The Nation Newspaper

Tag: Oil and Gas

  • Govt to take over ‘illegal’ oil and gas free zones

    The Federal Government may next week take over Oil and Gas Free Zones that have failed to register with the regulatory Oil and Gas Free Zones Authority (OGFZA), The Nation has learnt.

    It was learnt that the government decided to take this step after its use of moral suasion to make the oil and gas free zones comply to its regulations failed.

    An official of Lagos Deep Offshore Limited (LADOL), who pleaded not to be named, said the decision of the government  to force operators to register with the regulator was borne out of the need to provide standards.

    OGFZA’s Head of Operation/Technical, Mr Adekunle Ajayi, said the government had written  and visited Snake Island Integrated Free Zone(SHIFZ), Lagos Deep Offshore Limited, Lagos, and other oil and gas free zones across the country on the matter.

    He said the letter for the take-off of the operation was dated November 17,  this year, adding that the deadline is 30 days from that date.

    Ajayi said: ”Operators of Oil and Gas Free Zones can be said to have been operating unilaterally, when they refused to register as members with the Oil and Gas Free Zones Authority. Such actions are contrary to the Article No 8 of the 1996 constitution that established the Oil and Gas Free Zones Authority (OGFZA).

    He added that the body, in line with section 5, sub-sections 2 of the 1996 Constitution and other extant laws operating in Nigeria, is empowered to regulate the oil and gas free zones.

    “The Oil and Gas Free Zones Authority will not hesitate to apply sanctions in order to instill discipline in the sector. Nigeria has over 100 oil and gas free zones. While many of the zones are doing well, others are not. The body wants to ensure that the zones generate huge revenues for the government and also help in promoting the economy”.

    Ajayi said oil and gas free zones, have generated N76billion yearly and created over 200,000 jobs, adding that the zones have a the multiplier effects of on the economy.

    Also, OGFZA’s Head of Trade and Investment Department, Mr Adamu Knotogora, said the agency was not duplicating the roles of the Nigerian Export Promotion Council (NEPZA), adding that the two organisations perform different roles.

    NEPZA regulates the non-oil sectors, while OGFZA supervises  the oil and gas free zones.

    LADOL Nigeria Limited, Chief Executive Officer,  Dr Amy Jayesinmi, said the oil and gas free zones can provide huge earnings for the country, urging the Federal Government to provide enabling environment for their operators.

    She advised stakeholders, including the government, to ensure that LADOL and other oil and gas free zones become industrial hubs in West Africa.

    The issue,  Jaiyesimi said, would make Nigeria play dominant roles in oil and gas servicing in the region.

  • Oil communities pledge support to end militancy in Niger Delta

    Oil and gas host communities in the Niger Delta region have disclosed commitments to support oil and gas firms to end militancy in the oil producing states.

    The communities, under the aegis of Oil and Gas Host Communities Association, said beyond dialogue, it was ready to initiate development and empowerment programmes that would engage the aggrieved youths.

    In a statement issued by the association’s spokesperson, Franklyn Nneji Monday in Abuja, he stated that most youths had to engage in militancy due to joblessness and destruction of their ecosystem.

    He condemned situations where reasonable revenue of the federal government was sourced from the region, yet the host communities remained poor and under-developed.

    Nneji said: “The association wants to ensure that people of the host communities are adequately engaged and empowered. This is for the interest of the people, the oil and gas companies and the nation at large.

    “The major cause of insecurity, youth restiveness and militancy is idleness, lack of what to do to earn a living. Youths of the host communities are roaming the street without anything to do to support their existence, it may be difficult for them to be employed but the surest way for them to be engaged is though self-employment, but then, how can they be self-employed without technical and financial support?

    “The oil and gas host communities association will therefore identify the people of the Host Communities and harness their potentials to ensure that they are adequately engaged and empowered.”

    The association informed that in order to achieve their mandate, it would encourage formal education among the host communities, source for available amenities for people of the host communities and encourage entrepreneurship among the people.

