Monday, 8 October 2012

Nigeria’s position among OPEC countries

Nigeria’s position among OPEC countries
By Bayo Ogunmupe

NIGERIA is a major producer of crude oil, the sixth largest in the world. The country is a prominent member of the Organization of Petroleum Exporting Countries (OPEC). By virtue of  Nigeria’s position in the global market, the country sits conspicuously alongside other major producers like Saudi Arabia, Venezuela and Libya, among others, to dictate the tune and trend of world oil production and utilization. Nigeria has held the position of the president of OPEC under Dr. Rilwanu Lukman. That is to say, at one time, Nigeria presided and dictated the affairs of the rest of the oil producing nations in the cartel.
  Based on OPEC statistics, Nigeria has a population of 167.590 million people, with a Gross Domestic Product (GDP) per capita of $448 per capita (UNDP is $300). GDP is the total value of all goods and services produced in a country less income from foreign investments annually. The proven crude oil and natural gas reserves are put at 35,255 billion barrels and 4,997 billion cubic meters respectively. The crude oil production is put at 2,166 million barrels per day while the refining capacity is 445,000 barrels per day. Local consumption and export of refined products are pot at 240,000 and 68,000 barrels per day respectively.
  When compared with some other OPEC member countries, there are huge disparities. For instance, the GDP per capita in Algeria is $1,766; Libya is $4,064; Venezuela is $3,463; Saudi Arabia is $9,327; Indonesia is $960 and United Arab Emirates (UAE) is $24,244. These countries manifest glaring opulence, excellent infrastructures, high employment opportunities, better standard of living, and practically absence of poverty in the population. The fact that these countries produce oil is manifested on the streets and the people. The inhabitants of these countries don't grouse over petrol or diesel for their cars; the price paid is negligible in relation to their income.
  It is glaring from the above statistics that Nigeria has the least GDP among the OPEC countries. The per capita income in Nigeria is outrageously low at $300 below the $500 global benchmark. Nigeria is ranked as one of the poorest countries in the world (Central Bank of Nigeria, CBN, 2002). What it means is that the purchasing power of an average Nigerian is very low. There is lack of capacity for personal improvement by way of investment. An average Nigerian is not empowered. Access to credit is extremely difficult. There is no entrenched strategy to improve the standard of living of the people. Lack of investment with little or no income leads to vicious cycle of poverty. The inability of an average Nigerian to meet his basic needs makes him restive. Nigerians are constantly aggrieved and in despair.
  For instance, any attempt to increase the price of petrol is always resisted because it is like tightening the belt of the already emasculated populace. Nigerians cannot understand why in their country that produces oi9l, they cannot easily have access to the oil products at affordable price. No amount of political maneuvering or economic preachment would assuage an average Nigerian to believe that the more you produce a product the lesser you have it. This theory does not exist in any economics. Why is it only in Nigeria that this awkward situation exists among the OPEC countries?
  Petro is a macro product. It is a product that directly affects virtually every aspect of daily living. Therefore, tampering with it essentially means tampering with many products and services. Any increase in the cost of petrol affects the cost of transportation and the general cost of living. This in turn affects the price of goods and services; affects the cost of industrial production and further reduces income. The spiral effect leads to inflation; inflation further reduces the purchasing power and lowers the standard of living. The in turn heightens poverty, disease and lowers life expectancy. The life expectancy in Nigeria today is put at 47 years. There is a vicious cycle of poverty that has taken toll on Nigerians. Many have described this as poverty in the midst of plenty.
  Looking at Nigeria and its oil economy, there is nothing to show in the life of the masses of the people that the country is an oil-producing nation. With a crude oil production of about 2.5 million barrels per day and an export of over 2.3 million barrels per day, one would ordinarily expect some positive impact of the oil wealth on the economy and the people. But available statistics prove the contrary. For instance, Nigeria has what has been described as a disappointing level of economic development with a  GDP of about $45 billion in 2001 and a growth rate of 3.3 per cent
  Furthermore, with an average annual investment rate of barely 16 per cent of GDP, Nigeria is far behind the minimum investment rate of about 30 per cent of GDP required to attain a growth rate of 7-8 per cent per annum, required to achieve the Millennium Development Goals (MDGs) by 2015. Given the facts on ground, the economy is presently distorted and is managing to keep afloat. The only saving grace is the increased oil revenue. It is unprecedented that the price of crude oil recently climbed to as high as $71 per barrel and still spiraling.
  By selling at such high price, the country is earning huge revenue over and above its budget. Having benchmarked the budget at $30 per barrel, the country is reaping additional income of over $41 per barrel. This has impacted positively on the foreign reserve. The problem the government is contending with is how to meet the domestic demand for petrol. The problem is there because of the low domestic production of petrol consequent upon low investment in refineries.
