The Nation Newspaper

Tag: Oil money

  • How Nigeria ought to have developed with oil money – NNPC GMD

    How Nigeria ought to have developed with oil money – NNPC GMD

    •Advocates better life for Niger-Deltans

    The Group Managing Director of Nigeria National Petroleum Corporation ( NNPC ), Dr. Maikanti Kacalla Baru, has lamented that Nigeria with oil ought not to be economically backward if the country had emulated countries like Qatar, Norway, Bahrain and the United Arab Emirates.

    Baru, who stated this while delivering a lecture at the 40th convocation ceremony of Ahmadu Bello University (ABU), Zaria, said countries like Bahrain, Qatar and the United Arab Emirates that had taken the right steps at the right time are already thriving on sector-specific development such as the Financial sector of Bahrain, Airlines and Logistics in Qatar and the United Arab Emirates, Downstream Petrochemicals and Mining in Saudi Arabia, and the Small and Medium Scale Enterprises (SME) Sector in Oman.

    At the lecture session chaired by the Oba of Lagos, His Majesty Rilwan Akiolu, the NNPC boss spoke on “Oil and Gas Industry and the Nigerian State: Enduring Value, Promoting Economic Integration and Social Stability.”

    Baru while tracing the evolution of Nigeria’s economy pointed out that, unlike Qatar and others who used oil dollars to jump-start and diversify their economy, Nigeria abandoned its previous economic mainstay after the exploration of the oil.

    According to him, “The advent of oil production, other natural resources of economic value such as tin, columbite, limestone, Iron ore, and coal had been explored and produced. These mineral resources in addition to cash crops were the country’s export commodities and serve as the revenue base of the economy.

    “Steady but volatile flow of hard currencies accrued from crude oil took our attention away from Agriculture and solid minerals development; as a result, our people, by circumstances they had never chosen, began a journey of necessity, from rural to urban areas in search of better livelihood. Problems of unemployment, corruption, wasteful execution of moribund Projects soon took over our National development sphere.

    “As time goes by, Agriculture that was known as job for the assiduous and the affluent in the developed part of the world was relegated to the job of the peasants and less the privileged. Things changed quickly as oil boom brought about distortion in our production and consumption patterns, which gave a false twist to the Nigerian economy. Agriculture and mining which were the primary drivers of the economy were relegated in the 70’s for crude oil which now makes the country a virtual mono- product economy.

    “Some of us still remember the glory days of the agricultural boom. Nigeria was a huge haven for agricultural products. We nostalgically remember the groundnut pyramids of Kano, the wonders performed with cotton proceeds, the booming business of hides and skins and the contribution of coffee and cocoa down south. One wonders how we got to the present mono economic state with all these successes,” he said.

    Citing the Qatar’s example, the NNPC GMD pointed out that, Qatar has the third largest proven natural gas reserves and is the second-largest exporter of natural gas in the world, making it among the global top seven richest economies based on GDP per capita.

    In his words, “Today, Qatar’s economy is still thriving quite well despite the GCC blockade. The secret is a simple one, Qatar has over the years used its oil and gas resource to jumpstart other sectors of its economy. These included setting up of autonomous free-zone business districts, fertilizer and methanol plants and the recent drive in tourism. They have also developed agriculture towards food sufficiency.

    “Also, Trinidad and Tobago has been involved in the petroleum sector for over one hundred years, but today the country’s economy is primarily industrial, thanks to its huge petroleum reserve, especially natural gas. Trinidad and Tobago’s success story is linked to the judicious utilisation of its resources in developing the industrial sector.

    “While it could be argued that Qatar’s oil and gas resources spin-off to her financial sector, manufacturing, and tourism made the country beneficiary of trade surpluses. For Trinidad and Tobago, economic diversification has made her the wealthiest in the Caribbean and the third richest country by GDP per capita in the Americas after the United States and Canada.

