Dr Ade Afolabi is the Chairman/ CEO, Dansaki Petroleum Limited, an integrated oil company, aiming to grow from upstream through the midstream to the downstream. He is a Fellow of the Nigerian Society of Engineers, Fellow of Nigerian Institute of Mechanical Engineers, and the past council chairman of Society of Petroleum Engineers. In this interview with Simon Ugwu, he spoke on issues affecting the Energy Industry – Excerpts…
The Federal government targeted 7,000 megawatts of electricity generation by end of 2016. The year remains two weeks to go and generation average only 3,000 megawatts. Will this be achievable in 2017, and what will the government do to surpass this target?
We are seeing an increase in production and reduction in the case of pipeline vandalism. The 7, 000 megawatts is achievable come 2017. The government should encourage gas to power producers. So that we can generate more power supply, so also the Discos should also improve revenue collection. They should embrace the Information Technology (ICT) being used now. It will help. Eko Disco has embraced the technology and it is working for them.
Electricity generation and distribution companies said huge debts amounting to about N1 trillion militate against their anticipated performance and the chunk of this debt is owed by government ministries, departments and agencies. How will this be addressed in 2017?
They make enough provision for the distribution of oil and gas production. The government has to do something regarding settling the debt owed by its ministries, departments and agencies. It is very vital if the government wants a turnaround in the industry.
Vandalism of power equipment and energy theft through the bypass of meters and illegal connections has become a challenge. What is the way out?
The challenge can be overcome through the use of the latest technology in place. They need to get inspectors to follow through not just relying on information technology and sit back in the office. The inspectors should be goIng round to check the prepaid meter so that nobody bypasses the meter.
Oil production stands at 1.6 million barrels per day while targeted production is 3 million barrels. What can the government do to optimize production in 2017?
The industry is built on respect for the right-of-way. They should ensure that nobody passes or encroaches on the right-of-way. Anytime you allow squatters to encroach, they may build on the pipelines. The government has to devise a means that will prevent people from going close to the pipelines, using the Nigerian Security and Civil Defense Corps. Anybody who goes close after all these efforts to deter people from going close should be arrested.
When there is fall in the oil price as being experienced now, Nigeria is hard hit. How can the government overcome this challenge in the future?
If there is a decline in the price of crude oil, we should refine locally and also promote energy means. The refineries should be maintained, and also build new ones.
The Federal government through the Nigerian National Petroleum Corporation (NNPC) still subsidizes petrol, do you subscribe to the full deregulation of the downstream?
Yes, I do subscribe to full deregulation of downstream. Sometime in the past, around September 2015, petrol sold for N87 or N90 per litre without subsidy. The problem started when the issue of vandalism surfaced again. We couldn’t export the crude oil and we couldn’t refine locally. If we are sure of maintaining the present refining capacity, and we are anxious about the use of energy and build more refineries, we will overcome the challenge.
Can you talk about or assess gas development and utilization and gas-to-power in 2017?
I think there is an enabling environment in gas production as there is willing-buyer, willing seller. It is just like crude oil now as we buy at the international market price. If it continues like that, it will encourage production.
Sourcing of foreign exchange and the exchange rate have become major challenges to marketers and others importing. How can the issue be addressed?
We really have to make them confident about the business they are into. The government should convince the public that it can provide the foreign exchange for their business.
Are there more investments in the Oil and Gas industry? Are indigenous companies getting the benefits of divestments by the International Oil Companies (IOCs)? Why are the IOCs divesting?
The International Oil Companies (IOCs) are divesting because of the Petroleum Industry Bill (PIB), which is yet to be passed. It keeps lingering at the National Assembly. It is creating uncertainty in the business environment. Also, the vandalism and oil theft contributed to the issues that made IOCs divest. The government should create the enabling environment. The news emanating from those companies that bought from the IOCs are not encouraging. It is like they jumped into the transaction without proper feasibility studies.
What is the state of the search for oil in the Chad basin and in the North, generally?
We have seen those who started the search before Nigeria and they are still searching. So the government should not give up but I don’t want the government to put all the resources there.
The vandalization of oil and gas pipelines has been a major challenge, costing the nation trillions of foreign exchange. How can the problem be addressed?
We have to improve on the preventive mechanism in order to determine the spillage soon enough to be able to stop it. There are ICT controls that will tell you when you are losing oil from the pipelines.
The Military Joint Task Force (JTF) has been destroying illegal refineries. What can the government do to occupy those idle hands come next year?
There should be public awareness to enlighten people to be law abiding. They should not engage in illegality because it doesn’t pay to be breaking the law. There are gainful ventures they can go into and they will be earning income from there.