The Nation Newspaper

Category: Editorial

  • New Iran sanctions? Not now

    New Iran sanctions? Not now

    Negotiating with Iran on a permanent agreement to ensure that it doesn’t develop nuclear weapons is challenging enough. But the Obama administration simultaneously must deal with members of Congress who are determined to impose new economic sanctions on the Islamic Republic that could jeopardize not only the final agreement but also the interim deal reached in Geneva last month, in which Iran agreed to suspend progress on its nuclear program.

    In testimony Tuesday before the House Foreign Affairs Committee, Secretary of State John F. Kerry pleaded with Congress not to legislate new sanctions during “a very delicate diplomatic moment.” He’s absolutely right. Congress played a constructive role in approving the existing sanctions that put pressure on Iran to come to the negotiating table. But new sanctions legislation, which probably could be enacted only over a presidential veto, likely would have the opposite effect.

    Even when Congress appropriately asserts a role in foreign policy, complaints will be heard from the executive branch about “535 secretaries of State.” But in this situation that criticism is apt. It is Kerry (along with diplomats from other nations) who has been negotiating with the Iranians and has a superior reading of Iranian intentions. Congress should defer to his conclusion that the approval of new sanctions now, even if they were timed to take effect after the six-month period covered by the interim agreement, would derail the talks.

    The interim agreement says that the Obama administration, “acting consistent with the respective roles of the president and the Congress, will refrain from imposing new nuclear-related sanctions.” That language could be read to say that the agreement could survive even if sanctions were enacted over a presidential veto. But there is no reason for Congress to test that hypothesis. (Iran’s foreign minister says that if new sanctions are imposed, “the entire deal is dead.”)

    Some supporters of sanctions no doubt believe that inflicting further economic pain on Iran will make it more inclined to compromise. Others, however, would be happy if no deal were concluded, because they believe the best and only way to ensure that Iran doesn’t develop a nuclear weapon is through military action or regime change. The U.S. and its partners shouldn’t be willing to accept a deal that falls short of depriving Iran of a nuclear weapon. But as President Obama rightly put it when he announced the interim agreement, “I have a profound responsibility to try to resolve our differences peacefully, rather than rush toward conflict.” Congress should allow him and Kerry to get on with that job.

     

    – Los Angeles Times

     

  •  Oil crisis (4)

     Oil crisis (4)

    We are displeased that over 57 years since crude oil was discovered in commercial quantity in in Nigeria in 1956, an inept management of oil pipelines by the Nigerian National Petroleum Corporation (NNPC) has led to avoidable official frittering of huge revenue that would have accrued to the country from optimal production in the oil sector. More shattering is that the nation’s pivotal oil sector that contributes 90 per cent of the country’s gross earnings perennially loses billions of dollars to preventable vandalisation of petroleum products’ pipelines.

    The Presidency, in despondency, has put the annual loss arising from pipeline vandals across 5,120 kilometres of pipelines in Nigeria to an average conservative revenue of over N105 billion. The Nigeria Extractive Industries Transparency Initiative (NEITI), in its audit reports for the oil and gas sector for 2009 to 2011 said that the country lost over $11 billion to crude oil theft and pipeline vandalism over the period. The incurred loss in the intervening period of 2012 to 2013 is better imagined, with the rampancy with which the sad trend has continued, especially in the Niger Delta region. More than 136 million barrels of crude oil estimated at $10.9 billion was lost to theft and sabotage during the period in review, even as the Transmission Company of Nigeria (TCN) has attributed the reduction in electricity generation of over 450MW to invidious activities of pipelines’ vandals.

    Nigeria reportedly has a scandalous over $9 billion assets that have been unused, under-utilised or abandoned outright due to relentless oil/gas pipeline vandalisation across the federation. From whatever prism, vandalisation of oil pipelines is condemnable because its perpetuation is criminal and environmentally demeaning. We wonder what is making it so difficult for the NNPC to nip the criminal surge in the bud all these years. We could see negligence; we could see partly communal sabotage due to economic alienation and disenfranchisement of indigenous people; but largely, vandalism is due to official sabotage and conspiracy from influential quarters. Several reports have also shown that most pipelines that have been laid for several decades have become aged and plagued by metal fatigue.

