PEGASSAN Seeks Strategic Shift on Divestments by IOCs as Local Investors are Bedeviled by Paucity of Funds

……Wants FG to Acquire More Equity Stake in Dangote Refinery….

………by Ben Ndubuwa……..

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has said that the growing trend of divestment by International Oil Companies (IOCs) in Nigeria, needs strategic shifts that prioritize local empowerment and innovation.

PENGASSAN cautioned that while divestments can present opportunities for the Nigerian economy, they also pose significant risks. The Association expressed worries that most of the local investors that are beneficiaries of these divestments are bedeviled with paucity of fund to engage in the development of the assets they acquired which most time lead to the depletion of the assets. Consequently this they said has continued to reduce the nation’s daily crude oil output.  

The President of PENGASSAN, Mr. Festus Osifo while addressing journalists, Tuesday on the communique of the PENGASSAN’s 3rd edition of PENGASSAN Energy and Labour Summit (PEALS 2024) with the theme, “The Future of Nigeria’s Oil and Gas Industry: Energy Mix, Energy Security, Artificial Intelligence, Divestment, and Crude Oil Theft,” said that these divestments had raised concerns not only on declines in production levels but also potential reductions in foreign direct investment and loss of technical expertise.

Osifo pointed out furthermore, that the economic, environmental, and climate change implications of these divestments could lead to job losses, as a result, trade unions are now negotiating protective measures for workers.

To address these challenges, PEGASSAN put forth the following recommendations:

1. Implementation of a Comprehensive Divestment Framework: It was recommended that a thorough divestment framework under the Petroleum Industry Act (PIA) be strictly adhered to, guiding asset divestment by Licensees and Lessees in the Nigerian Upstream Petroleum Sector.
2. Gazetting Current Framework: In the interim, the current framework established by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) should be gazetted for full implementation until amendments to the PIA are enacted.
3. Job Protection System: The government was urged to develop a job protection system to safeguard employment for Nigerians in the wake of divestments.
4. Memorandum of Understanding (MOU): An MOU should be signed between divesting companies and trade unions to ensure job protection and enhance worker welfare.

PEGASSAN then calls for collaborative efforts to navigate the complexities of divestment while maximizing local benefits and minimizing adverse effects on the workforce and the environment.

Meanwhile, PENGASSAN, called on the Federal Government to stabilize the exchange rate which it says is the main problem the economy is facing today It says no country floats its currency the way Nigeria has done to the Naira and will not run into trouble. “No country allows its currency to floated anyhow”

On the issue of Dangote and the Nigerian National Petroleum Company NNPCL, over price, the PENGASSAN boss said disagreement came between the two parties when Dangote Refinery asked  NNPCL to pay a premium on the petrol it is going to sell to NNPCL. NNPCL refused, adding that the government is still subsidizing a litre of petrol with about N250  per litre.

He added that Dangote Refinery as a business concern was right to have made such demand because it is in business to make money.

According to him, the refineries should be modeled after the Nigerian Liquefied Natural Gas (NLNG) model, which he said has been successful.

“Ramping up efforts to make the nation’s four refineries work; once operational, the government should divest majority shareholdings and own at most 49% of the shareholding in the four refineries. Core investors will be brought in to take the 51% as applicable in NLNG”.