The Nation Newspaper

Category: Business

  • Mining raises hope of two million jobs

    Mining raises hope of two million jobs

    Mining has enormous potential for the employed, but they have not been fully tapped. According to experts, there is hope for job in the sector. They argue that over two million jobs can be created in the industry, if the government looks in that direction,writes AKINOLA AJIBADE.

     

    IT has become imperative to open up many areas because of high unemployment rate. One of such areas is mining which holds a lot of prospects, after oil and gas and agriculture. The industry, which is yet to be fully tapped boasts of solid mineral resources. The resources include tin, bauxite, iron ore, coal, bitumen, diamond, gold, lead and gemstone, among others.

    Stakeholders say the mining industry has the capacity to create over two million direct jobs in the country, if it is fully tapped. They said millions of tonnes of these resources are lying fallow under the bowels of the earth, as successful governments have failed to give it the desired attention.

    They said the solid mineral sector can create a huge platform for jobs irrespective of the literacy level of individuals. They said the solid mineral sector, more often than not only requires basic knowledge, thereby creating great prospects for employment generation for the masses.

    The National President, Progressive Miners Empowerment Association (PMEA), Mr Sunday Ekozien, had in a forum to showcase the contributions of the mining industry, said millions of unemployed youths can be taken off the labour market if the industry is revived. Ekozien said every state in Nigeria is endowed with mineral resources, adding that the resources would help in creating jobs and further galvanise the economy.

    He said the country has been a dumping ground for imported goods, while a lot of resources that can generate revenue and jobs are left untapped, adding that if the government can revive the sector, it could provide jobs for the teeming populace.

    He explained that there are diffenret levels of entry into the mining business, arguing that people have the power to determine the area they want. Ekozien said mining can be categorised into artisans, small, medium and large scale to suit the needs of investors. He said what is required to be effectively involved in artisan mining is about N1million, small mining N50 million, medium N200 million and large sacle mining N1 billion.

    He said each category determines the number of jobs to be created, advising Nigerians to try and invest in the mining industry.

    He explained that a mining site can accommodate as many investors as possible because there are different lines of jobs to be executed.

    Speaking on the issue, a quary operator in Idanre, Ondo State, Chief Sunkanmi Edunoye, said an artisan miner can create a minimum of 50 direct and indirect jobs, adding that the ability to create jobs depend on the nature of the solid mineral resources. He said a mining industry can create jobs for carpenters, welders, dredgers, bricklayers, transporters and food sellers, among other informal operators. He said formal operators that can work for a mining company include book keepers, accountants and marketers.

    Said he: “Different categories of people are bound to get jobs in the mining industry. While some jobs are seasonal, others are permanent. There are contract and permanent workers. It depends on the level of skills of people that want to work in the industry. Some miners prefer contract workers who would work over a period of time and get paid. Such miners believe contract staff can be done away with, when they do not have enough jobs at hand. This can save them the burden of incurring unnecessary costs. On the other hand are miners, who work throughout the year because they get a lot of businesses. This category of miners keep their staff because they are sure of getting money to pay them.”

    He said all segments of the mining industry have the potentials to create jobs, advising the government to invest in the industry.

    He said a study conducted on the mining industry, vis-à-vis its potential to create wealth in Nigeria, showed that millions of skilled and unskilled workers can get jobs to do if the industry is well managed. He said all segments of the mining industry have the potential to create jobs, advising the government to fund the industry well.

    “Besides oil and gas, the mining industry has potentials to create jobs. Also, it can as well contribute greatly to the nation’s Gross Domestic Product (GDP). Developed countries are generating billions of dollars in revenue from solid minerals. This has a multiplier effect on their economies. We can do the same thing in Nigeria. When this happens, there would be jobs for workers in the mining indystry and other allied areas.

    Also, a consultant and stakeholder in the sector, Mrs Emily Achor, said the mining industry holds great potential for employment generation.

    “There are different channels for job creation not only for geologists and mining engineers, but also for the miners who could be involved in the processes of minerals beneficiation (separation) even if they are not geologists, as well as the mining of gemstones which are used for different purposes both locally and internationally.”

    She said the employment of mining police is also another avenue for employment generation, adding that they will help in checking the activities of illegal mining operations across the nation. Achor said the activities of the illegal operators do not only deny government of revenue through the payment of royalties, but also endangers the lives of citizens through the destruction of the landscape and exposure to poisoning, as was the case with the Zamfara lead poisoning incidence.

    She said mining is a major contributor to the GDP of South Africa and Gabon, and many opportunities still remain untapped in the industry, as even rare fossils and plants can be excavated and polished for exhibition purposes, especially in countries that have never been exposed to the abundant natural materials Nigeria is blessed with.

    The Minister of Mines and Steel Development, Mohammed Musa Sada, confirmed that “the 350,000 jobs came from registered cooperatives groups, with some involved in quarry and gemstone mining. Because the operatives were licensed, there was an accurate figure of those benefitting from the available jobs opportunities, from minor to major among operators, especially in the chalk-making cottage industries in several communities now.”

    He said the registered cooperatives informed the cottage industry’s programmes, with one programme in each local government, which has since kicked off in several states of the federation.

