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Transcript of Sweetcrude November 2011
U P D A T E SMONTHLY BASKET PRICE
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Daily | Weekly | Monthly | Yearly 103.11US
80
A Vanguard Monthly Review Of The Energy IndustryNOVEMBER, 2011VOL 02 N0. 30
19
FOSTER, RevenueWatch build capacity on revenue analysis
7
PHCN Eko zone reviews operations … Distributes 85,000 prepaid meters
Usan floater in place off Nigeria
evelopment o f the deepwater Usan field D
offshore Nigeria remains on track for first oil during the first half of 2012, according to partner Nexen Petroleum.
The FPSO has arrived at the field location and has been successfully moored.
COVER
OIL
FOCUS
FEEDBACK
Contents
EDITORHector IGBIKIOWUBO
CORRESPONDENTS
Printed and Published byVanguard Media Limited.Vanguard Avenue, Kirikiri
Canal, P.M.B. 1007,Apapa.
Internet:www.vanguardngr.com
All correspondence: P.M.B 1007, Apapa, Lagos.
477
1111
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2020
GROUP BUSINESS EDITOROmoh GABRIEL
PAGE LAYOUT/DESIGN Francis AYO & Johnbull OMOREGBEE
FINANCE
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Victor AHIUMA-YOUNGFavour NnabugwuGodwin ORITSE
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4747
NNSL: The beginning, the end
Jonathan raises Nigeria’s mining profile
Canadian companies to bid for hydro station
We’ve been selling below cost with subsidy
Community engagement buoys successful operations
Fuel subsidy to gulp about $50bn in 5 years
Union lists conditions for downstream deregulation
4242
3838
Foster RevenueWatch build capacity on revenue analysis
FREIGHT
4545 TECHNOLOGY
SOLID MINERALS
Sweetcrude is a publication of Vanguard Media Limited
The Realities of facing deregulation headlong
Nigeria Gas reserves stagnate in 6 years
DEPUTY EDITORClara Nwachukwu
THE TEAM
Oil majors shun local insurance on credit ratings
S nc he word s o on h fulli e t got out, discus i ns t e reg i f h t et u
de ulat on o t e downs ream p role m sector, an h val u l ub i y n p i ular, hav d t e remo of f e s s d i art c eu d ou nal d s ou D s s t h
occ pie r natio i c rse. i cu san s ave u d s d he i ere t d targ e ba e on t ir nt s s an how he v l p l c e u n e d rde e o ment wou d affe t th ir b si ess s an /o i i u i .ndiv d al l ves
o d l , t d t rom t c u o Acc r ing y his e i ion f he over p tmm joi s i t d ou we i g on t
co unity n n he isc rse, d ll n he p n s of v us t e ol s g ver e tpre ared e s ario s ak h der – o nm n , mark t an a h t reg i i
e ers d os of others for de ulat on nt m o e ra mm o er s f F de l Government’s co itment t theol , he vai i i y f uc ure t u p a
p icy t a lab l t o infrastr t o s p orte arket wns re m s c or, a s at tfre m do t a e t nd the t e of he g an f e an t i t e n i alNi eri re ineri s d he ab lity o m et at on d d l peman for petro eum roducts.
h G o E e ut D c or, ni gT e r up x c ive ire t Refi n and he s N g i N i al r l
Petroc mical , i er an at on Pet o eum rp n, M l Chu wu r F uCo oratio NNPC, r. Phi k , in ou oc s i r w t t he r neri s n he n nte vie , admi s hat t efi e i t ir curre ta n n p i i n c t e c i d
st te are i o os t o to ompe e ffe t vely un er er gu a i n n wen o g td e l t o , a d t n to highli h the e a ita o a r a hr h bil tion pr gr mmes the co por tion as e b o ck t e i h em arked n to kno h m nto s ap .
d t o o t s a s r t o l In ad i i n t hi , we l o b ing o y u al thep s i ot e s o s of he p ro e m n us r
hap ening n h r ect r t et l u i d t y d c om a whole o b y l Ga an e on y as , n ta l , Oi , s, Power, n a c , b u , l d M n a Fr h I sur n e La o r So i i er ls, eig t,T ol g an m t , s h eg o echn o y d Com uni y o t at each s ment fhe s i t an o i o d i wi h
t oc e y c have s meth ng t i ent fy t .W r i d g s op ors an r u ye emind o l an a erat d othe ind str nd c mi lay i m e
a e ono c p ers to ava l the selves th op u t f d S t r er on port ni y o fere by wee c ude int nati ald t o s ll e s lve and hei p o
e i ion, t e th m e s t r roducts t the h c p f le and rt s sworld t rough ompany ro i s adve i ement hc orl e ro eum g , WPat the fort oming W d P t l Con ress C, c n u i Qa we D e 4 an omi g p n Doha, tar, bet en ecemb r d8 01, 2 1.
ls o i e art hi tA o, we c nt nu our p ners p with CWC for he 12 i ri a G I t nat f e
20 N ge a Oil nd as n er ional Con erenc and xh n 2, h d t l e E ibitio , NOG201 sc e uled o take p acn y we eb u y d 012 hi i
ext ear bet en F r ar 20 an 23, 2 . T s sai an p ort ni for er t ver s heiag n o p u ty op a ors to ad ti e t r om ni an p t i S etcr ewe ud . c pa es d roduc s n
Petroleum refining: Modular versus Conventional Refineries
Fuel Subsidy: Ekiyor warns Jonathan against bad advisers
Kaztec
4Cover Story
CONTINUES ON PAGE 5
CLARA NWACHUKWU
It is no longer news that
t h e F e d e r a l
G o v e r n m e n t h a s
developed cold feet
over going ahead with
the planned removal of
petroleum subsidy, which will
herald the full commencement
o f d e r e g u l a t i o n o f t h e
downstream petroleum sector.
Government’s indecision
follows mounting criticisms
against the plan, which many
believe would increase the
hardship of the common man.
This is because if allowed to
run, the price of petrol would
be as high as N140/ per litre,
while kerosene, the fuel for the
common man will be as high as
N155/L, according to the latest
market data on the Petroleum
Products Pricing Regulatory
Agency, PPPRA’s website.
Both petrol and kerosene are
currently enjoying subsidy,
which put their retail prices at
N65/L and N50/L respectively.
B y r e m o v i n g s u b s i d y,
government said it would be
saving about N1.3 trillion per
annum, which it plans to use to
shore up other sectors of the
e c o n o m y , s u c h a s
infrastructure provisions
particularly for effective
downstream operations.
As shown in the table above,
between 2006 and 2011, the
Federa l Gover nment o f
Nigeria has spent in excess of
N3.56 trillion, a huge burden
that has weighed heavily on its
finances in view of numerous
needs.
Apart from being a huge
resource drain, the subsidy
regime is open to corruption,
with the Minister of Petroleum
Resources, Mrs Diezani
Alison-Madueke, admitting
that checking marketers’
sharp practices had become
intractable.
According to her, rather than
the masses benefiting from the
system as originally intended,
“the majority of the subsidies
were actually going to the
middle line operators.”
Against this backdrop she
added, “I t has become
pertinent that we find other
ways to utilize vast resources
that are being channelled into
subsidy, which are not
reaching the masses.”
Going forward, she said
government would set up an
advisory body or a think tank,
“ who would monitor and
advise,” as government would
n o t h a n d l e t h e
implementation of these
benefits.
H o w p r e p a r e d a r e
s t a k e h o l d e r s f o r
deregulation?
As the arguments go back
and forth on the wisdom of the
subsidy removal, many believe
that the downstream sector is
n o t f u l l y p r e p a r e d ,
i n f r a s t r u c t u r e - w i s e f o r
deregulation.
For instance, what are the
states of the refineries, can the
Nigerian National Petroleum
Corporation, NNPC, the
operators of the four refineries
cope with the fuel needs of
Nigerians?
If not, can the Federal
Gover nment cope w i th
c o n t i n u o u s p r o d u c t s
importation and the attendant
capital flight and attendant
o f f s h o r e j o b s c r e a t i o n
associated with it?
In terms of infrastructures
are petroleum marketers –
majors or independents or
depot operators fully prepared
f o r t h e c h a l l e n g e s o f
deregulation in terms of depot
and storage facilities, jetties
and a host of others?
A r e t h e r e g u l a t o r y
authorities – the Department of
Petroleum Resources, DPR and
the PPPRA fully equipped to
enforce market discipline, and
check sharp practices, so that
consumers do not suffer
u n d u l y o n a c c o u n t o f
operators’ recklessness?
A Gas station at night
Courtsy: PPPRA
5Cover Story
CONTINUED FROM PAGE 4
CONTINUES ON PAGE 6
Oil workers at work
These unanswered questions
make market analysts believe
that government is putting the
cart before the horse, as these
issues should have been
d i s p e n s e d w i t h b e f o r e
announcing the intent to
deregulate.
Current demand/supply
reality
Local Refining - the existing
four refineries have combined
capacity of 445,000 barrels per
day, bpd. Over the past five
years the refineries only
contributed between 4% and
20% to the national PMS/petrol
consumption, according to
PPPR calculations.
Products Importation - the
tempo of importation activities
have increased due to lack of
local refining capacity and the
guaranteed cost recovery for
importers through the Subsidy
Scheme, PSF.
National Consumption -
there has been a noticeable
increase in the national
consumption of petroleum
products. PMS national daily
consumption for example
currently stands at 35 million
l i tres from the init ial ly
observed 30 million litres, and
Kerosene 8million litres up
from 6 million litres in previous
years respectively.
NNPC embarks on refineries
rehabilitation
The NNPC enjoys monopoly
on refining in Nigeria, as it is
the operator of the nation’s
existing refineries. However, in
view of current realities, the
corporation is not deriving
maximum benefits from its
monopoly status, as it should
because of the very poor state
of the refineries.
NNPC’s Group Executive
D i r e c t o r, Re f i n i n g a n d
Petrochemicals, Mr. Phil
Chukwu, in a no-holds-barred
interview with Sweetcrude, is
the first to admit that NNPC
cannot cope and compete
effectively under the current
state of the refineries.
He said, “The question has
been asked that can we survive
deregulation. And the answer
is that the way we are today,
no! For us to survive we must
look at how can we make the
refineries efficient.”
Chukwu disclosed that the
search for efficiency plunged
the NNPC into a rehabilitation
programme that will revamp,
maintain and prepare the
refineries for possible future
capacity expansion.
T h e r e h a b i l i t a t i o n
programme is expected to last
for a couple of years, because
according him, it goes beyond
mere turn round maintenance,
TAM, a routine structure that
the refineries have not enjoyed
for decades.
He explained, “Although we
have invested, we’ve done
s o m e t u r n a r o u n d
maintenance, but you find that
these are usually very far in
between.
Instead of doing them in
three year cycles, we wait till
sometimes 10 years and more.
S o , m a n y t h i n g s h a v e
happened and what we are
trying to do today is to look at
the problems from different
angles. We look at the plant
itself, the different ones I have
mentioned, we also look at the
supply chain because crude
comes from the fields and tank
farms into the refineries. They
go through pipelines and all
that and when the petroleum
products are produced, they
also go through pipelines into
depots, tank farms or hauled
by road to where they are
needed. These are all areas we
must look at.
“Then the third bit of the
problem is the people. How
have we been operating these
refineries, do we have the
necessary skills to achieve the
objectives of these refineries.
So we look at the plants, we
look at the supply chain and
then we look at the people. So,
in our rehabilitation efforts, we
are going to address these
three key elements.
“For us to survive, we must
move away from our current
production levels of 60% and
the fact that some of the units
d o w n s t r e a m a r e n o t
functioning very effectively, so
we must fix them. In fixing
them, it is not a one-day thing,
it is something that must be
planned properly – gathering
data, doing feasibility studies,
scoping, doing the design and
all and at the end of the day
you are guaranteed the time
when you finish and you are
also guaranteed your costs.
But if you don’t do it very well,
you are bound to mid-way start
to go here and there, trying to
solve problems that should
have been solved before you
started.”
Regulators perspectives
Downstream regulators in
the DPR were weary to
comment on the planned
deregulation when contacted
severally by Sweetcrude, but
its PPPRA counterpart had a
whole lot of arguments in
favour of deregulation.
According to the PPPRA,
“Deregulation and price
l i b e r a l i s a t i o n o f t h e
d o w n s t r e a m o i l s e c t o r
constitutes the basis for
medium to long term reforms
wi th in the downst ream
petroleum sector.”
This, it noted, will to
i n t r o d u c e c o m p e t i t i o n ,
enhance efficiency, and
Chukwu disclosed that the search for efficiency plunged the NNPC into a rehabilitation programme that will revamp, maintain and
prepare the refineries for possible future capacity expansion
6Cover Story
CONTINUED FROM PAGE 5
improve products supply, just
as appropriate and liberalised
pricing framework will help
reduce ineff iciencies in
sourcing, refining, marketing,
supply and distribution of
petroleum products.
It further argued that “the
elimination or reduction of
unsustainable subsidy burden
on government and allow
deployment of resources to
fund critical infrastructure and
vital social sector spending is
critical to revamping the
sector.”
It also said that a deregulated
sector will facilitate the
operation and management of
pipelines and storage facilities
under the Open Access,
Common Carrier regime.
N o t w i t h s t a n d i n g i t s
numerous advantages, the
PPPRA was quick to note that
“Deregulation/liberalisation
must be accompanied by
infrastructural development,
institutional and regulatory
re fo r ms ,” to encourage
prospective investors.
Some of the areas begging
for infrastructure upgrade in
the downstream the PPPRA
enumerated include, adequate
import reception facility,
which it said will reduce the
d e m u r r a g e e x p o s u r e
experienced in products
handling.
• Investment in storage
facil i ty and network of
pipelines as we move through
the creation of a National
Strategic Fuel Reserves, NSFR
• The existing pipelines
need to be refurbished and
adequately maintained.
• There is no pipeline
network in the North West
r e g i o n . C o u l d b e a n
opportunity for investment
• A l s o , d e v e l o p i n g
surveillance system of the
pipeline network in view of the
incessant pipeline vandalism.
Marketers also keep mum
None of the representatives of
the various marketing groups
were willing to speak on their
level of preparedness for
deregulation and challenges
ahead. The Major Marketers
Assoc ia t ion o f Niger ia ,
M O M A N ; I n d e p e n d e n t
P e t r o l e u m M a r k e t e r s
Assoc ia t ion o f Niger ia ,
IPMAN; Depot and Petroleum
P r o d u c t s M a r k e t e r s
Association, DPPMA; and the
Jetty and Petroleum Tanker
Farm Operators of Nigeria,
JEPTFON, all had nothing to
say.
But under the condition of
a n o n y m i t y, a DA P P M A
m e m b e r i n s i s t e d t h a t
deregulation is the only way
forward, adding that the only
issue at stake is, “the sincerity
of government to pull it
through because we have been
on the process for over 10 years
now.”
He noted that the only
reason why deregulation has
suddenly become a big issue is
because “government is cash-
strapped, and because of
increasing pressure from state
governments for increase in
allocation in the light of the
n e w m i n i m u m w a g e ,
government is trying to save
from every possible way.”
He argued that his members
have invested heavily in
storage facilities and were
waiting to get on with the
process and begin to reap the
d i v i d e n d s f r o m t h e i r
investments.
But most marketers of the
petroleum products marketers
had borrowed from the banks
at very high interest rates to
finance their projects and may
not start making profits
anytime soon. With the clamp
down on administrative
recklessness by the Central
Bank of Nigeria, CBN, banks
are under pressure to recover
their loans.
M o r e o v e r , w i t h t h e
acquisition and takeover of
some of the distressed banks
by new management and some
with international affiliations,
the fear of these downstream
facilities being placed under
receivership has heightened.
I n t h e f a c e o f t h e s e
challenges, government may
well continue the burden of
subsidy longer than expected,
except it takes the drastic step
of full blown deregulation after
certain structures have been
put in place.
Government is cash-strapped, and because of increasing
pressure from state governments for increase in allocation in the
light of the new minimum wage, government is trying to save from
every possible way
Long queue for fuel
Dispenser
Oil 7
igerian CONTENT INITIATIVECONTENT INITIATIVECONTENT INITIATIVECONTENT INITIATIVE
Dr. Ibilola Amao
… Groups map out action plans
Facility for Oil S e c t o r Tr a n s p a r e n c y, F O S T E R , recently ended a
two-day capacity building workshop on effectively analyzing and utilizing reports from the Nigerian E x t r a c t i v e I n d u s t r i e s Transparency Initiative, NEITI.