    “The oil and gas host communities association will make this possible by liaising with the necessary organs of government, multinationals, oil and gas companies operating in Nigeria and also ensure that all conflicts are resolved through dialogue. It is a new approach to bring peace,” Nneji added.

  • Nigeria looses $3.3b to oil and gas Companies 

    Nigeria looses $3.3b to oil and gas Companies 

    Nigeria has lost in the minimum as much as $3.3 billion as result of a series of extraordinary tax breaks granted by the Nigerian government to some of the world’s biggest oil and gas companies.

    The companies include Shell, Total and ENI, which form part of the Nigeria Liquified Natural Gas (NLNG) consortium. The tax break started in 1999. The NLNG Act grants a ten year tax holiday making the company exempt from all corporate tax payments for the first ten years of operation.

    According to ActionAid, the NLNG Act makes the consortium the only company in Nigeria with its own law defining its tax framework, also permanently exempts the consortium from a range of other taxes.

    The Country Director of ActionAid Nigeria, Ojobo Atuluku disclosed this during the launch of the report “Leaking Revenue: How a big tax break to European gas companies has cost Nigeria billions” in Abuja, Tuesday.

    According to Atuluku, “that amount is the equivalent of twice our national education budget and thrice the healthcare budget for 2015.”

    “This calls for serious concern in a country where over 20 million children do not go to school and almost 15 out of one hundred children die before their fifth birthday,” she said.

    ActionAid researches from 2013, she said, “show that the tax incentives cost developing countries at least $138 billion every year, part of which is an estimated amount of $2.9 billion, or a whopping N577 billion Nigeria forfeits every year as a result of tax incentives.” Adding that much of this fund would have gone into social infrastructure developments.

    “There is incontrovertible evidence from researches conducted in many developing nations that corporate profits are soaring, and corporate investments in low income countries had tripled since the 1980s. Yet the corporate tax revenues of the countries where these profits are generated have flat-lined as a percentage of their GDP,” she said.

    This, she said, has resulted to “women and children suffering as healthcare, schools and other key public services are starved of resources,” while suggesting that if many of these tax incentives are presented, we will be able to improve the lives of women and children with improved availability of health, education and other key public services.

    ActionAid and their partners on the Tax Justice platform “want Nigeria and other resource rich developing countries to begin to review their tax incentive policies and Nigeria National Assembly in particular not only to review existing laws on tax incentives but to exercise caution in the proposed amendment to the Companies Income Tax Act 2004.”

    The proposed amendment, Atuluku said, “aims to provide additional tax incentives for gas utilization, mining sectors and businesses located in areas with inadequate infrastructure. It suggests increasing the length of specific sectors’ tax holidays, and offering 10 year tax holidays to companies established where no infrastructure, that is electricity, water, or tarred road, is provided by the government.”

    “As a consequence of this new bill, more foreign companies would be allowed to benefit from large breaks as the three oil companies in this case study did,” she said.

    ActionAid urged the government to publish all tax incentive policies and practices; to systematically count and publish the full cost of tax in incentives through published tax expenditure reports and publish all communications with corporations pertinent to tax incentives.

    ActionAid urged multinational companies to be transparent about their finances, including reporting their profits, sales, assets, number of employees and tax payments to governments in each country whee they operate (including taxes not paid due to tax breaks.

    In his address, Member of the House of Representatives, Herman Lorwase Hembe, representing Vandeikya/Konshisha Federal Constituency, Benue State called on his colleagues at the National Assembly to exercise caution in the deliberation on the proposed amendments to the Corporate Income Tax which seeks to extend the granting of pioneer status to companies from five to ten years, as this cannot be in the interest of the country at a time when the country is in need of revenue.

    Reacting to this development, the federal government it was disclosed has set up a committee to review existing tax incentives to determine those that are not in the interest of the country. This disclosure was made by Mr. Funsho Ayo Fadola, Director, Fiscal Policy, Budget Office at the event.

    Fadola also revealed that the committee will start sitting in Abuja given the urgency and importance the minister of finance attaches to the issue of tax incentives.

