people such as four or five, were joined to one field. It does not make sense. The amount that people were asked to pay was exorbitant. It does not make any sense. There are many retirees who could have gotten fields and shown people how to run and leave it for future generations. But the amount they were asking for as a signature bonus was just crazy. If a retiree says he has that kind of amount, we should question how he got it. Of course, many people failed to pay. And it was given out on a discretionary basis and to people who did not actually participate at all. There is a very reason to condemn the bid round. It is sad that my former organisation was the one that conducted it.
Which bid round did you talk of?
It is that of the 2020 bid round. The other one is gas flare and it is even sad because sincerely they had gone to the point of the award and somebody said, “No, cancel everything.” No reason was given. And they cancelled everything. Now even the people who would have gotten investors to help them to develop those gas flare points, those investors will not come back here and would not take us seriously because we just cancelled it without reason. They just cancelled it and started all over again. So quite a number of people said they will not pay again. It did not show us as a serious country. Government is always a continuum. The one they are doing now, they have not finished it. The person that will be appointed as a minister may now say we will start afresh and that will be the third time if we are starting it afresh. It does not make any sense. It discourages foreigners from participating in our activities.
There have been divergent responses to the withdrawal of subsidy on Premium Motor Spirit by the current administration of President Bola Tinubu. How do you react to the development?
Thank God they have the boldness to implement it. In any case, the sitting President just gave the announcement, the immediate President, Muhammadu Buhari, maybe because he was going had said that by the end of June, there will be no subsidy again, that it was not in the budget. So technically, he removed it. The current President confirmed the removal during his inaugural speech, and that is good! Also the Nigerian National Petroleum Company Limited (NNPCL) came up with a new petrol pump price template and we say the prices in various places. People can buy and sell what they have. Their negotiation with sellers will be strictly to businesses, their negotiation with depots will be strictly to business and everything will be controlled by the market economy. You will see that eventually, we will no longer see any queues in Nigeria. queues will be a thing of the past because if you do not like the price at my petrol station, you will go and buy from another person.
But there are concerns that it has brought more hardship to Nigerians.
Wait a minute! What hardship? Has it been that the same price of petrol in Lagos is the same thing they are selling in Sokoto or Enugu? In the big cities, Lagos basically and Abuja, Lagos consumes maybe 60 per cent of what the nation consumes and the other ones share it. The people who are bringing food from rural areas to the cities buy fuel at exorbitant prices and they are paying exorbitantly.
What are you telling Nigerians concerning this high template from NNPCL?
It will come down because it is just like the telephone prices came down. When mobile telephones came newly to Nigeria, there was a time we used to buy a sim card for N35,000, which was almost equivalent to $500 at that time. Today, you get Subscriber Identity Module (SIM) card for free. So when the market forces take effect, everything will come down. The diesel price is already coming down.
Though there are initial pains, such as the petrol pump price increase, and the attendant hike in transportation and possible inflation; still we are going to make progress. The question now is since it has been removed, what are we going to use the money that we are gaining from the removal to do? There was a time they budgeted N450m for subsidy but by the end of that year, it was N2trn they spent. How? Why and where? The previous year, it was N250bn but that year N450 billion was budgeted and they spent close to N2trn. It would have continued to be like that except that President Tinubu has removed it.
What is your advice to the current government?
They should also plough the money that will be saved from subsidy withdrawal into things and sectors that will benefit the people and transform the nation. There are ways they can do it. Do not ask me the ways, that is my own trade secret. If they want the way, they should invite me and I will tell them.
The administration of the outgone President Muhammadu Buhari did not implement subsidy withdrawal. Is it that the administration did not affect it?
I will not say it is right or that it is wrong because I do not have all the facts that they had. When you are thinking from outside the system, you can propound so many theories and you can come up with many suggestions. But the reality is that you may not have seen some of the things they saw and they will not openly reveal them because of security implications and confidentiality. I do not have the facts they had so I will not be able to say they did right or that they did wrongly. But sincerely speaking, talking from my own point of view, I think the removal of subsidy will move the country forward. I will keep saying that anytime. Except that the petrol subsidy has now been removed, we would have kept roaming in the same place. We do not even know how much we are consuming. When I was in DPR, it was 36 million barrels per day that Nigeria was consuming but now they said it is 63 million. What has changed? Has the number of vehicles increased? Are people using their generators increased?