The workshop, which took place in Abuja was facilitated by the Revenue Watch Institute, is part of the institute’s global programme to boost the use of EITI reports, “so that they become effective tools of reform.”
T h e o r g a n i s e r s a r e concerned that the reports a re not be ing used s expected, especially as, “NEITI spends significant time and resources on the production of the NEITI reports, and these reports constitute the single greatest, publicly-available source of information on Nigeria’s oil sector.”
It, however, noted that the trend is not peculiar to Nigeria alone as the great potential of the reports in ensuring accountability and transparency in the extractive industries are lost in many
CLARA NWACHUKWU countries.As a result, the workshop
aims to give participants new skills and ideas on how to use NEITI reports to understand and analyse Nigeria’s oil economy, and also conduct oversight and advocacy activities.
Specifically, the organisers noted that users of the report focus more on the process of compiling the report rather than using the information and data contained therein as a working tool.
T h e y a r g u e d t h a t “accountability only works if people read, understand and use the reports, while knowledge of the extractive sectors only increases if numbers are accurate and complete.”
P a r t i c i p a n t s w e r e encouraged to assess the quality of the reports based on the 2011 edition of the EITI Rules, which among others stipulates that:
. Reports must be produced annually
. Data contained in them should not be more than two years old
. A clear definition of materiality
. Audited accounts required f r o m g o v e r n m e n t a n d companies
. Discrepancies between
government and company figures must be identified and reconci led, where possible
. Sub-national transfers, barter deals and social payments should be included
. Reports must be clear and accessible.
At the end of the workshop, participants, which included civil society organizations (CSOs), professional bodies, the media and NEITI representatives, charted actions plans on how to improve the quality of NEITI.
While the CSOs spoke about advocacy activities to the National Assembly; Federal Inland Revenue S e r v i c e s , F I R S ; t h e Department of Petroleum Resources, DPR; and calling for reconciliation meeting by a l l s t a k e h o l d e r s , t h e professional bodies called for the strengthening of the technical capacity of NEITI, and auditors given clear and defined terms of reference.
Also stressing the need for i n c r e a s e d t e c h n i c a l c o m p e t e n c e , N E I T I p r o m i s e d o f q u a l i t y assurance and control of its reports, while the media on its part demanded greater access to information and data to enhance public awareness.
Nigerian Oil Firm
Nigeria needs to establish a Refinery and
Petrochemical Plant Development Commission
(RPPDC) to increase its GDP, deregulate the
downstream sector of its oil and gas industry and remove fuel
subsidy to avoid bankruptcy and anarchy. It is no longer news
that Nigeria can not afford to sustain its export of crude oil and
importation of petroleum products at a subsidised cost which is
estimated to be between N1.2 and N1.5 trillion per annum. Fuel
subsidy would be better spent on improved infrastructure,
health, education and job creation through the promotion of
SME’s to jump start a vibrant economy.
Deregulation is a necessary step that must precede
investment in refineries. However, Nigeria needs to have in
place the necessary framework, resources, fiscal terms,
conducive environment and instrument of Government that
would act as an enabler for investors who just may be interested
in locating a refinery within its shores. Without increased local
refining capacity, the removal of subsidies would be tantamount
to robbing Peter to pay Paul as the same fat cats who are
involved in the export and import business would jeopardise the
good intent of deregulation and begin to extort money from the
masses through a hiked price of products which has been the
case whenever there is fuel scarcity.
There is a need to have a government commission that is
specifically assigned with the task of accelerating the
establishment of refineries (modular and standard). An investor
friendly process which removes repetitive and non-value
adding requirements for data, certificates, reports, proposal and
financials and has the required synergy to prevent duplicity of
effort would go a long way to encouraging investment in the
design and construction of new refineries. Struggling through
DPR, NNPC, FIRS, Ministry of Environment and Financial
Institutions is too cumbersome for investors who are used to
non-complex processesA commission would act as a one stop
shop and remove encumbrances that pose a deterrent to
investment in the downstream sector of the Nigerian economy
thus reducing project costs..
Every committed government that intends to achieve a goal,
such as increased in-country refining of crude oil and
production of a surplus of finished products for export, in an
accelerated, transparent and fair manner would be wise to use a
commission with key performance indicators (KPI’s) to drive
such a target. If the penalty for non-performance should be
clearly stated in the appointment letter issued to the Director
General, a clear and ethical road map for investors would be
adhered to and implemented.
Specific objectives for a refining and petrochemical
development commission would include:
1. Examining the existing policy, legal, regulatory and
institutional framework on refinery development in Nigeria vis-
à-vis approvals being sought and concluded within 3 months.
2. Providing the framework for registration with CAC,
Ministry of Environment etc and issuance of DPR License to
operate a refinery whilst ensuring that all bottle necks that had
hitherto resulted in non-performance are removed from the
implementation process.
3. Examining the issues which need to be addressed at
national and regional levels for the purpose of promoting
optimal refinery development in the most viable locations for
Oil 8
Products Current Capacity: Domestic Demand:
Petrol - PMS: 18 million Litres per day 35 million Litres per day
Diesel - AGO: 8 million Litres per day 12 million Litres per day
Kerosene - HHK: 6 million litres per day 8 million litres per day
Th e Pe t r o l e u m Products Pricing R e g u l a t o r y Agency, PPPRA, has proposed a
multi-phased programme on deregulation as the best option out of the current predicament.
The Agency said Federal Government could adopt the p o l i c y o f a o n c e o f f deregulation, in which it would have to make provisions for the “building of adequate fuel reserve, securing and making the pipeline network function optimally, providing various cushioning measures as may be necessary and agreed to by
CLARA NWACHUKWU all stakeholders,” or a phased.In a presentat ion on:
Deregulation of Petroleum Products in Nigeria: Real Sector Perspective, the PPPRA argued that under the latter programme, “Stakeholders in conjunction with the PPPRA will progressively determine in line with the trends in market fundamentals the quantum of subsidy the government will contr ibute for the pre-determined periods.”
In yet another proposal, the a g e n c y s u g g e s t e d t h a t deregulation could be done by appropriation. “In this case, the projected amount of annual subsidy required is determined by the PPPRA. The empirically determined amount is then appropriated by the National
A s s e m b l y . T h e implementation during the year is reviewed and advised by the PPPRA.”
It enumerated the benefits of this multi-phased approach to include;
? A d e q u a t e a n d e f f i c i e n t s u p p l y a n d distribution of products nationwide.
? E l i m i n a t i o n o f i n e f f i c i e n c i e s i n t h e m a n a g e m e n t o f t h e Downstream oil sector.
? Adjustment in the template (if necessary).
? Additional refining capacity would made possible
? Healthy competition within the sector.
? Self-financing and
sel f-sustaining of local refining.
? Efficient allocation of resources and steady revenue generation, and,
Given the above supply gaps, the PPPRA argued that this could be eliminated th rough inves tment in additional refining capacity, which, in turn, will create opportunities for export particularly abound for AGO and HHK.
Furthermore, it said this will attract additional investment in import reception facilities such as Jetties, Ports, Vessels and a host of others, which are currently inadequate.
But before these investments can come, the PPPRA stressed the need to “decongest the L a g o s a r e a , a s v i a b l e alternatives are presented by the two active free trade zones in Lekki & Olokola for the citing of jetties and depots.”
It added that the draughts advantage of these locations would improve on the economy of scale on bulk discharge of products.
In the recent time, the d e r e g u l a t i o n o f t h e downstream petroleum sector, particularly with regard to the removal petroleum subsidy on petrol and kerosene has occupied the national discuss.
S t a k e h o l d e r s h a v e expressed varied opinions and interests depending on what side of the divide they are on.
While on one hand, some argue that subsidy removal will increase the hardship of the common man, others believe that subjecting the downstream sector to market forces of demand and supply is the only way to free up the sector in order to attract the much need foreign direct investment.
The PPPRA, the organisation cur rent ly in charge o f administering the contentious subsidy, criticized the policy saying that it has “constrained government spending on the development of adequate infrastructural facilities and depletion of national revenue profile.
Besides, i t added, “It e n c o u r a g e s i n e f f i c i e n t utilization of resources and product smuggling across the
borders. The consumers of HHK do not buy the product at a regulated/subsidized price set by the government due to distr ibution bott lenecks, m u l t i p l e h a n d l i n g a n d malpractices by Marketers.
“It does not encourage healthy competitions among operators as the regulatory environment is controlled by the government.
“Similarly, subsidy regime is inimical to building an investor friendly environment for improving the national Foreign Direct Investment (FDI) profile.”
Even as the arguments rage, there are concerns about the place of determines the pricing policy of petroleum products through monitoring of relevant pricing indices.
Accordingly, the agency has tried to put its role into perspective, noting that even with full deregulation and the passage of the Petroleum Industry Bill, PIB, its current roles will be strengthened and expanded. These will include:
Regulation of the Market and Marketer’s Activities
D e t e r m i n a t i o n o f Appropriate Operat ional Tariff/Margins
Administration of Open-Access, Common-Carrier Regime
I m p l e m e n t a t i o n & Management of Strategic Fuel Reserve
Monitoring and Enforcement of Industry Standards
D e v e l o p m e n t o f G a s Utilization Initiatives
S e t t i n g r u l e s f o r t h e administration of the open access regime, regulate and administer the open access to t ransportat ion and bulk storage facilities
Determine the tariffs for the open access
Establish methodology for bulk transportat ion and storage tariffs
Administer and monitor the National Operating and Strategic stocks
Arbitration, mediation and conflict resolution
Supervision of the transport logistics company which will take over the products pipelines and depots
Division, segmentation and licensing of pipelines and depots to facility management companies.
Nigeria Oil rig
Oil 9
Artistic impression of an automated machine
One of the ways the Nigerian E x t r a c t i v e I n d u s t r y Transparency
Initiative, NEITI plans to some of the challenges facing it in terms of oil and gas audit p r o c e s s e s a n d d a t a gathering, to boost public confidence is in automation of processes.
Criticisms against recent oil and gas audits conducted by the agency, particularly in terms of uses and relevance to the public made NEITI to have a rethink to re-jig its processes.
The Executive Secretary, NEITI, Mrs Zainab Ahmed, speaking on: The Journey So Far, in the agency’s new publication, NEITI Open Audit, said the agency was faced with a lot of challenges, a d d i n g t h a t h e r administration was doing all it can to overcome them.
She said that part of the immediate plans include the development of strategic plan to guide NEITI’s future plans.
L i s t i n g o t h e r m a j o r priorities areas under the current operating year, Ahmed, who came on board NEITI in November 2010, said she intends to “ensure the commencement of 2007-2010 Solid Minerals Audit,” haven dispensed with the 2006-2008 oil and gas audit.
To reach a wider audience, she also said that her administration will intensify p u b l i c e n l i g h t e n m e n t prograammes and civil s o c i e t y e n g a g e m e n t s particularly at the grassroots.
She noted that NEITI has r e c o r d e d m o d e s t achievements within the past one year despite the plethora of challenges it faced, e s p e c i a l l y i n a d e q u a t e funding to execute its projects.
The NEITI scribe recalled some of the successes, especially the fact that
CLARA NWACHUKWU
between November 2010 and May 2011, the Secretariat was “able to meet all the six EITI conditions, which made it possible for Nigeria to attain Compliant Status.”
She further revealed that “the procurement processes for NEITI to embark on new industry audits have reached advanced stages” for the 2009/2010 Oil and Gas Audit, and the 2007-2010 Solid Minerals Audit. For the latter audit, she said a consultant for the Mining Scoping Study has already been appointed.”
Furthermore, she revealed that the implementation of the Multi Donor Trust Fund, MDTF, under the World Bank has commenced, “following the setting up of a steering committee and appointment of a Project Coordinator, Procurement processes of all activities under the fund.”
However, she noted that NEITI is still bugged down by ineffective government-NEITI relations/sectoral linkages; comatose Inter Ministerial Task Team and static remediation plans, dwindling donor confidence, a n d p o o r N E I T I / C S O relations and a host of others.
V i c e - Pr e s i d e n t , Namadi Sambo at t h e w e e k e n d
urged the European Investment Bank (EIB) to partner with the Federal G o v e r n m e n t i n t h e deve lopment o f the country’s gas sector to boost energy supply for speedy industrial growth.Sambo made the call when he received the Management team of EIB, led by its Vice President, Mr Walsh Patrick, at the Presidential Villa, Abuja.He said the call had become necessary in view of the fact that all the 10 on-going power projects across the country would be completed by 2012 and would become functional only when there was adequate gas supply.“One major area, which even yesterday we had an extensive meeting with the Ministries of Power, Petroleum and the major
frica's and fast-growing Apopulation will help ensure the continent prospers even if the developed world suffers another economic meltdown, Nigeria's president said.
told a business forum in the Australian city of Perth he was confident that strong economic growth seen since 2000 in would be maintained thanks to increasingly strong financial and political fundamentals.
"Africa has come a long way from the 1990s, which was characterised as a lost decade for development," Jonathan told the gathering of mining chiefs and other powerful businessmen from mostly Commonwealth nations.
"All across Africa there is optimism that this positive trend will continue."
Jonathan cited the continent's ability to feed the China-driven global commodities boom as one of the major reasons for believing in Africa's new-found economic resilience.
He pointed out that Africa had 10 percent of the world's reserves of oil and gas, 40 percent of its gold and about 80 percent of its bauxite, as well as significant quantities of chromium, uranium and iron ore.
FG Urges Investment In Gas Sector
oil companies, the IOCs, is the issue to address the local gas supply.‘’I will like to inform that at the present moment, we are constructing 10 new thermal power plants and these plants are at about 80 to 90 per cent completion.“Three of the plants are ready and are injecting power to the system, but gas is the big challenge.”Sambo observed that the
provision of gas for local use was a priority to government, as it was a major requirement for adequate power supply and production of fertilisers.He said that the country had a robust Gas Master Plan meant to speedily develop the sector.According to him, there are programmes in the Gas Master Plan to develop major gas processing centres, develop fields for additional gas and arrest gas flaring.
Africa to prosper despite globalturmoil: Jonathan
Oil 10
Natural Gas pipeline
Recently, about 60
participants from
n i n e A f r i c a n
countries took
part in a two-
week Regional Extractive
Industries Knowledge Hub
(REIK Hub) Summer School,
which held at the Ghana
Institute of Management,
Policy and Administration,
Accra.
Participants were drawn from
o i l a n d g a s o p e r a t o r s ,
m i n i s t r i e s , m e m b e r s o f
p a r l i a m e n t , l a b o u r ,
international organisations,
civil society groups, religious
institutions, traditional rulers,
the academia and the media,
who were put through intensive
coaching on avenues for
leakages and revenue loss in
the extractive industries and
how to checkmate capital flight
from their respective countries.
Participants were drawn from
CLARA NWACHUKWU Tanzania, Nigeria, Sierra
Leone, Uganda, Liberia,
Z a m b i a , M o z a m b i q u e ,
Zimbabwe and Ghana
The Nigerian contingent
comprised 10 representatives
that included two media
representatives, one of whom
was Sweetcrude’s Deputy
Editor, who were sponsored by
the Facility for Oil Sector
Transparency, FOSTER, a
British change programme
funded by the Department of
F o r e i g n I n t e r n a t i o n a l
Development, DFID.
According to the sponsors
a n d o r g a n i z e r s o f t h e
programme, GIMPA, Revenue
Watch Institute and Deutsche
Gesellschaft fur Internationale
Zusammenarbeit (GiZ), the
summer Hub also “seeks to
deepen knowledge and equip
participants with skills for
t h e m t o u n d e r t a k e
independent analysis of fiscal
and revenue management
policies, EITI reports analysis,
contracts analysis and finally
understand key legislation in
their countries.”
The two-week residential
course covered fundamental
and intermediate governance
issues in the Extractive
industry, EI value chain.
The Summer Hub, which
theme was, “Governance of
O i l , G a s a n d M i n i n g
Revenues,” was to acquaint
participants on critical issues
that will help their respective
countries maximize benefits
derived from the exploitation
of their natural resources.
Each course is made up of
modules that cover the EI
value chain and structured
along general concepts
( theor y and p rac t i ce ) ;
comparative analysis of
current situations of current
situations from the region and
beyond; case studies; policy
labs to analyse regional cases
s t u d i e s ; a n d p l e n a r y
discussions.