    The last major pipeline replacement was reportedly carried out in 1968, an alarming 45 years ago. This is without prejudice to skeletal pipeline changes, at scandalous costs, conducted by the NNPC with no meaningful impact on the oil industry and the nation. We ask: Does it mean that pipelines do not have lifespan? Is the general lifespan of current pipelines in the country not yet due? What is NNPC doing about this? These questions are obvious pointers to NNPC’s negligence in the handling of oil pipelines’ affairs in the country.

    The most effective, safe and easy means of transporting petroleum products in contemporary epoch is through oil pipelines – not through haulage trucks that have detrimentally become so rampant in the country today. The increasing trend of oil theft cannot be halted unless the pipelines are well monitored/secured and maintained by the NNPC. We are aware that oil pipelines could only be punctured with official connivance due to the sophistication and cost of equipment needed and because being highly pressurised pipes, it could not have been tampered with without an alarm being raised in NNPC monitor room where the flow of such petroleum products could easily be cut off.

    The award of N5.6 billion worth of pipelines protection contract to private companies allegedly owned by ex-Niger Delta militants, including Global West Vessel Specialist Limited (GWVSL) allegedly owned by Chief Government Ekpemupolo, popularly known as Tompolo, an ex-militant leader, has worsened the situation. However, the NNPC appears to have violated the provisions of NSCDC Act 2003 by awarding such surveillance contracts to pardoned criminals. In section 3(1) the Act empowers the Nigeria Security and Civil Defence Corps to maintain 24 hours scrutiny over infrastructure, sites and projects of the federal, states and local governments in the nation’s total land mass of about 910,770 sq km. We detest what NNPC is doing by allowing our priced pipeline assets to be witnessing avoidable damage and rot.

     

  • ‘Miracle’ workers

    ‘Miracle’ workers

    Nigerians have always summarised the challenges of the country’s police force under three broad headings: they are ill-trained, ill-motivated and ill-equipped. But these broad headings are not that helpful because they do not tell it as it is. For instance, much as we knew that things were bad in the force, we never knew it was as bad as 50 police trainees sharing one fish head at the police college.

    Now, investigation by a national newspaper has just claimed that 80 per cent of our policemen in Abuja, the Federal Capital Territory (FCT), do not have walkie-talkies! Invariably, four out of every five policemen in the FCT do not have a walkie-talkie or other means of communicating with the control room of the FCT Police Command. The implication: they are on their own even during emergencies.

    We wonder what the reaction of President Goodluck Jonathan would be to this, considering that instead of regretting the sordid state of the police where 50 police trainees shared one fish head, his concern was how the mess got to the press. The truth is that this is a story the police can hardly deny because if policemen have walkie-talkies, they would not tuck them under their uniforms. Policemen all over the world use such facilities on the streets and the fact that most of our own policemen use mobile phones instead should tell us that that is the means of communication that is common among them. We should be grateful to those who invented the mobile phone!

    But if policemen in a place like the FCT do not have means of communicating with themselves, we can imagine how bad it is in other parts of the country. If walkie-talkies are not available, then bullet-proof vests must be gold, which should not be. All these put a big question mark on whatever efforts the government might claim it is making to improve the force. This is because communication is key to policing and is about the least we can ensure that our policemen have access to in their arduous task of crime fighting.

    From the way our policemen are being treated, it is either the Federal Government cannot shoulder the financial burden of providing for the police alone, or it does not think that is a priority. Whichever is the case, it is unfortunate. In an age when criminals are getting increasingly sophisticated, it is unpardonable that most men of the Nigeria Police Force go to work without communication gadgets.

    We have said it several times that in a federal system, it is abnormal to have just one central police force. The Federal Government cannot complain of inability to fund the police well because it is a responsibility it gladly embraced for reasons best known to it. Governors who know they are the chief security officers in their states are unlikely to allow their police to degenerate to this level. Even under this sickening arrangement, many of the state governments heavily subsidise the police commands in their respective states so that people could sleep with their two eyes closed.

    Given the challenges faced by the average policeman on the streets, one would not be wrong to say that the officers and men are performing ‘miracles’ daily at their duty posts. Yet, they need not be miracle workers. We know that money is being appropriated for the police. For instance, between 2010 and 2013, about N135billion was released to the force for comprehensive reform. We want to know how this money was spent. Is it that funding is inadequate or it is misappropriated? If need be, there should be a comprehensive audit of monies released for police reforms over the years to know what is really happening. Our policemen should be able to talk to one another with ease, in our own interest.

