Tuesday, 23 October 2012

Salvaging Nigeria from oil curse


Salvaging Nigeria from oil curse
By Bayo Ogunmupe

EVEN while we cry out loud for mercy, how on earth can, in oil rich Nigeria, life be this short, brutish and nasty? In an August edition of The Economist, Nigeria was dubbed the world’s capital of oil theft.
  Thus, unlike other petroleum producing countries where oil products become missing, Nigeria’s oil custodian the Nigerian National Petroleum Corporation (NNPC) does not even know how many barrels of oil we produce monthly. The Federal Ministry of Finance put the figure of stolen oil and illegal bunkering at 400,000 barrels per day while the Joint Venture Operators estimate the loss to 180,000 barrels per day.
  If we rely on official figures, it means Nigeria and our operating partners are losing a cumulative estimate of about N6 billion per day. This translates to an estimated N2.1 trillion per year. Experts suggest that forms of oil theft range from local tapping of pipelines to very organised and sophisticated thievery perpetrated at the export terminals. But everything remains guess works that is shrouded in mystery.
  In 2008 during the G8 Summit in Tokyo, the late President Umaru Yar’Adua likened stolen oil to blood diamonds which exacerbates corruption and violence in Africa. Despite the rhetoric of fighting oil theft, the menace seems to be growing in sophistication. Recently, the Joint Task Force fighting oil theft in the Niger Delta reportedly destroyed 3,778 illegal refineries and seized eight vessels, 120 barges, 878 Cotonou boats, 178 fuel pomps, 5,238 surface tanks, 606 pumping machines and 626 outbound engines belonging to oil thieves in the first quarter of 2012. However, who are these thieves? The level of sophistication being deployed for successful operations and export point to very powerful Nigerians who can play behind the scene roles to sustain the large scale larceny.
  Commentators allege complicity of high profile politicians, former and serving generals, militants and former oil company workers. The helplessness shown by regulatory oversight functionaries leads observers to reckon that there could be some collusion and connivance by government officials. Also, there are international cartels who operate ships illegally. These illegal cartels operate on high seas to transport stolen oil and push same into the global market.
  Apart from the huge revenue loss estimated earlier, this illegal trade has done great damage to the environment due to oil spill. Until recently, the multinational oil companies operating in Nigeria had not being concerned about the rate of oil theft. That was because it did not cause them any economic loss. Government knows export figures only. It dared not bother about what happens between the well head and the terminal. That is the black box that harbours the crude theft phenomenon. Even at the export terminal, there are allegations of topping cases.
  In the absence of production data therefore, multinationals currently pay taxes and royalties based on available data, not on production figures as stipulated by law. And there is no one to enforce that law. The Nigerian Extractive Industries Transparency Initiative (NEITI) recommended the installation of meters both at the flow stations and at the terminals in line with international best practices. That recommendation has been frozen by vested interests in government.
  At current royalty rates: 20 per cent for onshore and 18 per cent in case of offshore on every barrel produced, companies are expected to remit N1.2 billion daily on the 400,000 barrels currently lost to thieves.
  With precision meters at the flow stations, it becomes the responsibility of the Joint Venture Partners to bear the economic burden of ensuring that the oil is policed safely to the export terminal. This is just one of the ways to eliminate oil theft in Nigeria.
  Next is the issue of illegal refineries. There are allegedly, thousands of them scattered in the nooks and crannies of Niger Delta region. Those who engaged in these dangerous business complain that they have no other choice. It was upon that assertion that the Central Bank Governor, Lamido Sanusi, suggested to a House of Representatives’ Committee that these illegal refineries should be bombed. We agree with him.
  Adding to that is that part of the one billion dollar U.N clearing money for environmental pollution in the Niger Delta should be used in creating interest free small-scale industrial loans to the people of this area. Another step in reducing oil theft is the deliberate overhaul of Nigeria’s security system. Since we are under policed, we should increase our police force from 300,000 men to one million. The use of contracted global West vessels to combat pirates in the Delta is reprehensible. Government should use the Navy to combat oil theft. Government could also sign surveillance agreements with the British Navy to assist us in combatting piracy.
  A modern method of combatting oil theft is to finger print, crude oil to identify its originating fields. This technology-intensive method should be adopted to check oil marauders. Besides, the authorities should prosecute arrested oil theft offenders. This failure to punish offenders is encouraging the crimes. This confirms allegations that powerful people, nay government officials are behind oil theft, which is why they are frustrating the prosecution of oil thieves.
  Much has been written in recent times of how Ghana has beaten Nigeria on many fronts notably in politics and in crude oil production. While hydrocarbon was discovered in commercial quantities in Ghana only in 2007, Nigeria was already close to five decades of shipping crude oil abroad. Today, Ghana produces 120,000bpd in her jubilee field. The lessons Nigeria can learn from Ghana’s successful management of her oil resources are legion. Ghana’s phenomenal production advancement puts to question the stagnation in Nigeria’s oil output.
  It is noteworthy that Nigeria has been stagnant on 2 million bpd since Yakubu Gowon era in the 1970s. Like most of other African countries, resource curse, also known as Dutch Disease is bedeviling the Nigerian oil industry. Resource curse is a paradoxical situation whereby the natural resources endowment of a nation ends up constituting setback to a country rather than bringing positive impact to her. Nigeria was better off in the 1960s before our attention shifted to oil. But unlike Nigeria, development economists affirm that Ghana is bettering Nigeria in evading oil curse.
  Unfortunately, the stagnation in our development caused by oil curse notwithstanding, the Boko Haram insurgency has exacerbated our security problems. The sect gives a divided impression of its capacity and observers point to there being different groups, operating; some more ideological than others who may have less spiritual reasons for their wars. Boko Haram is a symptom of a dysfunctional Nigerian state which turned our oil wealth to oil curse. This bastardisation of governance is attributable  to intellectual weakness, the poverty of ability which has kept us from producing great people, great leaders across the board in spite of our oil wealth.
  Jamaatu Ahlis Sunna Liddawati Wal Jihad means People for the Propagation of the Prophet’s Teachings and Jihad. Thus, Boko Haram is a misnomer. It did not cross the mind of those who coined the name that people cannot offer to die in order to stop the spread of knowledge.
  Coining the name is symptomatic of our penchant for mendacity, deception and corruption. Our jejune approach to issues led us to killing the organiser of Boko Haram – Mohammed Yusuf instead of interrogating him and locating his reasons for rebellion.
  We are aware that Boko Haram’s call for the creation of an Islamic state draws from a tradition of radical Islamic fundamentalism dating back to the Sokoto Caliphate, the maitatsine movement of the 1980s and the Nigerian Taliban of 2002. These Islamist groups have limited support among the people. But they are acting in the context of widespread poverty, unemployment, illiteracy and inaccessible welfare from the government. These circumstances have created the space for these groups to operate. Worse still, state security agencies have compounded the people’s insecurity in such states as Bauchi, Yobe, Borno and Taraba. The way to address this phase of oil curse, is to find a political strategy to whittle down the insecurity and the militarisation of society by adopting the amnesty programme of the Niger Delta militants. We believe amnesty programme for all, for the unemployed, the Boko Haram insurgents and the Okada Riders is the solution to the unrest from Nigeria’s oil curse. A full employment plan for all who want to work is the lasting solution to Nigeria’s crises of Boko Haram, Natural disasters, flood, unemployment and the oil curse.


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