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Tag: inevitable

  • ‘Legal system reforms inevitable’

    •Babalakin proffers solution on judiciary’s growth

    The Pro-Chancellor and Chairman of the Governing Council of  University of Lagos (UNILAG), Dr. Wale Babalakin (SAN), has said “repositioning” of the legal profession is inevitable.

    Babalakin said this would enable the Judiciary to “guide the development of the nation in a manner consistent with the due process of law”.

    The eminent lawyer spoke yesterday in Ilorin, Kwara State capital, while delivering the 10th Justice J. M. Adesiyun Memorial Lecture.

    He expressed sadness at the state of the legal profession, and proffered solutions to the problem.

    Babalakin said: “The role of the legal profession in Nigeria has caused me severe heartache, but I am hopeful we can place this profession on the right path. We cannot afford a blame game, which will lead us nowhere. We simply have to draw a line and start again.

    “The legal profession must be restructured from the start. The curriculum in the universities must place the capacity to think on the highest pedestal. The Law School must become more practical than theoretical. The Bar must become more efficient. The amount of time wasted at the Bar makes the legal profession very unattractive to young men and women who have a lot of options.”

    On incessant adjournment of cases, Babalakin said: “Cases must go on the dates and time they are slated to go on. Courts must adjudicate on matters on the dates they are slated to go on. Courts must not sit at the convenience of counsel; counsel must make himself available on the dates chosen by the courts. Counsel cannot agree to adjourn cases without substantial financial consequences.

    “A pleasant fallout from this is that law firms must become larger. The time of lawyers will become more valuable. It is not fair to younger lawyers that they spend a whole day in court and their matters are not heard because a couple of Senior Advocates have matters in court on the same day.”

    On the criteria for the appointment of Senior Advocates, the eminent lawyer said: “The criteria for appointing Senior Advocates in Nigeria must be reappraised. The current criteria have the tendency to congest the courts. Many cases are filed today not because of the seriousness of the issues between the parties, but because lawyers require a certain number of cases to qualify to apply for the rank of Senior Advocate of Nigeria.”

    Calling for improved remuneration for judges, Babalakin said: “There is need to enhance the status of the Judiciary and reposition it to where it was before 1975. Remuneration of judges must be enhanced. The idea of a judge not having enough resources to live comfortably anywhere in the country is unacceptable.

    “The appointment of judges must be on merit. I do not subscribe to the opinion that the need to comply with Federal Character in the appointment of judges is the reason for the weak appointments made to the Bench. I have had the privilege of working in all parts of Nigeria; every part of the country has exceptional men and women who are deserving of judicial appointments and can be appointed in their zones.”

    The lecture was chaired by the Chief Judge of Kwara State, Justice S. D. Kawu.

    Dignitaries at the lecture include a former Appeal Court President, Justice Ayo Salami (retd), Kwara State House of Assembly Speaker Dr. Ali Ahmad, former Attorney-General of the Federation, Chief Bayo Ojo (SAN) and Malam Yusuf Ali (SAN).

    Others are: Mr Lawal Rabana (SAN), Alhaji Aliyu Salman (SAN) and Chief Duro Adeyele (SAN).

  • ‘Legal system reforms inevitable’

    The Pro-Chancellor and Chairman of the Governing Council of  University of Lagos (UNILAG), Dr. Wale Babalakin (SAN), has said “repositioning” of the legal profession is inevitable.

    Babalakin said this would enable the Judiciary to “guide the development of the nation in a manner consistent with the due process of law”.

    The eminent lawyer spoke yesterday in Ilorin, Kwara State capital, while delivering the 10th Justice J. M. Adesiyun Memorial Lecture.

    He expressed sadness at the state of the legal profession, and proffered solutions to the problem.

    Babalakin said: “The role of the legal profession in Nigeria has caused me severe heartache, but I am hopeful we can place this profession on the right path. We cannot afford a blame game, which will lead us nowhere. We simply have to draw a line and start again.

    “The legal profession must be restructured from the start. The curriculum in the universities must place the capacity to think on the highest pedestal. The Law School must become more practical than theoretical. The Bar must become more efficient. The amount of time wasted at the Bar makes the legal profession very unattractive to young men and women who have a lot of options.”

    On incessant adjournment of cases, Babalakin said: “Cases must go on the dates and time they are slated to go on. Courts must adjudicate on matters on the dates they are slated to go on. Courts must not sit at the convenience of counsel; counsel must make himself available on the dates chosen by the courts. Counsel cannot agree to adjourn cases without substantial financial consequences.

    “A pleasant fallout from this is that law firms must become larger. The time of lawyers will become more valuable. It is not fair to younger lawyers that they spend a whole day in court and their matters are not heard because a couple of Senior Advocates have matters in court on the same day.”

    On the criteria for the appointment of Senior Advocates, the eminent lawyer said: “The criteria for appointing Senior Advocates in Nigeria must be reappraised. The current criteria have the tendency to congest the courts. Many cases are filed today not because of the seriousness of the issues between the parties, but because lawyers require a certain number of cases to qualify to apply for the rank of Senior Advocate of Nigeria.”

    Calling for improved remuneration for judges, Babalakin said: “There is need to enhance the status of the Judiciary and reposition it to where it was before 1975. Remuneration of judges must be enhanced. The idea of a judge not having enough resources to live comfortably anywhere in the country is unacceptable.

    “The appointment of judges must be on merit. I do not subscribe to the opinion that the need to comply with Federal Character in the appointment of judges is the reason for the weak appointments made to the Bench. I have had the privilege of working in all parts of Nigeria; every part of the country has exceptional men and women who are deserving of judicial appointments and can be appointed in their zones.”

    The lecture was chaired by the Chief Judge of Kwara State, Justice S. D. Kawu.

    Dignitaries at the lecture include a former Appeal Court President, Justice Ayo Salami (retd), Kwara State House of Assembly Speaker Dr. Ali Ahmad, former Attorney-General of the Federation, Chief Bayo Ojo (SAN) and Malam Yusuf Ali (SAN).

    Others are: Mr Lawal Rabana (SAN), Alhaji Aliyu Salman (SAN) and Chief Duro Adeyele (SAN).

  • Ondo Govt: hike in varsity fees inevitable

    The Ondo State Government yesterday appealed to parents and students of Adekunle Ajasin University, Akungba Akoko, to show understanding and accept the inevitability of fee hike.