     

  • South Africa after Mandela

    South Africa after Mandela

    Nelson Mandela was one of the towering figures of the 20th century. Like Martin Luther King Jr. and Mohandas K. Gandhi, he was revered around the globe for his vision and courage, and for the enormous personal sacrifices he made to right the wrongs that plagued his country. His half-century battle against apartheid — the system under which millions of South African blacks were governed by the country’s white minority — included 27 years behind bars. But he clung to his principles as well as his dignity, and emerged from Victor Verster Prison in 1990, it seemed, without rancor or bitterness. Ultimately, he and the African National Congress he led triumphed, ushering South Africa into black majority rule.

    For this, Mandela deserves all the adulation that will undoubtedly be heaped on him in the days ahead. But to truly honor his memory, the world should keep a wary eye on what is happening in his country, where a new generation of leaders has put his legacy of inclusiveness, selflessness and moderation in jeopardy.

    The early years after the fall of apartheid were hopeful ones. South Africa held free and fair elections (in which Mandela was voted in as president), conducted a riveting and revolutionary truth-and-reconciliation process, built a respected multiracial judicial system and permitted a vigorous free press. Thanks to Mandela, it largely avoided the angry reprisals against whites that were widespread in neighboring Zimbabwe. The black middle class began to grow.

    But South Africa has taken a turn for the worse. The country’s economic, racial and social problems pose a challenge to its democracy, and the competence and integrity of successive ANC governments have been called into question.

    Crime rates are high — especially those of rape and sexual assault. Allegations of corruption are widespread. Between 1998 and 2011, the infant mortality rate doubled. According to the Washington Post, a quarter of South Africans lack proper housing and a quarter have no electricity. Unemployment remains stubbornly high. The disparity between rich and poor has widened since the end of apartheid.

    The country’s leaders have failed to rise to the occasion. Former President Thabo Mbeki’s denial that the HIV virus causes AIDS so hampered the distribution of anti-retroviral drugs that an estimated 330,000 people infected with HIV died prematurely between 2000 and 2005. The current president, Jacob Zuma, has fought off accusations of graft and bribe-taking.

    Mandela’s death should remind us of the causes to which he dedicated his life. Rather than cynically wrapping themselves in the mantle of his name, the country’s leaders should work with new determination to build South Africa into the nation that Mandela dreamed it could be.

    – Los Angeles Times

  • Oil crisis (3)

    Oil crisis (3)

    •It is time to redefine the status and operations of a corporation that manages the nation’s cash cow

    IT is 36 years since the Nigerian National Petroleum Corporation (NNPC) was established. Apparently concerned that the processes involved in prospecting, extracting and sale of oil, the mainstay of the Nigerian economy were fully controlled by foreign firms and experts, the Federal Military Government established the NNPC, following the merger of the erstwhile Nigerian National Oil Corporation and the Federal Ministry of Mines and Power. Today, the status of the resulting organisation is unknown. Is the NNPC a rent collection company, a corporation or a mere record keeper for the sector? In none of these roles is it efficient, transparent or effective. Its inefficiency has robbed the nation of billions of dollars in oil revenue over the years.

    The accounting system is opaque, deliberately so to prevent the public from asking the necessary questions, and the structure clumsy. This must change as we move into a new year and set to mark the second anniversary of the Great Uprising of January 2012.

    Incidentally, the group managing director of the corporation, Mr. Andrew Yakubu, had said last month that the corporation was complying fully with provisions of the Freedom of Information Act and would do all required within the law to furnish the public with details of its operations when necessary. He said: “Long before the Freedom of Information Act came into force, the NNPC has been maintaining an open door policy which sees it volunteering information to its various publics through press releases, advertorials and presentations at different forums, including hearings at the National Assembly…

    “We have since internalised the contents of that report and as a corporation; we are ready to ensure that our actions and processes live up to public scrutiny. Under my watch as GMD, I intend to abide by this principle.”

    The facts, as we see them, do not support the GMD’s contention. Neither the state governors nor former Economic and Financial Crimes Commission’s (EFCC) chairman, Mallam Nuhu Ribadu, would agree. At a recent retreat of the Nigerian Governors Forum, Ribadu said of the NNPC, “Today, the NNPC is a producer, an importer, a marketer and a regulator paying to the Federal Government what it likes at any time and treating the states and local governments in Nigeria as if they have no stake in the establishment.”

