Addressing Petroleum Sector Crisis

Dr. Ahmed Adamu

By Dr. Ahmed Adamu

Today is the one year anniversary of the historic democratic revolution in Nigeria, when Nigerians cast their votes to install a new government headed by the new amalgamated political party. This was a remarkable turning point in the history of the country. Within a year of this development, people have so far seen changes in some aspects of their socio-economic lives. Even though, the challenges are enormous, the speed of the positive change may not catch up with the expectations immediately. One area that has been of serious concern to Nigerians is the petroleum sector, especially with the recent scarcity of the petrol.  This has affected the lives and wellbeing of the people, as the price of the blood of the world i.e Petrol is up to 117% higher than its regulated price.

The money that people would have used to buy food or to buy medicine or to pay for the bills, they now use it to pay for petrol, thereby denying them access to basic needs of life. People may become poorer as they could not provide for most of their needs, as their savings now go toward paying for the petrol. This most surely worry the government, and will require short term, medium and long term measures for it to be addressed. The government will always have to do better to maintain the trust and loyalty of the people, and people have to be patient and play their own roles, as change never comes easy.

Nigerians actually expect Magic from the ruling party (APC), and it appears it needs more than the magic to handle the complex issues facing Nigeria. And this is why the junior minister for Petroleum said the truth that he cannot perform magic in fixing the shortages of petrol, and that Nigerians shall be grateful for the little they have and endure the hardship. This confession made the leader of the ruling party (Senator Bola Tinubu) to blast the junior minister for Petroleum (Mr Kachiku) for his comment, and stressing that more can be done with much better optimism and better performance, which I could not agree more.

The current shortages of petrol and its erratic price is partly contributed by exploitation of the suppliers, who would rather maximise their profit at the expense of the poor. The government always has its limitation, and the citizens have their own leadership roles. Most of the hardship we go through are largely due to lack of sincerity, selflessness and patriotism from the citizens. Most of the major marketers now import petrol and sell at a price of their choice to maximise profit, and this profit maximization motives is transferred down to the retailers. People would have to accept any price, as Petrol has inelastic demand and it is a necessary commodity. Even though, some of the local marketers cannot access sufficient hard currency in the money market, and they still have to pay more Naira to acquire single unit of foreign currency, and this reduces their capacity to import. Nevertheless, if the marketers adhere to the regulated margins, the price of petrol won’t have reach this level high.

There is apparent disregard to regulation in the Petroleum Sector. If the Price of Petrol is pegged at N86.5 per litre, why is it sold at N188 per litre? Initially, the price was regulated at N97 per litre, but due to the drop in the crude oil price, the landing cost of the litre of petrol also reduced, which motivated the downward review of the price to N86.5. This was to allow the major marketers to make marginal profit. And since the price of crude oil has increased, there is need for the upward review of the regulated price, since there is no funding for subsidy. This will discourage the suppliers from unnecessary exploitations in the name of cost recovery. Therefore, there must be strict adherence to the adjustable and viable price of petrol across the country, and the regulated price shall be benchmarked with the most expensive crude oil market price.

As at last ten days, the landing cost of petrol per litre was N71.49, and the retailer’s margins was just N5/litre, and that of a dealer is just N1.95/litre. Now, one wonders what is the landing cost of the litre that was sold at N188? This shows apparent exploitations and profit maximization.

Fixing and building new refineries have been the critical propositions for fixing the lingering petroleum crisis in the country. Nigeria has the 10^th largest oil reserves in the world and is the 13th largest producer, yet it faces shortages of petroleum products. The investment cost of a refinery that can produce what Nigeria demands of petrol daily is estimated at around N800 billion. If this is too much for government to build, it can then consider a joint venture with the private sector, and by 2019, it will start producing sufficient petrol without the need to import any.

Providing sufficient and affordable petroleum products is the second highest point a politician can score after electricity. There is relative improvement in the electricity supply, the next big call is to ensure adequate supply of petrol and adherence to regulation. Mr Kachiku estimated that Nigerians will continue to suffer for the next two months, which I pray that should not happen, because, as a short term measure, we can use the recovered looted funds to adequately supply the petrol at the interim. The major marketers can even be incentivised to enhance their supply capacity.