    “We increased the number of investors in the mining sector due to the transparent manner in which titles are now issued on a ‘first come-first served and use it or lose it basis.’ A total of 2,476 active mineral titles were issued this year, compared to 666 titles issued out in the previous year, thereby significantly reducing illegal mining activities.”

     

  • RISAN to train risk surveyors

    The Risk Surveyors Association of Nigeria (RISAN) is set to introduce a training for risk surveyors in 2013.

    The new President of the association, Jacob Adeosun, announced this during the association’s conference in Lagos.

    Adeosun took over from the immediate past President, Chief Lebi Omoboyowa, whose tenure expired.

    Adeosun said: ”The essence for the structured training was because risk assessment is a knowledge driven profession, changes occur rapidly by the hour.

    ‘’The risk survey profession is anchored on knowledge and the knowledge should be as deep and broad as possible and relevant to the needs of the society. We must produce risk surveyors of local and international repute”.

    He also announced the introduction of the “Mandatory Continuing Professional Development (MPCD) program for all her members. He said: “While MPCD programme will ensure that the we rejuvenate the knowledge base of all existing members, we have recognised a missing gap to fulfill the aspirations of would-be professional risks surveyors.”

    He said risk surveyors are trained to add value in risk assessment, loss prevention and risk reduction in the interest of stakeholders, insurers, the insured and the public.

    He also announced that there is in-place now, a structured membership grading system that will be administered in strict compliance with approved guidelines.

    “To bring the Nigerian risk surveyors in line with international standards, there is urgent need to train and retrain the practitioners, Adeosun stated.

    He said the Federal Government registered and empowered RISAN to among other things, provide continuous education for members of the Association in the fields of risk surveying, risk management, loss prevention, risk control in relation to fire technology, safety devices, engineering, business information and other risks of industrial, commercial and personal lines.

    Some Honorary Fellows were inducted on the occassion. They include: Mr Oye Hassan-Odukale, Chief Prosper Okpute, Dr Remi Olowude, Prof Joe Irukwu, Chief Theophilus Idowu and Chief P.O.N. Egbuniwe.

  • ‘Fed Govt frustrating new revenue sharing formula’

    ‘Fed Govt frustrating new revenue sharing formula’

    The Federal Government has been accused of frustrating the early release of the new revenue allocation formula.

    Investigations by The Nation at the Presidency and the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) indicated that the government is wary that the proposed new revenue formula will significantly slash its portion of expected revenue thereby denying it the much- needed cash to execute capital projects and run its beaurocracy.

    A source in the Presidency, who asked that his identity be veiled, said the thinking within The Presidency is that, “if the current sharing formula is tampered with, any shocks in the global economic system, like loss of revenue from crude oil exports, will adversely affect federal government’s spending with its widespread attendant consequencies”.

    The source admitted that the government may not come out openly to speak against the proposed new revenue formula, but suggested that the Federal Government could starve the RMAFC of funds to carry out the exercise on schedule.

    Investigations by our correspondent revealed that although it had initially given a tacit endorsement to the on-going review exercise, its latest stance appears to be lukewarm, thereby leaving the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) at the crossroads on the exercise.

    The Presidency source noted that the government was in a dilemma on the issue because, “it has been contending with deficit financing for many years along with the need to finance capital projects,” adding that “allowing the new revenue formula would mean more money being given to the states and local governments.”

    He said the bickering among the states,particularly the squabble over oil wells by oil producing states, boundary issues and the distrust between the North and South, have further reinforced the Federal Government’s position of the need for a strong centre backed with adequate financial muscle.

    At the centre of the controversy is the RMAFC which has spoken very little about the new revenue formula and has changed to advising State Governors on the need to explore Internally Generated Revenue (IGR), depend less on the monthly allocation from the Federation Account Allocation Committee (FAAC) by diversifying and exploring the economic potential in their states.

    The RMAFC’s  diversification campaign for increased IGR, which had taken the body to two geo-political zones, is being relaxed for lack of funds.

    When contacted, an official of the RMAFC said the commission was being starved of funds, but that since the Federal Government did not enlarge the commission’s purse in 2013 fiscal year, the commission was prepared to fight for more funding in 2014.

    According to the RMAFC official, the commission, “will ask for more recurrent vote in 2014 fiscal year. We are not happy with the current situation where capital votes are higher than recurrent votes even for agencies like our own with little capital projects to execute in the current fiscal year,” he stated.

    Addressing reporters in Abuja last week, Chairman of RMAFC, Elias Mbam, said the success of the review of the new revenue formula would depend on funding.

    He expressed optimism that the 2013 budget will address the funding challenges to allow RMAFC go to the zones and carry out workshops and receive inputs from stakeholders on the proposed new revenue formula.

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

  • The $1.6bn refinery turnaround mess

    The $1.6bn refinery turnaround mess

    A whopping $1.6billion, (about N251 billion) has been voted for turnaround maintenance (TAM) of the four refineries across the country by the end of 2014. But concerned stakeholders have argued that laudable as it seems, this may be an exercise in futility because of the endemic corruption in the system, reports Ibrahim Apekhade Yusuf

    FOR anybody who has ever used an automobile, you can easily determine its functionality, durability, efficiency or otherwise by simply revving up its engine.

