Tag: collapse

The economy is heading for collapse, the Action Congress of Nigeria (ACN) raised the alarm yesterday.

The party said the oil industry, which is the mainstay of the economy, is threatened by fraud and the vagaries of international politics.

It warned in a statement by its National Publicity Secretary, Alhaji Lai Mohammed, that unless “urgent measures are taken to diversify the economy and shore up oil production…the government may not be able to pay its bills, including workers’ salaries within the next few years.”

Mohammed said: ‘’Contrary to what the Federal Government may say, this warning is not about crying wolf but is actually borne out of a patriotic fervour devoid of politicking, which is the usual refrain of this government when alerted to its shortcomings.

‘’We will like to be proven wrong, but this will depend on uncommon and monumental effort, rather than on the basis of the usual canned response from the government.’’

Giving reasons for its call, the ACN said: The cost of oil production which has skyrocketed from four dollars per barrel in 2002 to 35 dollars presently; the massive corruption in the oil sector, with oil theft and sabotage leading to lost production and costing Nigeria some six billion dollars annually in crude theft; the sharp fall in the discovery of new oil and gas reserves due to the low investment in the sector, and the most serious of all, the challenge posed by alternative sources of global supply of oil and gas.”

The party said the cost of oil production rose from only 4 dollars per barrel in 2002 to 7 dollars per barrel in 2005 and, from the 12 dollars per barrel at the onset of the Yar’Adua/Jonathan Administration in 2007 to 35 dollars per barrel in 2012, according to the just-concluded Nigeria Oil and Gas Conference in Abuja, where the mind-boggling cost hike was attributed to the cost of security in the Niger Delta (put at 16 dollars per barrel), it said.

‘’In other words, the gains recorded from ending militancy in the Niger Delta due to the Amnesty Programme have been wiped off by the cost of maintaining the ‘peace’. Here is how Shell Nigeria MD Mutiu Sunmonu described the situation: ‘Operating in the Nigerian oil and gas environment can be long and tortuous with costs at the high end of the global scale. There are a multitude of security related issues that have to be dealt with on a daily basis.

‘’’In the recent past, militancy has simply been replaced by Industrial Scale oil theft and sabotage(emphasis ours). We, and others, have had to shut-in significant production; spend huge amounts on replacing and repairing hardware and deploying massive resources to clean up spills’.”

On the discovery of new oil and gas reserves, ACN said the disastrously-low level of exploration activity in Nigeria is supported by the statistics released by the US Department of Energy for deepwater discoveries from 2009 to 2011 in which Brazil alone contributed some 40 new discoveries or 20 percent of the global total, US and Australia contributed 10 per cent each, countries like Ghana making nine new discoveries or 5 per cent of the global total, while Nigeria had only 4 discoveries or 2 per cent of the global total during this period.

This paltry discovery of new oil and gas reserves is due to the low investment in the sector, which needs to attract 15 billion dollars annually in capital investment, up from the present 3 billion dollars, in order to remain a significant global oil supplier and a respected player in OPEC.”

The statement added: ‘’Here are the facts: The US has more than doubled its estimates of recoverable domestic Shale-gas resources to some 827 trillion cu. ft.

(23 trillion cum), more than 34 times the amount of gas the US uses in a year.

Together with supplies from conventional gas sources, the US may now have enough gas to last a century at current consumption rates.

‘’Last month, the agency released a similar announcement in respect of Shale oil to the effect that California’s valleys alone hold as much as 15.4 billion barrels of Shale oil, which companies were hitherto unable to reach because the oil exists in pockets of rock that were expensive to reach before the present advancements in fracking technology. Similar announcements are being made in Europe and parts of Asia.

‘’For the first time in nearly a decade, the US has regained the position of being the world’s largest producer of natural gas and soon also oil. Thus, in less than five years, the US has gone from seeking new sources of oil and gas overseas to being self-sufficient. Industry experts believe that Shale oil and Shale gas will revolutionize the industry—and change the world—in the coming decades. It will prevent the rise of any new cartels and alter oil geopolitics.

‘’The announced objective of the US Government is to drive down oil prices from the current 100 dollars per barrel to 50 dollars per barrel within 2 years. If this happens, which is very likely in view of the alternative sources, Nigeria, with a cost of production of 35 dollars per barrel, would immediately go out of business, with dire consequences for an economy that thrives largely (if not solely) on oil,’’ the party said.