    Some of the students went on protest following the announcement of a new regime of fees.

    In a statement by the   Commissioner for Information and Orientation Yemi Olowolabi, the government said “It is very important for the general public and the good people of Ondo State to note that the tuition was arrived at and announced by the governing council after robust and exhaustive meetings with the university’s stakeholders, including the staff, students and parents.

    “It is equally important to note that the current fee of between N23, 000 and N37, 000 charged by AAUA was introduced about 18 years ago at commencement of the University in 2000.

    “How do you explain the fact that students in the Ondo State University of Science and Technology, Okitipupa (OSUSTECH) pay between N120, 000 and N150,000 as tuition per session, those in the University of Medical Sciences, Ondo (UNIMED) pay between N200,000 and N450,000 per session.

    “At the beginning, especially between year 2000 and up till year 2013, the University had it good with subventions from the state government for payment of salaries and execution of capital projects.

    “The fortunes of the University began to suffer with the downturn in the economy of Nigeria, becoming more serious from 2014, when the payment of subventions began to suffer and was eventually reduced.

    “It is rather unfortunate to note that, for a University of its status, no fund has been released for capital projects between 2014 and now.

    “The University further slid into financial problems in 2016 when subventions were not released to the university for a period of nine months. As we speak, the University still has an outstanding subventions, covering July 2016 to January 2017 and totaling N1.48 Billion.”

    According to the statement, despite the fact that other universities across the country have been compelled to hike the fees paid by their students, same cannot be said of the state owned university.

    “There is a wide gap between government subvention to the University and what is required to meet up with salary payment. The monthly wage bill for staff and pensioners is about N220 million while the monthly subvention is N150 Million, leaving a deficit of N70 million every month on salary payment alone.”

    “The public also needs to get the fact correct that there are two major classes of expenses the university is confronted with: Cost of maintenance of students and their education and Salaries for staff and pensioners

    We also need to know that despite its dwindling fortunes, the University is burdened with providing several other important services that cannot be left undone. These include health services, electricity supply and laboratory equipment among several others.

    Olowolabi called on the good people of the state to remain calm and eschew any form of violence, insisting that the governor will address the matter soon.”

  • NCC: why govt intervention is inevitable

    The Nigerian Communications Commission (NCC) has said the government will not hands-off its intervention in the telecoms industry because of the important roles it plays in the economy.

    Liberal economists have argued that government has no business in business, adding that its role should be confined to supervision, regulation and provision of an enabling environment.

    But the Executive Vice Chairman, NCC, Prof Garba Umar Dambatta, who spoke on: Broadband Penetration in Nigeria-Way Forward at the yearly Telecoms Executives and Regulator Forum (TERF) organised by the Association of Telecoms Companies of Nigeria (ATCON) in Lagos at the weekend, said government would keep playing the role of an interventionist in the broadband sector to ensure that coverage is achieved across the country.

    According to him, the country currently has nine terabyte capacity of international bandwidth at the shores from MainOne, Glo One, Sat 3, African Coast to Europe (ACE) submarine communications cable, West African Cable System (WACS) and others

    ACE is a cable system along the west coast of Africa between France and South Africa managed by a consortium of 19 operators and administrations headed by Orange. The consortium agreement was signed on June 5, 2010. The cable was manufactured by Alcatel Submarine Networks (ASN) and was laid by ships from ASN and France Telecom Marine.

    The first phase of the 17,000 km-long fiber optic cable was put into service on December 15, 2012, with an official inauguration ceremony held on December 19, 2012 in Banjul, The Gambia.

    The ACE Cable will eventually connect 23 countries, either directly for coastal countries or through land links for landlocked countries, like Mali and Niger.

    ACE is the first international submarine cable to land in Equatorial Guinea, The Gambia, Guinea, Liberia, Mauritania, Sao Tome and Principe and Sierra Leone.

    He said: ‘’We have duplicated inter-city back haul infrastructure deployed by global system for Mobile Communication (GSM), Code Division Multiple Access (CDMA), and National Long Distance (NLD) operators.

    ‘’However, there are limitations and access gaps in metro fibre deployments to nodes and neighbourhood, and last mile connection to homes and businesses. This requires government intervention to breach this gap.’’

    According to Dambatta, the key objectives of this Next Generation Broadband Initiative of the Commission include achievement of high level of broadband penetration across all geo- political zones in the country; ensuring competitive and affordable pricing of high speed broadband internet; positioning Nigeria as a leading infrastructure hub in Africa; ensuring development of smart incentives to support industry players; and contributing to the growth and development of a knowledge economy in the country.

    Speaking on the key considerations for designing the industry structure for Nigeria, he said it was motivated by factors which include the presence of substantial inter-city back haul infrastructure covering trunk routes in the country. Leverage inter-city layer two transmission services and/or dark fibre capacity; limited fibre penetration and deployment in the metropolitan areas available at competitive prices; lack of end-to-end open access transmission services available on a widespread geographical basis; focus on bridging the infrastructure gap in the industry while ensuring minimal disruption to existing licences and licence conditions; and ensuring that optic fibre infrastructure is available on a fair, neutral and non-discriminatory basis to all operators at reasonable

  • Nigeria’s economy: Is recession inevitable?

    Nigeria’s economy: Is recession inevitable?

    The fears being expressed by some analysts is that Nigeria’s economic signals are decidedly mixed and point to a recession what with rising inflation, dismal gross domestic products (GDP) among others, reports Bukola Aroloye

    On the view of financial and economic analysts, the nation’s economy is indeed headed south judging by the different economic indices.

    One body which has raised its voice above the din over the parlous state of the economy is the Central Bank of Nigeria (CBN).

    The apex bank only recently reported that economic activities declined faster in June, confirming that the nation’s economy formally entered into recession in the second quarter of the year.

    Economic recession is a period of general decline in economic activities and it is typically defined as a decline in year, as it recorded negative Gross Domestic Product (GDP) during the two or more consecutive quarters.

    Indication that the economy suffered contraction in the second quarter, and hence a slide into recession, emerged recently, as the CBN’s Purchasing Manager Index (PMI) for June  revealed that economic activities decline faster in June.