    Interestingly, Nigeria’s four refineries even at the best of times have never been your regular trusted automobile!

    The gargantuan machineries, if you may, like the proverbial giant with clay feet, have had a history of disappointments, lamentations, regrets and more regrets.

    An insider’s perspective

    Since crude oil was discovered in commercial quantities in the late 50’s, Nigerians, in a manner of speaking, have literally endured the “resource curse.”

    This is because the much sought-after black gold, with all its benefits, has been the cause of many woes including corruption that is endemic in the system.

    In the upstream sector of the petroleum sector for instance, the hydra-headed monster of corruption has been there from the beginning.

    Chief Benjamin Nnadi, a petroleum engineer and pioneer staff of Warri Refining & Petrochemical Company Limited (WRPC), where he worked for over 12 years, sadly reminisces about what transpired during his active working career at the WRPC.

    “As young men working at Warri Refining & Petrochemical Company Limited (WRPC), we all looked forward with optimism when the Italians set to work in the late 70’s when the ground work for the first refinery was being built. But it saddens my heart that what the Italians bequeathed to us at the end was a caricature refinery and not a brand new refinery as was anticipated by many of us at the time, “ Nnadi began.

    Expatiating, he said: “As a retiree, each time I hear that Warri Refinery is not working I’m surprised because it was never built to work efficiently… The whole machinery should be scrapped… Most of the machineries they brought in were not brand new. They were sandblasted and repainted, which explains why the refinery has never worked at maximum installed capacity because I recall that anytime we wanted to raise its capacity everything will just ground to a halt…Things were really bad. And this is why I heaved a sigh of relief when I was redeployed to Benin in 1990 and later to Lagos to work at NAPIMS where I worked until my retirement in 2004.”

    The foregoing terse statement speaks volume of the parlous state of the Warri refinery, albeit, the other refineries namely Port Harcourt Port Refining Company (PHRC), Kaduna Refining & Petrochemical Company Limited (KRPC).

    State of refineries

    It would be recalled that former President Olusegun Obasanjo had embarked on the privatisation of the refineries in 2007 but it was later upturned by the late Musa Yar’Adua because the latter felt certain interest in the north and south were sidelined in the scheme of things.

    From available information, the four refineries have a combined installed capacity of 445,000 bpd. The PHRC is made up of two refineries, located at Alesa Eleme near Port Harcourt with a jetty (for product import and export). The jetty is located 7.5km away from the refinery complex.

    In 1983, the Port Harcourt refinery with 60,000 bpsd name plate CDU capacity and the tankage facilities were acquired by NNPC from Shell. Subsequently, a new 150,000 bpsd export refinery was built in 1988 and commissioned in 1989.

    The current combined installed capacity of PHRC is 210,000 bpsd. The installed capacities of KRPC and WRPC are 110,000 bpsd and 125,000 bpsd respectively.

    Notwithstanding the cheery statistics, the country has never enjoyed the benefits of the refineries as it has had to import refine crude in large quantities to augment local consumption, albeit, at a drain on the nation’s resources.

    Poor maintenance culture

    The country, analysts, have argued, has a poor maintenance corporate culture, refineries inclusive. The 150000 bpd Port Harcourt refinery was built in 1989. TAM operations were carried out in 1991, 1994, 2000.

    The Kalu Idika Kalu Committee had last May during a visit to the Port Harcourt refinery found the Federal Government four boilers non-operational. Two out of the four power plants were down.

    Besides, there was evidence of poor maintenance with serious corrosion of major key units just as morale of the workers was low and management was dysfunctional with little or no financial authority.

    The last major TAM was in 2000. It will have to be modernised and upgraded.

    Ditto for the 110000 bpd Kaduna refinery, which had its last TAM in 2008. The one before that was in 1998 after a major fire. Production is at 25% of installed capacity. The 125000 bpd Warri refinery is also operating at 25% installed capacity. TAM operations were carried out in 1994, 2000 and 2008.

    ABC of TAM

    Refinery turnaround maintenance (TAM) is a planned partial or full shutdown of one or more units of a refinery in order to perform inspection, repair, and maintenance of equipment to ensure safe and efficient operations. Material and obsolete equipment are replaced. A refinery TAM takes place every three-five years and requires about one-two years of advance planning. The actual TAM operations take about 6-12 weeks.

    A well implemented TAM programme reduces unplanned disruption of production activities in a refinery and helps maintain operations at more than 80% capacity utilisation.

    A case for TAM

    In its quest to achieve 90 per cent optimum capacity utilisation of the refineries the Federal Government is proposing to spend $1.6billion on TAM in all the four refineries from 2013-14.

    Justifying the need for the TAM, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, said it was capable of turning the side in the sector.

    PHRC plants have operated for 12 years without TAM and this has caused the equipment to deteriorate and operate on very low efficiency.

    Official position on TAM

    Interestingly, for the NNPC, the proposed TAM sounds like good music to its ears.

    Sounding rather upbeat, Mr. Fidel Pepple, Acting Group General Manager, Public Affairs, NNPC, said the proposed TAM is already a fait accompli.

    “Port Harcourt refinery will be done in the first quarter of next year followed by Warri and Kaduna in that order”, Pepple said matter-of-factly.