    The governors have been shouting that the Federal Government just gets the corporation to pay into the Federation Account what it feels. It is accountable only to the Federal Government. On many occasions, the finance commissioners from all the states have rejected what the Federal Government chose to offer them as their shares of the federally collected revenue.

    A forensic audit of the Federation Account by KPMG in 2011 showed, for example, a gross mismanagement of the oil subsidy account. This is still generating ripples. The National Assembly that ought to keep an eye on the corporation has done no more than being a toothless bulldog. At a public hearing, the House of Representatives held that the corporation sold crude oil worth $20.9 billion, but remitted only $7 billion. It did not go beyond the disclosure.

    Similarly, the Senate reported after public hearing that the corporation could not account for N500 billion that ought to have gone to fund the SURE-P operations.

    The starting point in cleaning up activities at the NNPC is to redefine its structure. What is its relationship with the supervising ministry? As Mallam Ribadu pointed out, the states and local government areas ought to be brought into the control. This means straightening the board to accommodate this suggestion.

    Fifty-seven years after oil was discovered at Oloibiri, Nigeria cannot continue to run a prime organisation like the NNPC as coal corporations were run in Europe in the nineteenth century.

  • Caught napping

    Caught napping

    •Boko Haram attack on Borno military base undermined the gains of state of emergency

    Ironically, the eruption of grand-scale terrorist violence in Borno State, so soon after the presidency in November extended emergency rule by another six months, was a devastating blow against the military, the very organisation with the responsibility of quelling the insurgency. It is disturbing that the attack could be an ominous sign of what to expect during the new round of emergency, for if the Boko Haram militants could so audaciously and successfully target military locations, then the already terrorised civilian population could be in for worse times.

    It is a measure of the turbulence, which also disrupted activities at the Maiduguri International Airport, that the state government imposed a 24-hour curfew, compounding the emergency. Equally revealing of the urgent situation is the fact that President Goodluck Jonathan held an unscheduled crisis-management meeting with security chiefs at the Presidential Villa. However, it is important to stress that while such a security meeting may be useful, the situation gravely requires more of effective action than talk.

    Just what the Islamist fighters did, through a pre-dawn offensive, to reinforce the climate of fear, not only in Borno, but also in Adamawa and Yobe states, which are equally under emergency rule initially imposed in May, was authoritatively depicted by the Defence Headquarters. According to a statement by its spokesman, Brig-Gen Chris Olukolade, “Military locations, such as Nigerian Air Force Base and some Nigerian Army locations in Maiduguri, were targeted during the attack. Three decommissioned military aircraft as well as two helicopters were incapacitated in the course of the attack. Two Air Force personnel were also wounded while 24 insurgents died during the exchange of gunfire.”

    However, it is noteworthy that eye-witness accounts by residents painted a broader picture of the destruction, saying that the attack was carried out by hundreds of heavily armed militants who destroyed buildings at the base of 79 Composite Group of the Air Force and at the 33rd Artillery regiment barracks of the Army, and that shops and petrol stations were also razed while women and children screamed in horror. It is instructive that a local government official who survived the onslaught said, “Frankly speaking, if the insurgents had wanted, they could have killed all of us…because they came in large numbers …some with explosives, some with rocket-propelled grenades and some with AK-47 rifles.”

    Intriguingly, there are speculations as to the  possible reasons for this latest expression of bestiality by Boko Haram, perhaps suggesting, rather strangely, that the group’s narrow-minded rejection of Western education and unrealistic campaign for Islamisation of the country were not enough to prompt the mindless mayhem. Doubtless, seeking other justification for the violence is to forget inexcusably that the group has been responsible for thousands of deaths since it emerged in 2009 to promote unyielding fundamentalism.  It is said that the factors behind these fresh acts of terrorism allegedly include the recent military capture of a key commander of the group and the need to fight back in the context of continual air raids by the military to dislodge the rebels. Thinking about the immediate causes of the recent aggression is of little consequence.  The basic fact is that this is a group devoted to destruction; and it must be stopped.