  • Buhari is determined to diversify economy – Senator

    Buhari is determined to diversify economy – Senator

    Senator Abdullahi Adamu on Monday said President Muhammadu Buhari is determined to diversify the country’s economy.

    He spoke with News Agency of Nigeria in Abuja, noting that the present administration had said it on many occasions that Nigeria could no longer depend on oil and gas based economy.

    “Oil and gas have tended, over time, to spoil us; people have got used to easy money but now the wells are drying, even if they are not, the market is becoming very hostile.

    “The price has gone down and the demand for our oil is very low, even though previous administrations sang the idea of diversifying the economy, they did not do it.

    “Buhari has said that he would make deliberate efforts to diversify the economy and bring on board new attitude toward agricultural production.

    “He believes as much as we do that agriculture holds the greatest potential for job creation if we enhance,’’ he said.

    Adamu said that with agriculture, the nation would have excess food crops as well as industrial crops that would be exported to boost foreign exchange.

    Apart from agriculture, he observed that the country had solid minerals that could turn its economy around.

    “Buhari has assured Nigerians that he would also address the issue of solid minerals and he is taking a look at the entire policy, operations and the investments in that sector.

    “We have information that every one of the 774 local governments in Nigeria has one or more mineral deposits.

    “If we can mine, process and add some value to them, you can only imagine the kind of multiplier effects we will enjoy.

    “Once you can give agricultural and solid mineral sector a boost, sharpen the processes for revenue generation and block the leakages that we know, our economy will take a leap,’’ he said.

    NAN reports that Buhari, while presenting the 2016 Budget to the National Assembly, reaffirmed the commitment of his administration to job creation and economic diversification.

    He specifically laid emphasis on developing the agriculture and solid mineral sectors with increased funding, investment in agriculture and solid minerals, among others.

    He said that his administration would ensure increased capital expenditure with significant resources to critical sectors of the economy.

     

  • FG cancels oil/gas pre-shipment tender exercise

    FG cancels oil/gas pre-shipment tender exercise

    The federal government has cancelled the engagement of Pre-Shipment Inspection and Monitoring agents for oil and gas.

    A statement from the federal ministry of finance signed by Mr. Marshall Gundu the Director of press for the ministry, disclosed that the finance minister Mrs. Kemi Adeosun ordered the cancellation following complaints and petition alleging irregularities in the engagement exercise.

    According to Gundu, “Mrs. Kemi Adeosun has ordered the immediate cancellation of the tendering process for the engagement of Pre-Shipment Inspection and Monitoring Agents for Oil and Gas. The decision was necessitated by the receipt of numerous complaints and a petition regarding alleged irregularities in the process.”

    The statement noted that President Muhammadu Buhari had in June 2015, “mandated the Federal Ministry of Finance, under the then Permanent Secretary, Mrs. Anastasia Nwoabia, to commence the process of engaging Pre-Shipment Inspection and Monitoring Agents. Upon the approval of the Bureau of Public Procurement, a selective tendering process was initiated under which 65 companies were selected and invited to bid.”

    Gundu added that “since the inception of the process, numerous complaints were sent to the Federal Ministry of Finance, suggesting that the method by which the 65 companies were selected was faulty and lacked transparency.

    “Additionally, a formal petition was received by the Bureau of Public Procurement making specific allegations about the process. Under Public Procurement rules, the receipt of a formal petition requires a suspension of the tendering process to allow an investigation. However, in this instance, the Minister has taken the decision to cancel.”

    The finance Minister, Mrs. Kemi Adeosun was said to have lamented that, “the sheer volume of complaints and the wide range of sources they emanated from had raised a sufficient level of concern around the process to warrant a full cancellation rather than a suspension.”

    She further stated that, “This administration stands for transparency and accountability and it is therefore important that all procurement and tendering exercises must be undertaken in accordance with best practices.”

    Pre-Shipment Inspection of Oil and Gas Exports commenced in 2015 and require a Clean Certificate of Inspection to be issued, confirming the volume and the value of all exports. The programme is believed to have enhanced government revenues by preventing misstatement and understatement by exporters.

