Resources, Dr. Ibe Kachikwu, yesterday, blamed the
continued fall in the value of the naira against other
major currencies on the huge demand for foreign
exchange (FOREX) necessitated by the importation of
petroleum product into the country. According to the
Minister, the sector accounts for between 30 and 40
per cent of foreign exchange demand, adding that the
failure of the nation’s refineries to work optimally has
led to shortfall in the availability of FOREX in the
open market.
Speaking in Lagos yesterday, the minister painted a
gloomy picture of the industry stating that proactive
steps are required to bring Nigeria’s economy back on
positive track.
He said, “We need to get our refineries to work
optimally, in order to inject funds back to the
economy. It is taking us four to six months to go
through processes and bureaucracy even to get
investors coming into the country and inject money to
take the refinery to the point where it is needed.
“And the reality is that unless we do that, the dream
and hope I had was that in 2018 we should begin to
reduce drastically petroleum product import into the
country and in 2019, we should be able to exceed
total local demand, and so, if we can take care of that
alone, the pressure on foreign exchange will reduce.
The foreign exchange conversion rate, the exchange
rate will improve in favour of the Naira.
Vandalism
On vandalism and the impact on the economy, he
noted that between January and June 2016, over
1,600 incidents of vandalism was recorded resulting in
a loss of 109 million liters of petroleum products and
560,000 barrels of crude oil to refineries.
“An additional 1.1 million barrels of oil per day is
required to be produced between now and year end to
meet targeted annual production.” He explained that
compared to the 2.2 million barrels per day targeted
in the budget, the country currently produces
1.56million barrel per day resulting in a shortfall of
700,000 barrels per day translating to 29 per cent
fall. He further added that for the desired
diversification of the nation’s economy to be
successful, “the government will still have to depend
on the petroleum sector to provide the required funds
needed for the growth.”
Cash Call
Speaking further on the sector’s performance in recent
time, Kachikwu, stated that the industry is challenged
by $6 billion Cash Call indebtedness accumulated over
the last five years. He noted that the dwindling
finances at the disposal of government, it has been
unable to meet its part of Cash Call requirement
leading to inadequate financing in the industry, adding
that no investment has occurred in the sector in the
last five years.
Gas Production
The Minister attributed colossal loss of 60 percent
decline of gas production, to the activities of militants
in the Niger delta area. He revealed that between
2010 and 2015, the industry recorded over 3,000
incidents.
According to him about 850 million standard cubic
feet of gas production has been shut in due to impact
of crises and power outage exposure of 2,700 Mega
Watts to 3,000 Mega Watts.
On power
On his part, Minister of Power, Works and
Housing, Mr Babatunde Raji Fashola, stated that the
government continues to work tirelessly to ensure a
sustainable power supply across the country. The
Minister who was represented by the Acting
Managing Director/CEO of Niger Delta Power
Holding Company Limited, NDPHC, Mr. Chiedu
Ugbo, said “the road map we are embarking on is to
develop solar and other renewable energies which will
also play a major role in our roadmap to incremental
power. We have recently signed 14 PPAs for the
delivery of 1,125MW of solar power.
“Other renewable energy projects, such as the
10Megawatt, MW wind plant in Katsina, are also in
various stages of completion.” Continuing, he argued
that “this does not mean we are ignoring our gas
powered plants. Indeed, my team and I recently
inspected the dual fired 215 MW plant in Kaduna and
the 450 MW Azura plant in Edo and both are
progressing very well.
“Other Hydro initiatives such as the 40MW plant in
Kasimbilla, the 39 MW in Dadin Kowa, 30MW in
Gurara and the 700 MW in Zungeru are all in
various stages of construction. Many of these sites had
been abandoned, but workers are now back on site
and work will be completed by the end of next year
on some of them. Similarly, the Gbarain Power Plant
is completed while the Distribution Companies are
equally encouraged to develop and procure Embedded
generation in their areas of franchise. These are the
strategies that we believe will add incremental power
coupled with the expansion of our Transmission
capacity and metering of consumers.