    On insinuation that past TAM did not go well, he said: “Port Harcourt refinery was last done in 2000.”

    He assured that “the proposed TAM is a comprehensive one which will involve complete rehabilitation by the original builders of the refineries. There is no body better equipped to that than the original builders. There won’t be third parties or middlemen involved as the case may be.”

    It is envisaged that the scope of work at the refineries would include, clean-out of various pieces of process plants, power plant, oil movement equipment, as well as the inspection of repair of static and rotating equipment, among other works.

    Furore over TAM

    Speaking exclusively with The Nation over the weekend, Chief Frank Ovie Kokori, former General Secretary, National Union of Petroleum and Natural Gas Workers (NUPENG) expressed misgivings over the proposed TAM.

    “Though I don’t have the technical expertise in the field, I know for sure that tam should be done within a space of three-four years on a roll…But in a situation where this has not been done for years, you can only expect the worse”, he lamented.

    Continuing, the veteran labour activist said: “What I’m saying is that the refineries have to have good management, good technical maintenance and we still need more refineries… Besides, we need to properly verify the amount being proposed as budget for the TAM. That is what some of us are saying…”

    Echoing similar views, Nnadi said TAM is used as a conduit pipe to steal from the public till.

    “During TAM some Nigerian officials’ front for companies to get cuts and commission at the expense of the country…Even this proposed TAM is a waste of time and efforts because most of the things there are scraps…”, he stressed.

    Modular refineries a pipe dream

    The Federal Government had in March proposed plans to site modular refineries in Kogi, Lagos and Kaduna respectively.

    But to analysts, this may well be a pipe dream given the lip-service being paid to infrastructural upgrade.

    Economic cost of TAM

    There are fears that there may be a cost overrun for the planned TAM because of poor plan implementation.

    According to NNPC information, $32 million has been spent and 75% of the parts needed for the Port Harcourt TAM is already on ground even as $147 million would be needed for repairs and $406 million for modernisation.

    In the view of economic experts, by the time, the Warri and Kaduna refineries TAM come around in 2014-15, it price might snowball to over a $2 billion price tag.

    The TAM, they insisted, will doubtless offer little or no benefits to the Nigerian people because of the corruptive tendencies by officials.

    To these analysts, it is left to Federal Government to convince Nigerians out there that it means well with the proposed TAM, rather than offering mere platitudes.

    But will the Federal Government allow public interest override selfish interest by the select, albeit corrupt few?

    Time will tell.

  • Bank stocks rises as manufacturing sector dip

    Bank stocks rises as manufacturing sector dip

    A change in sentiments drove up prices in the banking sector, subsequently halting losses for the likes of UBA, GTBank and First Bank closing on the up-tick and recording price appreciations of 2.2%, 1.5% and 0.3% a piece. Diamond Bank, Skye Bank and Fidelity Bank were also up 3.7%, 1.5% and 1.5% respectively.

    But bearish sentiments sent Cadbury further south with a 3.6% loss, Dangote Sugar, Nestle and Honeywell Flour were also not spared dropping 0.1%, 0.9% and 4.6% respectively. Dangote Flour and Nascon were however divergent, recording gains of 1.2% and 1.6% a piece.

    Other sectors, recent correction in the price of NB spurred demand at the weekend leading to a 5.6% mark-up, UAC-Prop, Glaxosmith and Julius Berger also closed on the up-tick.

  • ‘TAM will offer no benefits to Nigerians unless …’

    ‘TAM will offer no benefits to Nigerians unless …’

    Dr. Izielen Agbon is former Head of Department, Petroleum Engineering and former Academic Staff Union of Universities (ASUU) chairman, University of Ibadan chapter. Agbon who is renowned for his expertise in oil and gas is currently based in Dallas, Texas, USA. In this online interview with Ibrahim Apekhade Yusuf he speaks on the pros and cons of the proposed turnaround maintenance (TAM) of the refineries, among other issues

    The Federal Government has plans to spend $1.6 billion for the turnaround maintenance of the three refineries next year. But what is a refinery TAM?

    Refinery turnaround maintenance (TAM) is a planned partial or full shutdown of one or more units of a refinery in order to perform inspection, repair, and maintenance of equipment to ensure safe and efficient operations. Material and obsolete equipment are replaced. A refinery TAM takes place every three-five years and requires about one-two years of advance planning. The actual TAM operations take about 6-12 weeks. A well implemented TAM programme reduces unplanned disruption of production activities in a refinery and helps maintain operations at more than 80% capacity utilisation.

    Have we always done TAM in our refineries every three-five years?

    No. We have a poor maintenance corporate culture. The refineries were built in the 1980’s and have a poor TAM history. The 150000 bpd Port Harcourt refinery was built in 1989. TAM operations were carried out in 1991, 1994, 2000 and 2007. When the Kalu Idika Kalu Committee paid a visit to the refinery in May 2012, they found the four boilers non-operational. Two out of the four power plants were down. There was evidence of poor maintenance with serious corrosion of major key units. The morale of the workers was low and management was dysfunctional with little or no financial authority. The second 60000 bpd Port Harcourt refinery has similar poor maintenance problems. The last major TAM was in 2000. It will have to be modernised and upgraded. The 110000 bpd Kaduna refinery is no better. The last TAM was in 2008. The one before that was in 1998 after a major fire. Production is at 25% of installed capacity. The 125000 bpd Warri refinery is also operating at 25% installed capacity. TAM operations were carried out in 1994, 2000 and 2008. We have run our refineries without maintenance. It is like running a car without tune ups, oil change or repairs.