In developed countries, the margin of increase is always realistic and small. For instance, they may use 10 million two years ago, 10 million last year and 10.5 million this year. It does not increase astronomically.
But why did our own suddenly jump from 36m to 63m and even different organisations are giving different figures? Such a thing should be checked and what is creating is open doors for corruption that we see.
But some people, including organised Labour, are not pleased with the way the petrol subsidy was removed. Their position is that before the subsidy was removed, stakeholders should have been carried along and certain things should have been put in place to cushion the harsh effect of the removal.
What are the things that must be done? For instance that the nation’s refineries should be functional.
The refineries should have been privatised. But now that the NNPCL is a limited liability company, it will do better. But you have four refineries that are not working at all and you are paying staff salaries; it does not make sense. Only the govenrment can do that. It is not about privatising refineries and removing the subsidy. The refineries themselves should know that they have to work in order for them to make money. The crude oil they would have sent to the refineries, they send the crude abroad. They import white products from that crude oil. We are losing money. You are exporting crude oil and you are importing the white products at exorbitant prices! I do not know what arrangement they reached with all the people who are helping them to do that. Until we study that agreement, we will not be able to say exactly what it should be. You have to remember that people like me sitting outside, it is different from when I was inside. When I was inside, I could go around and get the data but now I am outside, I can not get the data and the facts around those things to be able to give them concrete advice. But I can tell you that it will be difficult for us to make any progress if we were still subsidising white products. You are going to use the money to repair the refineries. Why are you going to get the money, if you even keep borrowing to keep subsiding? They have made Turn Around Maintenance (TAM) many times on the refineries. How do you service a car that has not been working and you keep servicing it, you change parts and it has not been working and you keep spending money on it? And that is what they have been doing. Engaging in TAM on something that has not been working for a long time.
Many people are against Nigeria accepting the $800m loan facility the World Bank offered to the country to cushion the harsh effects of the petrol subsidy removal. What is your position?
We should ask certain questions. What are the conditions for this offer from the World Bank? Once you see the conditions, we have settled one. And if the conditions are tenable to us, we have settled the second decision. Remember the days of the Structural Adjustment Programme (SAP), they gave the government loan on the condition that they must do SAP, which brought the naira to be devalued. The devaluation of the naira to the level it is today started at that time.
After settling the issues for the conditions of the World Bank loan, you now come to the issue of what the money will be used for. You can not just collect money and start thinking of what you will use it for. If I am going to approach a bank to give me a loan, I already know what I am going to use that money for. When I collect the money before thinking or knowing what I am going to use it for, that money will be wasted.
You can not do without taking loans but let us know the conditions that the loan is offered for. Let us be sure that those conditions are not going to put more hardship on the country or on the people. Let us know what we are going to do with the money and pluck the money directly into those things and not divert the money at all, and some big people embezzle the money because they are in the position.
The Federal Government said they are going to use part of the money for the FG’s social safety net, and t that they will give N5,000 to 10 million households for six months as a palliative for removing the petrol subsidy.
How does that make any sense? You give N5,000! N5,000 is how many dollars? At the Central Bank of Nigeria’s rate of N450/$1, it is less than $12. At the black market rate of about N740/$1, it is less than $7. You see we are pursuing what we should not be pursuing. You collect such money and you will not be giving people N5,000 each for what? To do what? What business can you do with N5,000 in Nigeria now? That is why I said we should know what they will use the money for before they collect it ooh!!
If the $800m from the World Bank they want to collect is to alleviate poverty, I do not support it. It does not make any sense in reality. How will that alleviate poverty? Are they going to divide the money among the poor? If they are sharing it, the story of this country is the person who will be sharing it will take three-quarters of it. So they should not take us through that path. They should leave thing the way it is now and everything will take good course in due time. Moreover, the so-called percentage of poor people were the ones that were bearing the brunt of the petrol subsidy. They live in far-flung places like villages. In the village where I grew up, I do not know when they ever sold petrol at a controlled price. It has not happened in the last 20 years. And those people are already used to it. When you were buying it for N145 per litre in Lagos, we were buying it for N300 and more there. So which poverty are they alleviating? They should not just collect any loan for this purpose. They should not.
