Nigeria’s minister of state for petroleum resources, Dr Ibe Kachikwu was elected the president of African Petroleum Producers Organization (APPO) early last week in Abuja. FESTUS OKOROMADU examines some of the challenges the minister will have to tackle to make it relevant in the global scene.
Driven by the conviction that African petroleum producers were better positioned to create maximum leverage from their resource endowments when they adopt a common platform for oil and gas policy initiatives and development strategy, an association now known as the African Petroleum Producers Organization (APPO) was born in January 1987.
Eight countries namely Algeria, Angola, Benin, Cameroon, Congo, Gabon, Libya and Nigeria participated in the inaugural meeting held in Lagos which created the association, while operational headquarters is based in Brazzaville, Republic of Congo.
Available literature identified five basic objectives and purposes for the association, they include:
First, promotion of co-operation among member countries in hydrocarbon exploration, production, refining, petrochemicals, manpower development, acquisition and adaptation of technology and legal matters.
Second, to promote technical assistance among member countries in the areas in which individual members have acquired valuable experience.
Third, promoting co-ordination of marketing policies and strategies of member countries through exchange of information with the aim of safeguarding their depletable resources and realising equitable revenue from exports.Fourth, facilitate increasing understanding of energy situation and policies in member countries through co-operation with a view to meeting domestic energy needs.
And lastly, the association was also expected to promote studying ways and means of providing assistance to net oil importing African countries to meet their energy requirements.
Nigeria’s vice president, Professor Yemi Osinbajo, while speaking at the opening ceremony of the council of ministers of APPO in Abuja, stated that Nigeria was concerned that the association has not lived up to the expectation of its founding fathers, 30 years after it was set up.
He therefore called for increased synergy and cooperation among oil-producing countries in Africa.
According to him, Africa needs a united front in the global energy discuss. He however expressed conviction that there was no better institution to convene those conversations than APPO itself.
Embarking On Reforms
Prof. Osinbajo who commended the association for identifying its weakness and striving to address them said, “It is gratifying to note that the decision to reassess the effectiveness of the organisation and to embark on significant reforms came from within the organisation itself.
“I want to commend the council of the ministers of APPO for the bold decision to confront the fundamental challenges facing the organisation, “ he said.
He then assured members of the competence of Kachikwu in driving the reforms.
“Let me on behalf of President Muhammadu Buhari and the government and people of Nigeria, thank you for the confidence you reposed on Nigeria, manifesting in your unanimous agreement to place the responsibility for leading the reforms process on Nigeria’s minister of state for petroleum resources, Mr. Ibe Kachikwu,” he added .
Speaking on reform initiatives embarked upon by Kachikwu in his home country, Osinbajo said, “Permit me the immodesty of saying that Kachikwu has since March 2016, very much remained at the centre of the reform efforts in the Nigerian oil and gas industry. He would deliver in this responsibility, given that it is very similar to what he has championed here in the domestic oil and gas front as minister in the last two and half years.
“Given the progress achieved so far in the Nigerian oil and gas industry, I can therefore, confidently assure you that Nigeria and Dr. Kachikwu and his team would exceed our expectations regarding the APPO reforms.
“I want to assure you also that Nigeria would give you all the support you need to render his vision of making APPO hold the world’s major institutions reference on Africa’s hydrocarbon matters and indeed the pride of Africa,” the vice president told the audience.
Task For Kachikwu
The oil and gas industry as noted by Prof. Osinbajo is a very capital intensive industry. He further explained that it was often difficult for individual countries to have the resources required to make the necessary investments in the industry.
“This is especially true, because these investments are competing with infrastructure and social services for the limited resources available to us as government,” he stated.
Speaking on how the association can help tackle the challenge, he said, “By serving as a platform for increased collaboration and cooperation among member countries, APPO would go a long way towards helping overcome these financial challenges. Increased synergy would no doubt help mobilise the investment needed to facilitate and to deliver the major infrastructure required by the continent, such as trans-border gas and oil pipeline, joint refineries, gas plants and so on.”
Concerning the APPO Fund For Technical Cooperation, said to be undergoing recapitalisation to enable it better fulfill the role for which it was established. Osinbajo demanded for some re-tweaking of its structure, stressing that it could be remodeled after similar institutions that had succeeded, like the OPEC Fund, where even non-OPEC members can begin to invest.
“It is time for us to open up the APPO, such that none APPO member countries and private institutions should be able to invest.
“In addition, the APPO fund ought to operate as an autonomous entity, independent perhaps, from the APPO secretariat, in the same way that the OPEC fund operates independently of OPEC itself.
“If institutions similar to APPO and the APPO Fund have succeeded and are continuing to succeed in other parts of the world, then we have no reason, no excuse to fail as a continent,”he said.
Need For Economic Diversification
While acknowledge the important role the oil and gas industry play as the mainstream of members nation’s economies, in terms of revenue generation and foreign exchange earnings, Osinbajo warned of the danger in over-dependence as the price of the commodity remains unstable.
He therefore urged APPO ministers to embark on economic diversification as well as investing current earnings from the industry in infrastructure and human capital that would underpin the future economic growth and development of member countries.
“We must keep in mind that oil and gas are only guaranteed as only today’s resources and not necessarily tomorrow’s. We cannot bet on the fact that even a few decades away from now, these natural resources would not be as central or as relevant to the global economy as they are today.
“All serious economies around the world has realised this and are making determined plans for a world beyond oil or as they say a zero oil world. As African countries, we cannot afford to act differently,” Osinbajo said.
Industry experts said Kachikwu would do well to re-echo the VP’s warning to his peers at APPO, as adherence to these words of wisdom would in no small measure help him revive the association.