Meeting Nigeria’s special assistant on petroleum matters

Jan 04, 2004 01:00 AM

by Emma Ujah

Ja'afaru Ali Paki is the special assistant to the President of Nigeria on petroleum matters.
As former managing director of Unipetrol under government ownership, he reveals about the government's privatisation programme for the oil sector in this interview.

Question: Can we meet Ja’afaru Ali Paki?

Answer: Paki is my name -- Ja’afaru Ali Paki. Paki is a small place in Kaduna State, just between Zaria and Kano. I started my working career with the Bendelcol Engineering Corporation, an American Space programme before I moved to Mobil in late 1966. I grew to the rank of management staff, then I left in 1973 to the NNPC where I started as a senior marketing officer. I grew to the level of the deputy manager, working in various places until I was seconded to Unipetrol in 1988.
I was executive director, marketing, with a specific mandate to prepare the company for privatisation. So we started with commercialising the company, then in1992, the company was fully on the ground and 60 % share was sold to the public, through the stock market and government retained 40 %. The company continued to grow steadily such that by 1998, I think Unipetrol share was the highest in the Stock exchange. In 1999, I became managing director and the company sold the remaining 40 % to the core investors, then I stepped aside.

Question: That was when you completed your assignment.

Answer: Exactly, that was when I completed my assignment.

Question: How did you receive the news of your appointment?

Answer: I see it as a challenge. I am coming at a time when the reform of the sector has started or is in place. As I said earlier, I was part of the reform because privatisation is a basic aspect of the reform. The down stream sector is now fully deregulated and we are moving further to reform. So the issue of petroleum products is behind government's decision.
There have been so many issues in the country, which have been distracting the government. If you remember very well some years back, rice used to be an issue, sugar used to be an issue, but today, it is a different matter. All things being equal, we want the oil industry to be fully deregulated, private sector driven so that the benefit realization might be general to other developmental projects like health, water, education and others.

Question: What exactly do you mean when you said the deregulation of the oil industry is entering a more challenging level?

Answer: Yes more challenging because the PPMC for example is going to be unbundled to have more companies. Refineries are to be privatised. Which means more private sector operators will take part. That is what I mean by being more challenging and the overall objective is that the industry will be opened. By so doing, we will attract more foreign investors and we shall be able to have more refineries.
At present, the three or four refineries we have today are certainly not enough. And you will agree with me that government cannot do better that what it has been doing. So we have to leave it to the private sector. The moment we have more refineries, there will be more employment opportunities. As an oil providing country, maybe we shall be talking of exporting refined products that would be value added, rather than exporting crude oil.

Question: You have highlighted government's objectives in the deregulation of the downstream sub-sector. But even after that, according to government, 18 firms have been given licenses, and nothing seems to be happening.

Answer: They would slot their projects because the market was regulated. They couldn't buy crude oil, refine and then sell at a subsidized rate. Every investor will like to recover his cost plus profit. Honestly, that was the reason why they could not establish their refineries. However, with all theses reforms in place, I think the ground is set for private investors to establish their refineries.

Question: Since your assumption of office, have you taken time to open discussions with the licenses on the level of their preparedness?

Answer: We are in the process of opening discussion with them, to find out how far they have gone. And whether there are areas which require government assistance. One major argument of government was that the downstream had to be deregulated in order to ensure steady supply of products. This is still not the case. These things cannot happen overnight. Unfortunately.
But we are hoping that by April, a substantial volume of our product needs would be met by the refineries. Today, we are importing much more than and we have limit facility for storage. About three months ago, the import contact was cancelled. The news is that GMD of NNPC asked for new tender which is just being implemented.
So the product has just started to come. These are teething problems, which are usual in a new thing, but as I said, by first quarter of this year, our refineries will start working and a substantial part of our consumption needs would be locally met.

Question: When I read the GMD's pledge to restore full operations at the refineries, I wondered if there is no reversal in government policy of privatising the refineries early this year.

Answer: There is no contradiction. There was commitment on the part of government before and we are still working on it. Government did not intend to keep the refineries moribund because we meant to sell them when they are ready. Not sell them as scrap. Besides, it is not 100 % of the refineries that will be sold. We are offering 51 % to cover investors. Government will still hold the remaining 49 % equity in the refineries.

Question: Kaduna and Warri refineries have not been working because the pipelines supplying them crude from Escravos where damaged. If the refineries are to work without interruptions, then there has to be peace in the Niger Delta. What is government's strategy towards an enduring peace in that region?

Answer: I can assure you that government is doing everything possible to tackle the Niger Delta problem. We believe that the problem is being put behind us successively.

Question: What is exactly the position of government regarding oil in the North. Is government considering returning to the Chad Basin in search of oil?

Answer: That is also being looked into. At the moment, the adviser (Presidential Adviser on Petroleum and Energy) is receiving various briefs and it's until that is concluded before we make our recommendations to the government.

Question: What informed the introduction of the N 1.50 petroleum tax. How can we say that it is in the interest of the people?

Answer: There has always been tax on the imported products. I think what it says specifically is since the toll gates are going to be removed; the tax will be used for road maintenance. So it is nothing new. The tax has always been there. The only thing is that we are removing it from one place and putting it into another place.
People should show understanding to the reform in the oil industry. It is in the interest of the overall citizens of this country. Andas I said, as we complete reforms, it is expected that more companies will spring up, thereby creating more job opportunities for our people. And we mean to move from exporters of crude oil to exporters of petroleum products.

Source: Vanguard
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