The NNPC may not have sufficient storage and distribution capacity to meet the country’s demand, as such, the marketers must be encouraged to be selfless and patriotic and adhere to the maximum regulated profit margin. They should not quantify their profit based on the money that go into their pockets, but how many lives they put at ease, how many businesses they put back, how many lives they saves, and how fast they make the economy grow.  There is need for emergency meeting with all the major and independent marketers to address the crisis within a week.  There should be radical investment in the construction of new refineries immediately, in order to make Nigeria 100% fuel sufficient devoid of the costly importation.

In terms of leadership of the petroleum sector, we know how honest and active Mr President is, and he has the necessary experience in the sector, however, I would strongly advice Mr President to strip himself of the petroleum ministership and appoint a substantive Minister for Petroleum, who will dedicate 100% of his/her attention and commitment to the complex sector. The petroleum sector would require robust attention more than any other sector. We know Mr President is already faced with many daunting tasks. Mr President has been travelling outside the country in order to mend the image of the country and cement new bilateral relationship that would prosper the country, and this has been distractive one way or the other. He is also very busy trying to stabilise the security and economy of the country. As such, he may not has to be so burdened with another challenge that he could easily assign it to someone else.

Mr. Kachiku (the junior minister for Petroleum) who doubled as the Managing Director (MD) of the Complex Nigerian National Petroleum Corporation (NNPC) and who handles most of the Petroleum Ministry leadership roles is already overwhelmed with so many pressing issues in the Petroleum Sector. To make things easy for managing the Petroleum Sector, Nigeria needs a separate MD of NNPC, separate Ministers (Junior and Senior) for Petroleum. Mr. Kachiku should retain his earlier portfolio as MD of NNPC only, and some young competent Nigerians who are very familiar with the current global and local petroleum sector shall be appointed as Ministers for Petroleum.

Dr. Ahmed Adamu,

Petroleum Economist and Development Expert,

Pioneer Global Chairperson, Commonwealth Youth Council,

University Lecturer (Economics), Umaru Musa Yar’adua University, Katsina,

Speech by Dr. Ahmed Adamu during the official Launch of N500 million Youth Entrepreneurship and Students Grant by NYPF in Lagos, Nigeria.

Dr. Ahmed Adamu presenting the speech during the launch
of N500 million YESGrant in Lagos, Nigeria.

Speech by Dr. Ahmed Adamu during the official Launch of N500 million Youth Entrepreneurship and Students Grant by NYPF in Lagos, Nigeria.

on Tuesday 22nd March 2016 at Four Point by Sheraton Hotel Victoria Island, Lagos, Nigeria

I am happy to be here to witness history in the making, it gives me great pleasure to see the dream we aspire comes true. Today, young people are taking the lead to help themselves by themselves. This is what we have been waiting for, to see young people not waiting for what someone or government can do for them, they are now doing something for themselves. This is the real leadership, where young people are saving and sacrificing from their income to help their colleagues and improve their lives through entrepreneurship and educational grants. This is not a loan, but a grant, we must therefore thank and congratulate the Nigerian Young Professionals Forum (NYPF) for initiating this grant. We thank the leadership of the NYPF, especially its founder, Moses Siasia, who has been a Young Politician and Young Professional (YP, YP) for the courage of launching this grant called “Young Entrepreneurship and Students Grant (YESGrant).

I have travelled wide across the world, especially among the Commonwealth Nations, where I have led the young people that numbered up to 1.2 Billion from these countries, and in all these countries, I have not seen this kind of direct youth-led entrepreneurship and educational grants. I am happy that this is coming from my own country. Congratulations once again.

This shall serve as motivation to other young people, so that young people can become real leaders. Like I keep saying, leadership is not about government positions, while other young people are out there spending their resources on sycophant political activities, here we have young people investing on their generation. This should be highly appreciated to encourage and inspire others. This project is exceptional, because it extends further to help students pay for their tuition fees. This project clearly showed that, it is not politically motivated, as no election is taking place right now, and no intention of using it to earn political advantage.