People even queried why should Nigeria propose to collect the $800m when the country is highly indebted.
It can be an argument for and against. If you want to use your own money to do business, if you are going to use it to do something concrete that we all see, I do not think it is a bad idea to collect the loan. But if you are just going to collect and pay people N5,000 and the remaining ones, they share it among themselves, and life continues, that is unacceptable. It is a sad situation. Sincerely, nobody does business with their own money. People who use only their money for business may not expand. Taking a loan is not bad but the loan itself should be able to pay back by itself. When you are taking a loan and you are distributing it where you can not get the capital back not to talk of the interest, what are we talking about? How many people will you give N5,000 today in Nigeria who will use it for any business? What business will they use N5,000 to do? But if you use it for something that will help people, that is acceptable. There are many things that you can do that will help people and enhance their well-being.
The Country Director of the World Bank, Shubham Chaudhuri, said the facility’s rate is considerate compared to the domestic money market and Eurobond. That Nigeria already has a N10.78trn budget deficit and the nation’s revenue is low, so taking loans to service the budget is inevitable. That the World Bank facility rate is more reasonable.
The World Bank Country Director is right. I said before that you need money to be able to make money. If they are going to use the loan right, nothing is wrong in taking any loan. But we are not even sure that they will use the money for something that will pay back the money. FG said part of the money will be used to distribute N5,000 to the vulnerable poor. How does N5,000 to individuals correct and ameliorate deficits in individuals? It does not make any sense. If they are going to use the money to create businesses, to teach people how to fish instead of them collecting fish, then it is going to be okay. There is no country that is not indebted in today’s world including the Almighty United States of America. They are indebted but what did they choose to use their money to do? Politicians all over the world are looking for an easy way of pacifying the people. For instance, giving them N5,000 every month. But when they finish the N5,000 what will happen? Is N5,000 equivalent to employment that will give somebody N100,000 or N50,000 monthly? The N5.000 with our exchange rate is next to nothing.
Some stakeholders believe that there are some aspects of the Petroleum Industry Act (PIA) that are not clear enough to give direction in the oil and gas sector of the country. What is your opinion?
There are blind spots in the PIA that should be clarified. There are overlapping provisions. There are provisions that are there that were not the original intent of the designers of the PIA. They changed drastically. I am happy that former President Muhammadu Buhari, at least, signed it into law, after over 20 years of trying to pass the bill. It is cheering that somebody finally did it. We give glory to God! But having done that, they can improve on it. For example, the blind spot is where you have the downstream in charge of the terminal. Terminal operation is actually an upstream business because from there you do a back calculation to the reservoir which affects you and when you take that out of the upstream, virtually they can not do all the calculations they want to do, to be able to manage the reservoir properly. You need to do all those back calculations. Again downstream took it.
I believe that all those small areas should be corrected and they should call the people who were originally planning the drafting of the bill to come and help them to clarify some of the grey areas. The two organisations that were holding meetings with the former Minister of State trying to lobby over their jobs, if the PIA was done very well, there would have been clarity that people did not need to sit down wasting man hours, talking that this is my job, this is your job.
Why are International Oil Companies (IOCs) leaving Nigeria?
They have seen better business somewhere else. If you see where you will make more revenues, gross or net, you will cross over. If you see where you are not over-regulated, you will prefer there. If you see where there is no insecurity, you will prefer the place. It is a business decision. I am not saying the factors I mentioned above are why they left but I am saying that they would have considered what benefits are here, viz a viz, where they are putting their money. The reality is that they would have a business decision because they are not a charity organisation and they are not Father Christmas. They are in business to make more money for their shareholders.
The surprising thing is that the places they have gone are not even better than the terrain they are leaving here: land, swamp and shallow water.
Are indigenous players taking advantage of the opportunities now in the oil and gas sector?
Yes, they are taking advantage but most of them are not using it very well. They are not managing it properly. Very few are actually managing it and we have records that the Nigerian National Petroleum Company Limited (NNPCL) has taken over about two companies because the management was poor. I suspect that many more companies will go the same way. Can NNPCL itself manage these things? It is because of funding. With NNPCL becoming a limited liability company now, the Joint venture Call may not be that easy to come by like before.
How do we enhance gas penetration in Nigeria?