    The CBN stated that the manufacturing PMI dropped to 41.9 index points in June 2016, compared to 45.8 in the preceding month. This implies that the manufacturing sector declined at a faster rate during the review period. Of the 16 manufacturing sub-sectors, fourteen recorded decline in the review month in the following order: electrical equipment; non metallic mineral products; furniture and related products; fabricated metal products; chemical and pharmaceutical products; printing and related support activities; paper products; food, beverage and tobacco products; cement; computer and electronic products; plastics and rubber products; textile, apparel, leather and footwear; petroleum and coal products and primary metal. The remaining two sub-sectors however recorded expansion in the following order: appliances and components and transportation equipment.

    “The composite PMI for the non-manufacturing sector recorded decline for the sixth consecutive month. The index dropped to 42.3 points, indicating a faster decline compared to that in May 2016. Of the eighteen non-manufacturing sub-sectors, fourteen recorded decline in June 2016. Of the eighteen non-manufacturing sub-sectors, fourteen recorded decline in June 2016 in the following order: construction; professional, scientific, and technical services; management of companies; utilities; accommodation and food services; real estate, rental and leasing; electricity, gas, steam and air conditioning supply; educational services; wholesale trade; public administration; information and communication; finance and insurance; repair, maintenance/washing of motor vehicles; and arts, entertainment and recreation. The health care and social assistance sub-sector remained unchanged, while the remaining three subsectors recorded growth in the order: water supply, sewage and waste management; agriculture and transportation and warehousing,” N420bn inflow crashes cost of funds.

    The Statistician General of the Federation and Director-General, National Bureau of Statistics (NBS), Dr. Yemi Kale, had last week released the nation’s economic scorecard for the first quarter of the year – GDP and Unemployment Reports.

    The GDP report showed that the nation’s economy plunged into negative territory with a decline of 0.36 per cent year-on-year (y/y) in real terms.

    The growth rate is 2.47 per cent and 4.32 per cent lower than what was achieved in the last quarter of 2014 and corresponding period of 2015 respectively.

    In nominal terms, the total value of the nation’s economy was put at N22.26 trillion in the first three months of the year.

    The NBS, however, had explained that the weak economic growth numbers could be attributed to a 5.77 per cent fall in the performance of the non-oil sector, which effectively puts  its real growth rate at negative (-) 0.18 per cent in Q1 2016.

    “Contractions in manufacturing (7.0 per cent), financial services (11.3 per cent) and Real Estate services (4.7 per cent) were the principal drivers for the sharp decline in the non-oil sector.

    The oil sector on the other hand, however, expanded by 1.89 per cent, which is an improvement from the 8.28 per cent and 8.15 per cent recorded in Q4 2015 and Q1 2015 respectively.

    This came surprising given record low oil prices at the beginning of the year coupled with marginal decline in the nation’s oil production to 2.11 million barrel per day from 2.16 million barrel per day in the last quarter of 2015.

    “In terms of jobs, the nation’s economy performed woefully as well, as unemployment rate rose to 12.1 per cent in Q1 2016 from 10.4 per cent in Q4 2015. Underemployment also increased to 19.1 per cent from 18.7 per cent in the last quarter of 2015.

    The poor job numbers were on the back of 1.9 per cent expansion in the country’s labour force as well as 340,000 net reduction in the number of persons in full-time employment.

    While assessing the Q1 GDP number, analysts stated that the first quarter figures have set the tone for the nation to enter into an economic recession by the end of the first half of the year as the weaknesses in the non-oil sector (manufacturing and financial services) are still very inherent.

    However, an economist, Professor Akpan Hogan Ekpo, has said the Nigerian economy is currently in recession, after studying relevant macroeconomic and social indices.

    According to him, in economics, it is possible to ascertain that an economy is in recession through the comparative study of statistics like the GDP, unemployment rate, inflation rate, among others.

    Ekpo who gave this insight which delivering a keynote paper in Lagos at the weekend at the inaugural lecture of the Centre for Financial Journalism said: “The morphology of growth indicates an economy with positive growth trajectories but no development.”

    The university don, who is also the Director General of West African Institute for Financial and Economic Management, said: “The high rates of unemployment, combined with reduced output in two quarters of 2015, suggest an economy in the sphere of stagflation, a prelude to a recession.”

    He also noted that GDP numbers, as provided by the National Bureau of Statistics (NBS), experienced significant declines in 2015.

    “The growth of the agriculture sector’ dropped from 4.47 per cent in the third quarter of 2014 to 3.46 per cent in the same quarter of 2015, a decrease of 1 per cent,” he said.

    He also noted that the industrial sectors contributions to GDP declined from 24.20 per cent in the third quarter of 2014 to 23.5 per cent in the same quarter of 2015.

    “This is an unhealthy situation given the importance of manufacturing in driving growth and development as well as job creation,” he explained.

    Although inflation had been steadied at single digits, due to the central bank’s tight monetary policy, Ekpo noted that the rising rate of unemployment makes mockery of the positive trajectory, currently standing at almost 27 per cent.

    He lambasted the NBS for trying to shy away from this sordid fact in its latest unemployment rates that suggests the economy is close to full employment.

    While admitting that recession is inevitable in any capitalist economy, Ekpo noted that the President Muhammadu Buhari government must put in place effective policies to combat the misery it brings upon the common man.

    The professor went on to advocate  policies that would prioritise massive investment in hard infrastructure, employment generation, investment in housing construction, rebuilding the public school system, building strong institutions, and an aggressive monetary and fiscal policy.

    “It is expected that President Buhari has a committed team that would put the economy on the path of sustained growth and inclusive development,” he said.

    Meanwhile, the International Monetary Fund (IMF), last Monday, admitted that the Nigerian economy “will probably” shrink in 2016, performing below the IMF forecast for the country.

    Speaking in Abuja, IMF resident representative in Nigeria, Gene Leon, said energy shortages and delayed budget weigh on output in Africa’s largest economy.

    After contracting by 0.4 percent in the first quarter of 2016, Leon said Nigeria will experience some growth in the second half of the year, but he added that it would not be enough to upturn initial shrinkage.

    “I think there is a high likelihood that the year 2016 as a whole will be a contractionary year,” Bloomberg quoted Leon as saying.

    “While the economy should look better in second half of the year, growth will probably not be sufficiently fast, sufficiently rapid to be able to negate the outcome of the first and second quarters.”

    The IMF had initially cut its 2016 growth forecast for Nigeria to 2.3 percent in its April Regional Economic Outlook from 3.2 percent projected in February.

