 This is the other breakfast in Plastivia Africa. We're looking at the new NNPC as it's been unveiled by the President. We have an economist who joins the conversation, Gospel Billy. Thank you for joining us this morning. Thank you for having me. Well, a bit of a background to it. 44 years after inaugurating the Nigerian National Petroleum Corporation, the NNPC in 1977 asked the Cornell in the Nigerian Army and Minister of Petroleum Resources. President Mohammad Buhari again has unveiled the Nigerian National Petroleum Company Limited, the NNPCL. An exercise which sees the NNPC officially transiting to a limited liability entity in line with the Provision of the Petroleum Industry Act, that's the PIA. With a change in structure and the company would be regulated in line with the Provision of Companies and Allied Matters Act, that's the comma. NNPC Ltd will operate as a commercial independent and viable national oil company at par with its peer around the world to sustainably drive and deliver to value to over 200 million shareholders and a global energy community while adhering to its fundamental corporate values of integrity, excellence, sustainability. And while the country's oil and gas industry lost about 50 billion dollars worth of investment, that's between 2015 and 2019 according to the report. As they said, 4% of 70 billion dollars investment in flowing to Africa's oil and gas industry came to Nigeria, even though the country is the continent's biggest producer and largest reserves. Well, Gospel Obele, an economist joins the conversation. Once again, thank you for being part of the show. Thank you for having me. Good morning. So let's start on this note. What do you make of this development? Well, the perspective is actually to enable the PIB to get correctly implemented and also within the context of changing realities in the oil and gas sector. We've seen that there have been critical changes happening recently in the global oil and gas industry. And from top of mind, it makes sense for the institution to also evolve in its brand and its processes to also identify with these changes as well. Okay, I'm also looking at it now. The question that a lot of people have asked is what does this mean to the industry, the petroleum industry, and what does this really mean in real time to Nigerians? Well, we'll note subsequently as time goes by, because it's a developing story, the conversation basically is if really the industry from the mentors would also evolve with the change. It's one thing to brand institutions and that's it for the institution to take a new level of leadership, governance, process, and improvement. So that's a different conversation entirely. So maybe by the next six months we'll be able to tell exactly from an assessment point of view if the details within the institution have also evolved within the context of this change as well. But there's also been some consent, but I want you to also talk about it in a layman's language, you know, the fact that we're getting to understand that, hey, there's a new NNPC, a new identity, and all that's going on. What can one understand? I mean, in common terms, what does this really mean? What does it mean that the government is just seeking for new ways to execute the Petroleum Industry Act, which will mean the ability to decide to get more people to play in the oil and gas industry, ensuring that major reforms or major changes can be well executed in the industry. And also making sure that the quote-unquote oil side of the Nigerian economy can really develop for what it is. I mean, being a fact that we have about six refineries, there are conversations on how to position the production state to become more relevant within the mix and all of that. So taking up that holistic reform would also need some kind of a stark cleansing. However, the concern is if a rebranded NNPC will be quoted to a stark cleansing, we don't know. So would you say that with a rebranded NNPC that the issue of not functional refineries would be a thing of the past? Does that take care of the problem that we will be able to refine our crude and don't have to improve? Or is it reported after exporting it? It doesn't take care of the problem. Even if you do not rebrand the NNPC, these are reforms that must happen. It has nothing to do with rebranding or re-opening a new NNPC and all that, you know, refineries reforms and all of that are a function of government, fiscal policy, you know, and all of the stakeholders, you know, that have different vested interests in enabling that to happen. So until there's some form of agreement on the table to enable that to happen, we may not say right or be there. You can still reform NNPC, sorry, you can still unveil a new NNPC and the refineries are still dead. You can still unveil a new NNPC and we are still struggling with subsidies, struggling with oil, struggling with crude oil processing and all that. So it doesn't in any way mean that, you know, the right is national reform to also happen. It's sure reforms also likely function of the level of governance, the quality of improvement, leadership, and, you know, if the stakeholders are willing to make that vision come to happen. So there are two different things ideally. So what then is exciting about, you know, the unveiling of a new NNPC, the identity and the change that we have really experienced as of yesterday, you know, officially? What then should be exciting or is exciting about it? I mean, the concept of institutional change will be definition and all that is to help the identity, to help the perception, to help the storytelling and to help possibly, you know, self-government in the new life, which is also very, very critical as a first level to reforms, you know, or one of the things you need to do when you are actually trying to reform an institution or reform a practice. So as I was ensuring that the culture and the practices internally or the governance processes and all that are improved, you also want to define the image and all that. So, but my own, my worry about this, it looks as if we are putting the cabinet for the House because we haven't really, really dealt with core reform blocks. And the conversation is how would a new NNPC enable the required reforms, one and two, the ease of implementing the PIB or executing the PIB. So those are the real conversations that need to start happening. But then again, unveiling a new institution or a new identity transition is part of the process in terms of it's an opportunity for the government to recommit its stance towards reforms and growth. Well, so let's talk about some of the issues, just like you have mentioned, some of the issues and consensus have been raised by different stakeholders and, you know, Nigerians generally. It's that it's more like having an old wine in an old skin. There's really nothing new, like it's almost one and the same thing. And the question now is being a commercial entity. Is it possible