You will have to explore more for gas. It has to be gas-targeted exploration. And you will enocurage gas utilisation. You will encourage proper gas management.
So what about ensuring safety as there are gas stations near some residential estates and homes?
That is the regulator’s problem. We have laws that regulate these things. If regulators are not doing their job well, the government should call them to order. Why are you putting gas stations in residential areas? I see it and I am surprised. You see petrol stations in residential areas. It is absolutely wrong.
Agriculture has been described as a sector that can provide massive employment for the people, transform and highly industrialise Nigeria. Should this administration optimise the sector for job creation and economic and industrial advancement?
I agree entirely but there is a problem. With kidnapping on the farms, and with herders killing people on the farm, who will go to the farm and do what? Ignoring the problem, people will say agriculture will solve many of Nigeria’s challenges, but what of the problem that is within the society that even when you release money for agriculture and people want to do it, they can not do it because of the security problems that are there? Who wants to go to the bush and somebody will kill or kidnap him? Now, some people go to the farm in groups.
Even though they go in groups, if those gunmen come with sophisticated weapons, what can the farmers in groups do?
(Laugh) Maybe one of them will escape and say this is what happened to the rest when we went in groups to farm. It is very sad! The fact is that you have to solve the fundamentals and insecurity is one of the fundamentals. That one requires an urgent solution. Why do we have security agencies? How many kinds of military and paramilitary agencies do we have in the nation and yet we have not been able to solve insecurity?
Do you advise for more utilisation of technology than relying more on human efforts to combat insecurity?
Modern and sophisticated weapons should be added to it. It is not rocket science. How are they doing it? How can we improve on it? We can do so many things with science and technology. But again, the challenge is that if people are not going to make money out of it, they will not allow it to happen. If they are not the ones that will bring the technology, they will not allow it to happen.
Is it a good story that Angola in April, 2023 overtook Nigeria in crude oil production?
It is not good that Angola overtook us in April, The reality is that a country that can produce 3 million barrels of crude per day (mbpd) is producing about 1mbpd, Something is wrong. It is not about comparison with another country. You are making your money and I am making my money. Whether we are producing 4mbpd, the important thing is that we are all making our money. That is the key. What brought our production down is what we should be correcting. Among the thing that brought it down is insecurity, vandalism of pipelines and other things. When you do not solve those problems, your production will continue to be low. It is not about your position. You can be seventh or tenth in the world, if you are producing only 10000bpd, you are still 10th in the world. But that is not good for the country when it can actually produce 3mbpd.
The fields that have been discovered for 20, or 30 years, which are still dormant, and still remain undeveloped discoveries, the government should find a way to bring those fields to upstream. On the basis of people coming to invest their money, if they want to do it, they better do it through a better process than what they did in 2020. That of 2020 was not good at all. The newspapers all even called them opaque bid rounds. That is what it is.
Dangote refinery has been inaugurated. He is a businessman who will want to recoup his investments, pay the loans he used in building the refinery and make a profit. Will the refinery impact positively on or be beneficial to Nigeria?
It is a good thing. Whether it will be beneficial, we will wait and see because Aliko Dangote is in business, a businessman is always alive to his business. He is always thinking of how he will generate revenue from what he is doing. He is not a charity organisation. We have to bear that in mind. The organisation, Dangote, will start looking at how best to use its resources. It is possible that he will consider giving Nigeria part of it if the conditions are right or he can decide to take his product outside. For it to benefit us in the country, we will wait and see. Of course, it is going to benefit Nigeria because he will employ more people and those people he will employ will also socially impact their environment. The organisation, itself will create many direct and indirect businesses around because people are going to be employed. That is going to happen. But for the larger society, the whole of Nigeria, we need to wait and see. Its impact will depend on several factors including the conditions they will give him to supply his product to the country. I am not too sure that they gave agreed on that yet. If they have, beautiful and great.
As of the fourth quarter (Q4) of 2020, the Nationa Bureau of Statistics (NBS) said Nigeria’s unemployment rate stood at 33.3 per cent. The Nigerian Economic Summit Group (NESG) projected it will rise to 37 per cent in 2023, while Global audit and tax advisory firm, KPMG, projected that Nigeria’s unemployment rate is expected to rise to 40.6%in 2023. People have said it is a time bomb. How do you respond to this Nigeria’s high unemployment rate?