Having appreciated this achievement, I have some suggestions on how to effectively improve on the efficiency of this investment. Since our targets is to encourage young entrepreneurs, then we have to protect them, and make them compete with only local entrepreneurs. This can be achieved by banning importation of all kinds of products and services that Nigeria can produce, so that the competition will be between local producers, which will help enhance the quality of local products.

There is need for deliberate investment on the right psychology and cognition of young people. A self-motivated and productive minds engage in productive ventures even without support. So, the efficiency of this project depends on the cognition and perception of the beneficiaries. If the beneficiaries are after luxury or status, no matter how much they receive, they cannot get out of poverty/unemployment. So the beneficiaries shall develop passion and interest in productive ventures, so that with little support they can reinvest and grow patiently.

This also brings about the need to identify the interest and the choice of the beneficiaries. Without interest, there is no passion, once there is no passion, there is no sustainability. Therefore, before disbursing this money, there is need to engage in an independent survey without the participants knowing the purpose of the survey. This is the way we can have them declare their real business interest, their exact economic condition and their capital base requirement, and once we have this information, the disbursement will be made based on their interest, economic condition and capital scope of their chosen business. There is no need to restrict the selected types of businesses, the choice of the business shall be identified by the applicants themselves.

If this survey is conducted, we can then develop the indicators that we can use to evaluate the success and impact of this project. The emphasis shall not be on the number of beneficiaries, but the number of sustainable businesses created. Similarly, the rural poor applicants who cannot operate the computer or access the internet shall be accommodated. More than 60% of the unemployed are unschooled and from rural communities, so emphasis shall be made to the rural poor and uneducated youth, as they have less propensity to be employed and more likely to engage in crimes.

To beneficiaries, they should not think that this grant is aimed at making them rich, it is provided to allow them start now and grow in the future. They should never assume that they will be rich quick. It took perseverance to succeed. They shall not compete in luxury and status, they should not try to upgrade the standard of their living immediately, and they shall have the culture of reinvestment.

I would like to thank the Heritage Bank for believing in young people and for agreeing to partner with the young people in this project. I congratulate the NYPF for launching this N500 million entrepreneurship and educational grant. Congratulations, we wish you successful disbursement of this grant.

Thank you

Dr. Ahmed Adamu,

Petroleum Economist and Development Expert,

Pioneer Global Chairperson, Commonwealth Youth Council,

University Lecturer (Economics), Umaru Musa Yar’adua University, Katsina,

Youth and Leadership: Necessary Ingredients for effective leadership

Dr. Ahmed Adamu presenting his speech during the inaugural
meeting of YCC-PRO in Abuja, Nigerria.

Speech delivered by Dr. Ahmed Adamu during the Inaugural meeting of the National Youth Centre for Change and Positive Re-Orientation of Nigeria (YCC-PRO), at Stonehedge Hotel, Abuja on Sunday 20^th March 2016.

For us to discuss leadership, we have to know what leadership is and what it is not. Leadership is not about government positions or authority, it is not about labels. Leadership is about action, creating way for others to live to the potentials, doing something to make better the lives of the people, and it is about serving others. So you do not need to be in government for you to be a leader.

It is disheartening that some youth nowadays confuses leadership with government positions, and that is why they spend so much on sycophant activities to acquire government positions. And that is a waste of resource and energy, if they really want to be leaders, with their resources, they can be effective leaders by taking actions to change the lives of people, and to even influence decision makings and institutions through democratic processes. Some may be motivated by the luxury of the government positions, and they become distracted of the real leadership roles when they eventually get there. So, first we have to believe that our leadership roles are not subjected to positions of authorities.

