TOO MUCH HYPE ABOUT NIGERIA'S OIL
by Madaki O. Ameh
The
centrality of oil to Nigeria’s economy is obvious, given the fact that
it accounts for over 95% of her foreign exchange earnings and over 80%
of her GDP. Due to the wrong emphasis placed on this resource over
time by successive governments, Nigeria has become a virtually
mono-cultural economy, and whatever happens in the oil and gas sector
creates shock waves all over the country. A lot of bad blood has also
been generated amongst the constituent units of the country over the
way this resource should be controlled, with the Niger Delta States
claiming absolute resource control, but in the interim, 25% share of
the revenues from the resource based on the principle of derivation,
with prospects of increasing to 50% over the next five years.
This controversy has
threatened the successful completion of the on-going National
Political Reforms Conference, with the South-South staging a walk out
and vowing not to return until their demands are met. As pointed out
by Reuben Abati in his vintage piece in the Guardian on Friday 24th
June 2005, the Obasanjo administration needs to address this issue
once and for all, and not beat a cowardly retreat, as Nigerian
governments are wont to do when faced with potentially explosive
issues. To do otherwise will be to postpone the evil day, and confirm
the analysis of the recent US Intelligence Report to the effect that
the Nigerian State is made up of disparate groups where all dislike
each other but dare not leave. The plight of the Niger Delta States
has been on long enough for it to be resolved in an enduring manner
based on the principles of equity and justice. There is no doubt that
no other section of the country will endure the sort of daylight
robbery the Niger Delta States have had to endure at the hands of the
other component units in Nigeria. It is on record that before oil
became the mainstay of Nigeria’s economy, the derivation formula was
different, as each region could keep up to 50% of the revenue accruing
from its resources, and this was enshrined in the 1960 and 1963
Constitutions. The fact that this position changed in 1969 with the
promulgation of the Petroleum Decree, and later found its way into the
1979 and 1999 Constitutions does not mean that it has always been like
this, and that things cannot change for a more equitable derivation
principle.
Even the 1999
Constitution envisages that the derivation percentage can increase,
without the need for any recourse to constitutional amendment, by
providing that not less than 13% of the revenue derived from any State
should accrue to that State. It is therefore surprising that so much
furore has been generated by this issue at the Conference, when the
other members should clearly see the advantage of quietly acceding to
the request of the South-South, which they all know in their heart of
hearts to be fully justified, without unduly overheating the polity
over the matter. What possible reasonable argument can any person
have to counteract the position of the South-South in this matter,
except an arrogant misconception that the resource, though located in
one part of the country, actually belongs to another part, and that
they alone should decide what the custodians of the resource can get
from it. This appears to be the position adopted in the recent release
by the Arewa Consultative Forum (ACF) which described the
controversial adoption of 17% derivation at the Conference as “an act
of excessive generousity”. One wonders who is being generous to who
in the circumstances, and expects that an organisation like the ACF
should know better not to make such inflammatory remarks on such a
sensitive issue of national significance.
Oil is a resource like
any other one, and should not be treated differently now, simply
because it is in the Niger Delta. In fact, in demanding an ultimate
percentage of 50%, the Niger Delta States are being very reasonable,
because the ideal situation, which will finally transform Nigeria into
a country of serious-minded component units, is for each State to
control 100% of its resources. The current primitive process of all
States Accountants-General gathering in Abuja from every 15th
day of the month to share revenue which most of them had no hand in
generating is not only deceptive of our so-called unity, but also
clearly unsustainable. Even at the micro domestic level, if only one
family member always brings all the money for the sustenance of the
family, a day will come when he will legitimately ask for a bigger
share of the meat from the pot.
Given the penchant of
Nigerians to degenerate into orgies of mindless violence over
frivolous issues, this potentially explosive issue should not be
allowed to create undue bad blood, but should be quickly nipped in the
bud by the government having the courage to do that which they know to
be right, without any further delay. The South-South should also hold
firm to their position, knowing that if they don’t win on this issue
now that it is hot, it may be difficult for them to win in the
future. By calling the conference in the first place, President
Obasanjo has inadvertently given them the platform to canvass for an
all time resolution of this injustice, and to back down in favour of a
negotiated political settlement, as the series of reported meetings
are aimed at achieving, will not solve this problem which has festered
for too long.
Having said that, it also
behoves on the leaders of the South-South to call for restraint among
their people, assuring them that the issues are being addressed, so
that they don’t take the laws into their hands. Oil and gas
activities are already very difficult to carry out by the companies
operating in the area without this controversy, and prolonging this
crisis will further heighten insecurity and make things much worse, a
situation we can all ill afford.