    The Ministry of Finance stated that it was in consultation with the Bureau of Public Procurement to commence a new process and to ensure interim arrangements for service provision. The Ministry further stated that details of the new process would be communicated shortly.

  • Oil and gas operations: rights and obligations

    Oil and gas operations: rights and obligations

    The world over, natural resources are a gift of nature.  As nature’s priceless gift to man and because nature’s endowment of these resources is without reference to people or nation, the subject of ownership and control is one that has generated a great deal of passion and controversy amongst people and nations.

    Unfortunately, these resources have been identified as playing key roles in triggering conflicts, and, all through history, the struggle for possession and control of natural resources has been the remote, if not the immediate, cause of great wars and human tragedies. The significance of land as a natural resource to man cannot be overstressed. Land, though representing only about one-third of the earth’s surface, provides a platform on which man’s activities ranging from shelter, food, industrial activities and movement are carried out.

    Nigeria has earned huge revenues from the vast oil resources, since the advent of oil in 1956. However, despite the huge revenues, Nigerians remains impoverished particularly in the Niger Delta. The impoverish state of the region has been attributed in the main, to negative impacts of oil activities on the environment and their deleterious impacts on traditional means of livelihoods. Thus, the impact of the land alienation through the Land Use Act has been given little attention. Nigeria has been bedeviled by conflict associated with the effects of natural resource exploitation for human livelihood, settlement and sustainability of the ecosystem.

    This conflict is intrinsically related to structural conflict of groups and factional struggle for resource control, and the mobilization of state power by elite of the dominant ethnic group to advance intrinsic interests. ‘Whose land?’ The Land Use Act 1978 vests all land in each Sate on the Governor. This is the one question that underpins much of the conflict associated with the exploitation of ‘strategic’ natural resources such as petroleum, diamond, gold, timber in Sub-Saharan Africa.

    It is presently at the center of crisis in the Niger Delta. It is thus imperative to examine the legal framework regulating oil operations in Nigeria and find out how these laws have shaped the relationship between the Federal Government and multinational oil companies on the one hand and the oil producing States/communities on the other. It is also the one issue that defines what communities and landowning groups receive by way of compensation for land expropriated for extractive industrial activities.

    The differing stances between the State and stakeholder communities as to who has a legitimate claim to land and the minerals under it can become quite complicated. While the state believes it ‘owns’ the natural resources and, so, must determine how best the exploitation of such resources can bolster national development objectives, indigenous communities often attach more than economic definitions to land. Many indigenous communities regard forests not merely as ‘a collection of trees and the abode of animals but also, and more intrinsically, a sacred possession.

     

    Legal Framework

     

    On attainment of independence in 1960, the Federal Government was vested with the exclusive power to “legislate on mines and minerals, including oil fields, oil mining, geological surveys and natural gas in Nigeria.

    The promulgation of the Petroleum Act of 1969 marked a watershed in the history of petroleum legislation in Nigeria. Its significance is that, among other things, it stipulated for the first time that the entire ownership and control of all petroleum in Nigeria is vested in the Federal Government of Nigeria. It also revised all the terms and conditions under which pre-1969 concessions were granted to Oil Companies. The Petroleum Act and its regulations remain the primary law regulating oil and gas exploratory activities in Nigeria.

    The Act vested the entire ownership and control of oil and gas resources in, under or upon all land or territorial waters in the Nigerian government, and authorizes the Federal Ministry of Petroleum Resources to issue licenses to Nigerian citizens or companies incorporated in Nigeria for oil prospecting, drilling, production, storage, refining, and transportation activities. The Exclusive Economic Zone Act 1978 also vest on the Federal Government of Nigeria sovereign and exclusive rights with respect to the exploration and exploitation of the natural resources of the seabed, sub soil and superjacent waters of the EEZ.