    The World Bank on the other hand lowered its forecast to 0.8 percent last month, citing weakness from oil-output disruptions and low prices.

    Leon said “most people would agree that if you should fix one thing in this country, it should be power. There is a need to start changing the power equation from 2016, from today, not tomorrow or later.”

    He added that the inflation, which is currently at 15.6 percent, may surge a little more in the months ahead but would not go beyond 20 percent before the end of 2016.

  • Is fuel subsidy ideologically inevitable?

     If indeed fuel subsidy assists the low-income and the unemployed, it is not to the extent that it benefits the middle-class

    “What we have simply done is a reorganisation. We have five business entities focus on business: Upstream, Downstream, Refineries, Gas and Power that are there before.
    “There is also Ventures that captures all our little companies that were not having proper stewardship. They are run by individuals who report to the GMD.
    “The NNPC is still a whole. There is nothing new that has happened”.—Minister of State for Petroelum.

    This article had appeared on this page before. It is being republished in view of the new resurgence of labour unions’ interest in the governance of the country at large, all in the name of protecting the interests of workers and the poor. Just last night, the Minister of State for Petroleum had to be seeking semantic refuge in a forced distinction between unbundling and reorganizing of NNPC. Apparently, this linguistic struggle on the part of the Petroleum Minister for State must have been made in order to appeal to striking PENGASSAN union members who were up in arms to stop unbundling of the NNPC. Admittedly, labour unions do in a democracy have the right to protect the interests of their workers, but they do not have the right to prevent those elected to govern the country from doing their job. If there is a serious danger that government’s decisions can threaten the welfare of citizens at large, it should not be just labour leaders and workers in a particular company that should block implementation of such government policies. Such fight should be between citizens who have delegated their power to govern themselves to representatives. Efforts to fight fuel subsidy, increase in electricity tariffs, unbundling of NNPC or any other government agency should not be made by labour unions alone. They need to be inclusive to the extent of calling for a referendum that allows citizens to indicate their preference. And citizens should not be just those who are lucky to have jobs and thus become eligible to belong to unions, but all other categories from farmers to the unemployed. The struggle of PENGASSAN against unbundling of NNPC is reminiscent of the opposition of other labour organisations to fuel subsidy removal a few weeks back, hence the return of this article to this page today.

    Many cases are being made in the traditional press and the social media in support of cancelation of fuel subsidy in the country. Some pundits base their position on evidence of corruption in the handling of the subsidy scheme, citing examples of revelation of irregularities in various reports of committees established to probe the country’s subsidy scheme. Examples of financial irregularity are drawn from Farouk Lawan Committee’s Probe in 2012. This report claims that N232 billion on subsidy was paid to marketers for PMS in 2011 for fuel that was not supplied. The same committee also established that, contrary to the claims of marketers that 60 million litres was imported for each day in 2011, only 31 million litres per day was accounted for.

    Some commentators focus on the Nuhu Ribadu Probe in 2012 to argue for cessation of subsidy on the ground of lack of transparency. They draw attention to the report that NNPC deducted subsidy-related expenses before payment to the Federation Account in 2011. This group argues that NEITI’s audits from 1999 to 2011 also confirmed that NNPC deducted a total of N1.40 trillion for subsidy. Similarly, the Presidential Committee on Verification and Reconciliation of Fuel Subsidy (2012) is cited by anti-subsidy commentators to illustrate that 197 subsidy transactions worth N229 billion were illegitimate and that actual expenditure on subsidy was higher in the same year than appropriated sums for fuel subsidy.

    Economic thinkers of the free market persuasion also argue that natural resources are finite and attract largely time-limited revenues, more so if such resources are sold in the international market where the exporting country has no control over price stability. This group posits that it is not rational for any government to prefer fuel subsidy for citizens across the social spectrum to promoting sustained inclusive economic development through investments that can have multiplier effects on sustainable empowerment schemes for the underprivileged. This group calls for an end to fuel subsidy which its spokespersons believe to be a non-sustainable way of allocating natural resource revenues.

    On the other hand, trade union leaders and self-defined advocates of the poor argue passionately in favour of continuing with fuel subsidy. The trade union’s claim includes the need to view fuel subsidy as a non-negotiable poverty-alleviating policy. This school of thought calls on government to accept the need to make every Nigerian enjoy the fruits of a natural resource that under a unitary system of government is viewed to belong to the entire country, regardless of the damage the exploitation of such natural resource does to the economy and ecology of the communities in which such resources are located.

    Another line of thinking within this group is that underpaid workers, poor, and unemployed citizens need fuel subsidy to mitigate the knock-on effect of their poverty. The same group also argues that it is unfair for the federal government to stop fuel subsidy until the government is able to create the type of transportation infrastructure that exists in more developed countries, where fuel subsidy is discouraged as a policy. They add that the government must repair existing refineries and construct more to bring the price of refined petrol for domestic consumption down to the point of making fuel subsidy unnecessary. The Jonathan government accepted the thinking of labour leaders by creating another bureaucracy, Sure-P, to pacify workers and labour leaders, after agreeing to peg the price of petrol at N97 per litre. Just like the subsidy scheme itself, it did not take a long time for Sure-P to become another trick to occlude financial mismanagement by the country’s venal political elite.

    The position of trade union leaders and believers in social democracy appears unassailable. In a country where there are not many social assistance programmes for citizens at the bottom of the economic ladder, there should be nothing wrong with calls for special assistance to underpaid and unemployed citizens. In terms of fine ideological thinking, trade union leaders and their social democratic supporters are making respectable arguments. But the hard question that needs to be asked and answered by radical social and economic thinkers is whether fuel subsidy is the best way to assist the poor in our country.

    Despite the social democratic credentials of this author for over half a century, I do not believe that there are no better ways to assist the poor than the current fuel subsidy that is as enmeshed in the culture of political and bureaucratic corruption as it can ever be in any human space. In a country in which political parties do not openly embrace any noticeable form of social democracy, just as in countries such as Canada, Denmark, Finland, Ireland, Netherlands, New Zealand, Sweden and Norway, where social democracy is a fact of life, there are hundreds of ways to assist the poor without having to attempt to pay some of the cost of fuel for them. In these social democratic systems, the line between the middle-class or middle-income and low-income groups is made clear when policies of social assistance are being crafted. It is not so in the case of Nigeria’s fuel subsidy scheme, which allows upper-middle class professionals to enjoy fuel subsidy that should have been reserved for the underprivileged.

