OIL INDUSTRY: Crucial Agenda For Government (2)

By Gregory Austin Nwakunor (Lagos), Azimazi Momoh Jimoh (Abuja), Alemma-Ozioruva Aliu (Benin City) and Tina Agosi Todo (Calabar)   |   08 November 2015   |   6:30 am  

Oil Wells PHOTO: www.theheraldng.com

Oil Wells PHOTO: www.theheraldng.com

THERE is something about oil, which predates Nigeria: it attracts attention. Whether from palm or crude, oil production often brings crisis and leaves the owner(s) at the mercy of resource hunters. It was no surprise that President Muhammadu Buhari recently said he would oversee the petroleum ministry, at least, to avoid the over the years pains that have been inflicted on Nigerians as a result of the mismanagement of oil revenue.

Rev. David Ugolor, a public affair analyst, human rights’ crusader and the Executive Director, African Network for Environment and Economic Justice (ANEEJ), said Buhari’s decision showed that the oil sector remains a key source of income for the country.

According to him, the reason petroleum sector is such a choice one for President Buhari is because, over 60 to 70 per cent of the money that comes from there runs the economy. He is, however, unimpressed at the manner where no government in the country has been able to say Nigeria must look beyond the oil industry. His words: “With the fallen oil price in the international market, it is clear that any government that wants to really tackle the challenge of poverty and unemployment in this country must look beyond oil, and unfortunately, we don’t even have the technical know-how to grow the industry, we still rely on international foreign partners and these partners are just traders in Nigeria, who have mastered the technique of not really investing in the country, and taking resources out of the country. They use all kind of techniques and at the end of the day, Nigeria loses.”

Beyond superintending the petroleum ministry, Ugolor believes that there are more pertinent issues or challenges that confront the industry that should be tackled. He remarked: “Look at the environmental degradation in the Niger Delta, I don’t think the profit all these multi-national companies have made is enough to deal with the challenges there, and unfortunately, nobody is taking about 50 to 100 years time, how that place will look like and the resources that will be needed to fix them. Look at the Ogoni oil spill problem alone, Ogoniland is just a small community in the Niger Delta and we are talking about mobilising such a huge resources to clean up that place not to talk about the entire region.”

Said Ugolor: “Government should look at all the reports that have been produced from the region, those things that we think are making young people go to the pipelines and the government should also look at the security, because there is a close working relationship between the security agencies and the vandals. The current security architecture in the Niger Delta should be redesigned, because the civilians don’t work alone. Look at the Nigerian Extractive Industry Transparency Initiative (NEITI), how is government going to ensure that revenue coming from oil goes to its coffers, as well as ensure that key institutions like NEITI function very well?”

Also miffed by the poor management of the country’s oil revenue over the years, the Managing Director/ CEO of Unical Micro Finance Bank Limited, Mr. John Owan, said Buhari’s decision to surprise the sector should bring the desired result.

Owan expressed disappointment that this is a nation that is among the sixth largest producers of crude, “but till today, we are still importing refined petroleum and exporting crude. Nobody will like to be in that kind of situation and I think that is why the President has decided to assume responsibility to supervise the oil sector so that all income would be effectively utilised for the purpose of infrastructural development.”

While supporting the President’s decision to take charge of the oil ministry, which is the life wire of the economy, Owan added, “Nigeria, for a long time, has depended on oil produce, and we all know that the price of oil crashed from $150 per barrel to between $40 and $50 per barrel. So, you can imagine the gap of decline in our income so the country needs to look inwards. Yes the President has said that he was going to supervise the oil sector, why is it so? It is because of the inefficiency and bad management of petroleum industry and since this is the live wire of the economy it is necessary that the President oversees all that is happening.”

Owan added, “we need agricultural development in Nigeria. In the past, the Northern Region’s economy survived on groundnut, in the West, it was cocoa; while in the East, palm produce sustained the structurey. So, we can re-invent that strategy and ensure that our agriculture earns foreign exchange. Also we need to encourage foreign direct investment (FDI) to our economy.”

He continued, “all we need is purposeful leadership. We have the manpower, we have all it takes for us to be productive, we have everything. Like the former minister of agriculture, he was performing and I believe that if the President appoints an active minister again, the minister that knows what he is doing and have the support of government, I believe that our agriculture will rise up to the level of sustainability and level of income earning. Many countries depend on agriculture alone for their survivals and succeed, so, I believe we can do the same.”