For us to be leaders, we have to go for actions, not positions; we have to go for results, not credit. We should not worry about whose name is mentioned or who took the credit, our aim is to see the objectives implemented. We have to channel our ego toward achieving the general ambition of our country/organisation. So, our country comes first, and once it progressed, our ego is satisfied. The youth should always be wanting to qualify, even if they think they have done so much. Never think you know it all or you are better than the rest, keep learning and then we can be effective leaders. We should forget about personal benefits, even if we have the chance, but we should be concerned about the benefits of our organisation or country.

There are some basic ingredients for youth to be effective leaders, these are categorised in 5 Cs:

The first C is Character: for us to be effective leaders, we have to have good character, we have to be modest, humble, honest, trustworthy, and keep to our promise. Some people think keeping time is exclusive to PMB, which is very wrong, we all have to keep to promise. President Buhari could not have earned the respect and followership if he does not instil the good character in himself. And so, if we have to enjoy the respect, we have to have the good character. Good character is developed, it is not inborn or exclusive to some. So we can start thinking how to develop the good character. We should not stand for personality and politicians, we should stand for the good visions and characters they stand for. We have to avoid being political sycophants, our actions and talks should be issues-based.

The second C is Charisma; Charisma is not about the size of your body or the beauty of your face, it is about how you were able draw or attract people toward you by focusing and working for them. It is natural that people will like those that care for them. So, the charisma is earned, it is developed, and it is not inborn.

The third C is Commitment: Your commitment attract people toward you and believe in you. The measure of your commitment is action. If you engage in positive activity, you are by extension telling people that you are committed, and they will buy into you. With this new national youth movement, we should attract people by our commitment.

The fourth C is Communication: Effective leaders are good communicators, people can only follow you if they understand your message. Therefore, our message has to be effective, simple and targeted to the relevant audience. We cannot talk about reorienting the society and engage in high level publicity to earn political credits, we have to engage in direct communication to our audience, no matter how small is the audience. The impact is what matters, not the coverage. The best way to effectively communicate your message is through action. Action speaks louder than voice.

The fifth C is Courage: Courage is about doing what you think you cannot do and believing in yourself. The limit to what you can achieve is limited to what you think is your limit, and if the decision is by your own thought, which you have control over it, then you have control over the limit you can achieve.

Finally, I want to advice the young people to work as a team, we don’t need thousand youth organisations to address single issue. There should be synergy and merger between youth groups, and this movement (YCC-PRO) has provided space for different youth groups to work together to achieve common purpose. It is important that youth groups are thematic-specific, we should not have so many objectives that we cannot achieve, we have to select a single issue to address. Youth should not form NGO or Civil Society just because they want to hold titles or get money, but to bring change they want to see, and they should not worry about taking the credit.

Thank you.

Dr. Ahmed Adamu

Petroleum Economist and Development Expert

Pioneer Global Chairperson, Commonwealth Youth Council

University Lecturer (Economics), Umaru Musa Yar’adua University, Katsina

UTME fees: How senate got it wrong

By Dr. Ahmed Adamu

Dr. Ahmed Adamu

The Nigerian senate last week agreed to review the Act establishing the Joint Admission and Matriculation Board (JAMB), recommending the reduction of its Unified Tertiary Matriculation and Examination (UTME) registration fees from N5000 to N2, 500. The senate also recommended for the extension of the validity period of the UTME result. No doubt, the senate did this with good intentions to enable the children of the poor afford the mandatory entry examination into tertiary institutions. However, this decision will not serve the desired purpose and would require thinking out of the box, which this piece attempt to do.

First, there is the need to go back memory lane on the need for the UTME itself. Forty years ago, precisely in 1976, there was no Joint Admission and Matriculation Board (JAMB) and then only seven federal universities existed, which individually administered their concessionary examinations before admitting candidates. The military administration under General Olusegun Obasanjo noted that there were some limitations and challenges for this kind of admission system, and there were wastes of resources especially on the part of the candidates during these concessionary examinations. The government then decided to create JAMB to address these limitations.

If JAMB was established to address problems that existed 40 years ago, did Nigerian government ever thought of addressing these particular limitations associated with university discrete admission system? The answer is no. Similarly, the creation of JAMB brought its own limitations and still cannot eliminate the concessionary university entry examinations and its associated waste of resources.