for the company to source its own enterprise or SBAT, SBAT is consultants, you know, staff without the interference of the government, which is usually hinge on ethnicity, tribe and what have you. We know that the government is still a public, you know, it's still tied, you know, to the government, despite the fact that it's been commercialized. But how do we achieve all of this? Because we know that you still have the same persons running the business. I mean, same government workers, just same as you have with the NMPC. So what difference does this really make? And in all of this, is there a possibility that it has the capacity to go ahead to act, you know, in this light? Yes, that's the expectation. I mean, what you have is for institutions that have been commercialized, you know, and probably branded in that order. Majority of the internet processes may not really change. But the expectation is that the structure is more open to doing business, especially in terms of engaging private sector and international players as it were. If that happens, large enough, you can say, I mean, consultants and all of the required strategy and vision of what would need to happen. But then again, the only nuance to this story that it's a bit unclear is the fact that it's oil and gas. And 80% of the current foreign exchange receipts or foreign receipts come from that sector. So they are still deep-level vested interests. They are still deep-level concerns about many things, especially how the PIA would be executed. So even if, yes, the NMPC may seem to have really branded, but because of the level of bias and the weight of vested interests in the institution, some things may still largely remain. So I agree with you when it's a commission of old wine, old skin and all of that conversation. But the expectation is that this just be able to evolve into newer levels of engagement and execution of the PIA. But some people have actually expressed their doubts in this. And you have not sound different from those who have said this. For instance, you have NEPA. People say you have some commercial ventures or what have you, but there's really nothing to show forth or there's nothing to talk about. It's one and the same thing. So it feels like we're going in circles or in circle. Yes, please. I mean, anybody who has paid attention to how institutions evolve in Nigeria shouldn't expect so much. Because, I mean, if you notice very well, even if you look at power or energy for instance, it's also an institution that is heavily invested by different stakeholders. Once it's an institution that contributes heavily or holds the potential to contribute to an economy, there are deep vested interests or deep powers that control the outcomes. So even when you switch the end quote structure, it's still the same narrative. So I want to also expect much from the new NNPC except to begin to see critical change. Like I mentioned at the beginning of the conversation that it's a developing story. We hope that the required innovation and the required new process or new ways of doing things will be introduced over time. But I hardly doubt that fact because it's a highly invested institution. So decisions will be largely influenced by the key stakeholder interests in the sector. But then again, let's not get it wrong, stakeholder interests can come together for the better good of things. However, the better good of things can be now related to the different conversations if it will be inclusive enough in its outcome. Now, we know that the NNPC has like 49% shares in the NLNG. And now that's been commercialized as expected to be only taxed to the federal government, who takes 39% dividends from the NLNG annually? We're not clear yet because there are other institutions that are invested within the structure of the NLNG. I also think that this is part of what will be evolving as we move into the execution of the rollout of this new initiative as a new NNPC. So there's too many blind spots, which is why I'm starting by saying that in sectors where you have highly invested interests because of the role in the playing economy, you don't expect very clear outcomes and initial state of things. As we evolve into the execution of that initiative, then we can expect some clarity. But even at that, clarity is a function of what stakeholders want you to know. So for now, we can't really, really decipher the entire structure of remittance because even if you say, okay, NNPC is like commercial entities, somehow somewhere in some part of structure and dividends, it still remits money to government. The conversation out there will be taxes. But if you know how economies and institutions work, especially how you invest in institutions, it cannot just be taxes. But then again to develop a story. Well, I like the fact that you constantly say it's a developing story, but it looks as if we're going to be dealing with the issue of tax evasion or also going to be dealing with the issue of lack of accountability because right now we can't really a certain where the 39% would be going to interest at the end of the year, especially with the fact that the NNPC has a share with the LNNG. That's if I got the acronym correctly. So where does this leave us? Should we be excited about this? These are questions that a lot of persons are asking and we're also asking right here and you are not very sure about it. But also right now, what happens with subsidy? Taxpayer will continue to pay taxes. Would there be subsidy? We're looking about four trillion nair for subsidy. Does this even make sense in the midst of this? Alright, the conversations subsidy has been brought from an economic slash safety net initiative to political slash political correctness conversation. And what I mean is I mean, subsidy should have been taken out a long time ago, right? But we have the back and forth around the first asset in the midst of things. You know, they are not ready to take out the subsidy. And the conversation is this. When you take out the subsidy, the cost of living will hike and it will impact on inflation. And it also worsens the state of things currently in the country. So that's a major concern for the political actors because it doesn't make them politically correct. So now to that, I do not forget that we're in a production yet. So the big of the subsidy conversation is that it is not really the conversation. Because if you fix power, you won't have any reason to be discussing subsidy in the first place. And that's because a critical chunk of the majority of those who consume PMS are primarily households and businesses. And that means that if you fix power, households and businesses will be less dependent on PMS. And you won't have to regulate or you will have so much pressure on the demand side or the supply side. And that's the concept that also informs subsidy. So instead of fixing the structural issue here, which is power or energy, they introduce initiatives to sort