#Nigeria: Make or Break Year 2018; Much Could Go Right As Could Go Wrong.

I remember when vision 2020 was first announced back between 1999-2000 with projections or aspirations that by the year 2020, Nigeria was going to be among the top 20 economies in the world. It did really seem so far from where we stood at that point that it was hard to imagine what that time would ever be like. At the time of this writing, the year is 2018; mission/vision 2020 is just two years away. Although efforts to imagine the year 2020 still remains understandably difficult, with a bit of squinting around the country, we see that we have come some way since 1999. Some of the objectives that the 2020 vision promoted addressed rudimentary societal concerns like increments in workers’ wages, efficient transportation, potable water, improved electricity supply, etc. As of today, the seventh day of January, 2018, well, shall we just say work is still in progress. The vision 2020 would be launched and the execution of the plans that it contains would see both good and trying times. Some of the projects would enjoy some extra boost from the country’s coffers and from the benevolence of the international community and global dedication towards aiding development in the world’s poorer regions – irrespective of how unfortunate it is that in the face of so much potential for development and national wealth, Nigeria as a country has to be ranked in this category. Some projects on the other hand, would be begun and abandoned some way through; some would be frustrated by lack of funding and others could be exemplified as both a means to depict a society’s inability to perceive the big picture and man’s inhumanity to man through what many have come to understand to be sheer avarice. Corruption, maladministration, misappropriation and graft are archetypes which, shamefully so, have come to be associated with the qualities of African leadership. Between Barack Obama’s tongue-lashing of African leaders, instructing that the continent needs fewer strongmen and more in the way of stronger institutions, a statement that was verified by Yahya Jammeh’s January 2017 recalcitrance on relinquishing power after a democratically conducted election saw his time at the seat end in favour of Adama Barrow and; David Cameron’s 2016 proclamation to Queen Elizabeth that Nigeria as a country was “fantastically” corrupt. The plight of development as a function of leadership and an expression of dedication to a vision for a better future in Africa still remains a story with very many subparts, many of which remain grim and tragic. For Nigeria perhaps, in addition to the myriad of socio-political demons that plague many African leadership systems, one veritable reason why the 2020 vision has been so continuously frustrated lies in the leadership’s inability to keep up with the exponential population dynamics with Nigeria adding some 82 million new citizens between the years 2000 and 2016. Perhaps the corruption that plagued the system was only reflecting the population induced frustrations on the part of the leadership. To adapt a conversation from the first episode of the second season of Rick and Morty: one moment, you’re making budgets to look after 100 million people for 8 years, the next [moment], bam! they are mysteriously almost 200 million! All looking to be beneficiaries of the pocket of the same government, financed by the same coffers and resources. The government’s bill for issues like healthcare, education and infrastructure development continues to expand, while the sources of state funding remain more or less constant leading to increased competition within the citizenry for basic amenities and welfare packages. From the standpoint of a biologist, this is something that may be observed in settings as simple as microbial cultures and a harsh reminder that blessings or not, first, too much of everything is still not good and; irrespective of how intelligent and sophisticated we may become as a species, we cannot escape the laws of science and to a lesser extent, economics.

However, in the case of the present, while there still remains a lot of expectations, disappointments and obvious room for improvement, the year 2018 comes with a lot of promise. The Buhari administration since the year 2015 when it first assumed office, launched many ambitious infrastructure development projects which inadvertently sought to continue in the execution of the vision 2020 as laid down almost two decades earlier. 2018 comes as a big year with some of these key projects looking to round off at some point within the year. Below, we outline some of the most critical.

Oil and Gas: once again, at the time of this writing, this particular objective seems like one that has been made as a reminder at a time that reeks heavily of sarcasm – Nigeria is currently experiencing another bout of her ill-famed fuel scarcities. Perhaps the most prominent of additions that 2018 brings is the commissioning of Dangote’s Refinery and one of the first steps the country is taking towards energy self-sufficiency. While time alone would adjudicate the success or constraints involved in an independent but synchronous mid and downstream private sector involvement, the Dangote refineries as they stand today, might lay down a formidable precedent that would suggest that a strong presence, or even a majority private sector constituted oil and gas sector might very well be Nigeria’s best chance at independence as far as this nagging issue of petroleum products is concerned. The Dangote Refineries have been quoted as having an output capacity of 650,000 barrels of refined petroleum products daily. With the understanding that the country currently has a daily consumption of petrol (as one instance) standing at around 30-45 million litres daily, 650,000 barrels (approx. 104 million litres) means a single organisation will be able to meet the entire country’s demand for these products, with enough left over for export. The refinery is also a pivotal project that might see Nigeria, as one projection, become a net importer of crude oil by the year 2020 or at the very least, see the volume of crude produced expand past 2.5mbpd for the first time since 1974. At last, our dreams and the dreams of previous governments, long gone into forgotten years and fading history, has finally come true. The 650,000 bpd capacity certain is commendable, however, if governmental regulation remains dedicated to the ambition of selling refined products cheap to the people (less than N145/l) it might be time to earnestly consider the future of state owned refineries such as those in Kaduna and those Port Harcourt and Warri, which are either outright wasting away or have been rendered incapable of any economic productivity. The Kaduna Plant for example as at 30th of December 2017, was reported as having laid dormant for four months, accruing a loss of almost N15bn in the period while those in the south, working to combined capacities of over 80% in the last quarter of the same year, still pulled down significant losses (around N3bn). Logistics infrastructure especially like transport media and pipelines especially are another issue, the productive use of which might add impetus to the government’s pump price reduction objective or might end up frustrating even Mr. Dangote’s refineries into a nightmare scenario where it imports its crude inputs, refines and sells the finished products outside the country. At a 650,000 bpd output, however if the Dangote Refineries work at 50% efficiency, some 52 million litres of products would still be pumped around the country and this does seem like a really comforting fact.

