To some experts and analysts, there is nothing in the N7.44 trillion 2017 “Budget of Economic Recovery and Growth” to inspire hope of a quick economic recovery. Rather, they argue that what will pull the country out of recession are basically developments in the oil and gas industry. They suggest how to make the relative peace in the Niger Delta permanent, reports Assistant Editor CHIKODI OKEREOCHA.
The fear of resurgence of militancy in the Niger Delta is the beginning of wisdom for the Federal Government, oil companies and stakeholders in the oil and gas industry.
The relative peace in the oil-producing region has contributed to the increase in oil production to 1.8 million barrels per day (bpd). Oil output had been cut to about half a million bpd by a fresh wave of militancy by restive youths before the attainment of a ceasefire.
With oil price yet to rebound and Brent crude standing at $48.46 per barrel as at the weekend, experts and operators in the oil and gas industry believe Nigeria might be out of recession faster than envisaged if the current 1.8 million bpd production output is sustained and pushed up further.
But they said the Federal Government must muster the political will to sustain the prevailing peace in the Niger Delta for this to happen.
Some of them, who spoke with The Nation, warned of the consequences of a resurgence of militancy in the Niger Delta, saying such development will hurt oil and gas operations. According to them, sustaining the oil production level was critical to the implementation of the N7.44 trillion Appropriation Act.
The Chairman, Petroleum and Natural Gas Senior Staff Association of Nigeria and National Union of Petroleum and Natural Gas Workers (PENGASSAN & NUPENG) National Petroleum Industry Bill (PIB) Committee, Hyginus Onuegbu, argued that the 2017 budget remained an estimate and that its revenue targets were based on mere assumptions.
Acting President Yemi Osinbajo had last month signed the N7.44 trillion 2017 budget tagged “Budget of Economic Recovery and Growth” into law. The lawmakers had raised the figure from the initial N7.28 trillion estimate presented by President Muhammadu Buhari in December last year.
Osinbajo said that the N7.44 trillion budget had a revenue projection of N5.08 trillion and an aggregate expenditure of N7.44 trillion; the projected fiscal deficit of N2.36 trillion is to be financed largely through borrowing.
It also set aside N1.84 trillion for debt servicing, N177.4 billion for sinking fund, N2.97 trillion for recurrent expenditure (non-debt) and N2.177 trillion for capital expenditure.
The Acting President said the budget would deliver positive economic growth and prosperity, as it would be implemented in line with the Economic Recovery and Growth Plan (ERGP). He said the budget was designed to bring the economy out of recession onto a path of sustainable and inclusive growth.
But Onuegbu disagreed. As far as he is concerned, “the 2017 Budget should not be celebrated.”
The immediate past Chairman of the Rivers State chapter of Trade Union Congress (TUC) said Nigeria will come out of recession not because of any special aspect of the 2017 budget.
Onuegbu said: “This is a budget that was signed in the middle of the year. he charged, asking, “How can you sign a budget in the middle of the year and come round to say it will bring the country out of recession? When will capital development begin to take place?”
Onuegbu insisted that the only viable way out of recession is for the Acting President and the Federal Government to take the peace that currently exist in the Niger Delta seriously and ensure that the promises made to the Niger Delta people are kept.
According to him, this was necessary to avoid any disruption in oil and gas operations.
“If there is crisis in the Niger Delta, the nation’s oil production target will not be met, and of course, its revenue target will not be met”, he warned.
Before the truce, oil output was cut by 50 per cent the disruption of oil installations and operations by militants. It was the lowest in almost 30 years. The effects of the sharp drop were devastating. The government lost an estimated 60 per cent of its revenue to the series of attacks by militants on oil gas facilities.
Besides, 60 per cent of her gas supply was lost to pipeline vandalism, a development which left sour taste in the mouths of investors in the power sector and by extension, electricity consumers across the country.