of like distract and, you know, keep buying time and all that. So the subsidy has to be taken out, but probably it should be taken out in phases. Even the government may not want to take it out now because it may bother heavily on the political correctness of the season and all of that. So it's a very dicey conversation. And I don't think it's something that the institutions are really, really conceding within the context of all of these changes are happening here. I really don't know how dicey that is, especially where, you know, four trillionaires has been budgeted for subsidy in 2022. And it would be from tax payers' money. And some people say that the NNPC has been sold to friends and cronies. Do you think that that's the case? And don't you think that all of this is just a sham at the end of the day? Of course, the subsidy is not a real, real, real 100% real conversation. It's also a very relative argument because who are you subsidizing for after first thing? Second, we've also seen that the price of fuel has also increased slightly over time, plus the fact that scarcity has been involved in the conversation. That's to show you that there's something else going on in the background, you know, and all that. But then again, if the subsidy has been exposed to market prices, that means the amount of supply side should determine what the price is. There will be so much pressure on the average in general. So it's not really a clear conversation because there are many institutional vested interests around that conversation. But like I mentioned earlier, subsidy is only a distraction if really we choose to do what is right, which is fixing the structural issues around power, energy inclusion, and the likes. So but we also look at another thing also that's been making the rounds as the fact that prior to this time, it feels like with the activities going on, we have a first of all scarcity of the product, the petroleum product. At the end of the day, there's also another issue of controversy surrounding the pricing, where there seem to be an increase from 165 naira per litre. We're looking at 117 naira per litre to about 119 naira. Now it's dependent on where you're located. So the price seemed to vary across the entire country. One would think that all with the unveiling of the NNPC, that these are things that you should sort out. I mean, these are practical things that Nigerians are looking at. Should this not solve the major concerns? Should be a fixed price or the product should actually, price of the product should be reduced and life should be smooth for the people? I mean, the fact that the price is not fixed is to show you how volatile that sometimes. And to show you that the real problem is in the inability to correctly govern the value chain. And that we can also correctly govern the value chain where you're not in control of the outcomes. Meaning that you're exporting new raw materials. When these things are imported, re-imported back to you. They are imported as finished goods and you need to buy them fresh, spend new monies buying them. So the pressure of subsidy plus the value chain cost plus the fact that there are a lot of vested interests has been such that the government and the stakeholders are unable to correctly manage all that. And what we are now seeing is that prices are permeating in different states, all right? And the same product has been sold at different prices in different states. So you are reinforcing inflation at a different level, especially at a state level now, you know, and all that. So it's something that it relatively has come to stay if the right actions are not taken by institutions to solve them. And I don't think this rebranding would bring any critical solution to the table because, I mean, if it was about solution and reforms, that would have happened regardless of whatever institutional branding that would be engaged in the moment. And I think that's more critical right now for that giant. Just before we let you go now, you are an economist. Can you quickly tell us what you think should be, you know, the solution to the oil and gas industry? Especially that were highly dependent on this sector for our enemies and survival as a country. So there are two perspectives from my angle. Number one would be to galvanize and pull out stakeholders together and find a middle point of interest. Because without the stakeholders, you cannot cause a level of reform. So pull the stakeholders and agree at a level of interest, what's the common good will be. And within the context of the common good, everybody has a stake on insight. You know, so on to reach that level, we cannot begin to roll out reforms. And that's because whatever reforms you throw out to the table that is not for the common good. All right, that reform will be at the mercy of the stakeholders at the end of the day. On the other end of things, to reduce the pressure on the oil and gas industry, you fix power. When you fix power, there will be less demand pressure. So the reason why you can talk about subsidy, you can talk about the fact that prices are going high in different states at different locations, is because there is a high demand and high dependency on the product or on the sector. So if you relax the pressure or the dependency level on the sector, you now realize that demand will drop and then you can clearly think of reforms and all of that. Another reason why you have a lot of stakeholders interest involved is because a lot of Nigeria's and literally everything you do in Nigeria is hinged on energy. And energy right now is hinged only to oil and gas. You know, so you don't have stable power supply, people need to go to different stations. So once you take that out of equation, it would mean that there will be less dependency on the oil and gas block of the energy need and all of that. So I think the government needs to think of it on both ends, right? Find a common ground for stakeholders to cause the required reform, as well as look at critical ways to begin to fix power so there's less dependence on the sector. Well, thank you so much for being part of the show this morning. Thank you for having me. Well, we've been looking at, you know, everything about the NNPC that's been unveiled, the new NNPC and what it holds for Nigerians and what it really, really, really means. And the fact that a lot of persons have been on the positive orders have been on the other side of the divide. We've probably had from the economists but we're hoping that, you know, government at the end of the day will be acting on the interest. I mean, at the end of the day would be the interest, the interest of the people and that's what it is. What fingers crossed? Let's see how all of this pans out. There's a size of it this morning on the first topic. We'll take a break when we return. We'll be looking at the fact that the President has given the Minister of Education an ultimatum to end the strike. Stay with us.