    “Since 1966, when Norway drilled its first oil well, the country has consistently been a trailblazer in judicious application and management of proceeds derived from petroleum resources. Today, Norway tops the list of countries best at providing broad based sustainable growth across different sectors, creating jobs for a great majority of the population, and reducing poverty.

    “But how was Norway able to achieve this? The country formulated and deployed robust policies that support education and innovation. The government prioritized education as a means to diversify its economy and foster higher and more inclusive growth through promoting Science, Technology, Engineering and Mathematics (STEM) subjects, alongside entrepreneurial skills.

    “The country emplaced a long term management of its oil and gas revenues through the world’s largest sovereign wealth fund. Overall, Norway identified her vulnerability exposures – such as oil price fluctuations – and deployed robust policies to deliver sustainable growth and development,” he noted.

    While noting that, President Muhammadu Buhari’s government has put plans in place to exploit success stories of Qatar and others, Baru pointed out embracing various sectors such as agriculture, mining, and manufacturing can rescue the nation from the current economic doldrums.

    He said, “Agriculture is still the sector that employs the largest share of the labour force in most developing and transiting economies including Nigeria. Improving agricultural productivity and commercialisation, and linking producers to markets are among some of the important measures required in this regard. Examples of countries such as Chile and Malaysia confirmed the proposition that a healthy rural economy is necessary for industrialisation because the linkages between the two are obvious.

    “Economic diversification by embracing various sectors such as agriculture, mining, and manufacturing that can rescue the nation from the current economic doldrums is therefore necessary. It is this strategy that has the potential of creating jobs for the teeming unemployed population of the youths as well as boosting the foreign exchange earnings of Nigeria.

    “Encouraging entrepreneurship and innovation through improved access to information, communication technology, finance and research and development. Also, promoting private investment in non-extractive sectors through improving the business and regulatory environment, providing better access to finance, and supporting entrepreneurship and skills development.”

    Speaking on economic integration and social stability of Nigeria, the NNPC GMD stressed the need to focus more on equitable resource proceeds distribution rather than equality in order to achieve meaningful economic integration and social stability across the nation, adding that, by so doing, the weighted inflow per capita to the smallest geographical entity in the nation will be at par with the inflow of the largest geographical entity.

    While advocating a better life for people in the Niger-Delta region, Baru noted that, “it is no doubt that the Niger Delta region has been a key contributor to Nigeria’s economic development. However, a cursory look at the state of development in the Niger Delta indicates that despite the huge resources channelled by the government, much progress needs to be made in improving the living conditions and quality of life of the people in the region.

    “Different administrations have deployed different initiatives to address the disparaging socio-economic issues in the region, including critical multi-sector interventions, but the development challenges have not only lingered, but also continued to expand, perhaps, in ways that might not have been envisaged”, he said.

    The GMD alongside the chairman of the occasion, Oba Rilwan Akiolu, the Obi of Onitsha, Igwe Alfred Ugochukwu Achebe, who is the ABU Chancellor and other dignitaries had earlier paid homage to the Emir of Zazzau, Dr. Shehu Idris, where the three monarchs harped on Nigeria’s unity.

  • ‘Obasanjo, Yar’Adua, Jonathan blew over N70trn oil money in 15 year’

    ‘Obasanjo, Yar’Adua, Jonathan blew over N70trn oil money in 15 year’

    •NEITI boss seeks prudent expenditure

    Nigeria Extractive Industries Transparency Initiative (NEITI) Executive Secretary Waziri Adio said yesterday that the administrations of Presidents Olusegun Obasanjo, Umaru Musa Yar’Adua and Goodluck Jonathan blew over N70 trillion earned from sale of crude oil and gas between 1999 and 2014.

    Adio said this in his office when the Senate Committee on Federal Character and Inter-Governmental Affairs visited him during an oversight function.

    He insisted that unless the country developed a prudent way of expenditure, it was likely to be in difficult times in years to come.

    The NEITI boss noted that it was unfortunate that despite the huge earnings from sales of crude oil over the years, the country was unable to account for over $100 billion in the excess crude account.