    So the refineries are ready for TAM in 2013-14?

    Yes. However, it is a little more complex. If NNPC is going to have a TAM next year, they must have started planning it in 2011. A TAM requires about 18-24 months advance planning covering its four phases (planning, preparation, shutdown, maintenance and start-up). The planning and preparation stage is essential for a successful TAM. Pre-planning starts about two years before the TAM. Pre-planning requires an inspection of the refinery with testing and critical analyses of the units. The integrity of each unit is evaluated. Let us assume this was done by the foreign company that is going to do the TAM (supposedly the companies that built the refineries in the first place). A plan encompassing labour, equipment and material is developed during the planning and preparation stage. We will presume a technical committee consisting of technical representatives of the company and NNPC/refineries did this in 2011. The plan would have set objectives, scope of work, milestones and deliverables. A budget would have been set to cover all aspect of the TAM of each refinery.

    The NNPC is asking for $1.6 billion for the TAM. Is this reasonable?

    We cannot say because we do not have a detailed breakdown of the budget. The TAM of the 140000 bpd Naantali refinery in India in April 2012 cost $77.5 million. It lasted six weeks and involved about 1000 skilled workers with maintenance of about 2000 equipment. On the other hand, the 413000 bpd BP Whiting refinery on the shores of Lake Michigan will have a TAM upgrade next year that will cost $4 billion. So, the cost of our TAM depends on the nature of work identified during the initial inspection and the resulting scope of work.

    According to NNPC information, $32 million has been spent and 75% of the parts needed for the Port Harcourt TAM is already on ground. So, a budget has already been approved and money is already being spent on inventories. $147 million would be needed for repairs and $406 million for modernisation. But, budgeting for a TAM is a complex exercise. Let me explain. A TAM budget for the two Port Harcourt refineries must not only cover the planned repairs, maintenance and replacement of faulty units, it must also cover temporary facilities for skilled foreign labour and hired equipment such as cranes and scaffold. The TAM will involve an additional 500-1500 skilled labour, a large percentage of which will be foreign. Security (against kidnapping, etc.) becomes paramount. By now, their housing, accommodation, transportation, security etc, should be ready.

    The budget must also cover known and unknown uncertainties. The known uncertainties include emerging and discovery work. Emerging work is additional work which comes up after the TAM scope of work is fixed. Discovery work is unplanned work arising during the TAM shutdown when detailed inspection of the faulty units will occur. For instance, they might find out the four faulty boilers in the Port Harcourt refinery need to be scraped when they finally open them up or that the two faulty power plants cannot be repaired and new ones have to be built. The whole piping system may need to be replaced due to corrosion.

    Then, there are the unknown uncertainties which include the Nigerian factor, unforeseen incidents, bureaucratic delays, corruption, inefficiency, political interference, etc. Unknown uncertainties add an additional 50% to a normal budget within the Nigerian context. So, we can expect cost overrun. I would be surprised if they can keep the TAM of the two Port Harcourt refineries under a $560 million budget and get them done in 2013. By the time, the Warri and Kaduna refineries TAM come around in 2014-15, we might be well over a $2 billion price tag. But, all this is good news for the cabal under the politics of Nigerian refining and petrol subsidies.

    You say they would likely be cost overrun and the NNPC might end up spending over $2 billion for the TAM of the refineries. How is that good news for anybody?

    The cost overrun will occur because we have a poor plan implementation culture just like we have a poor maintenance culture. We have these poor corporate and bureaucratic cultures because it is economically beneficial for those in power and leadership position. A TAM cost overrun will be bad for the Nigerian people but it will be an economic bonanza for the political leadership and the cabal. There will be political interference in the TAM and cost overrun will allow more slippage and political cronyism. A two months TAM means a two month shutdown or an increase in the importation of petroleum products. This means more contracts for the cabal. The more money the cabal has, the more money they can donate to the politicians for the 2015 election. There is therefore a political incentive to make the two months TAM into a 6-8 months TAM. The top bureaucrats, politicians and cabal will benefit from the extra TAM budget and the resulting extraordinary petroleum products subsidy budget. The cabal members will make a lot of money and make appropriate donations to the politicians and political parties.

    A good cabal member now knows you must settle the politicians and make donations to the political parties to cover all investigative possibilities (EFCC, Senate, House, State, NNPC, etc). So, the longer the TAM, the more money the leaders get, the more petrol subsidy the cabal gets and the more money the political parties and politicians get for their 2015 election. This is why the Ministry of Finance has not included the extra petroleum subsidy budget arising from the planned TAM and shutdown of refineries by the Ministry of Petroleum Resources in the 2013 budget. It is not that they do not know what they are doing. It is just that poor planning is good business for the ruling class in Nigeria. The maintenance of the lifestyle of the ruling class presupposes the sustainable underdevelopment of the Nigerian people.