    The argument that fuel subsidy in Nigeria is to protect the poor is spurious. Out of the 145 vehicles per 1,000 citizens in Nigeria, 85 of them are cars belonging to middle-class members of the society. It is not an exaggeration to say that it is the car-owning middle-class citizens that benefit largely from fuel subsidy. If indeed fuel subsidy assists the low-income and the unemployed, it is not to the extent that it benefits the middle-class. Definitely, there are better ways to assist the poor and the under-paid than for labour unions to play the role of opposition to government policies, more so when such policies have no direct bearing on the conditions of work and service in their place of work. Unbundling or reorganising NNPC without loss of jobs to existing workers appears not to have any direct bearing on the situation of the country’s downtrodden.

  • Is fuel subsidy ideologically inevitable?

    Is fuel subsidy ideologically inevitable?

    For example, the federal government can use the money spent on fuel subsidy to pay for such services as free education, free meals for school children, free health for the poor, social welfare checks for the poor, and free adult education for the poor. 

    Ade Alabi was sick in a village near Ibadan during the first fuel scarcity this year. His neighbour had a car and was willing to take Ade to the nearest primary health centre. Unfortunately for Ade, the raging fuel scarcity at the time prevented his neighbour from having petrol to buy, even though he was ready to pay the prohibitive price of N150 per litre charged by Black Market sellers of petrol in the village.  All efforts to take Ade to the hospital on his own okada proved futile. There was no rubber hose to transfer petrol from Ade’s okada into the car of his neighbour. Even though Ade had a brother who could ride okada, his brother was just as big as Ade. It was not possible to have both brothers on the okada with a third person to prop Ade up on the way to the clinic. While the entire village was thinking about how to get Ade to the hospital, the poor man slumped and died, leaving behind a wife and three children.

    The story above illustrates the danger (to the poor in particular) inherent in the insistence of self-defined socialist ideologues (in and outside the trade unions) on the religiosity of keeping fuel subsidy on account of protecting the poor and workers from avoidable exploitation by a government that is hardly capitalist but palpably thievish.

    Many cases being made in the traditional press and the social media in support of cancelation of fuel subsidy in the country. Some pundits base their position on evidence of corruption in the handling of the subsidy scheme, citing examples of revelation of irregularities in various reports of committees established to probe the country’s subsidy scheme. Examples of financial irregularity are drawn from Farouk Lawan Committee’s Probe in 2012. This report claims that N232 billion on subsidy was paid to marketers for PMS in 2011 for fuel that was not supplied. The same committee also established that, contrary to the claims of marketers that 60 million litres was imported for each day in 2011, only 31 million litres per day was accounted for.

    Some commentators focus on the Nuhu Ribadu Probe in 2012 to argue for cessation of subsidy on the ground of lack of transparency. They draw attention to the report that NNPC deducted subsidy-related expenses before payment to the Federation Account in 2011. This group argues that NEITI’s audits from 1999 to 2011 also confirmed that NNPC deducted a total of N1.40 trillion for subsidy. Similarly, the Presidential Committee on Verification and Reconciliation of Fuel Subsidy (2012) is cited by anti-subsidy commentators to illustrate that 197 subsidy transactions worth N229 billion were illegitimate and that actual expenditure on subsidy was higher in the same year than appropriated sums for fuel subsidy.

    Economic thinkers of the free market persuasion also argue that natural resources are finite and attract largely time-limited revenues, more so if such resources are sold in the international market where the exporting country has no control over price stability. This group posits that it is not rational for any government to prefer fuel subsidy for citizens across the social spectrum to promoting sustained inclusive economic development through investments that can have multiplier effects on sustainable empowerment schemes for the underprivileged. This group calls for an end to fuel subsidy which its spokespersons believe to be a non-sustainable way of allocating natural resource revenues.

    On the other hand, trade union leaders and self-defined advocates of the poor argue passionately in favour of continuing with fuel subsidy. The trade union’s claim includes the need to view fuel subsidy as a non-negotiable poverty-alleviating policy. This school of thought calls on government to accept the need to make every Nigerian enjoy the fruits of a natural resource that under a unitary system of government is viewed to belong to the entire country, regardless of the damage the exploitation of such natural resource does to the economy and ecology of the communities in which such resources are located.

    Another line of thinking within this group is that underpaid workers, poor, and unemployed citizens need fuel subsidy to mitigate the knock-on effect of their poverty. The same group also argues that it is unfair for the federal government to stop fuel subsidy until the government is able to create the type of transportation infrastructure that exists in more developed countries, where fuel subsidy is discouraged as a policy. They add that the government must repair existing refineries and construct more to bring the price of refined petrol for domestic consumption down to the point of making fuel subsidy unnecessary. The Jonathan government accepted the thinking of labour leaders by creating another bureaucracy, Sure-P, to pacify workers and labour leaders, after agreeing to peg the price of petrol at N97 per litre. Just like the subsidy scheme itself, it did not take a long time for Sure-P to become another trick to occlude financial mismanagement by the country’s venal political elite.

    The position of trade union leaders and believers in social democracy appears unassailable. In a country where there are not many social assistance programmes for citizens at the bottom of the economic ladder, there should be nothing wrong with calls for special assistance to the unemployed and underpaid workers. In terms of fine ideological thinking, trade union leaders and their social democratic supporters are making respectable arguments. But the hard question that needs to be asked and answered by radical social and economic thinkers is whether fuel subsidy is the best way to assist the poor in our country.

    Despite the social democratic credentials of this author for over half a century, I do not believe that there are no better ways to assist the poor than the current fuel subsidy that is as enmeshed in the culture of political and bureaucratic corruption as it can ever be in any human space. In a country in which political parties do not openly embrace any noticeable form of social democracy, just as in countries such as Canada, Denmark, Finland, Ireland, Netherlands, New Zealand, Sweden and Norway, where social democracy is a fact of life, there are hundreds of ways to assist the poor without having to attempt to pay some of the cost of fuel for them. In these social democratic systems, the line between the middle-class or middle-income and low-income groups is made clear when policies of social assistance are being crafted. It is not so in the case of Nigeria’s fuel subsidy scheme, which allows upper-middle class professionals to enjoy fuel subsidy that should have been reserved for the underprivileged.