    Adio urged the Federal Government to develop a saving culture that would ensure a slash on government’s spending.

    He said: “Let me inform the committee that we discovered that between 1999 and 2014, the country spent over N70 trillion it received from oil and gas alone. That is a whole lot of money. What is sad is that it was spent without the country being able to show anything for it. I think it is quite unfortunate.

    “For the sake of emphasis, however, I think if previous administrations had developed a culture for prudent management of resources, Nigeria ought to have over $100 billion saved in the excess crude account.

    “So, going forward, it is necessary for government to think about saving a lot more, and do all it can as well to cut down on wasteful spending, if the nation must make progress.”

    On the challenges confronting the agency, Adio told the committee that the country risked suspension from the global Extractive Industries Transparency Initiative (EITI), if the agency failed to complete its audit report by a given deadline, which comes up in December.

    The NEITI boss decried the paucity of funds in the agency due to late releases by the Ministry of Finance.

    He blamed lack of funds for the inability of the agency to conclude work on its audit report to the EITI.

    He noted that should Nigeria be suspended from the world body as a result of the agency’s failure to meet the December deadline, the development would be an embarrassment on the image and reputation of the country.

    Vice Chairman of the Senate Committee, Senator Suleiman Hunkuyi (Kaduna North), noted that the committee would require the effort of NEITI to close the communication gap between the agency and the upper chamber with a view to ensuring effective collaboration.

    He said that NEITI is the second agency of government among other that has not received its capital releases adequately.

    He described the development as “a misnomer”.

  • ‘Oil money: Honey or poison?’

    ‘Oil money: Honey or poison?’

    Last weekend Tahir Guest Palace, Kano, played host to the country’s energy correspondents for a workshop on reporting oil and gas. This was at the invitation of Kaduna Refining and Petrochemical Company (KRPC), which has made it an annual event it organises jointly with the Kaduna State chapter of the Nigeria Union of Journalists in the last four years.

    The theme this year was “NNPC in transition: Transformation and Media’s Role in Facilitating Positive Outcome.” Four of the five papers billed for the two-day workshop were delivered each by the new Managing Director of the corporation, Idi Mukhtar Maiha, the former Head of Mass Communication Department of Ahmadu Bello University, Zaria, Dr. Suleiman Salau, the Executive Director (Operations) of the refinery, Shehu Malami, and this reporter.

    The new Group General Manager of NNPC’s Public Affairs Department, Garba-Deen Mohammed, who was to speak on the role of the mass media in facilitating success in the latest reform of the oil and gas sector, was away in Port Harcourt where the Nigeria Guild of Editors he was the erstwhile president was holding a conference.

    Maiha spoke on the remit given to the management of our three refineries under NNPC’s recent reform to transform them from cost centres into profit making companies. Salau spoke on the social responsibility of energy correspondents for the development of the oil and gas, Malami on how to prepare KRPC for success in its new brief, and myself on how NNPC’s seemingly unending transition can come to a happy ending.

    On each day of the workshop, Dr. Musa Bawa, the principal partner of Topdesk Consultancy based in Kaduna, conducted mind coaching and intellectual games for participants in between the presentations. The games were as much fun as they were stimulating and educating.

    I opened my presentation with a reference to the editorial of New Nigerian of June 29, 1974 aptly titled “OIL MONEY: Honey or Poison?” This editorial, I said, is arguably the most insightful and prophetic editorial of any Nigerian newspaper since independence. Sadly, I said, its prophesy that our corrupt and profligate ways of the post-civil war years of the early 70s- readers old enough would remember the Head of State, General Yakubu Gowon’s famous sound bite about money not being an object but how to spend it – can only make our oil money more poison than honey, proved too true less than a decade after it was written.

    In the last 16 years oil and gas, it seems, have landed us in a predicament even worse than that of the 70s and 80s. For one, easy money from the twin commodities has afflicted us with so-called “Dutch disease” whereby our dependence on it had led to the hardening of our currency which, in turn, had led to cheap imports and made our exports uncompetitive and theretofore to the decline of our manufacturing and agricultural sectors.