Sincerely it is a time bomb. How the bomb is going to explode is what we can not see for now because a hungry man is an angry man. So the government needs to find ways to tackle this unemployment. The government should create an environment for businesses to do business. That will provide substantially more jobs for unemployed people. Which business are you going to do in Nigeria with a bank loan of almost 30 per cent interest rate? Nobody will collect that. Except if you are trading, then you collect it to go and buy large goods and trade and within three months you pay back. Even with that one, the profit margin will be reasonably low.
Nigeria still has high inflation. What is your advice to the new government?
I have a friend who is an economist, in fact, a guru in Economics and he told me that there are three indices that they look at when they want to control inflation. The indices are the exchange rate, interest rate and inflation rate. He said you can control two. So they try to control the interest rates and exchange rates. But sincerely at about N760/$1 on the black market, the interest rate of between 22 and 30 per cent, what are you controlling? You are not controlling anything. My prayer is that President Tinubu will not print more money because that will kill everything. Because the time this thing started, he suggested to President Buhari that he should print more money. The printing of money is what is bringing high inflation in the US today. They are printing more money and it is now hyperinflation. They said it is going to be transitory but it has come to stay.
My advice is that they should try to control the other two. We have every means to control them if we look inwards.
Is the payment of $12bn as recently demanded by the Bayelsa State Oil and Environmental Commission, to the Bayelsa State for the restoration, and clean up of decades-long oil pollution in Bayelsa State, the solution to the oil pollution and environmental degradation in Bayelsa State?
Cleaning of the Bayelsa State and other oil-producing states will engender, economic development, and more oil production. If the place is cleaned up and there is no restiveness again and people are gainfully employed instead of looking for where to vandalise pipelines to siphon crude oil, then the producers will spend more money to produce because if you are going to spend money to produce and you are not sure that the output will get to its destination, you will be wary of spending money. It is a plethora of issues surrounding it. Cleaning it up is not enough. You have to make sure that whatever created the pollution will not happen again. That goes with insecurity and all other things that come with it.
If they are cleaned up, it will engender more economic activities in terms of agriculture. It will also improve oil production to the intent that insecurity is removed. If you clean it up and there is this level of unemployment, people vandalising pipelines to siphon crude, you will be back to square zero and people who want to produce will not produce. They will not want to invest their money and they will not get a return on their investments.
I do not know what facts they have, what data they have and how they arrived at $12bn. Therefore I can not comment on whether the amount is too big or too small. You need to see the database that they are using and the body of facts they have before commenting on the amount.
However, when you get to the Niger Delta, when you are breathing in some places, and you put your hands in your nose, what will come out is the soot of the gas flare. And you also look at the body of water, the killing of the ecosystem, the fish and other aquatic life, all affected by pollution. Restoring that is going to take a lot. How much it is going to be, I do not know.
When you are talking of Bayelsa State, you also remember the remaining states of the Niger Delta. When you think of all the remaining states together, you have to think of the possibility of stopping pollution because whatever is creating it, if it is not removed from the root, the pollution will still continue after spending $12bn according to the report. They just have to solve the problem of insecurity there, they have to solve the problem of oil theft, they have to solve the problem of vandalisation, then there will be progress, otherwise, whatever they are going to do will be a waste of time.”
Once home to one of the largest mangrove forests on the planet, rich in ecological diversity and value, the region is now one of the most polluted places on Earth.
At least $12 billion” is needed to “clean up the soil and drinking water, reduce the health risk to people and restore mangrove forests essential to stopping floods.
The Kwara State Governor, Mallam Abdulrahman Abdulrazaq emerged as the Chairman of the Nigeria Governors’ Forum (NGF). What is your wish for him?
The Constitution of the Federal Republic of Nigeria does not provide for NGF. The forum does not add value to the states they govern but rather get the governors together to compare notes in order to let them do whatever they see the others do whether it is good for their states or not. Was that not the forum where they decided to strangulate the local government administration in their domain? My opinion is that each governor should sit down to administer his state according to the needs of each of them. Congratulations to AA (Abdulrahman Abdulrazaq) for chairing a forum that is unrecognised by Nigeria’s Constitution.