17 Jun 2009 |
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THE POLITICS OF OIL By Ladi Akeju The Nigerian government has decided to reform the NNPC. I think the term is “unbundling” whatever that means. Not everyone is happy; the big multinational oil companies in Nigeria are kicking up a fuss. They like things just the way they are and are gearing up to resist these reforms with everything they’ve got. If you are the type of person that likes a wager, you would be right to put money on them (oil multinationals) getting their way. Inspite of over $450 billion in oil exports, 7 out of every 10 Nigerians lives in abject conditions. The country is in fact endowed with more natural gas than oil. LNG exports are occurring piece meal with government forking out billions of dollars in MOUs with these same big oil companies. Corruption and backroom dealing is the order of the day. Nigeria has spawned billionaires, with no entrepreneurial skills, people who employ no one and who pay little or nothing in taxes. Their wealth is ill gotten from the proceeds of oil and naturally enough the monies are stashed away in foreign bank accounts. The disaster of the Nigerian oil industry however is not limited to corruption and mismanagement. There is a palpable absurdity to the whole industry. I for one fail to see the significance of the NNPC in the first instance. Imagine if instead of the NNPC we had several private Nigerian companies developing oil fields in joint ventures with foreign companies. They would have bid in a transparent manner for oil blocks and would develop them accordingly. They would also pay royalties, which would be divided at source; firstly to the locality or local government in which the field lies, secondly to the State in which the local government s and lastly to the federal government. If that had been the case the LNG project would not be so woefully behind schedule and the profligacy in the industry would be a lot less. Private companies want to make profit and they would plan properly and invest in the best possible ways to maximise their return. They would not ship away all their money overseas. The Nigerians, who prosper from such an arrangement, would subsequently invest in other vital and undoubtedly profitable areas of the economy. Without an NNPC, private refineries would have been the order of the day even export oriented ones in fact. The government may affect the price of petrol and diesel by manipulating tax. I dare say there would be no fuel scarcity. There should also not be any reason to be in OPEC. What is Nigeria a country with a population of 140 million people; remember 7 in every 10 i.e. 98 million people (one and a half times the population of the UK) are living in poverty doing in such an organisation? We are agreeing to sell a quarter of the oil Saudi Arabia is selling even though they have less than 10% of our population. This is utterly incomprehensible. Sure the ostensible reason for this is that they have more reserves, although it has to be said that with the way our government has mismanaged the oil resources, we are unable to meet our current quotas due to violence and other reasons. Such an organisation does not meet the needs of Nigeria and I can find no sensible reason to remain in it. Freedom from OPEC could leave the country unfettered and able to make long term plans regarding its energy future. The era of oil as the dominant energy source in the world is fast coming to an end. The west especially America has awoken to the danger of her energy policy. A country with about 5% of the world’s population consuming 25% of its energy resources, could afford to do that before but not anymore. The Chinese have between 5 and 6 times the U.S population and along with their new found prosperity they now have an appetite for oil that is rivalling that of America. India with at least 3 times the U.S population is growing at a very rapid rate too. Everyone sees the chaos this could bring for the world energy market. There are also the incessant security problems in the Middle East not to mention global warming. The question we need to ask ourselves now is; are we positioning ourselves for this boom? Or will it pass by yet again without us having anything to show for it? I hope that will not be the case. The people are the most important resource for Nigeria. Oil is a means to an end. At best it is an opportunity to invest in the people, investment in the people and in public infrastructure should in fact be the priority of government. Government especially the government of Nigeria should get out all business period. The government has been the bane of the people since independence all business ventures embarked on by the government have been resounding failures you name them: NITEL, NEPA, NNPC, Ajaokuta, NAFCON, even the LNG what it is producing at this stage is woefully inadequate. Just look at the mobile phone industry the private companies excelled while the government NITEL (privatised ineptly) cannot compete with them. The reforms needed for our government to function properly will take time and the right leadership team. If we are to finally get some meaningful benefit from oil, I fear we don’t have the luxury of time. The place to start is to advocate for the transparent withdrawal of government from energy, mining, steel, aluminium, power and water. We cannot hope to move forward economically if we don’t do that. On the other hand we might miss the boom and oil might become a vestigial energy source. Maybe then the madness that has ensnared us will dissipate and we can then revert to the true art of nation building that we should have done in the 1960s.
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