    Worse than our neglect of agriculture and manufacturing, easy oil money has led the entrenchment of waste and corruption in the country, the current “Padding-gate” unveiling in our House of Representatives being merely the latest of the unending corruption scandals in the country since the discovery of oil.

    “Padding-gate” may be the latest in the country’s parade of corruption scandals but in size it hardly compares to the Oil Subsidy scandal of 2011. As scandals go, this may yet prove the Gold medallist – actually Platinum is more like it. Certainly, next to the perpendicular drop in the price of crude oil since last year nothing has depleted our treasury like the subsidy scandal.

    The evidence lies partly in how the subsidy grew exponentially from an already high of N261 billion in 2006 to at least N1.3 trillion in 2011. I say “at least” advisedly because different government officials and institutions gave different figures in their testimonies before the House of Representatives Ad-Hoc Committee under Honourable Faruk Lawal which investigated the scandal and which in turn became a scandal all of its own; whereas the Finance Minister, Dr. Ngozi Okonjo-Iweala, said it was N1.3 trillion, her Petroleum counterpart, the all-powerful Dizeani Alison-Madueke, said it was 1.47, the Accountant- General of the Federation said it was 1.6, the CBN said it was 1.7, while the Ad-Hoc committee said it’s own estimate was an incredible 2.59 trillion!

    It was also instructive that whereas the subsidy gravy train started with only five companies, including NNPC, on board, the passengerss doubled in 2007, almost quadrupled in 2008 and increased to 140 by 2011!

    Again it was instructive that no one could say for sure what the daily consumption of petrol was before the Faruk committee; the oil minister said 53 million litres, NNPC said 35, DPR said 43, while the PPPRA said 24. The fact that the perennial queues at our petroleum stations have disappeared since the recent removal of the subsidies in spite of the fact that the amount available is no where near the least of these figures suggests that we have all alone been blatantly lied to with statistics.

    After taking our workshop through the history of the country’s oil sector going all the way back to 1908, i.e. before even our amalgamation in 1914, and analysing its ills, I suggested at least three ways to turn it from a curse into a blessing. My suggestion was clearly no rocket science; transparent pricing of oil, as opposed to the many ill-defined factors PPPRA uses, including outrageous remunerations and severance packages for its top management and board, enactment of the 2012 Petroleum Industry Bill and, as the New Nigerian editorial in reference said, massive investment in agriculture. The only difference was I added education, with much greater emphasis on primary and secondary education. This invariably means a review of our revenue allocation formula in favour of states and local governments compared to the Federal Government.

    At the end of my presentation the KRPC managing director suggested that I find a way to reproduce the entire New Nigerian editorial I talked about because of its contemporary relevance and because he said I had referred to it more than once in my column. I promised I would as soon as possible. I thought today was as good a day to do so as any. So here we go:-

    “It is commonplace to say that Nigeria is at the moment very lucky because of oil revenues. In a very real sense we have much more money than our system can absorb. Unofficial estimates put the figure added to our reserve this year at 2,000m Naira. In many essential respects this bounty has been a blessing. It has enabled us to pay some of our loans, liberalised commercial and industrial policies and has enabled increased revenue to be diverted to building of modern infrastructure commensurate with our executive capacity.

    “But the reverse side of this coin is painful to contemplate. The nature and source of oil money put it in a class of its own. A few years ago a disturbing international report was published arguing in stark terms the future of all underdeveloped oil producing countries to make more than marginal use of their splendid fortune. No effort is involved in our part. It is the foreigners who employ their capital and skills to exploit this resource and we simply receive autonomous additions to our national income.