    The Constitution of the Federal Republic of Nigeria 1999, section 44(3), further vest the ownership and control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria, its territorial waters, and exclusive economic zone on the Federal Government, and the Federal Government is to manage such minerals in such manner as may be prescribed by the National Assembly. Thus the Constitution confers exclusive jurisdiction on the National Assembly on matters relating to oil, gas and other minerals.

    This provision is an adoption of a series of statutory laws and regulations promulgated by the Federal Military Government between 1969 and 1990. The most important of these legislations include the Petroleum Act of 1969 as amended, Offshore Oil Revenue Act of 1971, Petroleum Profit Tax Act of 1959 as amended, Land Use Act of 1978 as amended, Oil Pipelines Act of 1978 as amended, Oil In Navigable Waters Act of 1979, Exclusive Economic Zone Act of 1978, Hydrocarbons Oil Refineries Act, the Petroleum Equalisation Fund Act of 1989, Associated Gas Re-Injection Act of 1979, Nigeria Liquefied Natural Gas Act of 1990, Oil Pipeline Regulations (Under the Oil Pipelines Act) of 1969, Petroleum (Drilling and Production) Regulations of 1969, and Petroleum Refining Regulations of 1969.

    Provisions within the Oil Pipeline Act of 1956 (as amended, 1965, 2002, 2004) and the Petroleum Act of 1969 empowers the Nigerian Government to grant access and use rights in relation to land for the purposes of oil prospecting and mining. Once a company has been granted permit, license or lease, the State government has to give access to the land.

    These laws have been one of the major sources of conflict between the host communities, the international oil companies (IOCs) and the Federal government, which have considerably impeded oil and gas production in the Country. The Federal Government with a view to mitigate the effect of these conflicts enacted several legislation such as the Oil Minerals Producing Areas Development Act 1992 which was repealed by the Niger Delta Development Commission Act 2000, the Allocation of Revenue (Abolition of Dichotomy in the Application of the Principle of Derivation) Act of 2004, Nigerian Oil and Gas Industry Content Development Act 2010 and others.

    The combined effect of the Petroleum Act, the Territorial Waters Act, the Exclusive Economic Zone Act and the Land Use Act 1978 is to vest ownership and rights of exploitation of mineral and natural resources in the territorial waters, exclusive economic zone of Nigeria in the Federal Government of Nigeria

     

    Ownership of Land

     

    Prior to 1978, land tenure system in Nigeria was based on various systems of customary law. In the southern states of Nigeria, there was a dual system of land tenure, namely; customary land tenure system and land tenure system under the received English law. Under customary law, families and communities owned land, while under English law; the English legal concepts of individual ownership were recognized.

    The situation was somewhat different in the Northern states where control and disposition of native’s land was vested on the colonial government. A significant turning point in the ownership of land in Nigeria was the promulgation of the Land Use Act in 1978.

    The Land Use Act vested land comprised in the territory of each state in the Governors of the State and such land are to be held in trust and administered for the use and common benefit of all Nigerians. The Act reduced the individual interest in land that was hitherto an absolute ownership right to a mere right of occupancy. The local communities are compensated according to a formula that assesses value based on ‘surface goods’ lost. The compensation arrangements however, do not consider the long-term implications of loss of access to critical livelihood resources.

    Also, the Land Use Act bars courts from addressing any concerns about the amount or adequacy of compensation paid to people who lose access to their land under the terms of the Act. Together, the constitutional provisions on oil and gas, the Land Use Act, the Oil Pipelines Act and aspects of the oil laws in Nigeria have empowered all the tiers of government to expropriate land for use by the oil industry without adequate compensation to the land owners in clear contravention of its International Human Rights Obligations (IHRO), particularly the right to adequate standard of living.

    There are various theories of ownership which include

     

    Absolute Ownership Theory

     

    This theory states that the owner of a piece of land is regarded also as the owner of the petroleum lying underneath the land. Land in this regard includes everything down to the crux and up to the sky. In Nigeria, the absolute ownership by the states is the order of the day. This is clear from the provisions of Section 1 of the Petroleum Act, which provides that the entire property in Petroleum shall vest in the state. Thus mineral oil is absolutely owned, but by the state.

