Kachikwu forgot his magic stick

Abraham Ogbodo

By Abraham Ogbodo [The Guardian]

My outing two Sundays ago was titled: Kachikwu And Official Sophistry. It was my candid submission after observing Dr. IbeKachikwu, the Minister of State for Petroleum Resources and Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC) for 10 months. After reading me, one of my ardent followers and a brother, Martins Okpalefe sent a text to add his views, specifically to defend Kachikwu against some of my assertions.

But just 24 hours after, Dr Kachikwu was on air again delivering another piece of sophistry. He said it was cheaper to import fuel for domestic consumption than to refine for same purpose. My worries returned immediately. If importation is preferred, why has there been so much noise about the massive expenditure and the administrative wizardry of Kachikwu to return the four refineries to production mode?

Now, after beating about the bush for 10 months, Kachikwu accepted only last week that he is not a magician and that it would take magic to even solve the current scarcity of petrol in the country. “One of the trainings I did not receive is that of a magician…” he told journalists after taking leaders of NUPENG and PENGASSAN for a meeting with President Muhammadu Buhari on the continued scarcity.

So, he, Kachikwu didn’t know he was not a magician when he was talking big like one and giving definite timelines, in weeks and months, for the turn-around of processes and institutions that took decades to disintegrate. In addressing the issues of the industry since coming on board last year, at no time had Kachickwu spoken like a lawyer or even anoil technocrat who understood the extent of rot in the system. He was always sounding like a voodoo practitioner that could circumvent scientific principles and force results from nowhere.

His narrative had followed a magic pattern. Something like this: Refineries will work at full capacity all year round; pipelines will be protected from vandals using drones; the very best hands shall take charge at all posts at the NNPC; the NNPC itself shall go offshore in search of business the same way Total, EXXON-Mobil, Chevron, Petro bras, Statoil, Agip and other International Oil Companies (IOCs) are in Nigeria for businesses; the NNPC shall be made profitable again; subsidy cabal shall be dismantled; products scarcity shall end and so on.

But the magic narrative effectively ended last Wednesday. And now in a reality mode, Kachikwu told Nigerians to start learning how to live with fuel scarcity for at least another two months. He explained that the major product importers, who were previously yanked off the procurement process to allow the NNPC a monopolistic advantage and also save good money for government from subsidy payments, are fully back in the mix. In fact, he said, these importers have been restored to do the job without the meddlesomeness of the NNPC, which is returning to a new role of creating strategic reserves for the nation.

You see, magicians do not easily lose traction. The man started talking big again like a man with a magic wand, even as he struggled to explain his ordinariness to his listeners last week. What is strategic reserve? Is it a thing to be decreed or developed? Where are the midstream storage facilities that can sustain peacefully that idea in a country where domestic consumption is almost always ahead of all the mechanisms at ensuring steady supply?

If truth be told, the infrastructures for an arrangement to bridge supply shortfalls do not exist as of now and it will take magic to achieve same in the short run. Put differently, the combined capacity of private tank farms and NNPC storage facilities, which is less able to sustain a daily domestic consumption of 40 million litres, cannot offer a spare capacity for strategic reserves.

The concept of Strategic Petroleum Reserve (SPR) began in the US in 1975 following the energy crisis of 1973. In doing so, the American energy secretary did not wake up one early morning and decreed into existence storage facilities that could hold up to one billion barrels of crude oil and ensure energy supply in the US for up to 115 days in any event. It was a process that included the enactment of an act – the Energy Policy and Conservation Act (EPCA) – to situate the initiative in a legal and regulatory framework. And it was not until July 1977 that the first consignment of about 412,000 barrels of Saudi Arabia Light crude was dumped into a storage facility to effectively begin the United States Strategic Petroleum Reserve programme.

I am pointing this out so that Kachikwu does not return tomorrow to say he didn’t have the magic to deliver what he had promised. The other thing he did not quite explain while debunking the magician theory is the fact that the marketers who have regained the fuel importation business are not Fathers Christmas. They cannot import at the prevailing conditions (forex scarcity inclusive) and sell at N86.5 per litre of petrol decreed by government.

And so, I want to use this golden opportunity to say what Dr. Ibe Emmanuel Kachikwu with all his textbook brilliance could not say last Wednesday to Nigerians. We are returning to the regime of fuel subsidy. How the Buhari government plans to achieve subsidy payment without appropriation (nothing like subsidy is captured in Budget 2016) is a different matter. It is a bridge that would be crossed at destination. For now, Kachikwu should back off from talking big and face the reality of the situation, which is that nothing will change (and that includes disappearance of fuel queues) if the petroleum sector, especially the downstream continues to enjoy protection from complete deregulation.

I am consoled by the fact that my brother, Martins Okpalefe, mentioned the Petroleum Industry Bill (PIB) somewhere in his text to me. The bill has remained in the legislative works since 2008 when it was introduced. It has journeyed through two National Assemblies and it is almost a year into the third and its passage is still awaited. The bill has actually begun to lose character. It now looks more like a proposal for political horse-trading with all the attendant intrigues than it looks like a piece of law intended for the efficient management of Nigeria’s hydro-carbon resources.

This is the crux of the matter. In scope, substance and spirit, the PIB aspires to answer all the difficult questions that Kachikwuhas been struggling so badly to put in the right perspectives for close to 10 months. If this is so, why then is it taking all the time to create the legislative consensus to move the PIB into law? I shall explain. It underscores the choking grip of a rogue group on the resources domiciled in a part of the country. The National Assembly is enjoying the endless debates on the PIB but doing little or nothing to push through the very instrument that will launch the Nigerian oil and gas industry into global competitiveness.
And so, I ask my brother, Martins Okpalefe: Which is easier and cheaper to achieve; push forth and back with nebulous administrative reforms at the NNPC or take it a notch higher by ensuring the passage of the PIB to create a legal and regulatory frame that will speak to the associated issues in the downstream, midstream and upstream sectors of the industry?

Kachikwu should climb down and do the needful. Someone close should tell him that what was not magic at Exxon-Mobile may be big magic at the NNPC. And so, instead of talking big and pushing forth outlandish proposal of creating a strategic reserve where there is already acute starvation, he should keep his eyes on the ball. The ball is the passage and signing into law of the PIB. All other things shall fall in place and the oil and gas industry will remember him for just that.