    Certainly, it is worrying that, once again, the episode reflects a failure of intelligence, which cannot be downplayed. It is difficult to imagine the penetration of such security-related areas without wondering how the military was caught napping.  If emergency rule is to achieve the desired result, the role of effective intelligence is key.  Apparently, given the fact that the group remains well-armed, it stands to reason that it must have powerful backers, and central to intelligence is the uncovering of the sources of its weapons. Additionally, one-in-a-while surprise attacks like the last one, designed to achieve maximum impact, may just suggest that the group is re-strategising. It must not be allowed to succeed.

  • Oil crisis (2)

    Oil crisis (2)

    •Wasting opportunities in local refining epitomise the NNPC as waste.

    Local refining is where the corporation can add value

    Visit the “Refineries and Petrochemicals” portal, on the Nigerian National Petroleum Corporation (NNPC) website, and be amazed at the glad tidings on local refining:

    “The downstream industry in Nigeria is well established,” declares the portal’s opening sentence. “NNPC has four refineries, two in Port Harcourt (PHRC) and one each in Kaduna (KRPC) and Warri (WRPC). The refineries have a combined capacity of 445, 000 bpd (445kbpd). A comprehensive network of pipelines and depots strategically located throughout Nigeria links these refineries.”

    To be sure, the facts are mechanically correct. NNPC does have four refineries. The installed capacity of 445kbpd too is correct. Also, the comprehensive network of pipelines are there – in any case, those not yet blasted by sabotage or ruptured by old age. But the interpretation of these facts is willfully wrong, bordering on deliberate deceit.

    The claim that “the downstream industry in Nigeria is well established” is clear fiction – except “downstream” is narrowly defined without local refining (or “midstream”) activities, which would be fraudulent. With “well established downstream”, there would be no question of Nigeria, though a crude-exporting country, importing white fuel from even non-crude producing country.

    It is in the non-domestication of refining, with its tantalising spin-offs in petrochemicals, plastics and allied industries that NNPC stays legitimately indicted as a grand failure and bastion of waste. Indeed, 52 years after the country’s first refinery, that NNPC has failed to establish the Nigerian petroleum midstream is its chief failure – aside from operational and accounting opacity – for NNPC’s core vision at creation was to add value to Nigeria’s crude. That remains a dream.

    Still, NNPC’s Greenfield Refineries projects, which it has bandied since 2005, are proof the corporation has given serious thought to this core but evasive business. By that project, NNPC proposes at least three additional refineries: in Lagos, Bayelsa and Kogi states. The three were projected to add 400-550 kbpd in refined products, to the installed capacity of 445 kbpd, from the comatose local refineries.

    According to information on the NNPC website, Nigeria spends between US $12 billion and US $15 billion yearly to import refined products to meet the country’s daily consumption of petrol (35 million litres) and kerosene (10 million litres), among others, and the new refineries were meant to address this shortfall in imported fuel. With a consumption growth rate of three to five per cent, by 2016, Nigeria’s imported refined products need would hit 500-560 kbpd, thus the need for the three new refineries.

    Since 18 refinery licences granted private investors since 2002 have virtually amounted to naught, NNPC (holding minority shareholding) proposes to go into partnership with local and foreign investors, to promote investment in Nigeria’s oil midstream. The Greenfield Refineries projects were also conceived to turn Nigeria into the refining hub in West and Central Africa, from Mauritania in the North to Angola in the South.

    A grand dream, no doubt. But between conceptualisation and implementation, little seems to be happening, aside from the Dangote refinery now in the works – and 2016 is only three short years away!

    NNPC’s public perception as a black hole and the thick whiff of corruption that accompanies its image are heavy dampeners that these projects would leave the drawing board in a hurry. Then there is the choking government influence which, ab initio, drives most of the corruption. That explains the scandal of the heinous opacity in NNPC’s operations and accounting, and the widespread angst suggests NNPC is uncontrollable; and could do virtually anything with the public money at its disposal.

    With this debilitating perception grounded on hard reality, the omens are not so good for NNPC delivering a vibrant local petroleum midstream. Yet, not delivering on refineries and adding value by exporting refined products and generating thousands of jobs along the way, is tantamount to NNPC pronouncing its own irrelevance.

  • Needless guarantee

    Needless guarantee

    •N50bn public funds to the GENCOs won’t let them put in their best

    The Federal Government, through the Bureau of Public Enterprises (BPE) and the Nigerian Bulk Electricity Trading Company (NBET) Plc signed a N50billion needless escrow guarantee account agreement on power with three Nigerian banks. The banks: United Bank for Africa (UBA), First Bank Plc and First City Monument Bank (FCMB) Plc are to act as custodians of the funds and to ensure adherence to due process in the bid to access it by owners of the electricity Generation Companies (GENCOs). The generating companies are successor companies of the Power Holding Company of Nigeria (PHCN).

