14 July 2017

Nigeria: Increasing Local Multi-Stakeholder Participation Will Move the Extractive Industries Forward

Social entrepreneur and founder of the Sustainability in the Extractive Industries Conference now in its sixth year, Bekeme Masade writes on the need for local capacity building to harness existing potential within the extractive industries

The extractive industries in Nigeria have certainly come a long way. From the days of the coal rush to the oil boom, mineral resources have always featured in building the country's economy. Before 1950, coal was the major mineral resource of focus in Nigeria. However, it soon lost its prominence following the discovery of oil, and by the 1980s, the country's economy was fully dominated by crude oil. Today, oil and gas exploration makes up not only the bulk of the extractive sector, but remains the major driver of the entire economy.

It is, however, no secret that the sector has been plagued with many challenges, especially because of our over-dependence on oil to the detriment of other mineral resources. As such, we have been particularly vulnerable to the global crash in oil prices, which inadvertently plummeted our economy to its first recession in about 28 years. While this end was unavoidable, we can, however, say trouble began with the oil price steadily declining from $120 per barrel in early 2014 to $30 per barrel in February 2016, causing us to suffer the ripple effects of decreased revenue generation, low foreign exchange earnings, and stalled productivity.

In addition, the intensified pipeline vandalism by militant groups like the Niger Delta Avengers further complicated a dismal situation, reportedly resulting in the destruction of thousands of pipelines, decline in productivity by at at least 1 million barrels a day, and a devastating loss in revenue of over $50 billion. Of course, before long, Nigeria lost its place as Africa's largest producer of oil, quickly bringing the economy on its knees. Could the situation have been avoided? Well, most agree that the effects of these crises could have been better contained if we had a more diversified economy, with significant contributions from other sectors and industries.

Nevertheless, while there is unlimited potential in other sectors of the economy, it would be foolhardy to ignore the tremendous opportunities for growth and development the oil and gas sector still holds, and the treasures in the mining sector we are yet to fully explore. We have had a few too many years to figure out what works and what clearly does not, and fortunately, these have brought to bear the '7 Big Wins' from the stable of the Ministry of Petroleum Resources. Designed to properly capture the 7 thematic areas that have plagued the sector over the years - policy and regulation; business environment and investment drive; gas revolution; refineries and local production capacity; Niger Delta security; transparency and efficiency; and stakeholder management and international coordination - this roadmap will frame conversations within the oil and gas space, and will feature squarely in the 6th Sustainability in the Extractive Industries (SITEI) Conference by CSR-in-Action.

With the theme, 'Building Local for Global', SITEI by CSR-in-Action will align with government, and focus on developing and standardising structures that will allow for increased local participation and inclusive growth within the oil and gas industry. The annual conference will again bring together industry experts and thought leaders from diverse backgrounds to proffer solutions for the deliberate development of infrastructure and technical capability, as well as the utilisation of Nigerian human resources, material resources and services in the exploration, development, exploitation, transportation and sale of oil and gas resources.

Granted, the message of 'local content' has been touted for many years now, with minimal results. The creation of the Nigerian National Petroleum Corporation (NNPC) quickly comes to mind as one of the measures expected to increase local capacity by raising oil production. However, the focus of the NNPC was diverted to collecting revenues from International Oil Companies (IOCs) in Nigeria instead, rendering it unable to fulfill its mandate. Fortunately, steps are being taken to remedy the situation, including the unbundling of the Corporation as stipulated by the recently passed Petroleum Industry Governance Bill (PIGB) - the legal framework for undertaking sweeping reforms in Nigeria's oil and gas industry.

Ultimately, we must come to the point where we recognise and harness our capacity to revolutionise the sector and create tangible results; and that is the avenue that SITEI provides. By encouraging local ownership of both talent and infrastructure through a diverse multi-stakeholder approach, we can build the propensity to increase efficiency, effectiveness and transparency in the oil and gas sector. Over time, it has become apparent that active participation from all concerned stakeholders is crucial to effectively manage priority issues - especially those presented by the 7 Big Wins. If we will expect to see growth in leaps and bounds by 2019 - as proposed - we must take advantage of every avenue that allows for critical consideration of these issues, and highlights immediate areas of need.

This July, CSR-in-Action will, therefore, partner with notable organisations like the Nigeria Extractive Industries Transparency Initiative (NEITI), Federal Ministry of Petroleum Resources (FMPR), Federal Ministry of Mines and Steel Development (FMMSD), Nigerian National Petroleum Corporation (NNPC), Petroleum Technology Association of Nigeria (PETAN), Miners Association of Nigeria (MAN), Ford Foundation, amongst others to host stakeholders to two days of expert analysis, strategic networking, focused problem-solving, and progressive policy guidance that will provide both the insight and foresight to truly move the extractive industries forward.

Since inception in 2012, SITEI has been solely dedicated to facilitating the active participation of various stakeholders from the private and public sector, academia, civil society, and media in building a thriving extractive sector. We have been blessed with numerous natural and human resources, just waiting to be harnessed and effectively utilised. With the right policies, procedures and processes clearly spelt out and followed through strictly, we can develop abundant capacity to construct refineries - and increase in local production, create thousands of jobs, acquire oil fields, expand the sector, and increase overall contributions to Nigeria's Gross Domestic Product (GDP). When we then think of the ripple effects of the success of the oil and gas industry on other industries with which it has forward and backward linkages, the prospects are simply too valuable to go to waste.

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