The participatory and
output oriented course also
drew from participants
experience, their professional
s k i l l s a n d i n d i v i d u a l
initiatives. In addition to the
lectures and case studies, was
a field trip to AngloGold
Ashanti Iduapriem Mine,
Takwa, to give participants
firsthand experience at the
mines.
They added that the variety
of approaches adopted for the
programme is meant to
encourage participants to
share the i r ideas and
experiences through small
group discuss ions and
workshops.
These approaches are
geared toward a deeper
understanding of the issues
and challenges in the EI
within Africa, which is an
emerging hub for providing
global energy security.
Participants are equally
expected to use the insights to
improve on the existing
frameworks in the sub-region,
whi le a l so deve lop ing
regional capacity to provide
e f f ec t i ve t ra in ing and
mentoring to grow the
number of knowledgeable,
skilled human resources who
are duly equipped to affect
s t r o n g o v e r s i g h t a n d
gover nance o f na tura l
resources.
“The purpose o f the
S u m m e r S c h o o l i s t o
s t rengthen, equip and
empower participants to
exercise their oversight roles
effectively in the prudent
management of extractive
industry revenues by their
host governments,” said the
organisers.
Over 30 courses were
delivered cutting across
policy, contractual processes,
fiscal regime, exploration,
exploitation and production,
refining, marketing and
t r a n s p o r t a t i o n , a n d
environmental issues and
rounding off with group
projects on specific subject
matter along the EI value
chain.
With regard to sponsoring
the Nigerian contingent to
the Summer School Hub,
FOSTER, said that this is
geared toward strengthening
t r a n s p a r e n c y a n d
accountability in Nigeria’s oil
and gas industry, especially
as the sector is the livewire of
the economy, from which it
derives the bulk of its
revenues.
FocusF 11
Mr. Phil Chukwu, the group executive director in charge of refining and petrochemicals at the Nigerian National Petroleum Corporation, NNPC, is a focused and driven man. Before his
current posting at the corporation, he had occupied other portfolios including that of group general manager, NAPIMS, group executive director, exploration and production, among others. In this interview with Hector Igbikiowubo and Clara Nwachukwu of Sweetcrude, he speaks passionately about how the refineries fell into disrepair, plans to rehabilitate them and restore production to 90 per cent installed capacity. He talks about the need to position the refineries to operate in a deregulated environment, among other issues.Excerpts:
Can you give us an update on
the state of the four refineries –
the two in Port Harcourt, and
the ones in Warri and Kaduna?
Let me first of all say that we
see the refineries as three
refineries because Port Harcourt
has two refineries in one – so we
talk about the 210,000 barrel
refineries in Port Harcourt.
In Kaduna, we have a refinery
and a petrochemical plant
attached to it. Actually, in
Kaduna there are two plants –
the fuels plant which uses
Escravos Crude, and there is the
Lubes plant , which uses
imported heavier crude. Also,
there is the LAB, which uses
some of the products from these
refineries to produce linear
alkaline benzene, which is a raw
material for detergents. From
this also, we produce base oil
from the Lubes plant for lubes,
wax for candles etc. So in
Kaduna, you may be talking
about three separate plants – the
fuels, the lubes and the LAB.
Then the tin and drum is for
packaging.
In Warri, you have the refinery,
and then the petrochemicals –
the PP or clean plant as it is
called and the carbon black plant
as well, so you also have about
three of them.
You can now see how complex
these refineries are and for us to
have the full benefits of these
investments, we must have all of
these units work. Unfortunately,
over time, the refineries have not
been operating optimally, they
are not doing well, and we are
doing very poorly.
I believe, if I may say that even
though we can do about 60
percent, that is the inlets or
DCUs- Crude Dispensing Units,
if they can take about 60 percent
of the name plate capacity, even
though we can do that, the other
units also have issues because
t h e y a r e n o t p r o d u c i n g
optimally. Therefore, you find
that the yield slate we have is not
being achieved in the refineries.
This is because of many years of
not investing in these refineries.
Although we have invested,
we’ve done some turn around
maintenance, but you find that
these are usually very far in
between. Instead of doing
them in three year cycles, we
wait till sometimes 10 years and
more. So, many things have
happened and what we are
trying to do today is to look at the
problems from different angles.
We look at the plant itself, the
different ones I have mentioned,
we also look at the supply chain
because crude comes from the
fields and tank farms into the
refineries. They go through
pipelines and all that and when
the petroleum products are
produced, they also go through
pipelines into depots, tank farms
or hauled by road to where they
are needed. These are all areas
we must look at.
Then the third bit of the
problem is the people. How have
we been operating these
refineries, do we have the
necessary skills to achieve the
objectives of these refineries. So
we look at the plants, we look at
the supply chain and then we
look at the people. So, in our
rehabilitation efforts, we are
going to address these three key
elements.
And how far have you gone
with tackling any of these
problems?
The programmes have started,
w e c a l l i t r e f i n e r i e s
rehabilitation programme. For
instance, the Port Harcourt
initially started with a turn-
around programme, and they’ve
gone as far as placing orders for
long lead items, and we have
also visited some of the
contractors because what we are
doing is that those who built the
refineries will be the ones to do
the jobs for us. We have
understanding with Technimont
that was proposed by JGC.
JGC is unable to come for
several reasons – there is a
J a p a n e s e G o v e r n m e n t ’ s
a d v i s o r y t h a t J a p a n e s e
companies should not come to
the Niger Delta. So that is an
issue, and we’ve visited them in
Japan trying to make them
understand, and the Ministry of
External affairs is assisting us in
this respect. So we are trying to
convince them so that the
Japanese Government can
change their advisory from a
high alert level, to maybe a
moderate one so that these
people can come. But the
situation today is that they are
unable to come. But they said
they will work with Technimont,
who has been partnering with
them all around the world. So
Technimont will be there to
w o r k , w i t h J G C i n t h e
background.
For Kaduna, Kaduna was built
by Chyoda, and Chyoda is going
to come and they have agreed to
come, even though they are
Japanese as well, but they are
not going to the Niger Delta,
which is where they have an
advisory. Chyoda have agreed to
come, we were in Japan and we
met with them and we are
working at how we can come to
an agreement for them to come.
Phil Chukwu
CONTINUES ON PAGE 12
Focus 12
For Warri, we have Saipem,
which is the successor of
Snamprogetti, who built the
refinery. Snamprogetti has been
acquired by Saipem, so it’s a unit
of Saipem; they are ready
because they are on ground in
Nigeria so we don’t have a
problem with them.
So all three contractors have
been identified, we are also
engaging NETCO, working with
Technip, an internationally
renowned company with a lot of
experience in refinery work and
they will act as consultants to
NNPC. NETCO and Technip
have formed a consortium, but
NETCO is leading and they will
now act as consultants to us. We
have started going round the
refineries to gather data, do the
inspection and auditing, gather
all the data, scope the work,
schedule it and do the cost
estimates, prepare all the
documentations for negotiations
with the afore mentioned
contractors.
So we’ve gone along this route
and we are currently engaging
with NETCO and their partners
to ensure that we wrap up
agreements with them. But
before then, they have already
started work and their proposal is
with us and we are in the process
of negotiating with them.
Going back to Port Harcourt
and JGC, in the event the
advisory is not vacated, what
happens, or do you have an
alternative arrangement in
place?
Let me assure you that
Technimont is a very competent
company, they’ve worked for us
in that refinery and they partner
with JGC all across the world, so
they don’t have an issue.
Actually, it was JGC that
suggested we work with them
and we believe that they have all
the competences required. They
even worked on the Eleme
Petrochemical Company.
We also know that the Port
Harcourt Refinery over the
years has been bedeviled by
electricity supply issues, is
there any plan to tackle that
problem head on?
Yes, we have two initiatives –
one is to refurbish the existing
electricity supply system, which
is the steam turbine. The
problem we have there is
because of the water quality
producing steam to drive the
turbines. So we are fixing that.
But the main plant, which
removes all the minerals from the
water, we have a contract in the
process and once that is
concluded, they will award
contract for the placement of a
mini plant, which produces the
water, which goes to the boiler
and from the boiler, you have
steam that drives the turbine. So,
CONTINUED FROM PAGE 11
this system is being worked on.
The second system is where
you have a reliable power
generation system just like you
have in Warri, to have a gas fired
generator. In that case what we
are doing is, we are talking to two
companies and as soon as we
conclude, in fact, the papers are
going to be considered in GEC, if
the GEC meeting holds today, we
will look at what has been
proposed, select the best one and
begin to work with them to install
a turbo generator inside the
compound in Port Harcourt. That
will be an alternative to the
existing system.
This doesn’t sound too
s a l u t a r y a n a l t e r n a t i v e
considering the issues we have
with gas, so how will it play out?
We don’t have that many issues
with gas because there is already
a gas pipeline that comes into the
Port Harcourt refinery. The
volume of gas required is
something like for 30 Megawatts
power generation, so it won’t
require that large volume of gas.
Already there is a pipeline taking
gas across that area and all we
need is to key into the refinery.
T h e i n t e r v e n t i o n s o r
p r o g r a m m e s y o u h a v e
mentioned so far appear to be
moving at snail speed, which is
usually the case with executing
policies in Nigeria?
The snail speed you’re talking
about, let me tell you that in
engineering projects you don’t
just jump into it, you must plan
properly else, you’ll have
problems in implementation
and that is what you must avoid.
If you want it to happen today,
it’s not going to happen. When
our consultants finish their
work, then you’ll know the
proper time schedule.
We are looking at three
elements in the implementation.
The first one is to revamp the
refineries the way they are today
in the immediate short term. We
look at the refineries, there are
things that need to be replaced,
some cleaning up and all that
and we’ll do that. The next stage
is the upgrade; you’ll agree with
me that in the time we are
talking about 25-30 years that
these refineries have been there,
technology has changed, and if
technology has moved on, you
need to also adapt to new
technologies. So we the upgrade
segment, after the initial
revamping, you have the
upgrade and if subsequently you
want to expand these refineries,
you can go ahead and refine
them. These are some of the
things that we hope to do.
The first bit is to revamp the
refineries, clean them up,
change the parts that are rusty to
make it more efficient, but it
remains the way it is. Then you
go to the upgrade side, this will
increase the efficiency because
we are introducing the latest
technology in refining, then the
final stage is if we want to
expand the refineries. But we are
not talking about that now.
These are the things we plan to
do and our schedule will address
the first part – revamping, and
then address the second one,
and we take them in stages like
that.
In order to address this
concern, can we look at the time
line, how soon do you expect a
f e e d b a c k f r o m y o u r
consultants?
L e t ’ s n o t l o o k a t m y
consultants because what we
have or the directive we have
from thee management – the
minister and government is that
we will do the Port Harcourt 1 for
one year, the other one we will do
Phil Chukwu
CONTINUES ON PAGE 13
Focus
CONTINUES ON PAGE 13
13
for two years. The Port Harcourt
1 like I told you, we’ve already
ordered for the long lead items. I
personally went to Japan to
speak to some of those who
manufacture these components,
so went to their offices one by
one. We spoke with them and got
agreement with them on when
they can bring them in. the
actual bit of during the time
when they will actually do the
work on ground will be say
during a two month or three
month period. What you have is
from now to probably August-
September will be for the
manufacture of spares and
equipment that we need and
once they arrive, the actual work
of installation and integration
will commence immediately.
We have been given one year
and we are trying to work within
one year, but the revamping bit,
if we now need to move ahead,
then that is another segment of
the work. Our objective at the
end of the day is to achieve about
90 percent of the name plate
capacity for Port Harcourt and all
other ones. Today, Warri is the
best that we have.
But you see, one of the
problems we have in Port
Harcourt is that it is the new Port
Harcourt that we will address
during this phase. The old Port
Harcourt is really in totally bad
shape and that one will be
included in a longer term work
and this will come in with the
upgrade because you have to
really go into it and do detail
work in order to upgrade it to a
standard where it can produce
on the basis of the name plate
capacity.
For the purposes of clarity, the
90% you’re looking at is for Port
Harcourt 2, the 150,000 barrels?
Yes, the 150,000 of the new Port
Harcourt. The old one has not
been functioning for a very long
time, therefore a lot more work
needs to be done there. Port
Harcourt is doing 66% as at
yesterday. But you have to
understand also that the FCC –
Fluid Catalytic Cracking unit
has not been working because of
power issue. So once the power
issue is solved, in fact, they are
trying to bring back the FCC
today.
A little more clarity, if you say
the refinery is doing about 66%,
yet the FCC is not working, how
is that?
The explanation is that the
CDU that is the unit that brings
in crude and when refineries
report their performance that is
what they report. The other units
will take input from the CDUs
and other units to function; the
FCC gets it raw materials from
the VDU and then processes it.
So what the FCC does is to
increase the volume of PMS that
you are producing. But in
reporting the 90% I am talking
about, is from the CDU, what the
refinery can take in at any
particular time. So now it is now
our responsibility to ensure that
these other units function
optimally so that whatever is
passed into them is also
processed.
In real terms, the refineries
supposedly get 450 000, barrels
per day, what volume of this are
you able to process?
I’ve given you an average for
all the refineries, if you talk
about an average of 60%, it will
be 60% of 450,000. But this
fluctuates because it is not that at
any particular point in time you
have just that same volume, it
could be higher, it depends on
h o w t h e r e f i n e r i e s a r e
functioning. But the issue with
CONTINUED FROM PAGE 12
the refineries in terms of the
restrictions of the crude you pass
into it, is not because the
refineries are not functioning all
the time. There are other issues.
There are the issues of bringing
in the crude, sometimes, you are
processing and the crude line is
broken. You process what you
have and if you finish processing
that, you have to wait.
In sum, when you are looking
at the average, you are doing
lower than what you expected to
do, and that is what the issue is. A
lot of problems associated with
the refineries come with the
availability of crude.
Let us look at another level of
the problem, the limited
authority in terms of approval
limits the managements of the
refineries enjoy are rather
small, has this been addressed?
That has been addressed. The
f ede ra l Gove r nment has
changed the level of financial
authority for most of the
ministries, departments and
agencies and we have adopted
that. Today, the approval limit at
the refinery is substantially more
than what it used to be in the
past. So I don’t see that as a
problem.
Given your explanations, it
appears the turn-around
maintenance will take longer
than anticipated?
What we a re do ing i s
rehabilitation not turn around.
Rehabilitation is more of TAM +
because you have to do a lot
more. TAM is a routine thing, but
this time around, we are not
talking about the routine
because when we should have
done Port Harcourt, we are
talking about several years back.
Now we are trying to do it and in
addition to that, we are talking
about all the others like power
system, the de-bottlenecking of
the FCC.
When the Port Harcourt
refinery was built, it was
originally designed at 100,000
p/d, then I think there was a plan
to build another refinery in
Calabar, but that one failed, so
government decided they
should increase the Port
Harcourt to 150,000 barrels. But
in increasing it to 150, 000, the
FCC unit was not increased.
Recall also that the old Port
Harcourt refinery was just a
topping refinery but it didn’t
have FCC, it had to also use the
existing one. So you have to de-
bottleneck it this time around.
You have to increase its capacity
or you add another unit that will
handle it to increase the volume
that it has to take. So the work on
ground is beyond turn around
maintenance.
Given these scenarios, from a
layman’s point of view is it not
just better to build new modular
refineries?
No, I don’t agree. Having a
modular refinery will be very
small and I don’t see a company
like NNPC going to have
smaller refineries. But if we
refurbish this one, we will do
that at a cost that what you will
spend here cannot even build
one refinery. Do you know how
much it will cost you today to
build a refinery of this capacity?
You’re talking about a combined
445,000 bpd refinery; it’s going
to be a huge cost if you decide to
build new ones. Why don’t you
spend a fraction of the money
you would have used to build
this one up, do the technology
upgrade. We have experts who
have looked at them and can do
it.
We are also looking at the
market, the market in Nigeria
today is different from the
market in Nigeria when some of
these refineries were built.
Therefore, the question is, when
experts look at it, am not saying
that is what will be done, but we
can reconfigure the refineries to
produce more of the products
desired in this market than
products that probably we can’t
handle.
Let’s take Kaduna for example,
when it was designed, it was
designed to produce asphalt, but
how do we evacuate it, have we
been able to successfully
evacuate it. Yes, asphalt is
needed in the country but since
we have not been producing,
have we not been using asphalt
in the country?