  OPEC statistics show that Nigeria’s refining capacity is 445,000 barrels per day. If 40 per cent of the population owned vehicles, there will be about 49.756 million vehicles that would require petrol to run daily. Ironically, the other OPEC member countries with lower population have higher refining capacity. Algeria with a  population of 31.84 million people has a refining capacity of 462,200 million barrels per day; Libya with a population of 5,600 million people has a refining capacity of 380,000 barrels per day; Venezuela with a population of 25.71 million has a refining capacity of 1.004 million barrels per day and Saudi Arabia with a  population of 22.67 million has a refining capacity of 1,864 million barrels per day. The figure is impressive in all the OPEC countries.
  The inability of Nigeria to meet domestic demand for petrol is a serious headache. Over the years, successive governments in the country failed to invest on refineries. There was no forecast of rising future demands of petrol and deliberate attempt to meet the target. As a result, only three refineries were established in Eleme (Port Harcourt), Warri and Kaduna. The combined total output of these refineries cannot meet the rising demand for petroleum products. There is a shortfall of 70 per cent in their installed capacity.
  The problem is compounded by the frequent shut downs and deliberate sabotage of the refineries. The turnaround maintenance of the refineries has been a sham. Recently, Mr. Funsho Kupolokun, the GMD of NNPC stated that it requires a staggering sum of N136.18 billion to revamp the refineries between now and 2007. This is outrageous, as nothing substantial has been realized from the huge amount expended on the previous turnaround maintenance done since the Obasanjo administration assumed office in 1999. As a major oil producing country, there ought to be refineries located at Lagos, Enugu and Jos, in addition to the existing three making a total of six. Besides, there should be some private refineries located in different parts of the country. If these were properly managed, enough petrochemical products would be available. Petrol would be available at affordable price.
  The importation of petrol and other petroleum products smacks of mismanagement and insincerity on the part of government. The argument that Nigerians must pay for petrol at the world market price is deceptive. Where is the principle of comparative advantage that Nigeria produces crude oil? It is difficult to comprehend or reconcile the fact that Nigeria produces and exports oil, yet the people have t pay even more than the people from countries that produce no oil. Can someone please explain why this is so.
The curse of oil
  The saying that oil is a curse rather than blessing for a country like Nigeria is based on the fact that oil wealth has done nothing to leverage the life of Nigerians. Oil has instead brought poverty, misery, pain and death. One can safely say that Nigeria would have been better off without oil. Arguably, Nigeria’s underdevelopment situation could be attributed to the oil wealth because oil is the root of corruption in every sector of the economy. The emergence of oil robbed Nigeria the vision of its founding fathers. Nigeria’s founding fathers never factored oil in the agenda for national development. The oil, all the solid minerals and agricultural products were regional assets. The regions owned 50 per cent of the accruable revenue. The federal government did not own the lion share like today. Nigeria’s founding father placed agriculture and solid minerals high in the agenda of national development.
  But oil has erased all that. Nothing else is working in the country except oil. Nothing else is given attention anymore except oil. Over 90 per cent of the national budget is predicted on oil. Nothing is expected from the other sources of revenue. When the price of oil is high, Nigeria authorities are comfortable. But when there is a slide in oil price, the authorities are jittery. It is like without oil, the nation will collapse. But Nigeria’s quest for nationhood was not predicated on oil. The irony is that despite the very high premium placed on oil, there is nothing to show for it, except corruption and national blight. Some Nigerians pray that the oil should dry up as a prelude to national development. Should such a thing happen, it is government officials that would lose sleep. The ordinary Nigerians would not feel the impact in Nigeria, it is oil, oil everywhere, yet nothing to show.
  This foregoing is given an insight to the paradox of oil in Nigeria. But that is not the main issue of this discourse. Apart from the psychological and material deprivation that Nigerians suffer from oil, the worst, perhaps, is the incessant mass deaths that oil wrecks on Nigerians. I call this the wrath of oil. It is wrath because each time it strikes, hundreds and sometimes thousands of innocent victims perish. There is no doubt that the exploration, exploitation, storage, transportation and distribution of oil are associated with grave danger. Oil pipelines, oil depots, oil tankers and oil facilities across the length and the country have been a source of disasters.
  The disasters take the form of oil spill, pipeline fires, explosions, oil tanker, accidents and fire outbreak from oil storage or sale facilities. Since the 1998 Jesse pipeline fire disaster in Delta State that killed over 1,000 people, there have been several other oil disasters in other parts of the federation. The incidents occur almost on regular basis. Lagos, Edo, Delta, Abia, Rivers, among other states, have recorded gruesome oil fire disasters that claimed innocent lives. Altogether, over 4,000 hapless folks have perished in less than ten years from one type of oil disasters or the other.