    “Such un-worked for riches can land a country in trouble of a peculiar kind. There is soulless opulence of a few, in evil contrast to crushing poverty of the many. There is unimaginable corruption and disastrously wrong allocation of resources. Above all there is absence of hard work without which the country cannot pull itself together. In that sense the oil money becomes poison rather than honey. How will an economic historian 50 years hence explain the relative expenditure on agriculture and on various forms of so-called “culture” : All-Africa Games, Black Arts Festival  and all the rest of it? He must conclude that we had taken leave of our collective senses.

    “Happily, in the Nigerian case the situation is by no means irretrievable. We could deploy considerable energies and resources in producing a commodity which is more important than oil: food. We must at all costs get agriculture on the move again. There are millions of acres lying fallow when they could be used to grow food for our burgeoning population. The setting up of two River-Basin Commissions is a great step in this direction (although the staffing has ensured that the two schemes would not take off for some time).

    “Nor are we unmindful of individual state efforts. But fiddling around with 10-15m Naira is just like one grain in a silo. We need a monumental plan. A 500m Naira plan with the help of say, Danish and Chinese experts under our direction would do wonders for grain production in this country. We may not have oil in 50 years. But to survive we must have food. The ground work can be done now.”

    The reader will agree with me that this less than 500-word editorial, published in its famous front page one inch column down the left side, is as relevant today as it was 42 years ago. The big difference, of course, is that today, in spite the huge difference in the scale of oil revenue, money is an object. Another difference, of course, is that whereas in the 70s we frittered away our fortune on games and festivals, this time we did so on wine, women, exotic cars and private jets and on fancy private property.

    As oil price begins to pick up we will, hopefully, this time learn the big lesson of the hard times our corrupt and profligate ways have landed us into.

  • Oil money sets brothers on war path

    Oil rich Gbaramatu Kingdom in Delta State is again gripped by tension over the constitution of the committee which manages N1.3 billion development fund given to the community by an oil company. Shola O’Neil writes on the intense scheming that is threatening the peace of the riverside community.

    The Egbema/Gbaramatu Central Development Council (also known as Ijaw Regional Development Council) was set up by Chevron Nigeria Limited to develop about 20 oil-bearing and impacted communities in Egbema and Gbaramatu kingdoms of Warri area in Delta State. It is a product of the Global Memorandum of Understanding (GMoU) signed in 2005 between the communities and Chevron at the end of the Warri crisis.

    Under the terms of the GMoU, the council gets N1.3 billion from Chevron over its three-year life span. The fund is disbursed in over N400-million annual allocation that is drawn quarterly. From the fund, the 32-man body pays allowances, maintains staff and carries out development project in the communities.

    The oil firm also keeps close watch on the management of the resources with its accountant and representatives of the state government and other agencies as signatory to a near foolproof account.

    However, the council is now faced with the strongest test in its short history as leaders in the Gbaramatu Kingdom are at war over the choice of a chairman. A source in the kingdom told our reporter that the “Council has not generated as much interest as it has done in this new dispensation.”

    Representation at the board is drawn from the oil-bearing communities in the two kingdoms who must first be elected (or selected) from their various communities or quarters. The elected community representatives then meet and choose leaders for the various positions, including chairman, secretary and public relations officers, among others.The heat generated by the new board reached a crescendo recently when the chairman, Mr. Edmund Doyah-Tiemo, raised the alarm over alleged threat to his life by Chief Government Ekpemupolo, a highly influential Gbaramatu personality and former leader of the Movement for the Emancipation of the Niger Delta (MEND).

    Doyah-Tiemo said Effurun-Warri that Ekpemupolo (aka Tompolo) wants to impose a new executive on the council. According to him, “He (Tompolo) called me and threatened my life. He (Tompolo) said if I go ahead to inaugurate a new chairman, he would find me wherever I am and deal with me.”

    Tompolo, however, debunked the claim as mere fallacy. He told our reporter that his only interest in the affairs of the council is hinged on a GMoU recently signed with Chevron and the interest of his people. Speaking through his media aide, Paul Bebenimibo, Tompolo urged Doyah-Tiemo to stick to his Egbema Kingdom and allow his Gbaramatu kinsmen decide their affairs.”Doyah-Tiemo is an Egbema man; he is not from Gbaramatu. So, he should be minding his business as an Egbema person and not dabble into the issues of Gbaramatu,” he added.

