How to grow Nigeria’s economy despite falling oil prices – Arco Boss

Crude Oil pipelines
Crude Oil pipelines

The Group Managing Director, Arco Group Plc, Alfred Okoigun, has advised the Nigerian government to cut down on wasteful spending, check corruption and grow the non-oil sector in order to boost the country’s economy.

Mr. Okoigun, who said this in Abuja, also called for the formulation of policies that would encourage private sector-led investment in refineries and petrochemicals.

While international oil prices continue to wobble with oil-producing nations lacking definitive solution to the crisis, he said Nigeria could leverage on the situation to attain unprecedented growth in its economy.

“The current situation is, therefore, an opportunity for us as a nation to cut waste in government expenditure; judiciously use the lean revenue accruing from crude oil sales; put in place private sector led investment in refineries and petrochemicals; and focus attention on non-oil sectors of the economy to bolster government revenue,” Mr. Okoigun said.

“More importantly, the government must muster the political will to stop the wanton stealing of the country’s crude oil, a matter that has become an international embarrassment for our country.

“Furthermore, government must learn the habit and discipline of saving for the rainy day when another opportunity presents itself.”

Arco Group Plc, one of the leading indigenous oil and gas servicing companies in Nigeria has witnessed significant growth as a result of the nation’s local content policy.

Drawing example from Malaysia, which is not a member of the Organisation of Petroleum Exporting Countries, Mr. Okoigun said that country attained significant growth in its economy by developing the local capability of its people.

He said Malaysia is now one of the largest exporters of skilled engineers and technicians in the oil and gas industry.

With the price of crude oil hovering around US58 per barrel, Mr. Okoigun said global economic fundamentals are not giving industry watchers the confidence that oil price will rally to the pre-June 2015 benchmark in the foreseeable future.

“Nigeria has not sufficiently invested in functional refineries and petrochemical industries, electricity and other infrastructure as well as local capability,” he said.

“The implication is that even the slightest downturn in the international oil market is bound to permeate the entire sectors of the economy and worsen government finances.

“Nigeria must place great emphasis on building local capabilities. If all the petroleum products consumed in the country were locally refined, we will save huge costs, conserve needed foreign exchange, eliminate the probability of fraud in subsidy payments and maybe, generate additional foreign exchange from the export of refined petroleum products.

“Similarly with huge gas deposits, Nigeria has been endowed by nature to generate sufficient electricity for own use.”

While he acknowledged some ongoing reforms in the sector, he, however, advised government to drive the process to a logical conclusion for the benefit of the country.

He urged Nigerians not to resign to fate in the face of the nation’s economic malaise but follow the examples of Malaysia, Singapore, Indonesia, South Korea and India that exploited their difficult situations to grow their economy.

Sharing the experience of his company, Mr. Okoigun noted that when in 2007 the Niger Delta crisis got to a frightening dimension, the expatriates maintaining gas turbines and compressors for one of the International Oil Companies,[IOCs] were evacuated from the site.

“After they left the country, the responsibility to maintain these sophisticated equipment fell on Arco’s engineers and technicians,” he said.

“Because Arco has sufficiently developed local capability through training and capacity building, these young Nigerians kept the plants running in the absence of the expatriate engineers and technicians.

“It was a pleasant surprise that these young professionals performed creditably and they were commended for this feat.”

Also during the Niger Delta crisis, he said Nigerian sailors who were highly qualified like their expatriate counterparts, but were hitherto looked down upon, were called in to crew and manage the vessels.

They creditably discharged the responsibility to the amazement of those who had been skeptical about their abilities.

Today, Nigeria has reduced the operational costs of its vessels by over 40 percent because indigenous operators are now playing major roles in the marine sub-sector.

Mr. Okigun commended the Federal Government for mustering the political will to enact the Nigerian Oil and Gas Industry Content Development Act.

“The law has created the platform for us to address the attempts being made in some quarters to prevent Nigerian companies from taking their rightful places in the Nigerian oil and gas sector,” he said.

“We request that government gives sufficient empowerment to those agencies charged with the responsibility to monitor compliance with the law in order to ensure that the law is implemented without fear or favour.”

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