These are some of the things
we have to look at, we have to
look at the market, what does the
market want? And we must be
able to address the issue. These
are some of the issues we are
carrying out studies on and we
hope at the right time we should
be able to say we can do this to
Phil Chukwu
Focus 14
CONTINUED FROM PAGE 13
the refineries or leave them the
way they are. But some of the will
need twitching here and there,
and I gave the example of the
Port Harcourt Refinery.
I also want note the situation in
Warri, where there is a PC-
Petrochemical plant, it has not
worked for over 12 years and we
hope that during this exercise we
will be able to bring it back to life
because it is also going to be a
money earner for us.
This brings us to a grave
concern out there, which is part
of what has brought the
refineries to where they are
today with regard to the
frequent policy shifts in
government and management.
Won’t you say the NNPC will be
better off partnering with the
private sector for greater
efficiency and less interference
from government?
Let me first of all say that the
policies regarding refineries in
Niger ia have been ver y
consistent in the sense that there
is hardly any government in
Nigeria that does not desire
optimum utilization of the
capacity of the refineries, it has
always been the same. They
want the refineries to run well,
they want them produce at
optimum levels.
Once this is done you may say
that in implementation, there is
scarcity of funds because there
are competing needs in this
country so if the funds are not
there and the money is not
invested at that time, we have
this kind of problems occurring.
So talking about policies, the
pol ic ies have been ver y
consistent.
Secondly, am here today, am
p u r s u i n g a p o l i c y o f
rehabilitating the refineries to
make sure that the refineries are
working at least 90% of their
capacities, it is not just me but
something being driven by the
management of the NNPC and
the government – the minister
up to the president. They desire
it and want this to happen. Why?
From a selfish point of view, if we
don’t do it, then we will b out of
business tomorrow. If there is
deregulation tomorrow and we
are not able to do it we will be out
of business, if we continue to
produce at a higher cost, as an
efficient organization, we should
be able to sell below my costs; if I
do that there will be no market
for me. In the long run, I won’t
even be able to refurbish my
refineries, so these are some of
the things that happened
because the business structure
was really such that we’ve been
sel l ing below costs with
subsidies and all that, it distorts
the market and we are unable to
run a refinery in a business
manner. And that is what
deregulation will probably
introduce and if we don’t do well,
we’ll just phase out. So it is very
important that we fix these
refineries, from the NNPC’s
point of view and bring it to the
level where we are very
competitive.
Then when you are talking
about joint ventures, I believe it
is beyond me, it is government’s
decision on what they want to do
because they own the assets. If
they decide tomorrow that they
want to do it then they will.
Would you then say the NNPC
and the refineries are prepared
for deregulation?
That is what this programme is
all about, it is geared towards
making the refineries efficient
and if the refineries are efficient
they will be able to compete
effectively in a deregulated
environment. For us to be
competitive and bring our
refining costs to a level
comparable to refineries across
the world, then we should be
able fix tem, once this is done,
the products prices will be
competitive as well.
You raised a critical point
about costs of your output; it’s
contentious out there, because
there are arguments that since
the crude oil is here, the
refineries here, the cost of
producing a litre of petrol is
relatively cheaper?
Let me explain that the way it is
today, PPMC buys the crude
f rom gover nment a t the
international market price. It is
PPMC that sends this crude to
the refineries, the refineries
process it for the PPMC, which
takes its products and sends it to
the market. For the refineries,
what they earn is the processing
fees from PPMC. That is the
structure on ground today.
But we are looking at a
structure where the refineries
can buy their own crude, process
and sell. This is happening in
other places. I went to France to
see how they are organized.
They have what they call
refining and marketing. They
process their crude and sell the
products. We are not running
that today and we are looking at
it. This is what was proposed in
the PIB, where the refineries will
buy their own crude, process it
and sell to off-takers and that is
an option we are looking at.
So you find that PPMC also has
a lot of issues, lines are
vandalized, they lose a lot of the
crude before it gets to the
refineries and same thing when
the products are produced
before it gets to the end users.
They carry the burden of these
losses. If they eliminate these
vandalism and all, the costs will
be lower.
I don’t know if this is still part
of the PIB, it was proposed that
the refineries will have a
structure where they will
become refining and marketing
companies and take over most of
the functions of the PPMC and a
n e w c o m p a n y w i l l b e
established to manage the
pipelines such that when you
use the pipeline, you pay a fee
for it and it will be open for all
users.
So why were all these not
done before full deregulation?
The question has been asked
t h a t c a n w e s u r v i v e
deregulation. And the answer is
that the way we are today, no. For
us to survive we must look at
how can we make the refineries
ef f icient . I f you look at
manufacturing in Nigeria, it is
done at a very high cost, no
matter which sector you are
looking at –m with having to
provide their own power and
other facilities and the refineries
are not an exception.
Earlier on we were talking
about how to give power the Port
Harcourt refinery, you can’t rely
on PHCN for power you have to
build your own power plant and
when you do this and buy gas
and other inputs your costs will
be higher than the ordinary
power supplied by PHCN.
So for us to survive, we must
move away from our current
production levels of 60% and the
fact that some of the units
downstream are not functioning
very effectively, so we must fix
them. In fixing them, it is not a
one-day thing, it is something
that must be planned properly –
gathering data, doing feasibility
studies, scoping, doing the
design and all and at the end of
the day you are guaranteed the
time when you finish and you
are also guaranteed your costs.
But if you don’t do it very well,
you are bound to mid-way start
to go here and there, trying to
solve problems that should have
been solved before you started.
This is what we are doing today,
engaging those who must work
with us and ensure that this
thing works, those who have
done it before. By the initial
studies carried out, by March
next year, we must begin to see
changes for Port Harcourt. For
the other refineries for the ones
the items that we need to order,
we have placed the orders so that
by the time the ground work
begins we have prepared
everybody. We need also to
address the skills of the workers,
such that in upgrading the
plants we are also upgrading the
skills of the people.
To this end we are planning to
establish a refining school where
people both old and new will be
trained and gradually over the
years they will be going back for
retraining. It’s going to be hands
on, to sharpen their skills, and
improve health safety and
environment knowledge so that
they won’t burn down the
refineries accidentally. Those
already there today, we need to
give them top up training,
because when people have been
in a place for too long there are
certain behaviors they acquire
which are not right. You need to
correct that and you can only do
that through training and
retraining. These are what we
are doing.
Phil Chukwu
15Gas
Gas Reserves
BY KUNLE KALEJAYE
Th e N i g e r i a n
A s s o c i a t i o n o f
P e t r o l e u m
Explorat ionists ,
NAPE, has said
that Nigeria’s gas reserves have
remained stagnant in the last six
years.
S p e a k i n g a t t h e p r e -
conference workshop of the
association in Lagos recently, the
Managing Director, Niger Delta
Petroleum Resources, Mr. Layi
Fatona, said Nigeria is not
discovering new gas due to lack
of exploration activities.
He said, “Nigeria is not
discovering new gas and the
only way to discover new gas is to
do exploration work, and to do
more exploration work is to have
more investments and what that
tells you is that nobody is
investing in oil exploration and
gas operation. All the gas we
h a v e f o u n d i s t h r o u g h
exploration for oil and if we have
not found new gas it means we
have not been exploring for oil.”
He attributed the development
to the worsening weather
condition and the non-passage
of the Petroleum Industrial Bill
(PIB). “When we have favorable
weather condition and the quick
passage of the PIB, Nigeria’s gas
reserves will improve,” he
argued.
In his welcome address NAPE
President Mr. Jide Ojo, said one
of the potential drivers for the
growth of the Nigeria oil and gas
industry is renewed search for
alternative energy.
“This search is driven mostly
by increasing but fluctuating oil
prices as well as an alternative
source of energy due to its
natural occurrence as fossil fuel
and its abundance which is
recognized globally as a cleaner
source of energy with mostly
carbon dioxide (CO2) and water
vapor as by product.”
Ojo believes that Nigeria will
come out from dormancy and an
apparent state of flux regarding
gas development and moving
the gas commercialization train
forward to the next level with
significant potential for gas
revolution through the unveiling
of the President Gas Revolution
Agenda on 25th of March 2011.
In his presentation, the
Managing Director/Chairman,
Chevron Nigeria Limited, CNL,
Mr. Andrew Fawthrop, noted
that there was the need for a
transition from just oil to oil and
gas based economy. This, he
pointed out was the enabler for
e x p l o r a t i o n a n d
commercialisation.
F a w t h r o p , w h o w a s
represented by the Director, Gas,
CNL, Mr. Steve Freeman, said
there was the need to determine
the price of the commodity. He
also stressed the need for
effective guarantee for payments
for the supply of the commodity.
A c c o r d i n g t o h i m , t o
encourage operators to invest in
the business and undertake
effective exploration of gas,
issues like policy, infrastructure,
market, partnerships and
security must be addressed in
the industry.
He maintained that when
there are clear and consistent
policies, players would be
e n c o u r a g e d t o m a k e
investments that would in the
m e d i u m a n d l o n g - r u n ,
transform the petroleum sector.
Fawthrop said the industry
would further emerge as a key
p l a y e r, a n d t h a t w o u l d
e n c o u r a g e d o w n s t r e a m
investments. He said that
companies would, therefore, be
e n c o u r a g e d t o c o n s i d e r
exploration portfolio.
The Group Executive Director,
Exploration and Production,,
Nigerian National Petroleum
Corporation, Dr. Andy Yakubu,
said steady growth in the
demand for gas remained a
good reason for stakeholders to
invest in its exploration. He said
that this was good for the
country’s growth, especially in
terms of national output.
Yakubu, who was represented
by the Group General Manager,
N a t i o n a l P e t r o l e u m
Investments Management
S e r v i c e s , N A P I M S , M r.
Morrison Fiddi, placed the
country’s gas reserves at 184
trillion cubic feet.
Also placing the demand of
the commodity at 225 trillion
cubic feet, he stressed that the
country needed to increase
exploration activities (not only
for oil, but for gas) to address the
deficit of 41 trillion cubic feet,
which is a huge shortfall.
He stressed the need for
effective management of future
demand and supply of gas in the
country, noting that funding had
remained a major issue for
companies that undertook gas
exploration.
A c c o r d i n g t o h i m ,
notwithstanding the challenges,
there were huge prospects in the
gas sector, which strategic
companies could tap into by
boosting their exploration
activities.
Stakeholders in the sector are,
however, argued that for the
domestic gas market to thrive,
issues like securitisation,
stability, development and
coordination, simplicity, and
c o m m i t m e n t ( f r o m a l l
s t a k e h o l d e r s ) , m u s t b e
holistically addressed.
Nigeria’s 2010 natural gas
production at 3.3 billion cubic
feet per day 2010 clinched the
third largest producer in Africa,
contributing 16 percent of
Africa’s production and the 25th
in the world accounting for only
one percent of the production.
Imo to host gas expo
h e I m o S t a t e G o v e r n m e n t h a s T
concluded plans to host an I n t e r n a t i o n a l G a s Roundtable & Expo, tagged IGR 2011, scheduled to hold between November 29 and 30 in Owerri, the state capital.
The Gas Expo, which theme is: Gas-to-Wealth is being organized by the state Ministry of Petroleum and Environment, and meant to serve as the “Energy corridor, linking the huge gas market potentials to gas Producers and Suppliers in Nigeria.”
The organisers also noted that Nigeria is increasingly turning into a significant gas market in her own right with over 187 trillion standard cubic feet, scf of proven natural gas reserve.
I n a s t a t e m e n t t o Sweetcrude, the organisers said, “IGR shall showcase v a r i o u s i n v e s t m e n t opportunities in the gas sector of Nigerian economy, p lay hos t to teaming delegates, oil industry players, resource dignitaries, exhibitors, gas consultants, L N G c o m p a n i e s , international and local gas t r a d e r s a n d b u y e r s , engineers and the gas industry regulators.”
Participants are promised the opportunity to enhance their brand reach, as the expo wil l provide the platform to meet the huge g a s p o t e n t i a l a n d opportunities in Nigeria.
16FeedbackFeedback
In d i g e n o u s j o i n t venture partners, Energia Limited and the Oando Group, have said that the only
way to r un a smooth operation in the communities is through partnership with the host communities.
H i g h l i g h t i n g t h e i r development efforts in their host communities, which made thei r operat ions successful, the JV partners said their host communities are carried along in all of their projects execution.
The host communities include, Emu Ebendo (major host), Obodougwa-Ogume, Umusam–Ogbe, Ogbeani, Isumpe–Ogbe, Umusadege-Ogbe.
Taking journalists on a tour of community pro jects executed in their areas of o p e r a t i o n s , a f t e r a n engagement programme with the communities last w e e k , t h e M a n a g i n g Director, Energia Limited, Mr. Felix A.V., said, whatever
the company gets as gross revenue, at least three percent of it goes back into the communities as a means to help in the development of the communities.
He also said that the company ’ s communi ty engagement approach has resulted into the signing of several Memoranda of Understanding, MoUs with host and other impacted communities.
He said, “1.25 percent of our gross production is ceded to Emu-Ebendo community as host community, and 0.75 percent to each of the impacted communities. We also incorporated a Trust Deed and established a separate Trust boards to manag e t he r e ve nue s a c c r u i n g t o t h e h o s t community, and a separate Trust board to manage the impacted communities for sustainable community development programs. We a l s o p u r s u e d t h e incorporation of a youth’s company, IFOGAT Limited, for the empowerment of the
youths through employment creation and contract award,
“Also, we initiated an i n t e r f a c e f o r m o n t h l y meetings with Ebendo at Kwale Base office, where we made series of cash/material donations to Emu-Ebendo Community during festivals, and other cultural occasions, Energia has remitted large sums of money to the trust fund accounts, held Trust Boards Meetings various ECDA meetings. Energia JV is also involved in other community development efforts outside of the trust fund, awarded series of contracts to IFOGAT, and
other Community registered contractors.”
Some of the community p r o j e c t s i n c l u d e t h e Construction of 12m x 18km earth road from Obodugwa to Ogume; the construction of a mini housing estate with standard borehole and e l e c t r i c i t y ; a n d t h e rehabilitation of Obodugwa water borehole system. Others are the institution of a n E l d e r s W e l f a r e Programme, Educational Re m e d i a l Pr o g r a m m e , c o n s t r u c t i o n a n d commissioning of ultra-modern market at Ebendo
During this period, the
Energia boss disclosed that the company also executed some projects with the site locations, such as the clearing and disposal of grasses and debris at the flow station; construction of 2 x 50HP export pumps skids a n d r o o f ; a n d t h e construction of 10 doghouses for our fire extinguishers storage
“We a l so engage in monthly evacuation of non toxic waste at the flow station, supply of electrical r e p a i r i t e m s f o r t h e construction of pump panel at the station, drilling of water borehole for the d r i l l i n g l o c a t i o n , procurement of two Hilux trucks for transportation purposes, production tanks i n t e r c o n n e c t i o n a n d commissioning, security caravan upgrading and furnishing, condensate return line construction and commissioning,” he added.
Currently, he said the company and its joint v e n t u r e p a r t n e r s a r e developing an Ebendo
Th e C h i e f
Executive Officer of Techno Oil Limited, Mrs. Nkechi Obi, has
been conferred with the Member of the Order of the N i g e r, M O N , f o r h e r meritorious and selfless services to the nation. Other no tab le indus t r i a l i s t s , politicians, educationists, administrators and eminent people were also honored in s e v e r a l c a t e g o r i e s a s announced yesterday by the Federal Government.
In response to the award, Nkechi Obi stated, “I thank Mr. President and the people of Nigeria for considering me worthy of a national honour. To me, it is a clarion call to
m a k e e v e n g r e a t e r contributions to the growth and development of my fatherland.”
“I am delighted indeed, that my country has made me proud and ful f i l led. I continue to advise our teeming youths to have abiding faith in Nigeria because God truly has good plans for everyone,”
With this award, Obi joins t h e r a n k s o f o t h e r distinguished women and men all over the world, who have been recognized for their selfless service in various walks of life.
Obi driven by a relentless passion was raised by a
modest working class family. She resolved at an early age to commit a significant percentage of her resources to help the poor. Over the years, she has remained committed to this cause.
F r o m i t s h u m b l e beginnings, Obi built an impressive track record having nurtured Techno Oil to be a leading indigenous oil and gas company in less than a decade. Her immense contribution to the oil and gas sector in Nigeria has earned Techno Oil a dominant role in the distribution of petroleum products across the country.
S h e i s n o t o n l y a n accomplished philanthropist
of repute; she is also a positive role model and mentor. Obi has shaped the l ives o f many people including the less-privileged and rural women.