The belief in some quarters is that the devastation would not have been far-reaching if Nigeria had not depended on oil for 70 per cent of its revenue and 95 per cent of her foreign exchange earnings. The reliance on oil as the mainstay of Nigeria’s economy accounted for why the crisis in the region pushed the economy into its worst recession in decades.
It took the intervention of the Acting President to reign in the region. His diplomacy shuttle to oil-producing communities in some states in the Niger Delta where he held series of dialogue with leaders and representatives of the militants yielded positive report.
The militants agreed to sheath their sword after securing Osinbajo’s assurances of government’s commitment towards genuine peace and development of the region. Certain promises were also made. The result was spontaneous. Disruption of oil production and destruction of oil installations and pipelines stopped, thus pushing up oil production level to 1.8 million bpd.
But the expert’s argument is that sustaining the peace in the region must be sustained to maintain the prevailing oil production level, which they say is critical to the delivery of this year’s budget.
“The Federal Government should understand that critical to the achievement and delivery of the 2017 Budget is the maintenance and sustenance of the peace in the Niger Delta so as to engender increase in oil & gas production that we are witnessing now”, Onuegbu told The Nation.
A Lagos-based lawyer and public affairs analyst, Mr. Obiora Akabogu, aligned with Onuegbu’s position. Noting that Niger Delta remains Nigeria’s wealth base and the goose that lays the golden egg, he hinged the growth of the economy on the level of peace in that region.
He urged the government to muster the political will to make necessary adjustments and concessions to ensure a lasting that region.
Akabogu said: “There are some adjustments the government can make with executive fiat; you don’t even need constitutional amendments just to make the people of that area more comfortable.
“People of that region are not greedy; they are easy to placate because if it were some other hostile environments they would have held the government to ransom until you meet up to 70 per cent of their demands.”
He insisted that the government must develop the political will and strategy to develop that region and also resist pressure to mount military operation in that region.
Akabogu said: “It is not a win-win situation militarily because of the peculiar topography of that region. Rather, dialogue and political will can do a lot of good to the Federal Government.
“The mere fact that the budget came mid-way into the year shows you that the survival of the economy is not necessarily based on the budget; that there are other indicators and calculations.”
Akabogu recalled that previous budgets have not done any serious miracle to the economy, but one way or the other, Nigerians have found a way to survive outside the budgets.
He said that the budget may be ambitious important because of capital projects, the fact that it came late into the year meant that Nigerians should not expect too much.
Fears of poo, shoddy implementation
The late passage and signing of the budget into law has raised fears over possible delay in the kick-off of its implementation, and consequently, its capacity to achieve the intended outcomes.
The Registrar/Chief Executive of the Institute of Business Development (IBD), Mr. Paul Ikele, said that beyond basing it on realistic assumptions, the budget must be judicious implemented to take country out of recession.
He told The Nation that it was necessary to avoid the same low and shoddy implementation of last year’s budget if this year’s must succeed.
Push for uninterrupted oil production heighten
Akabogu explained that the optimism that the economy will bounce back has nothing to do with the budget’s intended outcomes, but with other extraneous calculations such as the predictions by World Bank and the International Monetary Fund (IMF).
The World Bank recently upgraded its forecast for Nigeria’s economic growth to 1.2 per cent for 2017, citing improved oil production due to decreased militant activities.
The bank, in its June 2017 Global Economic Prospects report, said: “Nigeria is forecast to go from recession to a 1.2 per cent growth rate in 2017, gaining speed to 2.4 per cent in 2018.”
It noted that: “In Nigeria, militants’ attacks on oil pipelines decreased…..Oil exports are rebounding in Nigeria on the back of an uptick in oil production from fields previously damaged by militants’ attacks…”
The IMF also raised its projections for Nigeria’s economic growth this year to 0.8 per cent. It also revised its forecast for Nigeria in 2018 to 2.3 per cent, from its previous projection of 0.7 per cent. The forecasts were revised up mainly to reflect high oil production due to security improvements in the resource-rich Niger Delta.
