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Opinion

Lubricants And Nigeria’s Economic Future

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BY: COSMAS CHUKWUNONSO NWOBI

Every engine depends on oil, which serves as the heat transfer medium and lubricant for moving parts. It stops wears and damages from happening because the moving parts won’t be rubbing against one another.

The primary consumers of engine oil in Nigeria are those who own cars, generators, enterprises, tricycles, and motorcycles. Diesel and gasoline engines both utilize various grades of engine oil. Diesel engine oil is used to maintain heavy vehicles (diesel vehicles), small and large generators, as well as passenger vehicles (light vehicles). Petrol engine oil is used to maintain passenger vehicles (light vehicles).

The overall annual requirement for lubricating oils across the globe is projected to be 50 billion liters, or 60% automotive and 40% industrial. However, industrial lubricants account for more than 70% of total global gross revenues and profit margins.

According to projections, Nigeria, with a gross domestic product of N150 billion in 2013 and more than N450.37 billion by the end of Q1 2021, is the third-largest user of lubricating oils in Africa, consuming 700 million liters of the substance per year (or 1% of the global demand).

The aggregate profit margins of the blending plants were N45 billion in 2013 and N120 billion in the first quarter of 2021. Their total assets are projected to be worth N20 billion. This indicates that domestic production of lubricating oils meets 75% of the country’s total demand, with imports from specialist marketing companies providing the remaining 25%.

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You might also be interested to know that, over the projected period (2021-2026), the market for lubricants in Nigeria is anticipated to develop at a compound annual growth rate (CAGR) of 1.54%, reaching 300,399.52 kilo tons by 2026. which demonstrates that the market for automotive lubricants in Nigeria is anticipated to grow to $683 million by 2023.

This demonstrates that the significance of engine oil cannot be overemphasized and that lubricant production would be a very profitable business endeavor that would considerably boost Nigeria’s economy.

However, this industry was adversely affected by Nigeria’s slowing economic growth. The 2016 recession brought on by the sharp decline in global oil prices was the root cause of the downturn. Oil prices started the year at $36.76 a barrel and reached a high of $54.06 for the year. The lack of foreign exchange had a serious negative impact on the ability of various lubricants manufacturing companies to conduct business and imposed severe costs on key sectors of the country, which further cascaded into all areas of the economy. Given that many players in the industry imported large volumes of base oil and other raw materials needed to blend lubricants at the time, this meant that the shortage of foreign exchange affected all sectors of the economy.

However, the investment landscape is currently changing and Nigeria’s lubricant industry, if properly managed, will surely triple it’s current position in a few years to come. This is due to large oil marketers taking advantage of the lubricants market’s deregulation and lack of significant government intervention.

I commend the effort of the Nigerian Government so far in reducing import charges for Lubricant Blending plants firmly advocate for the need of a driving and I strongly advocate that more can be done in this area since Nigeria’s lubricant business has great prospects for investors. Should we succeed, early investors will also benefit from pioneer status and a five-year tax break.

I firmly believe that better consumer education, cooperation with transportation companies, increased consumer knowledge, and the provision of higher-quality lubricants at lower prices would help Nigeria’s lubricant manufacturers expand and make more money.

COSMAS CHUKWUNONSO NWOBI IS THE GROUP CEO, REXLUBS & PETROCHEMICAL LIMITED.

Opinion

Petroleum Industry Act: Problems and opportunities

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By Henry Akinduro

In 2021 the then Nigerian President Muhammadu Buhari signed the Petroleum Industry Act (PIA) 2021, bringing to a close a 20-year effort to reform Nigeria’s oil and gas sector, with the aim of creating an environment more conducive for growth of the sector and addressing legitimate grievances of communities most impacted by extractive industries.

A lot has changed in the sector domestically and globally since the reform efforts began. The number of indigenous oil and gas firms has grown, but so has the number of oil-producing countries in the region. Militancy in oil-rich communities, while remaining, has diminished. Concerns over climate change have fueled aggressive efforts to reduce global consumption of fossil fuels—driving divestment from oil and gas by companies, institutions, and countries.

The PIA represents an effort by Africa’s leading oil-producing country to respond to this changing environment. In 2019, the oil and gas sector accounted for about 5.8 percent of Nigeria’s real GDP and was responsible for 95 percent of Nigeria’s foreign exchange earnings and 80 percent of its budget revenues. In addition, because the law is far-reaching in its remit, it is complex and not easy to summarize.