     

    Qualified Interest Theory

     

    This theory states that petroleum cannot be owned until it is captured and reduced into possession. Under this theory the land owner is said not to have title to the oil and gas in situ because of the fact that he can be divested by drainage without consent and without any liability on the part of the person causing the drainage.

     

    The Non- Ownership Theory

     

    This theory states that petroleum is not capable of ownership. Since petroleum is like a fluid that can move from one place to another it cannot be owned in the strict sense of the word. There is not much support for this theory as modern practice show that petroleum though may move from one place to the other but is still subject to ownership by the person or authority that captures it at any particular point in time.

  • Three arrested over oil and gas employment scam

    Three persons have been arrested by operatives from the Zone 5 Headquarters of the Nigeria Police in Benin City have arrested three persons for defrauding members of the public millions of Naira under the guise of offering them employment in the oil and gas industry.
    The suspects are Ehikhamenor Lewis aged 32, Stephen Eefgom aged 32 and Abdul Qadri Ibrahim aged 33.
    They were alleged to have placed an employment advertisement sometime in August 2014 on the social media and 1,122 applicants from Edo, Delta, Lagos and Kano states respectively.
    Police Public Relations Officer, Zone 5 Headquarters, Emeka Iheanacho, who stated this in a press statement said the arrest was effected based on a credible information received by the police on their activities.
    Emeka said the suspects confessed during interrogation that they operated with Jocom Lean Concept Limited to defraud their victims.
    He said investigations revealed that victims paid between ten thousand naira (#10,000) to one hundred and fifty thousand Naira (#150,000) into Mr. Joseph James account, at Guaranty Trust Bank, owner of JOCOM LEAN CONCEPT situate at Comfort plaza, Block 2, Suite 29 New Etete road GRA Benin for application forms among others.
    Items recovered from the suspects included HP Laptops Model, detailed list of about 1,122 victims, JOCOM LEAN CONCEPT letter head, twenty-one (21) deposit slips of Guaranty Trust Bank (GTB), Letter of introduction to applicants and JOCOM LEAN CONCEPT Training manual and Handouts.
    The Zone 5 PRO said Joseph James identified as leader of the gang would soon be arrested.
    He appealed to the public to be wary of people who claimed that they can offered them jobs and advised to always cross-checked from such companies to avoid falling victims to job racketeers.

  • NEM Insurance repositions to grow its oil and gas business

    NEM Insurance Plc is deploring resources in increasing its contribution to the oil and gas business in the country, Group Managing Director of the company, Tope Smart has said.

    He made this known during a  briefing and facility tour of its multi-million naira head office in Lagos.

    Smart said the company had positioned itself to deepen insurance penetration in oil and gas and become one of the top three insurance firms in the country.

    Aside, the company was also looking at partnering other insurance companies by way of acquisition or merger to become a big player in the insurance industry locally and globally, he added.

    He also said that the company’s new headquarters has impacted not only on the company’s image but on the insurance industry.

    The industry has moved from where it was five years ago with a lot of potentials in the industry.

    The issues of confidence and lack insurance awareness that have held the industry down is fast easing out.

    This he said, has been addressed by the positive response of insurance companies to claims payment.

    He said: “It is good to have a structure of this nature in the industry. The building has impacted on NEM and on the industry. Since the commissioning of the building, we have been receiving several visitors and many of them have been surprised that this can happen in an industry that has been written off. But now it is making progress particularly with this kind of structure in place and they now believe that there is a great future ahead.

    “We are excited that the level of confidence in the industry is totally different from what it used to be before. The level of confidence has risen and to that extent, so many people now believe in the industry. You will agree with me that the industry has improved by way of response; response to some of the big claims which is in billions of naira that happened in the last five years. This gives a kind of confidence in the insuring public. Some of the busineses that were taken abroad four to five years ago have come back to Nigeria because of the kind of response that the industry gave to claims payment.”