How to sustain peace in the Niger Delta
Onuegbu spoke of the need for the Federal Government to abide with the agreement it reached the leadership of communities in the Niger Delta for continued peace in the region.
For instance, he said that issues around modular refineries must be resolved.
His words: “When the Acting President came to the Niger Delta, he made a promise about modular refinery. As a matter of fact, some youths started organising themselves. In fact, there was an association of modular refiners in Nigeria. That is an issue that needs to be resolved.”
The government had announced plans to establish modular refineries to engage youths engaging in illegal oil refining. The planned upgrade of illegal refineries in the region to modular refineries has been welcomed by the people.
Suspicion
As youths and prospective investors in modular refinery business waited anxiously for the government to come out with modalities for the take-off of the project, there were reports that the government would not allow the proliferation of such refineries across the Niger Delta.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, explained that having such refineries scattered across the Niger Delta would worsen environmental degradation and gas flaring, which will increase the problems of the region.
According to him, the government would commission a broad study for the development of an intelligent plan for the construction of modular refineries in the region. ,
The minister said: “It is important to clear a misconception, especially as it has to do with modular refineries.
“Setting up smaller modular refineries in so many places in the Niger Delta would worsen gas flaring in the region and also bring about environmental challenges. It is critical to develop an integrated approach and plan to modular refineries construction in the Niger Delta, ensure that they are properly optimized and are not scattered everywhere.”
But Onuegbu counselled the government against reneging on its promise about modular refineries. According to him, this was necessary in order to sustain the peace in the region and starve off disruption of oil and gas operations.
Yet, the modular refinery, which has been put on hold, was one in the long list of issues agitating the minds of Niger Delta people that have not been resolved. There is also the issue of restructuring and funding of the Niger Delta Development Commission (NDDC).
Onuegbu regretted that the government owed a lot of money to the NDDC, which it has yet to remit. He pointed out that these are funds necessary for the development of the Niger Delta.
The Nation learnt that restructuring and funding of NDDC was part of the 16-point demand being adopted as working document to end the Niger Delta crisis when Osinbajo led a high-powered delegation to the region early this year, beginning with Delta State.
The 16-point demand, prepared by the people of the Niger Delta under the aegis of Pan-Niger Delta Forum (PANDEF), under the leadership of Ijaw leader and elder statesman Edwin Kiagbodo Clark, was presented to Buhari when the President received them at the State House on November 1, last year.
On PANDEF’s shopping list are: Presidential Amnesty Programme; Law and justice issues, Effect of increased military presence in the Niger Delta, Plight of Internally Displaced Persons (IDP), Relocation of administrative and operational headquarters of International Oil Companies (IOCs), Ogoni clean-up and environmental remediation, and the Maritime University.
Other demands include: Strengthening the Niger Delta Ministry; the Bakassi question, Fiscal Federalism, Key regional critical infrastructure; Security surveillance and protection of oil and gas infrastructure; Power supply, economic development and empowerment; and Inclusive participation in oil industry and ownership of oil blocs.
Sources close to the preparation of the 16-point demand hava admitted that the government has made some appreciable progress in meeting some of the demands. They note that the commencement of the clean-up of Ogoni land, the revisiting of the unpaid amnesty stipends and the National Maritime University, among others, are signs that the issues agitating the minds of the people are gradually being addressed.
But, will the government pluck up the courage and political will to holistically address these demands rather than quick fixes? Will it strive to build trust, instill confidence and give the local communities in the Niger Delta some sense of belonging?
As answers to these questions remain a matter of conjecture, the prevailing ceasefire militancy and may not be permanent for as long as the issues remain unresolved.
Analysts say that no stone should be left unturned to guard against the resumption of hostilities in the oil-rich region and not hurt ongoing efforts at reflating the economy and take it out of recession.