    After the election in 2015, the government will finish the TAM and then argue that they must raise petroleum products prices in order to recover the $2 billion used for the TAM. The government will call for the privatisation of the repaired refineries because NNPC cannot run it efficiently. The political leaders will then attempt to sell the $25 billion refineries to themselves for $5 billion and run it with foreign partners. The Obasanjo government almost got away with privatising the refineries in 2007. The Yar’Adua government stopped them because they excluded the northern and eastern fractions of the ruling class from the takeover. This time, the takeover will be more inclusive.

    The TAM will offer no benefits to the Nigerian people unless we fight for them. The TAM will not reduce petroleum product prices. It will not stop long queues for petrol. It will not stop petrol shortages. It will not stop the petrol subsidy to the cabal. It will only move the petrol subsidy windfall from one cabal to another. We can only benefit if we force the government to reduce petroleum product prices.

  • Why FG is modernising railway network-Jonathan

    Why FG is modernising railway network-Jonathan

    THE nation’s railway system may have received a major boost with the commencement of comprehensive rehabilitation work across the country.

    This cheery news came from President Goodluck Jonathan over the weekend.

    According to President Jonathan the Federal Government has commenced the rehabilitation of the existing narrow gauge rail network covering 3,505km, signaling and communication as well as the construction of new standard gauge lines to modernise the railways.

    Speaking over the weekend at the opening ceremony of 26th edition of the Lagos International Trade Fair, held in Tafawa Balewa Square, Lagos, President Jonathan said the Federal Government has awarded contracts for the Western rail line connecting Lagos-Kano.

    “We are also working on linking our ports in Tin-Can, Onne, Calabar, Warri and Koko to the rail network,” he said.

    Jonathan, who was represented by Minister of Trade and Investment, Dr. Olusegun Aganga, said government is determined to improve trade and trade related infrastructure in the country, adding that it is determined to transforming the Abuja Securities and Commodities Exchange into a world class exchange serving not just our nation but the region as well.

    Justifying the need for the proposed face-lift of the Abuja Securities and Commodities Exchange, Jonathan said it will improve domestic and regional trade among other things.

    “We are at an advanced stage in transforming the Abuja Securities and Commodities Exchange into a world class exchange serving not just our nation but the region as well. It will also transform domestic and regional trade immensely”, he said, adding: “This should be completed before the end of next year. We have also attracted significant investments into the country from one of the global players in the Warehousing and Logistics sector. Your chamber’s second quarter’s Business Environment Report highlighted logistics and warehousing as a major constraint to trade. This investment will not only reduce the cost of transportation of goods but will contribute significantly to the trade facilitation process and reduce post harvest losses.”

    President Jonathan is also optimistic that the collaboration between the Nigerian Export Import Bank (NEXIM) and the organised private sector will boost the sea-link project.

    “I am glad to inform you that this project is at a very advanced stage. On International trade, while we are having Trade and Investment desks in our embassies across the world, we are also having Regional Investment and Trade offices worldwide,” Jonathan said.

    The President said the country’s Foreign Direct Investment (FDI) has increased by 46 per cent. This according to him makes Nigeria preferred destination for investment in Africa and ranked first in the top five host economies for FDI in Africa

    “The recent increase in FDI into the country ladies and gentlemen, by 46 per cent to $8.91billion in 2011 makes Nigeria the preferred destination for investment in Africa.  According to the latest report by the United Nations Conference on Trade and Development (UNCTAD), Nigeria ranked 1st in the top 5 host economies for FDI in Africa. This further attests to growing investor confidence in our nation. We all must play our individual roles to ensure this is sustained,” Jonathan assured.

    The National President, Nigeria Chamber of Commerce, Industry, Mines and Agriculture, Dr. Ademola Ajayi said to re-awaken Nigerian businesses and ensure the achievement of sustainable growth and development, of the economy the OPS must reposition itself to face the emerging challenges of global competitiveness by taking the driver’s seat in the economy.

    He said this could be done by putting up well planned trade expositions and promotions of this nature and magnitude in support of productive investments.

    He urged the government to facilitate trade as partner in progress by ensuring the prevalence of a conducive and enabling environment, including functional and efficient infrastructural and security facilities in the country.

  • The delta soap I know

    THE headline above is not exactly appropriate for this article, considering scope and character of its content. However, we shall be constrained to make quick references to it because it will greatly aid our learning on the concept of brand management strategy and life span. A member of MC&A Digest team worked on the brand from its introduction to early growth years. The opportunity of first-hand experience in the development of such a brand offers so much for purposes of practice, teaching and learning. Effectively, therefore, the frequent reference to Delta Soap brand in the course of this article is not about passing judgment on its present managers, but strictly as a case study for purposes of professional enlightenment, in order to help practitioners’ competence in case of future endeavor; an analysis a topical issue in brands management.

    Put succinctly, this article is about appreciating the concept of brand management or support strategy, within the context of timeliness. Every brand management support activity is dependent upon a strategy, and every brand support strategy has a life-span. Any brand management or support activity executed based on an “expired” strategy constitutes grave danger to the brand. From market entry through growth to maturity, every brand lends itself to varying degrees of support, significantly differentiated by the design and structure of the operative strategy, at every stage. That explains the element of dynamism in the development and application of brands management strategy: circumstantial peculiarity.