    A highly placed chief in the kingdom explained the interest thus: “It is not about N1.3bn; it goes further than that. This board has a lot of influence with Chevron and its recommendation in terms of contracts and others is weighty. When it was first inaugurated in 2005, there was not much interest because that was the era of militancy and people had several other interests, including bunkering but today it is different.”

    The alleged threat is just one of several controversies that have been sparked off by the constitution of the board. Prior to the claim, dozens of armed policemen and soldiers had invaded the council’s secretariat off Airport Road, Effurun in late January and disrupted the board’s meeting. The invasion was on the alleged behest of one of the contestants, Chief Michael Johnny, who was accompanied by his retinue of armed security men to the event.

    The Benikrukru community which is yet to submit its list is also embroiled in crisis, sources in the community fingered one of its most prominent members, Mr. Mathew Tonlagha, as the arrowhead. It was gathered that Tonlagha, who made his fortune as a top shot of indigenous oil service company, Fenog Nigeria Limited, was angling for the inclusion of the community chairman, Mr. Jeffrey Ojogu, as its representative, and eventually, chairman of the new board.

    However, one of his opponents, who spoke on condition of anonymity, said the people are suspicious because “We think Tonlagha wants to add the Benikrukru to his list of personal assets. He already is very rich and he just needs Ojogu to be there to secure his dealings with Chevron.”

    Yet, our investigation revealed that the drama is not restricted to Tonlagha/Ojogu conspiracy theory. Tompolo is said to be taking more than a passing interest in the activities in recent times. Several prominent Gbaramatu leaders, who spoke on strict condition of anonymity, said the former warlord is determined to have a say in who becomes the next boss of the council.

    One source said Tonlogha could be one of his plots to gain foot hold in the running of the affairs of the council. One of the strongest candidates in the race, Chief Dan Ekpebide, a key player in the Warri crisis and founding member of the highly influential Federated Niger Delta Ijaw Communities (FNDIC), is also linked with Tompolo. They are childhood friends and allies in a number of interests and fronts.

    Then, there is also the boisterous Chief Michael Johnny, from Okoitoru community of the high-yielding Marakaba Field, who has been at loggerheads with Tompolo for several years, until they reconciled in the dying days of last year. The reconciliation is seen as part of a complex scheming for the plush seat.

    However, his detractors say Gbaramatu leaders are not too comfortable with his relationship with an Itsekiri youth leader and a very influential member of the Itsekiri RDC, fearing that he could become an ally in a partnership that may not serve the interest of his people.

    But the youthful traditional titleholders said he is too “comfortable” to be tied to anybody’s apron strings, insisting that his emergence in the race was based on pressure from his kinsmen.

    Also in the race to head the council is Sheriff Mulade, an indigene of Benikrukru and Kokodiagbe, who is believed to be an independent candidate. A member of the old board, he is believed to enjoy the support of the grassroots and inner caucus of the council.

    Ekpebide faulted claims that his candidacy and those of others are backed by Tompolo, insisting that “Tompolo is my younger brother and we are friends. I did not approach him for support. He is from Kokodiagbene while I am from Benikrukru.”

    He said the people demanded change because their former representative, Pastor Emmanuel Imeleye, had spent two terms. In the same vein, he said the people of Benikrukru are desirous of producing the chair because their counterparts from Kokodiagbene had tasted the position through Dr. Tolar, the pioneer chairman of the council.

    He said rather than being castigated, Tompolo should be commended for his effort at peacefully resolving the impasse and inviting the PAC to this end.

    In the meantime, tension has risen in the kingdom as interest groups insisted on the February 28 date that was chosen for fresh election after the state police command waded in and gave Benikrukru one month to resolve its dispute.