    The argument that fuel subsidy in Nigeria is to protect the poor is spurious. Out of the 145 vehicles per 1,000 citizens in Nigeria, 85 of them are cars belonging to middle-class members of the society. It is not an exaggeration to say that it is the car-owning middle-class citizens that benefit largely from fuel subsidy. If indeed fuel subsidy assists the low-income and the unemployed, it is not to the extent that it benefits the middle-class. Definitely, there are better ways to assist the poor and the under-paid.

    For example, the federal government can use the money spent on fuel subsidy to pay for such services as free education, free meals for school children, free health for the poor, social welfare checks for the poor, and free adult education for the poor. In addition, poor citizens can be given social welfare support that they can use to pay for market price of petrol. Furthermore, trade unions can insist that the existing refineries be sold to workers for one dollar each so that workers’ cooperatives can manage the refineries. The federal government can put the matter of removal of subsidy to a referendum to determine what majority of citizens want, as opposed to what paid representatives of labour prefer. Without doubt, if Ade Alabi, referred to at the beginning of this piece and his relations, had been given a chance to vote Yes or No in a referendum on removal of fuel subsidy, all of them would have voted Yes, in hopes that the Ade Alabis of Nigeria can be taken to the hospital before it is too late.

    President Buhari and his team should pluck the courage to address this albatross around the neck of the nation.  They should take time to conduct rigorous research on the number of citizens who are poor and thus need social assistance. Even if such people need to get more than N5,000 a month, the federal government should plan to assist such people, so as to free the country from the chains of fuel subsidy barons in and outside government. In addition to initiating many direct social assistance programmes for the poor, the federal government should use the money from the federation account (currently used to pay subsidy charges) to assist the poor in ways that those assisted can use the social assistance funds to solve the problems most important to them.

  • ‘Gas revolution is inevitable in Nigeria’

    ‘Gas revolution is inevitable in Nigeria’

    Dada Thomas is founder and Chief Executive Officer of Frontier Oil Limited, operator of Uquo Marginal Field, the first marginal gas field in Nigeria with over 37 years of experience in the oil and gas industry. Thomas has managed a variety of increasingly complex engineering projects and general management roles in both Nigeria and Holland before setting up shop. In this interview with Ibrahim Apekhade Yusuf and Ambrose Nnaji, he speaks on the pros and cons of attaining a gas revolution in Nigeria. Excerpts: 

    Much has been said about Nigeria’s enormous gas reserves. Is this a fact or fiction?

    I believe that Nigeria should understand that gas revolution has started slowly but from now it will begin to gather momentum.  I think in the next 10-15 years, you will see a major improvement in the way gas is being harnessed and used in Nigeria to ensure that you can grow the Nigeria economy. It means improvement in the quality of life for Nigerians. For instance, if you turn gas into power, it means that the hair dresser can do her business properly; the welder can do his work properly. It means that the factories can produce goods, it means that people can be employed locally to generate wealth and that can only be well for the Nigerian nation. It means that when you finish your work, you can go to your house and turn the same power for you to cook, on your air conditioner, television set and relax before you go back to work the next day. It means a major improvement in the quality of life of every individual in the country.

    Your company won the contract for the first marginal gas field. What has happened after then?

    Yes, 24 marginal fields were awarded in 2003 and as today, eight or nine are in production. We became the 8th, when we commenced production in January 2014. I think the fact that we are successfully producing today is due to our belief in what we are doing; a belief in the Nigerian economy and system, and a belief that what was supposed to be an oil project turned out to be a gas project, but we did not run away – we did not abandon it, which is what most people have done in the past. We saw that there is a potential for gas to unleash the Nigerian economy if gas became a viable thing to do. We persevere; we took a chance and along the journey, gas pricing improved.

    In 2010, the Minister of Petroleum Resources and this current regime increased gas pricing from the $0.5 per thousand standard cubic feet to $1.5. So, that made our budget more hopeful but that was not enough. We persevered and we were able to sell gas on the willing-buyer-willing -seller agreement, first of all, with the Ibom Power Plant and then secondly, with Calabar National Integrated Power Project (NIPP). That allowed us to progress the project on the basis, which is not hugely profitable but, at least, can see some light at the end of the tunnel. I think that the fact that the Minister of Petroleum Resources has again announced an increase in price from $1.5 to $2.5 per thousand cubic feet – you guys should not keep on mixing the units. MSCF is a thousand standard cubic feet; MMCF is million.

    That success tells you the fact that yourself and our partners persevered in what we believed in. We managed to secure the gas contracts and our partners managed to raise the money because their job is to raise the money for this project; our job is to operate. The success of that dream and that perseverance paid off on August 14, 2014, when President Goodluck Jonathan himself came to formally inaugurate the Uquo Gas project and the gas plant. We are truly thankful to God that we have achieved something, which really nobody else in Nigeria has achieved; which is to successfully bring on stream the largest non-associated gas project in sub-Sahara Africa and, of course, Nigeria. We are proud of that. It is the first marginal gas field; every other marginal field has been oil. This is the first marginal gas field development; this is the first gas-to-power project by an indigenous group; this is the first development of a gas supply value chain in the south east Niger Delta – completely brand new. All those are the major firsts, which this project has recorded and we are very proud of that.

    I believe there is a future for gas in Nigeria. As for Frontier Oil, we have been in the forefront to develop gas for domestic use and we also want to develop oil as well. As an integrated oil and gas company, we believe in doing the work professionally with integrity because that is the only way to truly grow in the gas field in Nigeria.

    I can tell you that the other marginal fields’ operators that are not producing will know what will be their fate in 2015 when the government will decide whether or not to revoke their licences. My prayer is that the government will look at each case individually or on its own merit. By the end of March, we will know which marginal fields’ company retained what and which one has not lost their licences. I think they should increase their efforts to bring the fields into production. This has shown that marginal fields can contribute to the development of oil and gas industry in the country.

    Considering the onerous task of managing the kind of assets you have, how has Frontier Oil been able to cope thus far?