    As captured by Johnson and Scholes in their document “Exploring Corporate Strategy”, STRATEGY is the direction and scope of an organization over the long term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations.

    Functionally, strategy is about bridging the gap between Means and Ends. It is about deliberate systematic reasoning in determining the following:

    · Long-term business direction

    · Competitive advantages

    · Resource employment and allocation

    · Self evaluation and alignment with prevailing market dynamics

    · Expected or projected gains

    Following from the above, the essence and importance of strategy in the life of brands is evident. The success or failure of a brand depends on the underlining strategy (and its execution). To a large extent, the market place has no space for second try.

    In operative terms, strategy is applied in relative terms. In other words, strategy is fragmented along the line of application. So it is common-place to see strategic engagement in different forms to include sales, promotion, communication and broad brand management. The bottom line, however is achieving competitive marketing advantage over competition through strategic planning. Let us we quickly add at this point, the three basic components of vision, innovation and alignment working together to propel strategic engagement.

    In reconnecting with the focus of this article, we posit that no brand succeeds without a winning strategic platform. Secondly, every strategy has a life span. Therefore, any brand living by an outdated strategy is likely to fail.

    In less than 6months of the launch of Delta Soap brand of medicated and antiseptic soap the market was hungry for new trend in product usage within the segment and the consumer expectations had changed without notice. This was a period in the skin care market when target user knowledge of the product constituents and value essence was skewed by insufficient information. For instance majority of the target consumers within the skin care products market could hardly differentiate between the antiseptic and medicated product categories. Broadly, skin care soaps were seen as same in every circumstance antiseptic (preventive) and medicated (curative).

    Another anomaly prevalent then was the pattern perception and identification of value touch-point. By reason of the quality of advertising prior to the entry of Delta Soap, a skin treatment soap was considered efficacious and therefore dependable by the extent to which its medicated or antiseptic smell is conk (smell) and the degree of its harshness on the skin (feel).

    4The assignment for the new product introduction came without a brief (the client was only focused on the immediate marketing objective successful market entry and immediate target user connect for profitable engagement. In the face of such very difficult assignment, my previous experience with working on Procter & Gamble’s Euro-Pampers and Vicks Lemon plus became a child’s play.

    By the time we set to prepare for presentation to the client, the broad strategic direction was clear consumer education/enlightenment for adjusted value consideration and product usage pattern. That strategic platform led us all the way through in achieving general attitude change among the target market. There from we had a brand which pay- off line became TOUGH ON GERMS MILD ON (your) SKIN.

    Brand management is all about influencing behavioral pattern and the most influential tool is information. But all of the market research and report analysis are for the singular purpose of developing the right strategic plan. The strategic platform on which brand Delta Soap was lunched was consumer enlightenment (recall educational campaigns). To re-enforce the place of time in the relevance of any strategy, that direction did not last more than three campaign burst periods spanning about 9months. The market connected with the brand in no time causing a rejection of those existing market players who until then prided themselves as market leaders based on inadequate consumer knowledge. The entry of Delta Soap caused a major change across the antiseptic and medicated soap market. In no time Tetmosol and Roberts soaps repackaged and repositioned. The consumer value touch points changed and the new brand became a market leader in vital terms.

    Strategy and time: the success at introduction quickly necessitated a change in strategic direction from target consumer enlightenment to demonstration of brand promise, quickly followed by lifestyle support. That was the point when the brand ventured into developing icons for the brand in form of beauty pageant sponsorship. Remarkably, that was the point I disassociated from the brand. Since then, however, the brand has remained a part of my professional past of interest, tracking its evolution in broad terms. It is a little difficult to detail the basic structures of the brand’s management presently, but from the distance, some things are registering, indicative of a brand at cross-roads.

    The first major observation is its aggressive venture into line extension.

    Strategic brand management process starts with a clear understanding as to what (a) brand is to represent and how it should be positioned, versus competitive brands. The aim is to clearly identify and establish proper brand positioning which will reflect the benefits that the enterprise could maximize.

    We are not too sure of the managers of that brand presently, but it seems the introduction of line extension has negatively impacted on the brand, SO MUCH SO IT HAS BECOME A CONFUSED BRAND. The position statement at introduction is still the prevalent today, and it is at tangent with the concept of line extension – for a brand that was distinctively positioned as the truly sophisticated medicated and antiseptic soap (combination of both predominant values) that is distinctively tough on germs and mild on the skin.

    Secondly is its brands communication it comes across as lacking in strong strategic direction. A simple message impact check throws up target audience apathy due to emptiness of brand advertising message. The predominant recall element is the female models in the print materials. It is worse with the TV materials because the models do not keep up with the sophistication of the brand.

    The big one: all of the above observations are only fall-outs of absence of relevant brand management strategy, if you as us. I am not sure the brand has a brand manual even now, with all it had gained in stature and influence. The present managers of that brand need to rework the entire management, starting by reviewing its person in the market today. Those old brands that suffered shock by reason of Delta Soap market entry have recovered, through extensive review, including product reformulation and repackaging. We suspect that the older brands are gradually taking away from Delta soap’s market share not minding its line extension.