    The money, to be administered by NBET was part of proceeds from the privatisation of the defunct PHCN and is expected to insure the generating companies against revenue loss in their effort to boost electricity generation. According to Benjamin Dikki, Director-General, BPE, the Partial Risk Guarantee (PRG) expected from the World Bank could not be secured in the prevailing circumstance.

    Obviously, the Federal Government has shown understandable anxiety over the need to improve electricity generation in the country. This is because of the importance of stable power if the economy must truly develop. However, the way to go should have been for it to use whatever money at its disposal to develop infrastructure in the sector rather than acting as insurer to the GENCOs. The N50billion Naira would go a long way in helping to boost desired infrastructure in the power sector.

    This should not mean a denial of the fact that power generation requires a lot of financial investment. Dikki’s costing puts the average cost of installing a megawatt at about $1.3 million which we consider to be quite huge. But didn’t the GENCOs conduct due diligence before purchasing that part of PHCN? If they did, then the duty of providing guarantee should not be that of the selling government.

    And if they did not, the GENCOs are presumed to have voluntarily taken over the risks under the legal principle of volunti non fit injuria (voluntary assumption of risk) which should not be the fault of the government. It is this fear of loss that would make them put in their best to ensure the success of their business ventures in the power sector. The best the government ought to do is to provide the enabling environment through tax incentives and duty waivers on necessary machineries, among others, that could boost the generating capacities of the GENCOs, over a specific period of time. This policy negates the best tradition and spirit of free enterprise, and such guarantee will not instill discipline in the GENCO ranks.

    Going by the country’s awry antecedents in the handling/management of such funds, the sad result of this huge fund can easily be predicted. Despite government’s assurances that the money is not a gift, we have little or no confidence in a policy initiative whereby the government stands as surety for the GENCOs. The official fears that whatever is generated might not be bought by the public is unfounded as there is already in existence a huge market for whatever power may be generated by the GENCOs.

    This booty comes across as another ill-conceived policy grandstanding and misplaced priority by the government. Again, on this issue of power, the government should not be seen to be approbating and reprobating at the same time if truly it understands the whole essence of privatisation. We ask: What is the purpose of transiting the power sector from public to private enterprise when the government knows that our money would still be deployed to guarantee these investors?

  • Oil crisis (1)

    Oil crisis (1)

    HOW much crude has been produced from January to date? If we had expected a direct, verifiable answer, either from the Nigerian National Petroleum Corporation, NNPC, or the Department of Petroleum Resources, DPR, to the broad range of issues raised in our editorial of Monday last week – a matter over which the federal government and the governments in the 36 states of the federation have been locked in combat for the better part of this fiscal year, nothing of the sort happened.

    Instead, what this newspaper got for a rejoinder to the editorial was a rehash of the same old tales about how the corporation “sells government equity crude to oil lifters on annual contract basis”; and how the “selection process is transparent and competitive and involves the publication of advertisements in both local and international media calling for Applications for Lifting of Nigerian Crude Oil on Contract Basis”.

    Short of saying that claims of gross under-remittance to the federation account were baseless, it was more of the same about how “traders lift crude oil according to their contractual agreements applicable to all without exception on Free on Board (FOB) basis and all proceeds are paid directly into designated Central Bank of Nigeria Crude Oil Sales Account”; and that the crude is “sold at published official selling price (OSP) which is not only benchmarked to the internationally recognized pricing institution – Platts – but is regularly subjected to critical analysis of market fundamentals and price determinants at global level”.

    Are those the issues? To start with, we find it curious that the NNPC continues to play the ostrich by denying that there is a world of difference between the published rules and the actual behaviour of operators in the upstream sector. But even more astounding is its attempt to present the issue of discrepancies in oil production figures as either a non-issue or a recent one. A good way to look at the issue is to consider for instance that the audit undertaken by the United Kingdom’s Hart Group on behalf of the Nigerian Extractive Industries Transparency Initiative, NEITI covering the year 2007 – some six years ago – actually found that the NNPC understated crude production figures by 2.6 million barrels compared with the figures supplied by the oil firms. We are talking of a differential that amounted to more than $150 million at the time. In addition, the NNPC was also indicted for “taking advantage of its position as both buyer and agent for the government to make profit at the expense of the federation”.

