Financial Energy Review
…………by Ben Ndubuwa……
The Petroleum Economic expert and the Executive Director at the Emmauneul Egbogah Foundation Prof. Wunmi Iledare has called for the utilization of petroleum wealth for sustainable development. Prof. Iledare said there should be a shift away from sentimental approaches, emphasizing that effective governance, transformational leadership, and strategic manpower management are essential for harnessing Nigeria’s abundant oil and gas resources.
In a closing remark, Tuesday, at the 13th Emmanuel Egbogah Legacy Lecture Series held in Port Harcourt with the theme “Framework for Utilizing Petroleum Wealth for Sustainable Development Prof. Iledare said despite Nigeria’s vast gas reserves, the country faces persistent energy security deficits that undermine the sustainability of its economy.
“While economic populism makes society to feel good, energy security deficits delimit the ability to sustain a functioning economy over the years in Nigeria despite abundant gas resources and reserves.
On the ongoing debate on petroleum products affordability and availability, it is important to note that petroleum products are not public goods. They, unlike public goods and services, have rivalry in consumption as well as exclusivity. Thus, the pricing of petroleum products must be appropriate for availability and sustainable economic and national development for all” he said.
This paradox he noted is compounded by the ongoing debate on the affordability and availability of petroleum products. He argued that petroleum products should not be treated as public goods since they have both rivalry in consumption and exclusivity, necessitating appropriate pricing mechanisms to ensure availability and contribute to sustainable economic growth.
According to Iledare, Nigeria’s historical approach of providing subsidized consumables has been criticized for contributing to the collapse of essential sectors, including governance, energy infrastructure, health, and education. He insisted that the country’s petroleum wealth should instead be invested in building robust educational and healthcare systems and sustainable infrastructure to generate long-term benefits for future generations.
He pointed out that the nation currently operates a dual system that favors the rich, with wealth often concentrated among those who do not necessarily create value. This has led to a stark divide where the poor are increasingly marginalized, with limited access to the economic opportunities that petroleum wealth once provided. As a result, the educational system, once a bridge between social classes, has deteriorated, further entrenching inequality.
The Professor of Petroleum economics cautioned that Nigeria is on a precarious path similar to that of Venezuela, facing potential crises in food security, energy security, and economic stability, driven by inappropriate pricing of petroleum products.
He explained that the current prebendalistic governance, described as transactional and ineffective in promoting sustainable value, is criticized for its lack of efficiency, effectiveness, and equity, thriving instead on unethical practices and falsehoods.
Expressing concern that the structure of Nigeria’s downstream petroleum market has also come under scrutiny, with two dominant players—NNPCL and Dangote Refinery—exerting significant market power. NNPCL’s dominance in both the wholesale and retail markets, combined with Dangote’s position in wholesale, has led to concerns over anti-competitive practices.
“While Dangote Refinery is not a natural monopoly due to the potential for importation as an alternative source, there are fears that NNPCL may attempt to establish a monopsony structure to capture Dangote’s petrol, further destabilizing the market” he said.
Prof. Iledare calls for the establishment of a Petroleum Products Pricing Modulation Committee. This committee, under the supervision of the Petroleum Authority rather than the presidency or Ministry of Petroleum, would be tasked with overseeing the pricing of petroleum products.
Prof. Iledare who was the Ghana National Petroleum Corporation (GNPC) Professorial Chair in Oil and Gas Economics and Management at the Institute of Oil and Gas Studies, University of Cape Coast drew from his experience in Ghana suggesting that the Ghana’s model, which employs apolitical professionals to work with stakeholders in the downstream sector, the committee should be of help to compute market dynamics and data analytics to guide pricing decisions, ensuring fairness and transparency in the sector.
As Nigeria navigates the complex terrain of petroleum wealth management, he pointed out that removing sentiment from the debate on appropriate pricing and focusing on effective governance and sustainable development strategies is crucial for the nation’s future.