For the older refineries in the country, perhaps, revamping, expanding their capacities and privatising them would be the next best step as this would prevent the formation of a monopoly in the oil and gas sector. While this adds to the country’s daily output, for comparability, consider India, a country not especially known for its oil and gas reserves, but one anyway that possesses an output capacity of around 1.3 million bpd (230 MMT) of refined petroleum products, or the US as another, with a combined daily output of 21 million bpd with the implication being: the higher the national daily output capacity, the higher commercial competitiveness and the projected export volume. Additionally, the completion of the refinery does come with some heavy political innuendos for Nigeria regarding her role as a regional power broker and of course for the Dangote Group who in 2015 stated their desire to grow an ability to trade forex to the Central Bank.

A few statements have been on record by government officials stating that the Nigerian Federal Government would be looking to at least partially restrict the importation of refined petroleum products by 2018. Coming off the data from the NNPC however and the apparent difficulty in profitably executing its operations, the older refineries with combined capacities of 445,000bpd wasn’t exactly their point of focus as the government continues to seek investors over to whom, these structures might either be handed over or collaborated with for more efficient running of the enterprise. Dangote’s refinery cost some $17bn and was entirely privately funded; the federal government who has been quoted as “relying on the refinery’s completion to meets its proposed ban on fuel importation”, is generously supporting this enterprise through an open market “policy pledge”. Additionally, Ibe Kachikwu, the Nigeria’s Oil Minister of State, was quoted in October 2016 as saying that the FG was looking to reduce the importation of petrol products by 60% in the year 2018. Should the year eventually run out without major reforms being implemented to the state owned refineries (Kaduna, PH and Warri.) it would become obvious that on this end, the Nigerian Government had no solid plans to improve its own ability to thrive in this sector. Additionally, and as an afterthought, perhaps this period of “scarcity” is one that has been necessitated more by the independent marketers and a last ditch need to make something of a huge profit before the dynamics of the market changes irreversibly by the coming of the Dangote Refineries with the scarcity conveniently being blamed on exchange rates, costs of lifting, increments in the price of crude, winter? etc. with a strong belief that one way or the other, they will  get away with it either through forcing the government to resume petrol subsidies pay-outs or forcing the market to meet their ransom by sustaining low supplies.

The biggest question by far associated with this development, as perhaps, it holds the key to sustaining major infrastructural development that remains so desperately needed across the country is: after so many trials and failures, what did the Dangote Group do right? So much so that the largest single refinery in Africa has taken just around three years to complete compared with decades of promises, aspirations and even more failures on the part of the central government. Was Dangote’s decision to exclusively, privately raise the humungous funding for this project key to its success? And was it easier and more cost effective to build a new refinery from scratch than to take over the state-owned refineries with an ultimate goal of rejuvenation? This leads to an inescapable insinuation where one has to decide if the structures involved or the people who ran them were the real liabilities. Conversely, is it time Nigeria did away ministries of works and power, etc. in favour of privately run corporations who would deliver the associated services or at the very least, permanently relegate them to regulatory roles? And should the government simply bother itself with creating or stimulating a business environment in which these kinds of funding could be privately realised? This comes riding on the wave that Nigeria would require at least $3tr within the next 30 years at current monetary inflation standards, to meet its infrastructural deficit.

Electricity Generation: The issue of electricity generation takes a notable position on the top of a lot of lists if for little else, the mention of the names Mambilla and Zungeru. Since 1982 when the Mambilla hydroelectric generation plant was first proposed, one which was understandably made in efforts to augment the supply from the Kanji hydroelectric plant, it has lingered more in the realm of imagination and abstract good ideas having been knocked on and off successive budgets but having finally secured funding (N9.8bn) as well as imported the expertise to commence the project, it begins officially in 2018, with the construction phase lasting until 2023, with part of its mandate on commissioning being the addition of about 4000MW (from both plants) to the 7000MW national grid. The country has an installed if not functional generating capacity well over 10000MW anyway with the bulk of the problems affecting the power sector coming due to deficiencies in the existing transmission and distribution infrastructural network although this has been an issue that has been actively attended to since the earlier parts of 2017. There are also smaller generating stations coming along around different parts of the country the smallest being Katsina windfarm having a capacity of a modest 10MW and the relatively large Azura power plant in Edo State adding 450MW all expected to go online within the year. 2018 also sees the commissioning of the Dangote Power Plant which for its being attached to the largest single refinery in Africa as a megaproject, is expected to generate 12,000MW of electricity. By the end of the year 2018, with these major additions as well as independent state projects like Lagos’ ambition to add around 3500MW by the end of this same year, Nigeria might very well have an installed generating capacity edging around 30GW; almost three times more than what the country had as at January of the same year and might very well stand a chance at finally solving her power problems and joining countries like China and France in becoming an exporter of electricity.