    The question of course bears repeating as to how much of the activities carried on in the upstream sector can stand the test of proper scrutiny. Or more specifically, how much of the daily activities at the export terminals are known to those who are supposed to be in charge of the industry? We have heard the Minister of Finance and coordinating minister for the economy, Ngozi Okonjo-Iweala declare that the nation loses 400,000 barrels daily to the resultant shut-in from crude thefts and other operational issues. For once, we need the figures decomposed.

    Surely, it is not too much to ask how much the nation makes daily from the sale of its prime product? Recently, the Central Bank reported noted that the NNPC netted $20 billion while the Jonathan Administration disclosed $7 billion.

    The same applies to the process of transfer and cession of oil blocks that have remained shrouded in utter mystery. The NNPC and the petroleum ministry need to come clean. Earlier this year, we saw a bizarre, inexplicable arrangement in which some juicy oil blocks owned by the Nigerian Petroleum Development Company were surreptitiously ceded to an indigenous operator – Trans Atlantic Energy – something hard to justify under a transparent regime.

    For far too long, the NNPC has operated with criminal indifference and impunity; time to do things properly and responsibly. We cannot have our main pot unaccounted for.

  • Double standard

    Double standard

    THE Federal Government has hired a foreign firm, Mckinsey, as a tax consultant to the Federal Inland Revenue Services (FIRS) for the next 12 months. This is coming a few weeks after the Joint Tax Board (JTB), audaciously ordered the Inland Revenue Services of the various states to sack similar consultants that they employed to increase their revenue base.

    According to the Minister of Finance, Dr. Ngozi Okonjo-Iweala, Mckinsey is expected to increase the non-oil revenue of the Federal Government for the next fiscal year, from N2.2 trillion to N2.95 trillion, and if it is able to meet its target, the firm will be paid N470 million, which is 1.75 percent of the entire sum. When that intrusive instruction was handed down by the JTB, we had on this page protested the action, as we considered it an unlawful intervention by a federal agency in an administrative decision that should be left to the individual states.

    The unilateral decision of the Federal Government to hire a foreign tax consultant, without consulting the states, further vindicates our position concerning the need to respect our federal system of government. In explaining to the public why the Federal Government hired the tax consultant, the minister was quoted to have said, “FIRS has really worked hard, but we feel that there is still room to do better”.

    So, does it mean that the state governments are not entitled to seek avenues to also do better? The minister complained that the tax ratio to our country’s Gross Domestic Product was a mere seven per cent, and was optimistic that the consultant would help to increase it to 22 per cent. She was hopeful that the firm would work out the modality to attain the objective, which she considered very important for the success of the fiscal programmes of the Federal Government. Yet, the JTB under her supervision seeks to stop the state governments from also taking necessary steps to meet their revenue targets, as they consider being in the overall interest of their states.

    In promoting the choice of the consultant, the minister listed the following means as the ways it would use to improve the tax returns, namely, improved audit, tax filing enforcement, review of tax holidays and exemption, tax arrears and debt enforcement, increased registration of companies and improved external relations. The consultant is expected to provide technical support in these areas to the FIRS. Are the state governments not having issues in all these areas?

    The minister further compared the tax ratio of Nigeria and some countries in Africa, and argued that there is an urgent need to tap from the technical competence of the consultant to ensure a favourable return for the non-oil income base of the Federal Government. The point is that the state governments need money just as the Federal Government and they should be allowed to get this from all legitimate means at their disposal.

    No doubt the minister’s intention and arguments seem unassailable; more so, it is her primary responsibility to design ways and means to maximise the revenue of the Federal Government. But it will be unfair and unrealistic to conversely seek to undermine the rights of the states, to seek an increase in their revenue base, by also seeking technical assistance, for efficiency, from consultants.

    To do so will be undermining the rights of the other partners in the federation. It will also be unrealistic to seek to determine the parameters and conditions that a state must adopt in choosing its preferred consultants.

    In our view, the primary essence of a JTB in a federal system of government should be to determine joint taxes, harmonise the payments, eliminate multiple enforcement and ensure a fair distribution among the beneficiaries of the taxes collected. We do not agree that it includes issuing orders to state tax agencies.