If properly and vigorously implemented, the PIA can represent the gold standard of natural resource management, with clear and separate roles for the subsectors of the industry; the existence of a commercially-oriented and profit-driven national petroleum company; the codification of transparency, good governance, and accountability in the administration of the petroleum resources of Nigeria; the economic and social development of host communities; environmental remediation; and a business environment conducive for oil and gas operations to thrive in the country. However, these results are conditional on Nigeria’s political and oil industry leaders overcoming some key challenges that are discussed following the summary of the key provisions of the act.

The PIA overhauls the regulation and governance of the oil and gas industry. The law provides for two regulatory agencies—the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian Midstream and Downstream Petroleum Regulatory Authority, (NMDPRA)—that will be responsible for the technical and commercial regulation of petroleum operations in their respective sectors, and have the power to acquire, hold, and dispose of property, as well as sue and be sued in their own name.

The law commercializes the perennially loss-making state-owned enterprise, the Nigerian National Petroleum Company (NNPC), turning it into the NNPC Ltd, a quasi-commercial entity the ownership of which shares shall be vested with the government, and the ministries of Finance and Petroleum shall hold the shares on behalf of the government. Per the PIA, the president of Nigeria will appoint the president of NNPC Ltd as well as heads and members of the regulatory agencies.

Separately, the minister of petroleum, then, will head the industry with a wide range of powers to formulate, monitor, and administer government policy under the PIA.

Importantly, the PIA provides that 30 percent of the profits of the NNPC Ltd will fund a new entity, to finance exploration in other basins in the country (Frontier Exploration Fund). Ten percent of rents on petroleum prospecting licenses and 10 percent of rents on petroleum mining leases are also assigned to Frontier exploration. The act is unclear on whether there will continue to be exploration in existing basins.

The relationship between oil and gas host communities in Nigeria has historically been very poor. The PIA aims to address this problem by creating the Host Community Development Trust Fund (HCDTF) whose purpose will be to, among others, foster sustainable prosperity, provide direct social and economic benefits from petroleum to host communities, and enhance peaceful and harmonious coexistence between licensees or lessees and host communities.

Specifically, the law stipulates that existing host community projects must be transferred to the HCDTF, and each settlor (or oil license holder) must make an annual contribution of an amount equal to 3 percent of its operating expenditure for the relevant operations from the previous year.

The management committee of the trust must include one member of the host community. In addition, the act stipulates a penalty for failure to comply with host community obligations, including revocation of license.

Henry Akinduro is the chairman of Total Grace Foundation.

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Opinion

Garo, Still Available, Accessible-Labaran Dantala

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Murtala Sule Garo
Murtala Sule Garo

 

By Labaran Dantala

In the midst of whispers and speculation, one question echoes through the corridors of Kano’s political landscape: Where is Murtala Sule Garo, the APC’s deputy gubernatorial candidate in 2023 governorship election in Kano? Some party supporters lament his perceived elusiveness. That he is no longer in the public eye. But can this be true?

First and foremost my question is and remains, are we in an election period or electioneeeing campaign period, where you expect to see Garo going round campaigning for his party? But for any right thinking persons, know that, closer examination can reveal Garo’s unwavering commitment to the people, unshaken by the ebbs and flows of politics.

His reputation as a straightforward, grassroots politician with a genuine passion for youth empowerment and inclusion speaks volumes. He deceives not and he doesn’t make empty promises, no matter whose ox is gored.

His independent mind and political sagacity have earned him admiration across party lines. Unlike some politicians, he doesn’t prioritize self-promotion or wooing foreign investors at the expense of local concerns. Instead, he focuses on nurturing the growth of Kano’s communities. Through true inclusion of women and youth in politics and governance.

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Accessibility and approachability are hallmarks of Garo’s leadership style. He maintains meaningful relationships with supporters and admirers, eschewing the trappings of power for genuine connections. You can reach out to him, with or without an appointment, and expect a warm reception.

His strength lies in his ability to mobilize women and youth without fanfare or social media posturing. His humility and sincerity make him a hero in Kano politics, transcending party affiliations. This young leader’s commitment to humanity, not personal gain, sets him apart.

No empty promises or deceitful tactics for Garo. He’s a pillar in Kano politics, and his influence extends far beyond his party. His legacy will endure, built on honesty, respect, and genuine connection with the people.

Garo’s authenticity has earned him loyal admirers across the political spectrum. When he sneezes, real politicians take notice. His unwavering dedication to the welfare of Kano’s citizens has created a ripple effect, inspiring a new generation of leaders.

