21 June 2010

Nigeria: There Should Be Oil Sovereign Fund, Says Utomi

Lagos — Professor Pat Utomi, Chairman of the Social Democratic Mega Party has opined that only $30 of the value of oil sold should go into the Federal Allocation Account, FAAC.

The rest of the money should be kept in a Stabilisation Fund for a variety of federal interventions for subsidizing the everyday living of the poorest of the poor in our nation as well as investment for future generations of Nigerians. He said this during the review time of the Town Hall Meeting organized by the Restoration Group, a caucus made up of professionals within the Social Democratic Mega Party. The weekly meeting held at the Colonnade Hotel, Alfred Rewane Street in Ikoyi, Lagos late Thursday.

The meeting which gathers to deliberate on key national issues every Thursday at that location, convened last Thursday to deliberate on the subject of electric power. Themed, "Why Cannot Nigerians Enjoy Stable Power?" the meeting attracted professionals and experts on the subject of Energy, Oil and Gas and Engineering. They examined the vexatious subject from all possible angles, including strategy and legislation.

Dr. Lola Amao, a consulting expert on oil and gas and former staffer of the Nigeria National Petroleum Corporation, a member of the board of discussants averred that faulty pricing policy and strategy are some of the factors that are bedeviling the power sector in Nigeria. Lamenting that the nation has all the feed-stock needed to provide power for all citizen, but the policy of government to put a price of 30 cents on unit of gas which should have gone for $3 is not making the prospect of gas-gathering by international oil companies attractive, so they are not willing to invest in gas-gathering but would rather flare off the gas and pay the required penalty. Government officials, she averred, are also in cahoots with these IOCs to perpetually push forward the flare-out date, the date designated for oil companies to stop flaring gas which was last fixed for 2008 but was pushed forward with the excuse of its not being realizable.

Mr. Lanre Banjo, erstwhile National Conscience Party, NCP's gubernatorial candidate for Ogun, another panelist averred that power generation, distribution and marketing should be decentralized. He recommended that if the present administration is serious, it should simply direct all states to set up a Directorate of Power and award a rigorously regulated grant for each of them. They should then set about providing their states with power, independent of the national grid.

Other discussants wondered why it is only Nigeria that is going against the grain in national power development in that it is going for the development of a national grid in place of creating hundreds of small power station that would focus adjoining towns. "It is only in Nigeria that policy-makers would prefer to go "Top-Down," Engr. Tunde Akinleye agonized. "All other countries starts from bottom-up." They explained that the small power stations producing about 10 kVA each would power urban centres and small cities. "It is only excess energy provided by these stations that would be taken up by the national grid for giving to states which cannot produce enough for their local population." For strategic reason, they say, mindlessly centralizing the nation's power is foolish. "In the case of war or external aggression, the opposing force only needs to level Osogbo, seat of the national grid to plunge the entire nation into darkness, not minding any level of power generation."

In the review, Professsor Pat Utomi said that it is a very unfortunate coincidence that the faulty strategic policy of emplacing the national grid has helped in no small way to aid the national inclination to fraud, corruption, waste and mediocrity. On the way forward, Utomi pointed out the case of Vietnam, emerging from a ruinous war: "The Vietnamese embarked on the process of establishing hundreds of small power stations all over their country that is focused on urban centres and industrial parks. Today, they are energy-sufficient nation and rapidly industrializing."

The call for establishment of the Stabilisation Fund came in the wake of the question of total cost recovery for energy provision, which may make the cost of energy prohibitive, at least, in the short run. Utomi said that if the fund is established, "the affluent part of the population could pay the full cost while the fund would intervene on the side of the poor." He further averred that "to say that everybody should should pay total cost recovery price for electricity is to say that the poorest of the poor should remain poor."

He calls for the strengthening of the National Electrical Regulation Commission, NERC, in order that it may do for the energy sector what the National Communication Commission, NCC, did for the telecommunication sector in the nation. In the final analysis, he regretted the subsisting fact that Nigeria still remains one of the worst places in the world to do business, according to the latest ranking of the World Bank. He suggested that if the obnoxious regulations centralizing the power sector are repealed, we should have an influx of foreign direct investment in the power sector that would resolve the power situation in the country.

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