It said the signs of imminent trouble are already visible for those who are willing to see: The Brass LNG Project is unable to take Final Investment Decision (FID) because of the collapse in the US LNG market and rising costs; and a similar situation faces the Olokola LNG Project.

The party urged the Federal Government to put on its thinking cap in order to rise to the challenges listed above and save Nigeria’s economy from collapse, adding that any delay could mean that those in charge of the country’s affairs would not have enough time to change course as the ship of state heads for the rocks.

For the umpteenth time, the Supreme Court again yesterday adjourned hearing in the suit filed by the 36 states against the Federal Government over the legality of the Excess Crude Account (ECA).

The apex court had adjourned till yesterday for report of settlement but the parties failed to reach an amicable settlement as promised at the last sitting.

Praying for the understanding of the apex court, Counsel to Federal Government, Chief Wole Olanipekun (SAN), asked for an adjournment for parties to resolve the matter, which according to him, is “purely political”.

But the Plaintiffs lead counsel, Chief Adegboyega Awomolo (SAN), prayed “unresolved issues”, which he noted are above counsel but justiciable by the court.

“It appears the court may have to make pronouncement on the constitutionality of this matter, because the unresolved issues are beyond counsel in this matter but certainly below this court to adjudicate on, by way of setting down a definite hearing date.

“We have had 12 adjournments since this matter was filed in 2008, all at the instance of the defendant to seek amicable resolution with the plaintiffs, we have shown sufficient diligence, and hence the need to set a date for definite hearing if the amicable settlement option fails”.

Ruling, Justice Chukwuma Eneh, chair of the seven member panel said: “Having listened to counsel in the matter and the failure of the defendant to report back on terms of amicable settlement, this matter is hereby adjourned to May 9th, 2013 for report of settlement or a definite hearing “.

Justice Eneh ordered parties to file their processes which will be deemed appropriately filed ahead of a hearing date if the amicable settlement fails.

The Nation recalls that the states have tabled fresh demands before the Federal Government as part of conditions for amicable settlement.

According to the Terms of Settlement obtained by our Correspondent yesterday, the states are asking the Federal Government to first admit that the establishment and operation of, an its unilateral deductions from the Ecxess Crude Account during the 2004 -2007 were inconsistent with the provisions of Section 162 of the 1999 Constitution.

They also asked that the Federal Government should undertake and agree that, forthwith upon the execution of this Terms of Settlement, it shall cause all sums standing to the credit of the Excess Crude Account to be transferred to the Federation Account and distributed, within 10 working days from the execution of this Terms of Settlement, among the beneficiaries of the Federation Account, i.e the Federal Government, State Governments and Local Government Councils.

Besides, they are asking the Federal Government to bear the Legal Costs and the Professional Fees of the lawyers for all the parties. This sum is to be paid within seven days of the execution of this Terms of Settlement, directly to the Plaintiff’s lead counsel.

The states are demanding for equitable shares corresponding to each state and local government council monetary values in the National Integrated Power Project (NIPP), Railway Modernization Deductions and Ibom Power Plant Project Deductions.

To start with, they want all the assets including contracts of the NIPP which was paid for using about $8.425 billion “from the Federation Account to be clearly identified, inventoried, and valued by a competent and reputable Nigerian accounting firm;

That the Federal Government should cause a company, whose sole object shall be to takeover and operate the assets and undertaking of the NIPP, to be incorporated as a limited liability company under the Companies and Allied Matters Cap C20 Laws of the Federation of Nigeria 2004 with a share capital in a sum equivalent to the value of assets and undertaking of the NIPP as valued, among other demands.

SIX houses went down yesterday in Kogi State; no thanks to the floods ravaging communities in the Confluence State.

The houses, located at Adankolo New Layout behind Government Day Secondary School in Lokoja, according to eye witness account collapsed yesterday.

It was learnt that the affected buildings were the ones submerged when River Niger over flew its banks.

Other landlords feared a similar fate might befall their property, even as many houses have been vacated.

A civil servant, Mr. Emmanuel Adaji, whose house is affected by the flood, recounted how he struggled to build the 3-bedroom apartment on Ganaja Road.

According to him, the house was built with loans from the cooperative society, which he lamented, was yet to be fully repaid.

The visibly frustrated Adaji said: “My happiness of owning a house is gradually becoming sadness should this house collapse.  This is the only property I can boast of since my career as civil in the civil service.

“In three month time, I will be retiring for the service and the only thing I am falling back on is this house. The government should please come to our aide,” he added.

Adaji’s house is one of the structures overwhelmed by the flood.