Transportation: the transportation projects, majorly the rejuvenation of the railways, is a bit trickier to accept. In the campaigns leading up to the 2015 elections, rejuvenated railways were part of the points the incumbent party at the time, PDP, used in furthering its campaign agenda. In other words, the rails have been functional since at least 2012. In the understandable politics of things, the APC, after condemning the railways as being uncompleted and abandoned projects, came in a few weeks later to commission the same rail route (Abuja – Kaduna) they had earlier castigated. Photographs from the event showed the Nigerian President as well as the Governor of Kaduna State where the project was commissioned, in an air conditioned train coach, waving to the people around who had come to bear witness to such a monumental achievement.

The Nigerian Railway Corporation holds the exclusive rights to rail transport in the country. Having been established in the 1800s by the British colonialists, going through at least one round of mergers in 1912 before the amalgamation of the North and the Southern Protectorates in 1914, the railways would function relatively optimally until after the country gained her independence in 1960. From ’64 the corporation would begin a steady decline that would culminate in a 1988 declaration of bankruptcy after which the rail service would have some on and off periods, completely sinking again in 2002 before the attention of the government would be turned to it in 2006 through foreign promises of new locomotives, expanded rail networks and funding. Neither the Nigerian Bureau of Statistics nor the Nigerian Railway Corporation itself were able to provide significant statistics through which the performance of rail networks in Nigeria since the last two decades at least, could be judged, however, according to reports, the schedule of the railway networks would remain erratic and largely unstable until around the year 2012 when regular scheduled runs between Lagos and Kano would resume. With a cumulative network of around 3500km of railways, rail transport in Nigeria has played a minimal role in the Nigerian transport sector, comparable with China, the country with the most expansive rail network in the world with more than 120,000km of rail network crisscrossing the country and almost 6,000 station attending to them. The NRC as at 2015 had in its possession, around 200 locomotives, 75% of which were reportedly unusable; around 480 passenger coaches and almost 5000 freight wagons, with less than half in any usable condition. 2018 however comes with both a new standard gauge line running from Lagos to Kano coming as well as the Lagos – Ibadan rail route coming to completion before the end of the year. Work on the Itakpe – Ajaokuta – Warri standard gauge line is also expected to come into completion about 30 years after the contract was first awarded. While these represent a good share of the major projects being completed within the year, work still continues on dry ports in Ibadan, Aba, Jos, Funtua, Maiduguri and Kano as these have been pegged to play major strategic roles on opening the country’s economy and linking more consumers and travellers up with both commercial commodities, finished products and opportunities. There are also expansions to the existing networks that are looking to connect Lagos to Calabar, Benin, Agbor and Onitsha to name just a few. On road transport, the story is not much different for what we have known for very long: most of the roads are deplorable and in need of immediate attention. However, with the record levels of allocation budgeted for the development and maintenance of roads around the country, as well the strategic deployment of alternate means of transport, especially rail, one might retain auspices that by December at the very least Mr. Fashola, our honour triple threat minister, would give a bit more than the excuses he has given in the past years.

While these obviously make for exiting projects, strategic implementation is key. Using the refineries and rail system as one example, the pump price of petrol might be less if the country refined its crude locally, but with efficient logistic strategy, the consumer price might go even lower. It is imperative that the Dangote Refinery would be linked with major depots in the country through pipelines but also, for more of the petrochemical products that would be manufactured, efficient rail and road links to manufacturing entities further into the country would reduce the supply chain and manufacturing cost for commodities that have their origins tied directly or indirectly to these petrochemical raw materials.

https://twitter.com/Ade_Nurayn/status/890897177513521152

https://twitter.com/simonreef_NG/status/775725602582228992

It is also essential that steps are taken to ensure smooth administrative operation of these projects, especially for the railways and electricity generation when they begin operation as they have potential to generate substantial revenue for both the private sector participants that have sponsored them to life or for the government itself. It goes without saying that the massive potential for success that these projects come with can very quickly become a new standard against which the present administration’s failures may be measured. I remain confident however, that if these projects are completed and commissioned, a second term bid for the incumbent Buhari might be a force too strong against which anyone could contend. The year 2020 would come anyway but at the very worst, grading against the tasks and objectives we set for ourselves we might not have passed optimally in flying colours but maybe we have not entirely failed either.

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