    The NEM boss emphasised that on the part of the company, it had always been responsible, reliable and faithful to its clients.

    “Although we are not yet there but we are evolving and our focus is to be one of the top three insurance company in Nigeria. There is a lot of prospect and the potential in the industry. We have reengineered our operation and tried to differentiate our brand from others through our attitude and character.

    “We have had influx of foreign investors in the country and people have been talking about consolidation. I agree that there must be synergies for us to grow faster. The bigger we get, the better for us. We at NEM are looking at towards partnering either by way of acquisition or merger. We believe that it improves on the entire industry.

    “Insurers should not be threatened by the foreign investors because it is good competition that will separate the boys from the men. So, it is a welcome development,” he added.

  • Govt urged to regulate oil and gas

    THE Federal Government has been urged to put in place appropriate legal framework that will regulate the oil and gas industry.

    Participants made the call in a communiqué after a workshop with the theme, Gas development:  On-shore and off-shore, a level playing field of the future in the industry, at the Petroleum Training Institute (PTI), Effurun near Warri in Delta State.

    In the communiqué, participants urged the government to enact laws to regulate the oil and gas industry to enable the optimal exploitation of the opportunities in the oil and gas sector, stressing that PTI has the capacity to train the appropriate manpower for gas development in Nigeria.

    It challenged players in the sector to team up with PTI for technical skills development by way of staff exchange programme and other forms of infrastructure support to enable the Institute proffer requisite programmes in line with industry requirement to harness the business opportunities in gas sector of the economy.

    It noted the need for more awareness through consistent and frequent advertisement to showcase the potential of gas business in Nigeria. It underscored the imperative for the government to develop gas infrastructure (Gas pipelines) to harness benefits derivable from the exploitation of Gas investment in the country.

    It added that the government should provide financial incentives, such as tax holidays and insurance to attract investors to the sector.

  • Expert to Buhari: Focus on energy, others

    Expert to Buhari: Focus on energy, others

    President Muhammadu Buhari has been advised to focus on the energy,  oil and gas as well as transport sectors of the economy.

    Chief Executive Officer (CEO), Economic Associates, Dr. Ayo Teriba gave the advice at a breakfast meeting by the Society for Corporate Governance Nigeria (SCGN) in Lagos.

    Describing the three sectors as enablers that would ultimately impact on other sectors, Teriba said no meaningful development can be achieved unless there was a cargo rail system in place.

    He urged the government to liberalise the transport sector so as to allow for partnerships and other investors, just as he emphasised the need for Nigeria to start refining its own crude.

    He said only six of the 46 sectors of the economy were huge, just as he stressed the need for a clear sense of priority in order for change to become a reality.

    Teriba said unless there is an effective and efficient cargo rail system in place, manufacturers will forever find it difficult and agriculture will remain uncompetitive.

    He urged the government to take the same steps it took in deregulating the telecoms sector in 2001,  which eventually brought the sector among the big six from the lowest.

    He also advised the government to remove the fiscal autonomy of the revenue generating agencies,  in order to block leakages and achieve fiscal adequacy.

    He lamented that while the government was broke, its agencies such as the Central Bank of Nigeria (CBN), the Nigerian National Petroleum Corporation (NNPC) and the Nigerian Ports Authority (NPA) were rich.

    “Nigerian government is inadequate in revenue. Some state governments are owing their workers up to six months salary. It is not that the government does not generate money the size of its economy but  it is because the leakages from fiscal process in Nigeria are bigger. The leakages ensure these revenues don’t get to government coffers.

    “There are abuses on fiscal policies such as import duties; tax wavers; payment of subsidies for products that were never imported.

    “We have large number of revenue collecting agencies in Nigeria enjoying autonomy. They collect, spend, declare surplus  and only remit percentage to the government.

    “The government is broke buy many of its agencies are not. NNPC does not even know how many accounts it has, neither does the finance ministry.

    “Fiscal autonomies should end. We run an economy of pretence. Our CBN was modelled after the Bank of England but the Bank of England does not enjoy financial autonomy,” he said.