Engineer Sunday Adebayo Babalola, who currently is Director of All Grace Energy is also a retired Deputy Director of the Department of Petroleum Resources and a former acting Managing Director of Belemaoil Nigeria Limited.
He in this interview with STANLEY JOHN, he profers suggestion on some challenges in the oil industry as well as the on the Petroleum Industry Bill recently passed by the National Assembly.
Some prominent leaders from the Niger Delta have decried a section of the Petroleum Industry Bill which tend to regard communities where oil pipelines passed through as oil producing communities. Don’t you think this developmemt may resume militancy and destruption of oil production, which may impact negatively on Nigeria’s economy?
Anything can happen really because the people that you think that do not know now may eventually wake up. We have seen it happen before. In the 1960s, nobody talked about oil being produced in his or her backyard and that he or she needed something or was impacted by it. In the 1970s, it was the same thing. In the 1980s, rumbling started with Ken Saro-Wiwa and co. Then militancy went haywire. Today, we are still battling with it.
What, rather, we can do is to encourage other states to also develop the mineral resources in their areas. Because if you do it for them with regard to oil; for solid minerals, you should also do it for others, make them host communities, make the same law and make them enjoy the benefit of the host communities. In spite of the abundant resources in Nigeria, it is sad that we are all focused on one resource: oil.
Should the National Assembly then review that aspect?
Yes. There should be a review of the aspect of the PIB which gives the communities where pipelines passed the status of oil producing communities and make only those regions where the oil is being produced enjoy the benefit of oil production which is meant for oil producing or bearing communities.
What has always been in existence is oil producing states. It did not say pipeline states or petroleum depot states. It is oil producing, let it be oil producing, so when we have diamond producing, we also have diamond producing states getting their own portion. So that aspect and others should be reviewed.
What they have done is actually encouraging laziness. States have resources that nobody is even talking about and so you find foreigners exploiting those things illegally, using the local people while we are focused on oil.
Host communities should have the effect that something is being produced from their backyard, then the restiveness will go down. I know communities that are enjoying, for example, light produced from their stations, there are communities enjoying water produced from their stations and some communities that their roads are good and you will never hear of any disruption of production activities and no spillage. What the PIB is trying to address is that but now it has brought this primordial instinct that the thing must reach my side as we are now making the whole country a host community.
It says oil producing states, it did not say pipeline states or petroleum depot states. It is oil producing, let it be oil producing, so when we have diamond producing, we also have diamond producing states getting their own portion. So it should be reviewed.
Since there are fears that making communities where pipelines passed through sort of oil producing communities could reinvigorate militancy, what is the best way to address this situation?
It is simple financial restructuring. The whole thing is about money. You are producing something from my backyard and I am not getting anything, nobody will feel good at that. Financial restructuring is very key but the governors are afraid of that, the Presidency is afraid of it. The governors are afraid of it because some of them got to that position without knowing what to do with the position. So they can not think outside the box on how to make money for their states. Today, only Lagos, Rivers and few other states can stand as a state without federal revenue again.
Some states can not stand on their own. So the governors can not support financial restructuring. The FG also will not support it because they take almost over 50 per cent, or more than that of the revenue.
What do you mean by financial restructuring?
It is what exactly was in the 1960 and 1963 Constitution. Before then we had a constitution that gave the regions autonomy. They made their money but paid tax to the FG and they were able to live comfortably and did something for their people. When people pay taxes, they will make demand and hold the government accountable but the governors do not want to be held accountable. When people pay taxes, they will demand to know how you are using their money. That is why people can not embezzle or misappriopriate money in the United States of America (US). When the US government is awarding a contract, the terms of the contract will be done in two ways. When a contractor does not deliver on time, the contractor will start paying the government, so every contractor will want to deliver on time. And if the government owes the contractor, the government will start paying. So the government will want to pay so that they will not owe and the contractor will not want to renege on delivering the contract.
What should be done to ensure harmonious relations between host communities and oil companies?
One of the ways is to give the host communities some percentage of the revenue which the PIB is addressing, although there is some wrong aspect of it because when you make everywhere the oil or products pipeline passes a host community, it becomes very laughable. When you give host communities some percentage, that is why people sign General Memorandum of Understanding with host communities and they are able to use that general memorandum to carry out some development. The host communities that are enjoying it are those that ensure monitoring and security of these facilities because they know that any disruption will also disrupt their lives. We have started in the right direction but wrongly. Wrongly because when you make every state or community that pipeline passes through or that has a depot, a host community, it might be a good thing for the affected community or state but is it also a good thing for the oil producing communities or the Niger Delta? Government and the companies should do something to enhance the environment of the host communities. You hear of the money going through NDDC, and there are allegations that the impacts are not being felt.
Host communities should have the effect that something is being produced from their backyard, then the restiveness will go down. I know communities that are enjoying for example, light produced from their stations, there are communities enjoying water produced from their stations and some communities that their roads are good and you will never hear of any disruption of production activities and no spillage. What the PIB is trying to address is that but now it has brought this primordial instinct that the thing must reach my side as we are now making the whole country a host community.
Pollution is another menace of oil exploration and production, which has impacted negatively on many host communities. What should be done to address it?
The regulators should also be up and doing while the companies should find means of becoming energy efficient. You have to remember that about 84 per cent environmental pollution is not because of the activities of the company. There could be errors and oil may spill due to the errors. I do not disagree with that. But mainly pollution is based on people interfering with the activities of the oil companies and breaking pipelines. There is unconfirmed insinuation or allegation that sometimes they break those pipelines to cause environmental degradation so that they can start talking with the companies and the companies start to negotiate. Less than 20 per cent of the degradation is caused by operations. The remaining is caused by people or external parties tampering with the operations, breaking the pipelines to siphon some crude and other activities. So what can they do? They have to make their system more efficient like putting pipeline sensors so that once somebody tampers with it, it alerts instantly, and you shut down before much damage is caused. Because those pipelines are actually pig both to clean them and test their integrity. There are a lot of things they do that make them monitor the systems but sometimes when the pipeline is tampered with, it takes time for the pressure drop to be noticed and a lot of spill has already taken place, for instance.
What is your advice on the rumour that pump price of petrol could be increased though the government has debunked it?
Government should not be fixing prices of white products. Water will eventually find its level. When you start increasing and decreasing prices, that is when people will start doing all kinds of things and be cutting corners. Market forces will determine the price. Government should not even be talking about the price. They should be regulating and ensuring that our environment is good enough for businessmen and women to come in and invest their money. When I read that it may rise to N1,000, I felt very embarrassed. Because in the first place, you are making people to be afraid. The second reason is that while the price has not reached N1,000 people will start hoarding.
People will start doing unholy things to cut corners. Such should not come from the mouth of government. In the US, the price of petrol (or what they call gas) is now about $4, rising from $1 since Joe Biden came in. They did not announce the price, the market forces are there and you will see that it will fall when things change. The same thing happened to the telephone industry. It is sad they said it but it is also good that they denied it. But people will say they are only denying it because of the outcry, that they will still do it so you will see people acting on that without doubt. So, I will advise the government to actually let the market determine the price, that is deregulation. Telling us that the price will be N1,000 soon is not deregulation.
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