Among her impressive charity initiatives that have impacted positively on the society is the scholarship scheme to undergraduates in Nigerian universities who may have never had the opportunity to be educated. Techno Oil’s ethos of social responsibility is founded on Obi’s passion to ‘give a heart.’ She has single handedly undertaken the r e h a b i l i t a t i o n o f f i v e secondary schools, as well as constructed two ICT centres in Lagos and Anambra state
in a bid to bring succor and hope to the less-privileged.
D i s t u r b e d b y t h e predicament and challenges f a c e d b y p h y s i c a l l y challenged people in Lagos, she staged a musical concert attracting top personalities in the society including Gov. Babatunde Fashola to give their hearts to the less-privileged. Proceeds from the event were donated to charity.
Nkechi holds a BSc in Economics and is a core professional in strategy and business development. She is an alumnus of the Lagos B u s i n e s s S c h o o l a n d Harvard Business School in the United States.
BOLAJI AJALA
17Power
OSCARLINE ONWUEMENYI
Ca n a d a h a s
revealed that
some of its major
e n e r g y
companies have
expressed an interest to invest
in Nigeria’s power sector.
T h e C a n a d i a n H i g h
Commissioner to Nigeria, Mr.
Chris Cooter, and his Deputy,
Mr. Jean Gauthier, dropped the
hint recently when they paid a
scheduled visit to the Minister
of Power, Professor Bart Nnaji,
in his office in Abuja.
According to the High
Commissioner, “There is a
g l o b a l a w a r e n e s s t h a t
s o m e t h i n g m a s s i v e i s
unfolding in the power
industry in Nigeria,” even as
he sought from the Minister
specific areas of challenge the
C a n a d i a n f i r m s c o u l d
participate in.
“The air indicates that
something is enveloping
Nigeria’s capacity to lead the
wor ld . We are here to
complement these efforts to
resolve your e lect r ic i ty
challenges and galvanize your
industr ial leadership of
Africa,” he added.
The envoys predicted an
explosion of employment in the
sector as soon as the reforms
are through and allayed fears
being entertained by workers
on lay-offs.
Cooter disclosed that major
Canadian energy companies
will be visiting Nigeria soon to
join other multinational
corporat ions to b id for
participation in certain areas,
especially hydro electricity
where he believed Canada has
the highest comparative
advantage in the world.
He noted that institutional
structures like bulk trading
and privatisation are already
exciting global investors,
boosted by the country ’s
bidding process and urged that
the “foot remains on throttle” to
s tamp out ins t i tu t iona l
corruption. “Canada will go
the whole hog with you,” the
envoy pledged.
In response, Nnaji expressed
Nigeria’s readiness to partner
with Canadian construction
giants in the Mambilla and
Gurara hydro electric power
projects expected to jointly
produce 3,300 Megawatts,
MW.
He told his guests that
reforms in the power sector
h a v e i n s t i t u t i o n a l a n d
legislative backing, and as a
result, their implementations
have been procedural ly
systematic to avoid loopholes
that ruined past efforts in the
sector.
On the need to involve the
state governments in the
sector, Nnaji noted that the
lawmakers put electricity in
t h e Fe d e r a l E x c l u s i v e
Legislative l ist , thereby
imposing the authority to
construct, produce, regulate
and supervise the sector on the
central government.
He quickly promised that the
Federal Government will
continue to encourage the
states, adding that in view of
the sensitive nature of the
Shiroro Hydro-Power Plant
sector, government would
discourage the mutation of
state run power stations that
could possibly be mismanaged
in future and take Nigeria back
to the abyss again.
Nnaj i sa id Niger ia i s
carefully monitoring the
distribution efficiency of the
existing stations as well as the
tariff to incentivise the value
chain. ”We are guarding
against the mistakes of the past
whi le address ing o ther
institutional lapses through
the strengthening of the
National Power Training
Inst i tute , NAPTIN, and
ensuring that World Bank
commitment to the issue of
bulk trading is not lost.”
With regard to labour
agitations against reforms, the
minister said that labour
leaders justifiably fight for
their members and that “they
are elected to do that.”But he
noted that some of their
agitations were motivated by
the self-centeredness of their
leaders and gave the assurance
that all of their grievances
would be addressed.
The minister further argued
that corruption in the power
sector has been a serious
impediment to its efficiency
and effectiveness, adding that
government was not taking the
matter lightly.
Shell fined for Brazil non-compliance
hell has joined Petrobras with the dubious honour S
of facing fines for failing to comply fully with Brazilian local content requirements.
According to Energia Hoje, an electronic news bulletin Brazil’s national petroleum agency (ANP) held that the company had not met its commitments during the exploration phase of a block awarded eight years ago and subsequently relinquished.
The non-compliance attracted a penalty of 1 million Brazilian reais, equivalent to less than $600,000
Andre Araujo, Shell’s president for its Brazilian unit, said the company was considering whether to appeal against the ruling. The company is one of several targeted for alleged non-compliance of local content requirements.
18Power
An Electric meter
OSCARLINE ONWUEMENYI
Just a few months after t h e N i g e r i a n Electricity Regulatory Commission, NERC, announced a new
Multi-Year Tariff Order, MYTO, the Commission is now seeking the removal of the Meter Maintenance Fund, MMF, which could reduce the m o n t h l y t a r i f f p a i d b y consumers across the country.
The introduction of the new MYTO led to a “slight” increase in electricity tariff charged by the Power Holding Company of Nigeria, PHCN,
According to officials of the Commission, the Distribution
Companies (DISCOs) no longer have justification for charging the maintenance fee since such a charge is adequately covered by the MYTO review. The removal is meant to be reflected in the October 2011 bill, which i s usua l ly p resented to customers in November.
The MYTO review in July was met with protests in some quarters due to the poor state of electricity supply in the country. Many claimed that the resultant hike would further worsen the economic gloom of Nigerians. NERC officials, however, argued that the review was long overdue since it had been proposed by the previous administration.
Before the review, DISCOs were permitted to charge
certain fees including the Meter Maintenance Fund, which were aimed to help them shore up their limited funding. However, the latest MYTO review appears to have taken care of such
funding, making any additional charge a burden on the consumers.
I n a n i n t e r v i e w w i t h Sweetcrude, the Chairman of NERC, Dr. Sam Amadi , sympathised with electricity consumers while noting that there has been little or no difference in the state of power supply in the country since the power reform was initiated by the Chief Olusegun Obasanjo government in 2005.
Amadi explained that the Commission was in the process of consulting with stakeholders over the need or otherwise to increase electricity tariff in the country. He urged stakeholders to be objective over the review process, noting that, “Public power supply in the country is still a standby in most homes and offices, as it was in 2005 when the reform in the sector began.”
He added that, “The state of electricity generation in this country is so terrible that one patriotic duty of every Nigerian is to speak strongly and critically about what needs to be done to review the situation. To us at the Commission, there cannot be a better time than now to put issues plaguing the sector back on the front burner. It comes as the Federal government is on the verge of divesting sole ownership and control of successor PHCN companies to allow private equity and management in line with the spirit of the Electric Power Sector reform Act, 2005.”
According to Amadi, the general belief in the electricity sector is that current MYTO p r i c e s c a n n o t s u p p o r t investments therein as they are much lower than in most developing countries. He added that market imperfections as low generation capacity, low private sector participation, high and unprecedented operating costs and overheads still abound in the industry.
But he further noted that, “As
daunting as these challenges seem, we cannot give in to these frustrations if we must succeed. We must confront the pricing challenge while taking into consideration the prevailing economic situation of our country folk.
“For the avoidance of doubt, there is no guarantee whether the tariff will go up or down. It is the outcome of this consultation that will determine where the electricity tariff goes.”
Amadi insisted that all over the world, prices have played a d u a l r o l e i n a c h i e v i n g efficiencies in the distribution of goods and services to consumers and in driving private investment into the economy. “Therefore, if we must achieve the goal of giving every citizen access to stable, reliable and fairly-priced electric power, a reliable and sustainable framework must be put in place to ensure the robust interaction of market forces with social policy to attain equilibrium.
“ T h i s w e c a n d o b y establishing a pricing regime that will sustain massive private s e c t o r i n v e s t m e n t a n d guarantee a positive return on investment, while also being f a i r t o u n d e r p r i v i l e g e d consumers.”
The NERC boss observed that prior to the introduction of MYTO, the industry was characterised by lack of a t r a n s p a r e n t p r i c e determination process and abysmally low tariffs, adding t h a t t h e P H C N - f i x e d government-determined tariffs mostly based on the political whims and considerations as opposed to the economic principle of full cost recovery.
“This promoted inefficient pricing of electricity and constrained the ability of government itself to recoup costs of investment. This ultimately undermined the growth potentials of the sector because it totally distorted the economics of the electricity and d e f e r r e d p r i v a t e s e c t o r participation until now,” he stated.
He explained that “MYTO provides for periodic review of the cost parameters through the minor (annual) and major (five-yearly) review windows. The annual review of the framework takes into cognizance changes in gas price, inflation and exchange rates while the major review considers holistic changes in major parameters.”
However, he pointed out that despite the attributes of MYTO, “the market is yet to become robust. The market has failed to achieve optimum efficiency and milestones as envisaged by the Commission. The much needed private sector investment especially in the distribution sector has not materialized.”
19Power
… Distributes 85,000 prepaid meters
A pre-paid meter
YEMIE ADEOYE & KUNLE KALEJAYE
IN a move aimed at implementing the F e d e r a l G o v e r n m e n t ’ s p r o p o s e d
transformation agenda in the p o w e r s e c t o r t h e m a n a g e m e n t o f E k o Distribution Company, one of the eleven distribution companies under the Power H o l d i n g C o m p a n y o f Nigeria, PHCN has begun the review of its operations.
This is meant to improve efficiency and turnaround time, in order to serve its customers better and shore up its revenue base.
The newly appointed Chief Executive Officer of the c o m p a n y M r. O l a d e l e Amoda, an engineer, dropped the hint during a media interactive session which held at the company’s head-office in Marina, Lagos recently.
According to him the era of a public service mentality for workers of the company is over, as it has become
imperative for them to treat customers’ complaints with paramount importance.
To d e m o n s t r a t e i t s w i l l i n g n e s s t o s e r v e c u s t o m e r s b e t t e r a n d eradicate the issue of crazy billings, which is rampant in the country, Amoda said that the company is set to roll out the distribution of 85,000 prepaid meters to customers on its network, to be followed by the deployment 350 distribution transformers even as 120 has been set aside as relief transformers for customers in overloaded areas.
The CEO explained that aside from the transformers, the Zone’s intention to roll out 85,000 prepaid meters in phases is actually to replace the existing old meters which have become obsolete.
According to him, the zone h a s c o m m e n c e d t h e replacement of the old meters to eradicate the problems associated with inappropriate billing of customers.
He gave the assurance that customers would be given
the new meters within one week of payment, adding that the zone was also replacing all obsolete equipments that had limited its capacity to evacuate power.
He also added that there was an on-going construction of new 33kv and 11 kv lines, as part of the plans to rehabilitate dilapidated lines.
“We have embarked on the construction of new 33kv and 11kv lines. In Eko, the NIPP is also executing 27 projects, including the construction of 33kv and 11kv lines. All the projects under construction,
including those of the NIPP run into billions of naira,” he said.
As part of the measures to ensure that the activities of workers remained in line with the new customer f r i e n d l y s t a n c e o f management, the CEO said that a new re-orientation of the workers had begun.
The new CEO said apart from organising customers’ forum, he would also revive cus tomer consul ta t ive meetings, and also introduce town hall meetings all over the company’s network and areas of operation.
il and gas authorities in the Ivory Coast have O
appealed for petroleum companies to stop drilling i n t o i t s w a t e r s f r o m neighbouring Ghana in a war of words over offshore territory between the two states.
“The state of Ivory Coast, which has continually denounced these operations, again appeals for this [drilling] to end, because the resources being exploited are our exclusive property”, the country’s directorate-general of hydrocarbons said in a statement.
T h e A b i d j a n - b a s e d authority has released a new map delineating three offshore blocks to the far east of its sedimentary basin, dec lar ing tha t “ever y company who wishes to o p e r a t e a n y k i n d o f petroleum-related activity in this zone must apply for permission”.
It says the indicated blocks CI540 to CI544 (see map, above), totalling 5526 square kilometres, are within its territory.
C o m p a n i e s a l r e a d y operating in the indicated area without authorisation should halt operations immediately, the directorate
Ivory Coast urges end to 'illegal' drilling
said, “because their actions consist of assault amounting to theft and looting of raw materials”.
The dispute has already been raised with the UN C o n t i n e n t a l S h e l f Commission without a conclusive result, and it is t h o u g h t a n e g o t i a t e d resolution is the only way to end the dispute without costly arbitration.
The Ivorian government has recently instituted plans to expand oil and gas exploration after President Alassane Ouattara replaced Laurent Gbagbo earlier this year following a bloody standoff in the wake of October 2010 elections.
20Financing
NNPC building, Abuja
YEMIE ADEOYE
NO T l e s s t h a n $50billion would have been spent in the next five years i f t h e f e d e r a l
government yields to the ongoing pressure to allow the continuation of fuel subsidy according to Sweetcrude investigation.
Oil subsidy in a single year gulps anything between $8billion and $9billion, and in the next five years with increase in fuel demand and domestic consumption, the country would have spent about $50billion subsidising fuel.
Oil industry operators, who s p o k e w i t h S w e e t c r u d e exclusively, opined that if the entire budget for Year 2011 is N4.972trillion, which is about $31billion, then it would be destructive to continue with the subsidy scheme, especially as it has been established that most parts of the country don’t enjoy subsidy.
Those opposed to the subsidy removal argued that the federal government would impose untold hardship on the people if the oil
subsidy is removed outright, hence, government should consider a phased removal of subsidy to ameliorate the hardship on the people.
They said, “The Labour Union and other stakeholders at this point need to engage the government from a position of knowledge. They should make government commit itself to laudable and economic-driven infrastructural projects, as there is currently lack of trust for the government due to past experiences over the years.”
Meanwhile, the former Deputy National Chairman of the ruling People’s Democratic Party Chief Olabode George, has also joined other professionals to throw his weight behind the federa l government’s proposed subsidy removal by 2012.
George spoke on the sidelines of the Practical Nigerian Content forum, which held last week in Port Harcourt, South-south Nigeria.
According to him the subsidy is only beneficial to the fat cows who unfortunately are also saying they are against it, now we should note that subsidy gulps a lot of money, where is the direct benefit to the people? He queried.
“In all, our neighboring countries petrol sell far higher than we sell here. What the government should do in this instance is to have the Central bank Governor, the ministers of petroleum, finance and information, to come out and sensitise the people on this issue.
“They can go to as many state capitals as possible to speak to the people in the language they understand through a kind of public hearing. They can also bring the opposition people to the debate, so they can discuss the matter and clear all grey areas.
“It is my view that when the people see the loophole in the treasury as a result of deregulation, they’ll be alarmed. Hence, to change that policy government needs to effectively engage and educate Nigerians.”
Meanwhile, a highly placed industry professional who pleaded for anonymity, argued that the only way the subsidy removal as laudable as it is, would make sense to the average Nigerian, is if the removal is structured in phases.
According to him, the effect on the people would be too severe and government would be unpopular for it. He, however, urged
government to make public what it would be doing with the over $8billion of annual saves if it must remove subsidy.
He further noted, “Part of the problem with government is improper analyses. They need to work with verifiable statistics on this issue of subsidy removal. They need to know how many Nigerians go by diesel powered public transport to work every day and how many go on petrol powered vehicles. In Paris, for example, about 3 million people go about in public buses daily, and with such a figure government can plan.
“They need to be able to tell us for instance, that in the first phase of the subsidy removal refineries would work at optimal level; in the s e c o n d p h a s e , t h e p o w e r generation would rise to a particular level; and in the third phase major road contracts in the country would be awarded and completed in a particular period of time. This is the only way government can show that it is responsive to people oriented issues and would not end up doing the right thing in the wrong way,” he said.
But George differed and opted for an outright removal of subsidy, as according to him, it is benefitting but only a few. “I believe outright subsidy removal is necessary. It takes a lot of courage, but it should be properly explained to the people. The ministers should leave their seats and go out there to enlighten the people that is why they are there.