    Frontier was formed with a very clear vision. The vision was to build a Nigerian E & P company that would have the demonstrated capacity and ethical approach to developing an oil and gas business entity. So, we have always been very focused; we are not rent seekers; we did not form our company to be rent seekers. We formed our company to grow from a little income into a mighty oak. Frontier was formed by a group of like-minded people; I am the founding Chief Executive Officer. The Chairman is Chief Odoliyi Lolomari, who is a former Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) in the 1980s and represented Nigeria at the Organisation of Petroleum Exporting Countries (OPEC). There are also ex-directors of Nigerian Agip Oil Company (NAOC) – professionals with considerable oil industry experience and non-oil industry experts to broaden the capability of the board. We have a diverse board but mostly oil industry experts and we formed Frontier Oil to grow from a little company to a regional company, making use of Nigerian expertise, knowhow, capability and, of course, you mix that with international knowhow because that is the nature of the oil and gas industry. That is our objective. We were formed in 2001 to participate in the first marginal field round and we won it in 2003 in the most competitive marginal field round. We came out on top and we are very proud of that. As I said before, we won it 100 per cent – some of the fields have two or three people joined together but only Frontier Oil won this field. As at today, we have a very broad-based shareholding. There are more than 30 shareholders in Frontier Oil and they are all Nigerians. We are 100 per cent owned and managed Nigerian company. We have grown from staff strength of only me in 2001 to over 130 Nigerians as at today. There is no single expatriate in Frontier Oil. The Uquo Gas Processing Facility was inaugurated and is being operated by 100 per cent Nigerian Frontier personnel. There is no single expatriate in Frontier Oil or in that plant. So, we are very proud that our vision of 2001 is still valid. What we want to do now is that having brought Uquo to life, we want to grow the business- we want to grow the company because our vision is to become a regional company that will be listed on the Nigerian Stock Exchange and possibly, either London or Toronto, or whichever other bourse suits our objective.

    The International Oil Companies (IOCs) are not keen in investing in domestic gas because they said that the price is not economic to justify the investment. How are you coping with the current price of $2.5?

    I think you have to look at the context of everybody. The IOCs are very different from indigenous companies. The reason that they exit marginal fields in the first place is that within the portfolios of the IOCs, those fields are not just economic to develop because their cost structure, their overheads, is just too large to make such fields profitable. In any business, you have to look at cost-benefits ratio. If the benefit is low compared to the cost, you will leave it. So, you don’t blame them based on their own criteria for not wanting to do certain things.

    Remember, they have one thing they call choice. They are sitting in The Hague or London or in New York on San Ramon or wherever it is with a $10 billion and they have the whole world to look at. If the cost per unit of operation is X there and 2X there and 3X in the other place, you will naturally go for X. So, the IOCs have the power of choice to make a decision because they have global reach.

    If Nigeria continues to make itself unattractive, we will continue to lose investments. Small players like ourselves – our cost structure and overheads – are completely different. That is why we can make marginal fields successful. That is why there are nine marginal fields producing today, from fields the IOCs would have never produce. But coming to gas – why are we able to make a success of it? We are not in the heaven yet with Uquo. The Managing Director of Total spoke in your paper recently, saying that they have spent $900 million to build gas pipeline from Oil Mining Lease (OML) 58 to supply Alaoji Power Station and that the current gas price will not make the project economic, despite the fact that they have done it and that to make sure that the project is economic, they need between $5 and $7 per thousand standard cubic feet of gas. I fully agree with her. The current increase from $1.5 to $2.5 per thousand standard cubic feet is very good but we are not yet near where we ought to be. We are still well below world market price. What it means for us is that it is encouraging that slowly, instead of digging ourselves into 50 feet grave, may be, we are in a 23 feet grave and with time, things will change that will allow our project to become totally economic.

    We need to get gas pricing domestically as attractive as may be, Henry Hub in the United States; I am not saying as in Korea because in Korea, that is the highest gas price paid in the entire world. Henry Hub is about $5, $6 or $7 right now in the United States and that is in spite of Shale gas. We need to get gas pricing moving in that region in Nigeria for you to have absolutely no reason to beg anybody to invest in gas. They will invest so much in gas; you will have so much gas that we won’t know what to do with it. This current price of $2.5 per thousand standard cubic feet is nice but is not going to have people screaming to invest in gas. There is another impediment, which is the infrastructure for distributing gas and transmitting gas. It is expensive to build pipelines and there is not enough gas grid to make it attractive for people to just be developing the infrastructure. The fiscal regime for gas in Nigeria is under threat as we sit here now. What do I mean by that? Here is an industry you want to grow and my simple-minded concept is that to grow an industry, you should incentivise it. Instead, in the proposed Petroleum Industry Bill (PIB), they propose to increase gas taxation from 30 per cent Company Income Tax (CITA) to 80 per cent. How does that incentivise an industry? So, you are going to nearly triple the tax and yet you think people and going to run and put their money in that. Secondly, royalty on gas is steep. Why do you want to put additional royalty on top of the proposed 80 per cent taxation? You have royalties on gas. Those policies do not seem sensible to me. To me, what I would expect is to incentivise people to bring their money and put it into gas, which is a long term investment. It is not like oil where people expect to make their returns in two years. Gas is a long term investment. Therefore, you need to incentivise people – either decrease or retain the current tax rate, which is 30 per cent; you need to make the royalty regime far less stringent. Relax it, okay. Thirdly, I think you should give people tax break on gas development. This is what any sensible nation that wants to incentivise a sector to grow by people bringing their money and putting it in that sector. I don’t think we should be increasing their taxation on gas. I don’t think we should have stringent royalty on gas. I think we should have tax holidays. Why shouldn’t we? Remember that when Liquefied Natural Gas (LNG) was being built, they got massive tax break; massive tax holidays. When Chevron was building, the Escravos project, which has just produced its first liquid, they were given massive tax break. Why is it now that indigenous operators like us, who are going to provide all your new gas in the next five years – ourselves, Niger Delta, Seplat – those are the new gas that will come on stream in this country, not from the IOCs. Why are we facing penalties rather than incentives? If you could incentivise IOCs for Bonny LNG; for Chevron’s Escravos, why are you not incentivising us, your home-grown players? It does not make sense to me. I will call upon the government to truly look at incentivising gas by reducing or retaining current tax; relaxing royalties; giving tax break and giving gas access to people like us, who have proven that we are not jokers and that we are real. Total came; Shell came – Shell used to own the entire country. When they come, they have may be, only one field but over the years, they have 20 or 30 fields.