This means that those limitations that JAMB was created to address are still manifesting since Universities still have stake and administer the final assessment of candidate’s suitability for admission. If the limitations associated with the university concessionary examinations were addressed directly then, JAMB would have been scraped for long. Nowadays, for a candidate to go to a University, he/she has to go through numerous (at least five) examinations, and there are charges for each of these examinations, and paying for this charges still cannot guarantee one’s admission. This means, the waste of resources on the part of candidate which the JAMB was supposed to eliminate is even exacerbated now. If a candidate is to be admitted into a University, he/she has to pass his/her school continuous assessment, West African Examination Council (WAEC) or National Examination Council (NECO), UTME, and Post-UTME. This makes access to University extremely difficult and complex, and results to inconsistency in the assessments, and led to denial of access to the tertiary education.

Many believed that passing UTME is by chance. Being an objective test; it may not exactly test one’s depth of knowledge and suitability for admission. Many confessed guessing the answers and eventually getting the required result. Now, UTME has become relaxed to the extent that some candidates interchange computers during the examination, and there were many reported cases of inadequacies and malpractices. In some cases, those that scored higher UTME result do not score good results in Post-UTME and semester examinations.

So, the question to ask is, which of these examinations truly test student’s qualification? In many circumstances, students that acquired good grades in WAEC/NECO still fail in UTME, and there are situations where the reverse is the case. For example, there is a student who has a very good result in WAEC, but failed UTME six times, and had to end up in polytechnic. Similarly, a candidate may pass all the entry examinations, and then perform poorly in the semester examinations.  So, this inconsistency necessitated narrowing the entry examinations to few. So, it is better to select one or two entry examinations and make it efficient and adequate. And UTME should not be considered here, as the need for it does not exist anymore.

The reduction in UTME fees is a welcome development, because there are many students who could not join university because they could not afford to pay for the UTME, and with this reduction, at least half of these students can now pay for the UTME. However, it is not about sitting for the UTME, as in 2015 only 40% of the candidates that applied for first degree (under UTME) eventually secured admission.

This proportion will now reduce as the number of the applicants will definitely increase, as the admission capacities remain unchanged.  For example, in 2015, around 1.5 million candidates applied for first degrees under UTME and only 500,000 eventually secured the admission. With this reduction of UTME fees, the number of applications may reach around 2.3 million, and yet only 500,000 will still get to the university. So, this will add to the frustrations, under-studentships and overstretch of university capacities. Therefore, what we need now is to fix our universities education issues and expand their absorption capacities, so that all the qualified candidates can get into universities and acquire quality education. And UTME cannot truly test one’s qualification.

Some believed that, it is a deliberate effort to make the system complex and make it determined by chance, so as to reduce the number of qualified candidates, because the Universities do not have enough capacity to absorb all the qualified students. So now, by reducing the UTME registration fees, you are by extension increasing the number of people that may likely qualify for admission, and there is no immediate corresponding increase in the university absorption capacity.

So, this will eventually compound the entire issues. Apart from money, other factors play role in denying candidates access to higher education. The first call will be to improve the quality of the education, increase the university capacities, employ more qualified teachers, and then invite more applicants. Of course, the number of entry examinations have to be reduced and made efficient.

Therefore, secondary schools should be strengthened to efficiently examine and assess their students’ qualification at each level up to the graduation, so that, it will be expected that any candidate finishing from Secondary and passing the external examination from WAEC or NECO and passing the Tertiary institution’s concessionary assessment shall be qualified for University admission.

These three examinations (Secondary school’s continuous assessments, WAEC/NECO and University examination) shall suffice. The additional hurdle and extra charges (no matter how little) related to UTME should be eliminated, and this can only be done by scraping the UTME.

Ahmed Adamu, PhD, is a Petroleum Economist, Development Expert and Pioneer Global Chairperson of the Commonwealth Youth Council. He is a lecturer with the Department of Economics, Umaru Musa Yar'adua University, Katsina.