    One last thing, the extension is negatively impacting on the brand because its value essence does not seem to support line extension. There is a need for rework at this stage.

    Let us sign-off by reiterating that all we have done and said in this article are only for the purpose of professional refreshment and could be reference material for young practitioners. No malice.

  • IMF warns National Assembly against high oil benchmark

    IMF warns National Assembly against high oil benchmark

    AMID the raging controversy over the 2013 budget, the International Monetary Fund (IMF) has backed the Executive against the Legislature.

    It warned the National Assembly against increasing the benchmark price higher than what the Executive is recommending.

    IMF’s Senior Resident Representative in Nigeria, Mr. W. Scott Rogers, spoke in Abuja yesterday when he presented the World Economic Outlook to reporters.

    According to him, the Nigerian economy stands the risk of being faced with lower crude oil prices due to weak global economy as such a high oil price benchmark, as being proposed by the National Assembly could hurt the economy.

    Rogers advised those clamouring to spend money the country makes to “stop spending what is meant to be saved. Make the oil price rule effective.” The challenge before the country now, he said, “is for the nation to generate fiscal surplus while oil prices are high and use it to build the nation’s reserves, rather than drawing it down from the Excess crude Account to be spent” he said.

    The IMF Resident Representative in Nigeria also disclosed that an analysis of Nigeria’s oil reserves in comparison with her over 160 million population has shown that the nation’s wealth is not as much as some people would like to think and, therefore, appealed that the resources from oil which is a depleting asset must be deployed to the expansion of the nation’s economic base.

    The IMF chief in Nigeria cautioned the government against expansionary fiscal policies, because of the existing global economic uncertainties.

    While praising the economy for performing appreciable well under the circumstance, the international financial body however cautioned managers of Nigeria’s economy to “take advantage of the current growth to strengthen her fiscal position by saving for the future, as there is no assurance of early global economic recovery.”

    The Resident Rep urged the government to initiate policies that would encourage saving as much funds as possible and avoid unnecessary government’s spendings to avoid a burst if oil prices crash.

    According to Rogers, “if the world economy remains weak, it will continue to affect countries of the world especially those with strong ties with the US and the Euro area which could actually go into recession. Export growth in Sub-Sahara Africa has remained weak due to the weakening economies of the advanced countries”.

    The IMF boss in Nigeria also cautioned the government to be mindful of the situation could be worse if by January, American President Barak Obama fails to reach a deal with the Congress to raise the deficit ceiling, as, according to him, “that will mean raise in tax rates and cut in government expenditure across board which could further weaken the growth or even throw the economy into recession”.

    Rogers noted: “The US housing prices remain depressed and that nation’s week economy is impacting negatively on many other countries of the world because the US is an export destination of many countries of the world.The US economy is in recovery but the recovery is still weak.”

    While presenting the report, the IMF chief stated that about 80 per cent of the petrol consumed in Benin Republic is smuggled from Nigeria.

    Rogers said the smuggling of petrol to neighbouring countries has been on for over 20 years and has continued to boom because of the high profit incentive on the sale of the commodity in neighbouring countries because Nigeria’s petrol price is the lowest in the region.

    According to him, “80 per cent of PMS consumed in Benin is from Nigeria. Nigeria’s oil price is the lowest in the region. This has been going on for many years and not a new phenomenon. It will continue”, he said.

    Mr Rogers who did not mind opening the old subsidy wound stated that Nigeria has been paying for petrol in other countries because of her subsidy policy noting that for “a nation which is one of the world’s largest oil producers to be importing fuel and having long queues at fuel stations is an aberration.”

    In his words, “as long as your prices fall far below prices in other countries around you, you will always have products smuggling. Wouldn’t you like to have efficient refineries? Wouldn’t you like to see the queues go away. Wouldn’t you like to see the funds spent on petroleum subsidy to be redeployed to other critical sectors. Wouldn’t you like to have better-funded educational sector? Wouldn’t you like a better health sector? Better transport system? Nigerians have to make a choice. Nigerians have to decide for themselves”, he said.

  • Okonjo-Iweala worried over oil price fall

    Okonjo-Iweala worried over oil price fall

    Nigeria is concerned that oil and gas prices could fall as more countries uncover reserves, Finance Minister, Dr Ngozi Okonjo-Iweala, has said.

    “We are worried. We are concerned, because obviously so many countries are discovering oil and gas so the supply will be increasing over the next few years and, therefore, we need to plan accordingly to make sure we have the necessary buffers in our own economy,” Okonjo-Iweala told reporters during a visit to London.

    Reuters said she spoke in the context of a domestic budget debate, which has seen parliament press for the government to count on a higher oil price and save less of its current high revenues from the sector.

    Oil makes up about 80 per cent of government’s revenues. The draft 2013 budget assumes a global oil price of $75 a barrel, up from $72 a barrel this year, but parliament has pushed to raise the benchmark to as much as $80 per barrel.

    Money earned from oil over the benchmark price is deposited into a savings mechanism called the Excess Crude Account (ECA). Any increase in the benchmark price will, therefore, reduce savings and make Nigeria less resistant to oil price shocks.

    “In terms of benchmark price, we strongly believe that $75 is the right benchmark for us, it will help us to build buffers,” Okonjo-Iweala said.