  The latest in the series of the oil disasters occurred on Monday, March 26, 2007 in Katugal, Kagarko Local Government Area of Kaduna State. The exact number of casualties from the inferno is not yet known but estimates put it at over 100 villagers, comprising mainly of youths (students) and family heads. The victims were roasted by the fire sparked off by an exploded petroleum tanker that lost control and fell.
  According to reports, the tanker which was fully loaded with petrol and heading to Kafanchan, lost control while negotiating a sharp bend and fell spilling its contents unto the road and the surrounding areas. Within minutes, a crowd of youths made up students, farmers, and onlookers from the nearby Sobo Katugal market, rushed to the scene with bucket, jerry cans and other containers to scoop the spilling petrol, a highly inflammable liquid. Like other Nigerians, they have known oil as gold, a highly priced product, hence the rushed to grab it that very moment. But little did they know that they were running to their untimely death. The traditional ruler of the community, Mr. Daniel Akuso, was reported to have stepped out barking at the youths to get out of the danger zone, but they ignored their ruler and continued to rush the more for the “free gold.” The man left in anger.
  Not long after that, at about 6 p.m., the tanker exploded with a huge fire all and thick smoke. In not ensuing blaze that raged for hours, over 100 people were roasted alive. Several others who sustained injuries were rushed to the hospital. The fire razed everything on its trail. The aftermath is that Katugal, a hitherto sleepy community; was turned into a graveyard. The victims were buried in a mass grave. Disbelief, anguish and sorrow descended on the hapless widows and children who have nobody to fend for them. One Mr. Samuel, Ma??fiya, a primary school teacher in the neighbouring Aribi village reportedly lost his father, six brothers and older sister. The community’s secondary school lost over 39 students.
  The Katugal incident occurred three months after the oil pipeline explosion at Abule Egba in Lagos State claimed over 700 lives on December 26, 2006. Counting back, it is a catalogue of oil related disasters, deaths and destruction, which is what the masses of Nigerians reap from oil. The Katugal inferno occurred and razed lives and property without any intervention from any government agency. There was no police in sight to cordon off the tanker scene of the accident. There were no Federal Road Safety Commission (FRSC) personnel to control traffic. No fire service. No Red Cross. Above all, there were no National Emergency Management Agency (NEMA) rescuers in that vicinity. The fire raged and burnt itself off.
  This kind of incident raises the question of governance. Governments at all levels in Nigeria are paying lip service to governance. There is no program for the rural communities where a large segment of the population lives. The rural dwellers are just in the catalogue as citizens. That explains why such a disaster occurred and no government agency showed up for rescue. From another angle, it is like some states are too large to be governed under the present administrative arrangement. The Katugal village is like an abandoned enclave, where nothing that makes life worth living exists. The General Hospital in the community where the victims were rushed to could not offer help. The hospital did not have light to carry out night duty!
  Since the nation is in darkness as a result of the collapse of the electricity sub-sector, hospitals manage to work during daytime. The Katugal hospital is just there in name; it doesn't render services. There are no drugs and the medical personnel mere represent political interest. If a government hospital could not give first aid to fire victims, is it heart transplant that it would do? That is why Nigerian leaders fly abroad to treat minor injuries? Government officials have no confidence in the healthcare services.
  Furthermore, like the previous accidents in other parts of the country, the Katugal accident also exposed the absence of database of vital statistics in the country. This is a community of rural dwellers who rarely visited Kaduna the state capital. It was impossible for the authorities to know how many people died in the fire because there is no database of the citizens. The traditional ruler had to embark on house to house check of his subjects.
  It is unfortunate that Nigeria is bedeviled with frequent oil disasters of his nature. The national psyche is focused on oil. Every other thing is beclouded. Nigerians have been made to see oil as the most important thing in our national life. Oil has been raised to the status of gold. Petroleum products – kerosene, petrol and diesel are scarce and expensive like gold. That is why wherever there is a leakage of petrol, whether from a pipeline or tankers, there is a mad rush to scoop it for sale. Oil has very high appeal to Nigerians. High unemployment provides willing hands that rush to oil accident scenes but die in the process.
  Nigeria is not the only country producing oil in Africa. Cameroon, Gabon and Angola are also oil producers. Why is it that these disasters don't occur elsewhere frequently as in Nigeria? The absolute lawlessness and corruption in every fabric of Nigeria life is to blame. Elsewhere, oil facilities are treated as dangerous, which only authorized personnel could handle. But in Nigeria, the laws are weak and flagrantly broken. There is no regard for safety. Except the authorities do their job and change the people’s attitude, unfortunately, disasters like this will continue to occur. That is the wrath of oil when mishandled.

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