Ugolor also agrees with Owan that the solution lies in diversification. “We can no longer rely on oil, we need to diversify the economy now, especially, as oil has crashed, and may crash further. We need to diversify our economy. The President has even said it that he is going to place emphasis on solid minerals that is an entire sector. I can tell you that some countries earn a lot of money through solid minerals and those countries are countries that do not even have oil. There are lots of mineral to be developed. So, if our country can diversify on solid mineral, I think that we will get additional income that will support our economy,” he said.

However, before the desired commitment to agriculture, Owan strongly advocates the removal of subsidy on oil, because it has not worked, meanwhile, it is making a few people, who are involved in petroleum import rich.

“We will support the president to remove subsidy, but you know it is not just easy, because of political consideration. Labour and other organised civil society groups need to be carried along, let them know the template, and understand the dynamics that subsidy is good, but since subsidy is not for the common man, it is better they remove it so that everybody will be buying it at the market cost,” Owan noted.

Considering the corruption in the system and the scam that is associated with the subsidy regime, Ugolor harped on the need to block all leakages in the system. He said, “if Buhari wants to tackle corruption, the major platform for which he was elected, he must deal with it squarely.”

Experts and watchers of events in the oil industry have canvassed the promulgation of the Petroleum Industry Bill (PIB), which has travelled a long, tortuous journey through three regimes —Umar Musa Yar’Ardua, Goodluck Jonathan and Muhammadu Buhari — as the solution.

When the Bill was first introduced to the National Assembly by the Yar’Adua ‎administration, there were agitations in the South South particularly the oil producing communities of the Niger Delta regarding alleged attempt to shut them out of the oil wealth privileges.

The fact that the then Petroleum ‎Minister, Rilwan Lukman, was from the North further fuelled the suspicion. And during the administration of Jonathan, the bill was reviewed to accommodate the interests of oil producing communities, a decision which attracted much criticism from the North.

But many elements in the Northern part of the country ‎were of the argument that the PIB ought to be structured in a way that would balance all interests, insisting that the interests of non-oil producing states must not be ignored.

The National Assembly, during Jonathan’s regime, shared the sentiments expressed to support the balance of interests. A member of the 7th House of Representatives, Hon. Uzoma Nkem, representing Ukwa East/West Abia State, said the inability of the House to pass the PIB was based more on politics than national interest. He stated that some unseen hands had worked round the clock to frustrate the passage of the bill.

For Nkem, “unseen hands pressurised indirectly to see that the PIB would not be passed.”

He subsequently called on the 8th National Assembly to focus more on passing the PIB, irrespective of the politics that might want to play out. But the former secretary to the Northern Senators’ Forum,‎ Smart Adeyemi, who represented Kogi West Senatorial District in the 7th Senate, believes that until steps were taken to ensure the exploration of oil in the 19 Northern states, Senators from the North will not support the passage of the Bill.

Adeyemi added that what would facilitate the passage of the PIB would be the establishment of an agency to regulate the activities of oil exploration in the country and not the department as recommended by the committee.

Adeyemi, who was Chairman, Senate Committee on Federal Capital Territory, however, acknowledged that oil exploration in the Niger Delta region, to a large extent, had affected the environment in the area and that the quality of lives in the region should be improved upon.

A look at the country’s economic development shows that agriculture was the mainstay before the oil boom of the 1970s. Before 1954, the Nigerian economy was mainly agrarian, both in production for domestic consumption and export. Industrialisation in Nigeria was anchored on making Nigeria producer of primary raw materials for British industries and importer of British manufactured goods.

Because the dominant motives of colonialism were the search for cheap raw materials and expansion of markets for products made in Europe, agriculture and trade dominated the economy. The principal commodities were palm oil and palm kernels, which were used in Europe to make soap and as lubricants for machinery.

The authorities equally stimulated production of cocoa, cotton, groundnut and rubber. Perhaps, the most significant and conscious encouragement from the colonial administration was in the area of research.

In particular, government left production of food crops in the hands of peasant households, who, generally, worked on small plots of land, with low inefficient technologies.



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