  • Price increase inevitable – MultiChoice MD

    Price increase inevitable – MultiChoice MD

    John Ugbe, Managing Director, MultiChoice Nigeria, explains the organisation’s new subscription rates

    The hike in MultiChoice’s subscription rates has hit subscribers like lightning. The prevalent view is that MultiChoice has no justification for such and is just taking advantage of the lack of alternatives in the sector. How accurate is this view?

    Price increases are always painful and we are very mindful of this. However, they are sometimes necessary for businesses to provide service to their consumers and also provide necessary returns to stakeholders. They ensure that we can continue to provide quality entertainment to our subscribers even with the rising costs and inflation. It is because of the prevailing economic situation and rising cost of content and our other inputs that we have had to increase the cost of subscriptions and this has affected all the other entities across the continent. If you look at a lot of goods and services you will see that there an increase in a lot of sectors as we are not isolated.

    Many subscribers are calling on MultiChoice to institute a pay-as-you-watch regime, which some claim is available to MultiChoice subscribers in South Africa and some other countries. Are you looking in that direction?

    As a leader in innovation, we consider all viable options to provide our subscribers with the best and most affordable way to consume entertainment. At the moment, we provide our services through a model that is in use around the world that allows us to take advantage of the economies of scale and provide an aggregate service that reduces the costs for all subscribers.

    I can confirm that no other country under MultiChoice is providing its pay-TV services through a “pay as you watch” model. People often confuse “Pay as you watch” model with “Pay Per view”, where essentially, subscribers pay specifically for big ticket events in addition to their monthly subscriptions. This effectively even makes the subscriptions more expensive.

    We have opted for a more economic model where our subscribers have access to these big tickets events as part of their monthly subscriptions. We will always strive to bring the best entertainment in the most affordable way and also continue with our innovation. An example is our Catch up service which is our Video on demand service, that allows you to watch your best programs at your convenience and our Box office service which lets you download the latest blockbuster releases with your PVR decoder and online from your couch at home.

    There are claims that the hike in subscription rates has been effected only in Nigeria. Is this the correct position?

    This is not true, as subscription rates have been increased across the continent. However, as an independent entity, we ensure that we take the decisions based on the prevailing market conditions. For example, where other countries may have effected price increases last year, this is our first increase in two years notwithstanding the changes in inflation foreign exchange and other indices in our local market.

    Most MultiChoice subscribers in Nigeria believe the country is where the highest subscription rates are charged. Why is this so?

    No, we do not have the highest subscription rates as many people believe and this is a fact. Subscription rates vary in Africa and the rest of the world according to several factors including the local costs of doing business. I am sure that you can independently verify that Multichoice Nigeria does not have the highest subscriptions in the world or the rest of Africa.

  • National Conference inevitable, says The Patriots

    National Conference inevitable, says The Patriots

    AFTER a long while, the sovereign national conference battle yesterday, with some elders telling President Goodluck Jonathan that it is inevitable.

    According to The Patriot, that is the only way Nigeria can develop.

    In Abuja, they submitted a 13-page document titled “Transforming the nation through a national conference” to the President during a meeting at the State House in Abuja.

    The leader of the group, Octogenarian Prof. Ben Uwabueze, was accompanied to the meeting by Chief Ayo Adebanjo, Prof. Kimsa Okoko, Senator Ben Obi, Mrs Bola Kuforiji-Olubi and Michael Adekoya.

    The other members of the delegation were Chief Solomon Asemota, Mr. Chris Okoye, Mr. Michael Orobator and Air Commodore Dan Suleiman (rtd.)

    They met with the President behind closed doors.

    After the meeting, Nwabueze told reporters that although the President is qualified to contest in 2015, he believes he should not run.

    Stressing that the national conference should be convened before 2015, Nwabueze said the 1999 Constitution was not prepared by the people but a schedule to Decree 24.

    He called for a new constitution, which, he said, should derive its authorities from the people.

    Nwabueze said he stood by his earlier position that Jonathan should not contest the election but concentrate on delivering the goods to Nigerians.

    Reviewing the meeting with Dr. Jonathan, he said: “Briefly, we talked about the transformation of this country; what we said is that this country , the situation in which we have found ourselves today is in dire need of transformation. Its entire economy, the entire polity and the entire society would need to be transformed.

    “We believe that the way to achieve that objective is through a National Conference, a National Conference of ethnic nationalities in this country. We have done our own research, and we have in this country 389 ethnic nationalities. We need to bring these nationalities around a conference table to discuss how we are going to live together as one country – in peace, in stability, in security – as one country with the aim of achieving national unity.”

    “But as of today, we are not a nation yet; we are a state. So that is the gist of what we put forward to Mr. President and that this conference should be convened as a matter of priority as soon as possible, in any event before the 2015 general elections.”

    On the belief by the National Assembly that there is no need for a sovereign conference since there is an elected National Assembly in place, he said: “This is what we want you to read in the memorandum, paragraph 18 -32 where we have discussed this matter. It is important that what the National Assembly is putting forward is their powers under sections 8&9 is to alter the constitution. Power to alter is not as important as the power to abolish what you are altering and to replace it completely.”

    “And we said ‘no; in this country, we need the people’s constitution whose source of authority derives directly from the people’. Forget about the contents; we will talk about the contents later, presidential, parliamentary and all that. Though important, but they are not as important as the source. Where does this supreme law derive its authorities? It must be directly from the people and that is the position of at least 85 per cent of the countries of the world.”

    He continued: “So, we examined this and we said this is a bogey; there is no problem; don’t confine yourselves to sections 8&9, because the 1999 Constitution is a schedule to Decree 24. If you read Section 1(1) of the Decree these are all preambles to that decree and the 1999 Constitution that you are talking about, it is a schedule to Decree 24. Repeal the decree and the constitution will disappear and you enact a brand new constitution, which would derive its authorities from the people. That was done in 1963, when we adopted the Republican Constitution to replace the Independence Constitution. That 1960 Constitution was also a schedule to British Order-In -Council just as the 1999 Constitution, is a schedule to the Decree 24.”

    “In 1963, we abolished the schedule under Section 2 of the Order-in-Council and made a new constitution called the Republican constitution. That is what we should do now; abolish the schedule and relieve yourself entirely free to make the people’s constitution.”

    Stressing that the meeting with President Jonathan was not on whether Jonathan should or should not contest 2015 election, Nwabueze said he stood by his earlier position that he should not contest but face “the paramount problem of this country”, which is “national transformation”.