“The fat cows benefiting from subsidy have a lot of money at their disposal to fight through the press so as to misinform the people so that it can continue. It is a large chunk of our treasury and if it goes on and the people meant to be impacted are not impacted, then what are we doing? It simply means government has failed.
“There cannot be sanity in this system when even beneficiaries of the fuel subsidy are also calling for its removal, probably to shield themselves from the fact that the system has benefited them.
Government should also ensure that the refineries are optimal and create a level playing ground for investors who may be interested in the business of refining. People should be able to go to the bank get money if need be and invest in the business of refining as this is the only solution.
Government cannot run refineries and cannot be in business. All they need to do is create the enabling environment to allow for more investor to flood the system. All over the world if government goes into business it loses money. About 18 companies have been given licenses to build refineries and they have not proceeded, it simply means there is a problem and any responsible government would want to know what went wrong with such a process” he enthused.
21Insurance
ROSEMARY ONUOHA
In t e r n a t i o n a l o i l c o m p a n i e s i n Nigeria, IOCs, have been accused of r e f u s i n g l o c a l
insurance companies the opportunity to cover their risks under the guise that the local underwriters don’t have international credit ratings.
C o n s e q u e n t l y, t h e s e companies still take their oil and gas risks abroad even when the Local Content Act stipulates otherwise.
Mrs. Justina Omekere, an insurance practitioner who made the allegation in Lagos, lamented that with such actions the oil majors have continued to disregard the laws of Nigeria, thereby depriving local insurers’ the opportunity to expand their h u m a n a n d f i n a n c i a l capacity.
In order to guard against the spread of this ugly trend, O m e k e r e c h a r g e d underwriters to subject themselves to international credit ratings to stop the oil majors from using such cheap blackmail to deprive them of what is rightfully theirs as well as saving the country from the incidence of capital flight.
In her words, “The oil majors always demand for credit rating from us before they can insure their risks. In e s sence , under wr i t e r s should avail themselves to be rated by credible rating agencies so that they will not continue to lose business.”
Meanwhile, the former Director General of the Nigeria Insurers Association, NIA, Mr. Ezekiel Chiejina, added that in line with being rated, underwriters should also do a lot of reinsurance in special risk business if they wish to play big in the oil and gas sector.
A c c o r d i n g t o h i m , underwriters should enter into reinsurance treaties with ‘A’ ra ted internat ional c o m p a n i e s t o f u r t h e r increase their ability to underwrite special risks.
Chiejina noted that special risk business is highly capital intensive, as such, insurers should ensure that adequate reinsurance is in place b e c a u s e a d e q u a t e reinsurance is imperative for underwriting companies to pay claims promptly when and where the need arises.
The fo r mer NIA DG advised insurance operators t o e f f e c t i v e l y u s e coinsurance to pull capital and develop relevant skills such that pricing of risks could be done in Nigeria. He added that they should avoid unhealthy competition that e r o d e s t h e p o t e n t i a l
profitability of the companies to participate in the sector.Chiejina stressed that every oil and gas risk underwriting
business must be insured to a Nigerian company for them to take what they can cover, then cede the rest to a captive company, adding that insurers are over exposing their account if they take too much of these special risks and exposing clients unnecessarily.
An Oil Rig
Shell Plans to Boost Nigeria Gas Production Next Year
Royal Dutch Shell Plc, operator of Nigeria’s largest oil fields, plans to boost its natural-gas production in the country as it starts a new facility and cuts flaring, or the burning of the fuel at fields.Shell’s vice president for gas in sub-Saharan Africa, Osten Olorunsola said in Abuja that the Hague-based company plans to increase daily output to one billion cubic feet within a year from about 700 million.Nigeria, holder of Africa’s largest gas reserves of more than 187 trillion cubic feet, flares most of the fuel it produces along with oil because it lacks the infrastructure to process it. Shell plans to collect gas at its Utorogu and Ughelli fields and start the Agbada non-associated gas facilities from the first quarter of 2012, Olorunsola said.“We mop up the gas which otherwise would have been flared and we also make the gas available for power,” he said. “We’re basically using one stone to kill two birds.”About 70 percent of Nigeria’s domestic gas demand is provided by Shell, most of which is used to generate electricity in Africa’s most populous nation. Chevron Corp., Exxon Mobil Corp., Total SA and Eni SpA are the other major suppliers of domestic gas.Shell cut gas flaring 50 percent in the African country to about 300 million feet a day in the eight years to 2010 after installing gathering infrastructure, according to the company’s website. The gas gathering project will cost about $6 billion when completed, it said.Shell has about 14 ongoing gas projects including the integration of the Forcados oil and gas development that will come on stream between the first quarter of next year and 2015, Olorunsola said.
Gas facility
22Insurance
ROSEMARY ONUOHA
Th e N a t i o n a l
I n s u r a n c e
C o m m i s s i o n ,
N A I C O M , h a s
charged insurance
brokers in the country to avail
themselves of the opportunities
in the Local Content Act and
carve a niche for themselves.
Commissioner for Insurance,
Mr. Fola Daniel, who gave the
charge, stated that the Local
Content Act has given brokers a
huge leverage as well as a rare
opportunity to participate in the
oil and gas sector.
Daniel, who made the appeal
at the 2011 National Insurance
Conference, organised by the
Nigerian Council of Registered
Insurance Brokers, NCRIB,
reiterated that the Nigerian Oil
and Gas Industry Content
Development Act 2010, has
given insurance brokers in
Nigeria a leverage, adding, “It is
significant that by section 49 of
the Act, all oil and gas insurance
businesses in Nigeria must be
transacted through a Nigerian
registered insurance broker.
This is indeed a rare opportunity.
However, brokers require
technical, as well as Information
Technology (IT) capacities to
take effective advantage of the
provision.”
Towards developing the
needed capacities, Daniel
advised that building strategic
alliance with some established
foreign insurance brokers may
be helpful in addition to
deliberate efforts to develop
human and technical capacities.
The Insurance Commissioner,
however, regretted that brokers
have not brought sufficient
energy in to the Marke t
Development and Restructuring
Initiative, MDRI of NAICOM.
Daniel stressed the need for a
more energetic and proactive
collaboration from brokers than
is being seen at the moment,
adding that there is the need for
the brokers, and indeed the
insurance industry to reflect on
how to tap into the vast
insurance opportunities that
currently abound in the country,
as these were yet to be fully
exploited.
Daniel noted that in the past
two years, the Commission has
been under the burden of
developing and expanding the
insurance market and by
extension, increasing the
insurance sector’s contribution
to the nation’s Gross Domestic
Product, GDP, and part of the
efforts is the introduction of the
MDRI in 2009.
He said, “For emphasis, one of
the key objectives of the MDRI is
continuous availability of
genuine insurance products at
the grassroots. Naturally, fake
insurance products will thrive in
the absence of genuine.
“We therefore need more
brokers and agents at the
grassroots. Towards achieving
this objective, the Commission
has tended to be more liberal
with licensing of brokers and
agents. Notwithstanding, it
appears that brokers have
continued to be concentrated
only in our major commercial
cities. This trend must change if
we are to truly develop the
insurance industry in Nigeria.
Beyond MDRI, brokers now have
the opportunity even to explore
Micro and Takaful insurances.
This is important especially in
the face of the renewed efforts by
world governments towards
financial inclusiveness.”
The insurance commissioner
stated that the government has
d e m o n s t r a t e d r e n e w e d
commitment for developing the
agricultural sector through the
launching of the Nigerian
Incentive Based Risk Sharing for
Agricultural Lending, NIRSAL
project currently coordinated by
the CBN.
“The insurance element in the
project is indeed a big plus for
the insurance industry. A
necessary fal lout of this
development has been the
proposal for deregulating
agricultural insurance in
Nigeria. At the moment it seems
that the Nigerian Agricultural
Insurance Corporation, NAIC
Act, has conferred on NAIC the
exclusive right to insure all
subsidised agricultural risks.
However, opportunities still
abound in the a reas o f
commercial unsubsidised
agricultural risks.”
Daniel noted that going
forward, the Commission shall
give appropriate consideration
to underwriters desiring to
u n d e r w r i t e ’ a g r i c u l t u r a l
insurance under the relevant
provisions of the law, noting that
existing underwriters are well
advised to take advantage of the
capacity already accumulated
by NAIC. As a means of
attaining sufficient capacity for
large risks, the Commission
shall actively support pool
arrangements, co-insurance
For mer Managing Director of Financial Institutions Training
Centre, FITC, Mr. Oladimeji Alo, has advised insurance operators to create a strategy that suits their own business pattern and not involve themselves in every business in the insurance sector.
According to Alo, because of the varying capital base levels of insurance operators, not every insurer can go into oil and gas business.
Alo who gave the advise in L a g o s , s t r e s s e d t h a t u n d e r w r i t e r s s h o u l d consider their strengths and capacities before they decide to do oil and gas business.
Meanwhile, Managing Director of the Law Union & Rock Insurance Plc, Mr. Yinka Bolarinwa, said that underwriters and Nigerians i n g e n e r a l h a v e n o t
pos i t i oned themse lves strategically in reaping from the benefits which the Local Content Law provides.
According to Bolarinwa, one key element that the country needed to play actively in the oil and gas sector is infrastructure, and the government has provided the infrastructure on a platter of gold, which is in the form of the Local Content Act.
In his words, “Now there is a guideline on this Local Content Act which stipulates that 70 per cent of non-life
risks in the oil and gas sector must be domic i led in Nigeria, while 100 per cent of life business must be done in Nigeria. To me, that is the infrastructure that we need and nothing more.”
On what operators need to do to tap into the benefits of the Local Content Act , Bo la r inwa s ta ted tha t u n d e r w r i t e r s s h o u l d c o l l a b o r a t e a n d w o r k together as one team to develop capacity, human capital as well as skills that will be able to match the
demand from local insurers.He stated, “Nobody can
love this country more than you and I. it is you and I that must do it and build this country. So insurers must collaborate, work together and ensure that the Nigerian model work for us. I must tell you the truth; we have not started penetrating the oil and gas market. So we need to collaborate and work h a r d e r. T h e N i g e r i a n Government has said ‘this is what I want in my country,’ so if the oil majors don’t corporate with Government they should be shown the way out.”
He, therefore, tasked insurers to ensure that the Local Content Law worked, adding, “This is our country, the oil majors should not dictate what happens in our country for us. If they don’t
comply with the law of the land they should leave. So you and I must not also be saboteurs, we must ensure that we collaborate with government so that it works. No outsider will come in here and do anything that is not in line with the law except you and I connive with them.”
C o m m e n t i n g o n t h e directive handed down to insurers by NAICOM to transit to International F i n a n c i a l R e p o r t i n g Standard, IFRS, Bolarinwa stated that collaboration a m o n g s t i n d u s t r y p r a c t i t i o n e r s w i l l b e beneficial to all. “Naturally, when we are starting a new thing like this it is better to collaborate if others are available to collaborate with you. But if they say, ‘no’, there is no way you can force them.
For emphasis, one of the key objectives of the MDRI is
continuous availability of genuine insurance products at the
grassroots
23Insurance
Naicom corporate building
Th e N a t i o n a l
I n s u r a n c e
C o m m i s s i o n ,
NAICOM, has
been accused of
not doing enough to engage
o t h e r l a w e n f o r c e m e n t
agencies and security outfits in
its drive to increase insurance
penetration through the
Market Development and
Restructuring Init iat ive,
MDRI.
The Regional Manager, Law
Union & Rock Insurance Plc,
Mr. A. Falade, who made the
assertion, stated that the
regulatory body should do
more to engage such outfits
like the Nigerian fire brigade,
Nigerian police, and the
Federal Road Safety Corps, to
increase insurance penetration
in the country.
Falade stated that for the
MDRI to work, NAICOM
should regularly engage these
law enforcement agents and
security outfits in various
awareness campaigns and stop
relying on its own agents
alone.
He said, “NAICOM wants to
stamp out fake insurers in the
country and have not engaged
the law enforcement agents to
enlighten them on what
const i tute fake or real
insurance certificates. The
policeman on the street does
not know fake or rea l
insurance paper, so how does
he apprehend people with fake
certificates?”
He argued that NAICOM
needs to regularly train these
people to get the best because
if they continued doing the
same thing, they will keep
getting the same old result.
The concept of MDRI is
based on the development of
t h e m a r k e t t h r o u g h
enforcement of compulsory
insurances; restructuring of
the system through a review of
the channels of distribution as
well as the elimination of fake
insurances. The policy is also
meant to build consumers
confidence in the Nigerian
insurance market; promote
public understanding of the
i n s u r a n c e m e c h a n i s m ;
increase the penetration from
six per cent to 30 per cent by the
year 2012, as well as grow the
nations insurance density.
Others include enhancing
the citizens’ access to relevant
and affordable insurance
products; as well as reducing
the potentials for insurance
firms to be used for financial
crimes.
Aside from engaging these
other agencies, some experts
are of the view that the
government has a big role to
play if the insurance sector
must grow.
T h e G r o u p M a n a g i n g
Director of Royal Exchange
Insurance Plc, Mr. Chike
Mokwunye, said that the
government needs to lend its
support towards the growth of
insurance in the country and
assist it in deepening the retail
end of the market because it is
important to the nation.
According to him, “The
government should assist the
insurance industry to develop
the retail market because
developing retail end takes
time but with government’s
support, it will be achieved.”
Mr. Wole Oshin, Managing
Director of Custodian & Allied
Insurance Plc, stated that the
g o v e r n m e n t n e e d s t o
recognise insurance as is
obtainable in other economies
where governments pick on
insurance for progress.
il prices rose by more than a dollar after O
European leaders agreed to boost the region's rescue fund, raising hopes that the euro zone debt crisis will be contained.
The new version of the euro zone's rescue fund will be leveraged four or five times, giving it firepower equivalent to about €1 trillion ($1.4 trillion) accord ing to French President Nicolas Sarkozy
Brent crude was up $1.00 at $109.91 a barrel last week, after touching a high of $110.12 earlier. US crude gained $1.51 to $91.71 a barrel after hitting an intraday day high of $92.04.
"I attribute the edging up of oil futures to some apparent progress in the discussions in Europe regarding the European debt crisis," said Victor Shum of Purvin & Gertz.
"The stock markets, if you look at the Japan Nikkei index, are also reacting p o s i t i v e l y t o t h i s development. The macro event and the financial markets are leading and oil futures are reacting even t h o u g h t h e c r u d e inventories in the US have increased substantially."
Crude stockpiles rose 4.74 million barrels to 337.63 million barrels in the week to 21 Octoctober, EIA said. This was sharply h i g h e r c o m p a r e d t o analysts' projection of a 1.3 million build.
Expectations that the Ch inese gove r nment would begin loosening tight liquidity policy in the fourth quarter as China's economic growth slows also supported oil prices. .
Oil rises on EU rescue plan
Barrels of Oil
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OSCARLINE ONWUEMENYI
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34Labour
Union states conditions for downstream deregulation
VICTOR AHIUMA-YOUNG
Th e N a t i o n a l U n i o n o f Petroleum and N a t u r a l G a s W o r k e r s ,
NUPENG, has warned the Federal Government to be ready for war if it goes ahead with the deregulation of the downstream sector without meeting the agreements reached with organised labour over two years ago.
The union, at its National Executive Council, NEC, meeting in Owerri, Imo State, also decried the non-passage of the Petroleum Industry Bill, PIB that has been before the National Assembly since 2008 and the increasing insecurity in the country.
In a communiqué signed by comrades Igwe Aches, and Elijah Okougbo, NUPENG’s President and General Secretary respect ively, m e m b e r s s a i d t h e y deliberated on issues that were key and germane to socio-economic and political transformation of the country. These issues included the PIB, deregulation of the downstream sector and the insecurity in the Niger Delta region and a host of others.
The communiqué read in part, “The NEC in session expressed dismay over procrastination in the general reform of the oil and gas i n d u s t r y t o e n s u r e t r a n s p a r e n c y a n d accountability increased investment and return through the timely passage of the petroleum industry bill which has been at the national assembly since 2008. It is even more worrisome and disturbing that there are various versions of the bill in circulation giving room to w i l d s p e c u l a t i o n a n d apprehension in the industry and the nation at large.”
“The NEC in session therefore cal ls on the National Assembly to make
Refinery
available the authentic version of the bill to the public to enable concerned s t a ke h o l d e r s t o m a ke meaningful contributions to the content of the bill. The NEC in session further calls on the National Assembly to immediately put in motion all processes for the speedy passage of the bill for the actualisation of the much anticipated reform in the oil and gas industry.”