The whispers of criticism fade into the background as his actions speak louder than words. He walks among the people, listening to their concerns and offering solutions. His door remains open, welcoming those seeking guidance or support.

Murtala Sule Garo’s story serves as a testament to the power of selfless leadership. In an era of politics-as-usual, he stands out as a beacon of hope. His unwavering commitment to the people will forever etch his name in the annals of Kano’s political history.

As the dust settles, one thing becomes clear: as people wrongly perceive that he is absent from the spotlight, which I vehemently reject, that also doesn’t equate to absence from the scene. He’s working tirelessly, building bridges and fostering growth. The people know it. The politicians know it.

And when the history books are written, Murtala Sule Garo’s name will shine brightly, a hero of Kano politics, fused in the real understanding of integrity, humility, and unwavering dedication to the people.

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Opinion

Celebrating Governor Abba Kabir Yusuf: A Champion for Education-Hotoro

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By: Salisu Yahaya Hotoro

Education stands as the cornerstone of societal progress and individual empowerment. In an ever-evolving world, the role of teachers and educational policy cannot be overstated. It is a challenging endeavor requiring vision, dedication, and an unwavering commitment to nurturing the intellect and potential of future generations.

Today, I pause to celebrate and congratulate Governor Abba Kabir Yusuf for his remarkable achievement in receiving the Teacher Friendly Governor award, a testament to his significant contributions to the field of education.

Governor Abba Kabir Yusuf’s recognition as a Teacher Friendly Governor underscores his unwavering commitment to advancing the education sector, with a particular focus on the welfare and development of teachers.

This award is not only a personal accolade but also a reflection of the positive changes his governance has brought to the educational landscape. By fostering an environment conducive to teaching and learning, Governor Yusuf has set a benchmark for educational leadership.

At the heart of his educational initiatives lies a deep appreciation for the vital role of teachers. In many regions, teachers are often undervalued and under-resourced, facing numerous challenges that hinder their ability to deliver quality education. Governor Yusuf has worked tirelessly to address these issues, implementing policies that enhance teachers’ professional development, provide better resources, and ensure competitive compensation. These efforts not only recognize the pivotal role teachers play but also aim to attract and retain dedicated educators.

One of the hallmarks of Governor Yusuf’s administration has been the prioritization of teacher training programs. By introducing comprehensive professional development initiatives, he has empowered teachers with the latest pedagogical skills and innovative teaching strategies. These programs ensure that educators are not only well-equipped to adapt to changing educational needs but are also able to inspire and engage students more effectively. Through workshops, seminars, and continuous learning opportunities, Governor Yusuf has fostered a culture of growth and excellence within the teaching community.

Equally important is Governor Yusuf’s commitment to improving the learning environment for students. Understanding that quality education requires more than just skilled teachers, he has invested in school infrastructure and educational resources. From building new classrooms and renovating dilapidated ones to providing modern teaching aids, his administration has worked to create safe and conducive learning environments. These improvements reflect an understanding that education is a holistic experience where both teachers and students thrive when provided with adequate support.

Moreover, Governor Abba Kabir Yusuf has placed a strong emphasis on inclusive education. Recognizing the diverse needs of students, his policies have aimed at making education accessible to all, including marginalized and underserved communities. By promoting inclusivity and diversity within the educational system, he ensures that every child, regardless of their background, has the opportunity to learn and succeed.

The Teacher Friendly Governor award serves as recognition of these substantial efforts. It acknowledges the effective policies and programs led by Governor Abba Kabir Yusuf that have had a tangible impact on the educational community. The award also serves as an inspiration for other leaders to emulate his dedication and approach to fostering educational development.

In congratulating Governor Abba Kabir Yusuf on this significant achievement, it is essential to also acknowledge the broader implications of his work. Education is a cornerstone of societal advancement and economic growth, and by prioritizing it, Governor Yusuf is contributing to a brighter and more prosperous future. His leadership exemplifies how education can serve as a catalyst for change, empowering individuals and strengthening communities.

As we celebrate Governor Yusuf’s achievements, it is a reminder that effective leadership and a commitment to education can transform societies. His innovative and compassionate approach to governance sets a powerful example for others to follow. I extend our heartfelt congratulations to our able Governor, a true friend of teachers and a visionary leader committed to the advancement of education. May his continued efforts inspire positive change and nurture the minds of generations to come.

Salisu Yahaya Hotoro
Senior Special Assistant on Social Media to H.E the Executive Governor of Kano State.
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