However, securing a
higher share of the resources will not automatically translate to
better living standards for the people of the Niger Delta. The end of
this struggle should be aimed at also entrenching responsible
leadership across the area to ensure that the benefits really get down
to the people. At the moment, this is sadly not the case, as most of
the Governors in the area do as they please, without any sense of
accountability. The huge revenue so far derived from the 13% formula
has not translated to real physical development in the Niger Delta
States, except for a few isolated cases. Even though this piece is not
about projecting achievements and failures of the Governors in the
zone, misguided expenditure, such as the recently reported procurement
of an Air Ambulance by the Rivers State Government when the most basic
amenities are still very much lacking in the hospitals, and the undue
emphasis on praise singing without really putting anything tangible on
ground, is a major frustration to people who live in the State and pay
their taxes there. One only hopes that when the battle for resource
control is won at the State level, another agitation by the actual
owners of the land will not start, due to mismanagement of the
resources by the respective State Governors as has been largely
witnessed, not only in the Niger Delta, but across the country since
the inception of democratic rule in 1999. The huge waste of the
military era, which was attributed to the authoritarian nature of
military rule seems to have been perfected, even in this democratic
dispensation when the people are supposed to have a say.
On a final note, there is
a basic hype about Nigeria’s oil, which needs to be corrected in order
to put the analysis of this subject in proper perspective. In
analysing Nigeria’s relationship with the United States, especially in
the wake of the recent US Intelligence Report which has been wrongly
touted to have predicted the disintegration of Nigeria in 15 years,
many writers fall into the error of thinking that the interest of the
US in Nigeria is predicated mainly on its oil and gas resources.
Nothing could however be farther from the truth.
In his piece titled ‘Nigeria
and the American Prediction’ published in The Guardian on
Thursday, 23rd June 2005, Edwin Madunagu fell into the same
error when he wrote: “…On the other hand, Nigeria may break up
provided the oil-flow to America continues unimpeded, that is,
provided the section or sections that eventually control the oil
fields are secure and are prepared to allow the oil’s unimpeded flow
at reasonable prices to where the ‘black gold’ is really needed and
appreciated and where nature ought to have located it in the first
place, that is, America.”
The above quotation
underlies the fundamental fallacy that US diplomacy in Nigeria and
other parts of the world is mainly oil dependent. To start with,
there is no such thing as Nigeria’s oil flowing to the US. Oil is an
international commodity, traded on the spot market, and all the oil
exported by oil exporting countries, including OPEC form part of that
market and can be bought by any consumer, the US inclusive. The
impression should therefore not be created that all of Nigeria’s oil
production goes directly to fuel the US economy, as Nigeria’s oil is
not only sold to the US. Secondly, the underlying assumption is also
that the US does not produce any ‘black gold’ on its own. This
assumption does not take into cognisance the fact that, after Saudi
Arabia, which is the world’s largest oil producer, the United States,
is the second largest oil producer, with a daily production of 8.71
million barrels from 533,000 functioning oil wells. The only snag
however is that US daily oil consumption is 21.9 million barrels,
leading to a shortfall of 13.21 million barrels per day, which is
imported from the world oil market, of which Nigeria is a part.
Informed watchers of US policy in the region and the Middle East will
therefore conclude that, even though oil plays a part, the US interest
is actually in ensuring a free flow of oil to the international oil
market in order to keep prices stable, and not all about getting
access to oil from a particular country, as there is no such thing.
Viewed from the above, it is obvious that Nigeria’s daily production
of 2.4 million barrels pales into relative insignificance, when one
considers other heavy producers like Saudi Arabia – 9.5 million
barrels per day, US – 8.7 million barrels per day, Russia – 8 million
barrels per day, Iran – 3.9 million barrels per day, etc. Also,
relative to its population, the national income from oil is too meagre
to generate the hype that surrounds the resource in Nigeria today.
Nigeria’s total oil export revenue in 2004 stood at $27 Billion for a
population of approximately 130 million people, accounting for 96% of
Nigeria’s export earnings, compared to Iran with oil revenue of $32.5
Billion and a population of 68 million people, accounting for 80-90%
of its export earnings, or Saudi Arabia with oil revenues of $100
Billion and a population of 26.4 million people, accounting for 90-95%
of its export earnings during the same period. And these figures were
attained in an era of very high oil prices, as the figure was much
less before now. In a country where the government is up and doing
and providing the necessary amenities for its people, this income is
not enough to make all the other states lazy and wait for the period
of revenue sharing on a monthly basis, as is currently the case. But
because most of the money goes into funding the lifestyles of
government officials and maintaining a bogus governmental structure
without trickling down to the ordinary people who are meant to be the
real beneficiaries, this fact of a gross inadequacy in national income
is not an issue which occupies the pride of place it deserves in
national discourse.
It
is sincerely hoped that someday soon, the right focus will emerge, and
Nigerians will all agree that the main challenge facing the country is
institutionalising good governance at all levels, and diversifying the
national economy, such that all the component units of the country
become revenue earners rather than revenue sharers, as is now
shamefully the case. [back
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