On deregulation of the downstream sector, the NEC e x p r e s s e d t o t a l disappointment at Federal Government’s attempts to
deregulate the sector under the current import driven petroleum product supply status. Furthermore, they noted that the refineries are not functional, compounded b y o b s o l e t e p r o d u c t s pipel ines network and depots, low local refining and i n a d e q u a t e e n e r g y generation capacity and dilapidated road network in the country.
The union reiterated that it i s n o t o p p o s e d t o deregulation, but that it must be undertaken under the following conditions:? T h e r e m u s t b e
immediate practical and p ragmat i c s teps to rehabilitate the existing four refineries in the country to ensure optimal capacity utilisation.
? Government must c r e a t e a n e n a b l i n g environment to engender private investors’ interest in building refineries in the country for the purpose of improving the local refining capacity to meet the ever increasing local demand of petroleum products and indeed for exportat ion purposes? Engage in massive infrastructural development v i d e , r e p a i r s a n d construction of road network, modern railway system, e x p a n s i o n o f e n e r g y generating capacity, repairs and recons t r uc t i on o f p e t r o l e u m p r o d u c t s pipelines network and depots to improve and ensure
effective distribution of petroleum products. ? E n s u r e t h a t a p p r o p r i a t e p a l l i a t i v e measures are instituted to cushion the immediate impact of the deregulation on the citizenry, and ? Ensure adequate protection of all oil and gas workers in the country as the UNION will not hesitate to take appropriate actions should these attacks and a b d u c t i o n c o n t i n u e unabated.The union equally expressed alarm over the increasing rate of insecurity in the country as reflected by reports of violence across the country and the high rate of criminal activities vide, kidnapping, communal strife, resulting in wanton destruction of lives and properties, bombing, arson ,armed robbery, rape .
These issues included the PIB, deregulation of the downstream sector and the insecurity in the
Niger Delta region and a host of others
35Labour
Informal workers reject planned subsidy removal…Say safety nets will be meaninglessVICTOR AHIUMA-YOUNG
& NOAMI MGBAKOR
WORKERS in the informal sector have rejected the F e d e r a l
Government’s plan to remove subsidy on petrol, saying it would worsen the sufferings of Nigerians and that the so-c a l l e d s a f e t y n e t s b y g o v e r n m e n t w o u l d b e meaningless.
Under the umbrella of the Federation of Informal Workers’ Organisations of Nigeria, FIWON, the workers said that
Informal of sector of the economy
government’s reasons for the removal of subsidy were not tenable because the welfare of the majority of the masses was the reason for government’s existence.
The General Secretary of FIWON, Comrade Gbenga Komolafe, also faulted the plan to hike electricity tariffs and wondered why government did not discuss the so-called safety nets with stakeholders and unions.
He contended that “If some monies embezzled during programmes and those cut from salaries of political appointees can be saved, it will be enough to
fund social protection net.” According to him, “The federal
government has announced its intention to increase the prices of petroleum products and electricity tariffs. They have gone on to link this plan to an intention to implement a programme of ‘social safety nets’ to cushion the effects of the increases. These so-called ‘ sa fe ty ne t s ’ have been arrogantly announced without consultations with relevant s t a k e h o l d e r s e s p e c i a l l y organisations of the working poor and the trade union movement. It is no surprise that the content of the so-called
‘safety nets’ have little bearing to the central concerns of the working poor. More importantly, we deplore a situation whereby the announcement of social protection measures by the federal government is made conditional on policies that will completely obliterate whatever good the so-called safety nets will achieve. Increases in the prices of petroleum products and electricity tariffs will make aggregate costs of production, transportation of food and raw materials even more prohibitive with attendant consequence of more small businesses closing down. Kerosene will become more costly forcing even more people to use firewood with dire c o n s e q u e n c e s o n t h e environment.”
“On the other hand, a reasonable reduction in the colossal cost of governance with government bureaucracy and political appointees gulping close to 70% of national resources will immediately free trillions of naira to fund social protection measures as well as massive social and physical infrastructural projects all over the country. After all, previous increases in petroleum products’ p r i c e s a n d c o n c o m i t a n t promises of investing in the social sectors have never been implemented. We therefore reject unequivocal ly, the planned increase in the prices of petroleum products as well as the hikes in electricity tariffs. We demand that our right to social protection be respected without conditions while calling on the National Assembly to enact a comprehensive social protection law to cover unprotected Nigerians. We also demand that the federal government should mass ive ly inves t in the construction of refineries not only for domestic consumption but also for export as several other developing countries including non-oil producers have done rather than wait forever for so the called private sector to do so.”
On social protection the FIWON scribe said, “Most poor people in Nigeria are in the informal economy where there is no protection against their multiple vulnerabilities making the lofty objectives of the Millennium Development Goals (MDGs), a pipe dream in Nigeria.
We also demand that the federal
government should massively invest in the construction of refineries not only
for domestic consumption but
also for export
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visitors to our website Call: Hector on +234 805 1100 256, Ubong on +234 705 656 5800 or
http:www.vanguardngr.com.
Email: [email protected], [email protected]
36Labour
WORKERS i n t h e P o w e r H o l d i n g Company
of Nigeria, PHCN, have insisted on the October 31 deadline to the Federal G o v e r n m e n t a n d t h e i r management to pay the 50 p e r c e n t a g r e e d s a l a r y increment or risk industrial unrest.
The threats came against speculations that instead of the 50 percent pay rise agreed to and signed between government and the workers, government is preparing to pay them only 37 percent.
It will be recalled that the w o r k e r s a n d P H C N management agreed on 150 percent pay rise, of which only 15 percent had since been paid. The 50 percent was the final agreement after the g o v e r n m e n t - a p p o i n t e d conciliator, pioneer President of Nigeria Labour Congress, NLC, and Secretary General, Organisation of African Trade Unions Uni ty, OATUU, Comrade Hassan Sumonu, prevailed on labour to accept at a conciliatory meeting.
Sweetcrude gathered that both organised labour and Comrade Sumonu have k i c k e d a g a i n s t t h e government’s latest antics and have totally rejected it.
A labour leader in the sector who spoke on condition of anonymity, said government was playing with fire as the workers would not accept anything less than 50 percent, as this was a compromise by the workers.
The two in-house unions in the power sector, the National U n i o n o f E l e c t r i c i t y Employees, NUEE, and its Senior Staff Association of E l e c t r i c i t y a n d A l l i e d C o m p a n i e s , S S A E A C , counterparts had on October 14, issued the October 30 deadline to pay the 50 percent salary increases or face industrial unrest.
General Secretary of NUEE, Comrade Joe Ajaero, told S w e e t C r u d e t h a t t h e ultimatum remained and that the choice was government’s, to either trigger off or avoid industrial unrest in the sector at this critical point in time.
In a separate letters to the PHCN management, NUEE and SSAEAC noted that the new pay package ought to have begun since June, but has been delayed, adding they were no longer in a position to restrain the workers after the expiration of the ultimatum.
Victor AHIUMA-YOUNG
The NUEE letter signed by Ajaero, read in part; “Workers in the industry have flooded our Secretariat with complaints of non-reflection of the 50% salary increase in their September 2011 salary as prev ious ly promised by Government. We are amazed at this unwarranted development because Government made it very clear in our maiden negotiation meeting in Abuja on May 19, 2011 that enough fund had been set aside to take c a r e o f a l l f i n a n c i a l implications emanating from the negotiations.
“The non-implementation of this salary increase clearly s u g g e s t s t o u s t h a t Management and Government are only paying lip service to the spirit of tripatism and social dialogue. In view of this mistrust deliberately created by Government, we cannot but
carry our destiny in our hands to salvage our situation. We therefore demand that the salary increase including the arrears from 1st June, 2011, be paid to workers in the industry not later than October 31, 2011. We have waited enough. At the expiration of this two weeks’ notice, the Union w o u l d n o t g u a r a n t e e industrial peace in the sector.”
Similarly, the SSAEAC letter by its Secretary General, C o m r a d e A b i o d u n Ogunsegan, to the Minister of Power warned that workers should not be held responsible for any action to be taken by them if the agreement reached on the 50% salary increase is not implemented by the end of this month
The letter, also copied to the Managing Director/ Chief Executive Officer of PHCN, read: “We need to inform you
that in breach of our line of c o m m u n i c a t i o n , t h e H o n o u r a b l e M i n i s t e r dispatched letters to the market Operators, the CEOs, and station heads on the payment of the negotiated 50% salary increase, thereby creating serious distortions in the information flow and consequently affecting the payment of the salary increase agreed.
“The 50% salary increase negotiated in May 2011, was to take effects from June 2011, and be effected in staff salaries from September 2011 as Government had stated and pleaded in the negotiations with the unions in July 2011. However, the report we received from our members is that the new pay is yet to be computed for payment due also to the lackadaisical a t t i t u d e a n d l a c k o f
c o m m i t m e n t o f t h e m a n a g e m e n t a n d t h e Government to pay.
“We wish to draw you attention to the increasing u n e a s i n e s s a m o n g o u r members due to the refusal to pay as agreed and wish to inform you that we will not be held responsible for any action taken by the workers, if by October 31, 2011, payment of the arrears of 50% salary i n c r e a s e f r o m J u n e t o September 2011, and salary of October incorporating the 50% is not effected.”
Theworkers, however “called on the Government to intervene on the implementation of the 50% salary increase, stressing that when the announcement was made in May 2011, it was not clear to Nigerians that by S e p t e m b e r 2 0 1 1 , t h e implementation is yet to take-off.”
Demonstrators on the street
Ferry
38Solid Mineral
Pr e s i d e n t
G o o d l u c k Jonathan has cont inued to demonstrate his
a d m i n i s t r a t i o n ’ s c o m m i t m e n t t o w a r d s developing the mining and minerals sector as a counter-f o r c e t o o i l a n d g a s exploitation.
Speaking last week at an interactive dinner with leading Australian mining and solid minerals investors, the President said his a d m i n i s t r a t i o n w i l l v i g o r o u s l y i m p l e m e n t policies, programmes and projects that will ensure the rap id deve lopment o f Nigeria’s solid minerals sector in the next four years.
He invited the Australian miners to also invest their resources, skills, expertise and technology in the development of Nigeria’s solid minerals sector. “You are well known for solid
Jonathan raises Nigeria’s mining profile
Oscarline Onwuemenyi
minerals and you will find a lot to do in Nigeria,” he told his audience at the dinner.
The president, who spoke at the foreground of the meeting of Commonwealth Heads of Government, CHOGM, in Perth, Western Australia, said this is in furtherance of efforts to c r e a t e m o r e j o b o p p o r t u n i t i e s f o r t h e country’s youth. Western Australia with its huge solid minerals resources is the richest mineral region in Australia.
President Jonathan had earlier in the day met with the Premier of Western
Australia, Mr. Colin Barnett, a n d d e c l a r e d h i s commitment to the full development of Nigeria’s s o l i d m i n e r a l s s e c t o r because of its huge potential for boosting the national economy.
He told Mr. Barnett that his administration was working towards the full development of Nigeria’s solid minerals sector to expand and diversify the country ’s economic base. “We have a lot to learn from you in solid minerals development and w e l o o k f o r w a r d t o establ ishing mutual ly-beneficial partnerships with
Australian investors and industrialists,” he said.
The President also re-assured the gathering that his administration had the p o l i t i c a l w i l l a n d c o m m i t m e n t t o f u l l y implement all the regulatory reforms required to facilitate the ent rance o f more investors to Nigeria’s mining sector. According to him, Australian investors were also welcome to invest in other under-developed sectors of the Nigerian economy such as agriculture, noting that the country was blessed with vast arable land on which almost anything
can be grown.
The Minister of Trade and
Investment, Mr. Olusegun
Aganga, who also spoke at the
occasion, told the Australian
investors that Nigeria had over
33 solid minerals in sufficient
quantities for commercial
exploitation. He also promised
of government’s commitment to
c r e a t i n g t h e e n a b l i n g
e n v i r o n m e n t f o r t h e
development of Nigeria’s solid
minerals sector.
O n e m a j o r i m m e d i a t e
outcome of the session was the
proposal by Mr. Hugh Morgan,
a leading Australian solid
minerals developer who co-
chaired the interactive dinner,
for the establishment of a Joint
Nigeria-Australia Trade and
Investment Commission, to
promote economic cooperation
between countries.
Miners at work
39Solid Mineral
The Minister of M i n e s a n d S t e e l Development, M r . M u s a
Mohammed Sada, has stressed that the Federal Government would not entertain an out of court settlement nor would it enter into further negotiations with Global Infrastructure Holdings Limited, GIHL, over the cancellation of the concession of Ajaokuta Steel Company Limited, ASCON.
Sada, who said this at a policy dialogue and briefing with the media in Abuja, said government would see the case through, adding that it would not withdraw from a case with an investor w h o m h e a l l e g e d cannibalised the assets of the steel company and breached the terms of the concession agreement.
He noted that the present a d m i n i s t r a t i o n w a s determined to wrest the management of the billion-dollar steel complex from the Indian managers, whom he accused of “asset-s t r ipp ing and round-tripping.”
According to him, “There will be no negotiation; we cannot enter into any negotiation with a company t h a t h a s r e p e a t e d l y breached the terms of agreement. What we must do is to demand for our rights and ensure that things are done properly. We have already articulated our position on the issues and hope the matter will be amicably resolved soon.”
He, however, said that government and are in arbitration, adding that both parties met last month and would meet again in January next year, when Nigeria will present its counter claim.”
Meanwhile, he said, government has concluded plans to re-stream some of the completed units of the Steel company such as the Engineering Workshop, the Thermal Power plant, and the Rolling Mill, which workers retained on the job are being paid regularly.
“The arbitration does not say we cannot operate on our asset, and we are ready to go ahead and do what we must do to keep the place afloat even as we try to find a way to resolve what has turned out to be a sham of a concession and a ridicule to our national pride and
Oscarline Onwuemenyi
Carbon Steels
resource,” Sada stated.H e n o t e d t h a t t h e
concession to GHIL, which was based on a principle of capital importation, could have seen the Indian steel manufacturer investing billions into the company. However, “what we have seen over the years is a continuous stripping of the assets of the company by people who are supposed to be investing money into it.”
He added that, “What they met on the ground in terms of raw materials, they did not try to improve upon that, rather they just sat on the r a w m a t e r i a l s a n d consumed and drained the natural resources.”
The minister further hinted that more than N37
billion borrowed by GHIL from local banks was partly to blame for the crises that set in some of the banks.
On government’s plan for the firm and the Nigeria Iron Ore Mining Company, NIOMCO, Sada said that to avoid the repeat of past mistakes, government has raised an economic team to carry out a study on what to do with the two entities.
The team, headed by the Coordinator of the Economy, and Minister of Finance, Dr. Ngozi Okonjo- Iweala, is to study the possible rate of return for the plants.
He said, “Government wants to transform the place. As I am talking to you, there is a study of economic rate of return on the two facilities. I
think it will be concluded very soon. It is being c o o r d i n a t e d b y t h e Coordinator of the Economy because it is not a technical thing; it is strictly business.
“All the factors will be put into consideration, as we don’t want a situation whereby a private investor will come and look at it and say I can operate it. No. We want professional managers to contact professional engineers, get the input from them and get their report so we know this is their direction. So, we will be able to advise the government on the various available options, between concession, outright sale or joint venture. This is where we are now.”
O n t h e c o n t r o l o f explosives, Sada said the ministry and stakeholders have agreed that explosive dealers and directors of user c o m p a n i e s w i l l b e thoroughly screened before licences are issued.
He said stakeholders unanimously agreed at a conference in August for the review of the Explosive Act of 1964 and the Explosive Regulations of 1967, to address emerging needs, trends and challenges associated with explosives handling. The review is also expected to address issues that border on security, manufacture and export.
40Solid Mineral
Th e F e d e r a l G o v e r n m e n t h a s u r g e d operators in the n a t i o n ’ s
extractive industries to operate in a professional manner that will ensure the s u s t a i n a b i l i t y o f t h e environment and help create opportunities for wealth creation for millions of Nigerians.
The Minister of Mines and Steel Development, Mr. Musa Mohammed Sada, s t a t e d t h i s d u r i n g a Stakeholders’ Forum on C o m p l i a n c e a n d Enforcement, organised by the Council of Nigerian Mining Engineers and Geoscientists, COMEG, in Abuja.
He charged professional bodies to uphold standards
Oscarline Onwuemenyi and best practices in their areas of operation, saying, “There is no gainsaying that an established and well-managed extractive industry will accelerate economic, social and political growth of the country through the p r o v i s i o n o f g a i n f u l employment and a rise in national economic earnings. In addition, solid and liquid minerals development will provide local raw materials for industries and bring vital infrastructure and wealth to rural areas.”
Sada stressed that the mining industry is a global industry with many countries competing for exploration funds, adding that the government is generally creating an environment that will enable businesses to flourish.
“There is therefore a need to develop the mineral resources of the country
along policies, actions and strategies that are conducive to investment. The policy thrust would respond to the n e w a n d g l o b a l developments in the sector, and furthermore, develop human capital development in the extractive industry. Most importantly, this will develop the legal and r e g u l a t o r y f r a m e w o r k consistent with international best practices,” he said.
He argued that the global increase in demand for e x t r a c t i v e i n d u s t r y commodities has enhanced the need for quality and adequate manpower for the s e c t o r. “ G o v e r n m e n t recognizes the need to continuously develop skills in order to meet the demand for professionals in the extractive sector.
H e a d d e d t h a t “ t h e registration of a professional is a testimony that the
individual has achieved a standard of proficiency sufficient to guarantee the possession of the knowledge and skills required for the efficient practice of his area of discipline.”
Sada, however, charged members to upgrade their skills as best as possible in the light of advancing knowledge. “A member is therefore expected to, at all times, possess and exercise the skills and judgment of an average member of the profession practicing his or her discipline.”
A l s o s p e a k i n g , t h e Registrar of COMEG, Engr. Jonathan Ikeako, dislosed t h a t t h e c o u n c i l h a s developed a Code of Conduct and Ethics for members, to ensure the proper exercise of skills within the prevailing knowledge and disciplines.
According to him, “The member shall at all time act
in a judicious manner and with full regard to the code of practice of the profession in accordance with the rules laid down in the Code of Conduct and Ethics.”
The forum was meant to sensitize practitioners especially those in the Mining and Quarrying industries, oil and gas as well as water and well-drilling, and construction on the need to regulate their activities through formal registration with COMEG in accordance with the Decree (now Act) No 40 of 1990.
“The main thrust is to regulate and control the training, deployment, discipline and practices of professionals, who work in the extractive i n d u s t r i e s . T h e s e professionals include g e o l o g i s t s , m i n i n g engineers, metallurgists, minera l processors , h y d r o - g e o l o g i s t s , hydrologists and in other related fields,” he stated.
COMEG registers all p e r s o n s w h o a r e authorized to practice specialized professions in Nigeria; approves any course for the training of prospective members of these professions as stipulated in the Decree; approves any institution either in Nigeria or elsewhere, which it considers to be properly organised and equipped fo r conduc t ing the training of relevant p r o f e s s i o n s t o b e registered.
The Council also sets standards for candidates who wish to be registered t o s h o w t h a t s u c h c a n d i d a t e s h a v e sufficient knowledge and skill to practice the relevant professions, besides maintaining d i s c i p l i n e i n t h e professions.
Underground tunnel miners
41Solid Mineral
Th e N i g e r i a n
g o v e r n m e n t
constantly speaks
of the desire to
“d ive rs i f y the
source of revenue generation for
the economy away from oil,” and
regularly projects the mining
industry as the next best thing
outside crude oil.
Accordingly, government has
identified dimension stone
production as the gem of the
solid minerals industry, and a
sure route to the creation of
millions of jobs and wealth for
Nigerians.
This belief appears to be
catching up even internationally
since the country’s participation
in one of the biggest and most
colourful Dimension Stones
Fairs in Italy, last year.
Locally too, there has been a lot
o f m o v e m e n t s i n t o t h e
dimension stone sector, showing
that perhaps local operators may
have finally woken up to the
potential of the sector to create
wealth. Indeed, the growing
interest in Nigeria’s dimension
stones by international market
operators marked the sector as a
valuable tool for the nation’s
u p w a r d b u i l d i n g a n d
construction industry as well as
for architectural designs.
Speaking recently in Abuja,
the Minister of Mines and Steel
Deve lopment , Mr. Musa
Mohammed Sada, noted that the
workshop reflects government’s
determination to grow the
industry rapidly.
He said this is in line with the
policy of utilizing the nation’s
natural resources for the overall
economic growth and well-
being of Nigerians.
Sada, who spoke at a workshop
on: Fundamentals of Dimension
Stone Quarrying Techniques,
o b s e r v e d t h a t N i g e r i a ’ s
basement complex hosts a wide
variety of granites and marbles
with attractive colours and
textures, which have a huge
potential for both domestic use
and for export.
He stressed that Nigeria is
endowed with huge natural
resources for the dimension
stone industry, but which
potential are undermined by the
over-dependence on finished
imported stones from Europe
and Asia.
According to the minister, “The
cost of the finished locally
p r o c e s s e d m a t e r i a l s i s
considered too expensive, hence
the high patronage of products
from other countries.”
H e a r g u e d t h a t t h e
development of dimension
stones is one of federal
g o v e r n m e n t ’ s s t r a t e g i c
interventions towards the rapid
transformation of the minerals
Oscarline Onwuemenyi
Dimension stones
industry as a catalyst for
economic growth.
He said that over the past few
years, the ministry has worked
assiduously to implement a wide
range of reforms to create an
environment conducive for both
government and investors.
He said, “Government has
p r o v i d e d t h e n e c e s s a r y
t r a n s f o r m a t i o n f o r a n
accelerated development of the
sector. The private sector is
hereby challenged to invest in
mining. The dimension stone
industry with its diverse
downstream opportunities,
including a large Nigerian and
international market is no doubt
a good business.”
He hoped that the workshop
would igni te interest o f
architects, builders and other
stakeholders to “the large and
beautiful deposits of Nigerian
stones, the technical criteria for
architectural stones and modern
usage of stones in architecture.”
He said that his ministry
through the World Bank-
A s s i s t e d S u s t a i n a b l e
Management o f Minera l
Resources Project, SMMRP, has
commissioned a baseline study
to prepare a typical business
plan for the development of the
stone industry. This is meant to
promote Nigeria’s dimension
stone industry, including the
s o u r c i n g o f p l a n t s a n d
machinery (mine to market).
Sada explained that the study
was carried out by “reputable
international consultants from
Italy,” adding that tremendous
interest had since been shown in
the development of the industry.
The minister stated that the
country is targeting self
sufficiency in dimension stones production.
He noted, however that one major issue that came up during the fair was the European Union policy on the certification of all stone blocks imported into EU countries, generally referred to as CE Marking.
“This involves the technical evaluation of the quality of the stones for use in architectural and decorative designs. Some l a b o r a t o r i e s h a v e b e e n approved all over the world for the pre-evaluation of stones entering the EU countries.”
Other challenges are the need for the training of Nigerians on the s tone quarrying and processing and the need to establish a World
class DS testing laboratory in the
country.
To this end, the minister
d i sc losed tha t Pres ident
G o o d l u c k J o n a t h a n h a s
approved a programme to
facilitate the development of the
sector to include organizing a
construction industry workshop
on dimension stones in the
country; the engagement of
i n t e r n a t i o n a l a n d l o c a l
consultants to professionally
classify Nigerian stones; and the
t raining of operators on
dimension stone quarrying and
processing techniques.
Furthermore, he said that
Nigeria has now established a
world-class dimension stone
testing laboratory, located at the
National Geosciences Research
Laboratories Centres, NGRL, in
Kaduna, Kaduna State.
42Freight
TH E
establishment of t h e N i g e r i a n N a t i o n a l Shipping lines
L t d w a s b o r n e o u t o f government deliberate policy not only to participate in the invisible earning sector of the economy but also as part of its economic independence from the colonial masters and the creation ofthe country ’s distinct image.
The Company therefore came into being through a Private members Motion in the Federal House of Representative in 1958 and 1959 calling for the establishment of a Government Shipping line that would carry the “country’s flag to all the seas of the world.” After the motion was passed into an Act of Parliament in 1959, the Federal Government then incorporated the NNSL with the following Object Clauses:
1. To project the good image of Nigeria abroad by flying the Nation’s flag on the High seas and world seaports.
2. To promote the acquisition of shipping technology by creating and diversifying employment opportunities in the shipping industry.
3. To improve the country’s balance of payments position by enhancing the earnings and conser vat ion o f fo re ign exchange.
4. To assist in the economic integration of the West and Central African sub-region.
5. To support the Nigerian Navy in the event of conflict.
From the foregoing object Clauses, it could be said that profit motive, though implied, was not the motivating factor f o r t h e c o m p a n y ’ s establishment.. One has to understand the mood of the major political players at the t ime to appreciate why “showing the nation’s flag to the world’ was a major focus. The sh ips were indeed expected to play the role of” A m b a s s a d o r s ” f o r t h e e m e r g i n g i n d e p e n d e n t country. Arguably, NNSL achieved most of its major objectives as envisaged by the founding fathers before its liquidation which I personally consider ill advised and very unfortunate.
T h e C o m p a n y w a s i n c o r p o r a t e d w i t h a n Authorised and Fully paid-up Share Capital of N4 million (four million pounds sterling) held jointly by the Federal Government and two non-Nigerian shipping lines, namely Elder Dempster lines Ltd and Palm line Ltd both
Gerald CHIDI
Ship in the sea
British which were technical p a r t n e r s . T h e Fe d e r a l G o v e r n m e n t h e l d a Controlling Share of 51% while the two technical partners had 49% between them. In 1961, either in the e u p h o r i a o f p o l i t i c a l independence or selfish interest of the Nigerian Management of the Company, the non-Nigerian equity holdings were bought out rather prematurely and the Company became wholly o w n e d b y t h e Fe d e r a l Government with Nigerian Management in total control. The company, however, had a small office in liverpool in the United Kingdom wholly manned by British personnel for fleet management which included technical ship maintenance and commercial p r o g r a m m i n g . E l d e r Dempster lines were also General agents in the UK which provided the major
ports of call. The Company started operations with four second hand vessels in 1959 and this increased to 15 vessels by 1971 but at that time the ships were already becoming old and unable to meet the c h a l l e n g e s o f m o d e r n s h i p p i n g . T h e Fe d e r a l Government then decided to retonnage the fleet with 19 combo vessels but by the time the first of the new ships was delivered in 1976/77 changes in ship technology and containerisation concept had taken place and unfortunately all the 19 ships were the same t y p e - c o m b o v e s s e l s . Diversification in ship type, s i z e a n d t h e e v o l v i n g technology could not be reflected in the “new” ships d u e t o i n f l ex i b i l i t y i n Government policies as it was the Government that provided the fund. This situation ultimately played a part in the failure of the Company.
When the 19 new vessels were introduced into service, there was no working capital. Even the initial bunkering of the vessels at the builders’ ship yard was done on credit. But the situation was managed because in 1973 NNSL incorporated a subsidiary c o m p a n y k n o w n a s NIGERLINE (UK) Ltd based in Liverpool, England. The subsidiary company acted as General Agents in Europe to N N S L . T h e s u b s i d i a r y c o m p a n y e m p l o y e d e x p e r i e n c e d a n d k n o w l e d g e a b l e B r i t i s h shipping technocrats in the field of marine engineering for fleet technical maintenance as w e l l a s commercial/operations, etc. even though a Nigerian was the Head of the subsidiary company. That subsidiary Company was trusted in Europe by creditors and shippers alike. The Company
was a training ground for
training Nigerian officers and in
particular for the co-ordination
of sea officers training. One
notable advantage of this
arrangement was that apart
f rom per for ming agency
services for the parent company-
NNSL - and earning agency
commission which was hitherto
paid to Elder Dempster Lines,
the outfit was supervising ship
repairs and making sure that the
r i g h t w o r k e t h i c s w e r e
ma in ta ined resu l t ing in
reasonable ship maintenance
costs and seaworthiness of
vessels. However, when civilian
government returned to the
country, in 1979 interest groups
w i t h i n t h e L a g o s - b a s e d
management began to criticize a
situation where decisions on
ship repairs/maintenance was
not totally controlled by Lagos
Head Office even though all
major repairs for strategic and
economic reasons were carried
out in Europe.
43Freight
NA T I O N A L
President of
t h e
Association of
N i g e r i a n
Licensed Customs Agents
( A N L C A ) A l h a j i S h i t t u
Olayiwola has said that the
eviction of the Standard
Organisation of Nigeria and
other security agencies from the
nation’s seaports will reduce the
cost of clearance of cargo by as
much as 40 percent.
In an exclusive chat with
Vanguard Shittu stated the
affected agencies before their
eviction had constituted check
points in the ports.
He accused SON and other
agenc ies o f be ing more
interested in the so called levies,
fees and penalties which they
tagged administrative charges
because these monies are
auditable.
He said “SON claims to know
the importers of fake and sub-
standard products let them go
after these unscrupulous
importers.
“We are talking about trade
faci l i tat ion must Nigeria
continue to remain like this that
is my worry,, we want the
wrought to stop so as to help this
country
Godwin ORITSE
“You have what is called single
window project being practiced
by the Customs NICIS. By the
time you go to the Trader Data
Input (TDI), the information you
get from your importer v ia the
internet if the importer is
compliant, automatically your
cargo can go to green.
“Now the number of times
your importer brings in cargoes
and has been dec lar ing
genuinely determines the level
of confidence the system has in
the importer but majority of
Nigerian importers are not
complaint and I can tell you that
the importers I work for are
compliant some of them have
been with us for 15 years and
once their cargoes come, they go
through green.
“Green means that you b do
not have to do any examination
but you are given immediate
release .
“But Customs will not sign
your exit until you have gone to
all these agencies to sign that
they are satisfied with your
examination
“Meanwhile, there is this one
stop shop that was brought by
Customs that any container that
is meant for examination must
have all the agencies in
attendance.
“And when they come, they
send the lowly junior staff to go
and give them report in their
offices.
The importer will now in turn
go to their office to negotiate the
release of their cargoes before
they sign his exit
“Now the representatives of
the affected agencies ensure
that as long as your cargo
remains in inside the port, you
are under pressure to negotiate
the release of your cargo.
And as long as your cargo
remain in the port, you will e
intimidated to part with money
so that you can go.
“Otherwise, while you are
waiting demur rage is running
on the trailer, demurrage is
running on the container
demurrage is running on the
terminal rent so they know you
cannot afford to waste time so
you must ‘settle’
“Let SON and others do their
work outside the port, the port is
suppose to be a transit area,it is
not suppose to be storage area, it
is not suppose to be a check
point but what we are seeing are
check points in the ports
Nigerian Port main gate
HE management of Transport and TP o r t
Management System (TPMSL promoters of the Cargo Tracking Note in Nigeria, has said that the scheme is a veritable tool to facilitate international
T P M S L ‘ s spokesperson Mrs Tola Aiyewumi explained that these notes provide additional security by collating and storing all data or information on all cargo either coming or leaving the country.
Some of the provided by the scheme on every cargo inc ludes the identity of the importer, country of origin, the f o r w a r d e r , t h e consignee; notified party, car r ie r, vesse l and voyage number, port of loading and discharge, d e s c r i p t i o n o f t h e quantity/quality of the content and value of goods, etc.
A i y e w u m i f u r t h e r s ta ted that , among others, the notes help in the generation of data for economic planning and development; provide a single windowv system of operation in the clearing process, I e. a database; and improve the integrity of the information in the bill of . lading and manifest, thereby el iminating false/ under-declaration! concealment of cargo.
“Since the operation is web - based, we operate round - the - clock, t h e r e b y h a v i n g information before the a r r i v a l o f o t h e r documents.
“This is an important aid towards Nigeria’s projected 48 hour cargo clearance time frame”, she said.
44Freight
TH E L a g o s Deep Offshore L o g i s t i c s (LADOL) base, an indigenous
o r g a n i z a t i o n h a s commenced talks with foreign investors for the take off of its proposed $ 3 0 0 m i l l i o n d o l l a r s mul t ipurpose fac i l i t y o ther wise ca l led the Float ing, Product ion, Storage and Offloading (FPSO) platform.
T h e p l a t f o r m w h e n completed is expected to advance the count r y towards the realization of her potentials and desire as a major Oil &Gas hub station for the West African sub-region.
Managing Director of LADOL, Dr. Amy Jadesimi, who dropped this hint Tuesday in Lagos at a Business DayConference, t a g g e d ‘ A n n u a l Infrastructure Roundtable’, described the FPSO as a massive investment that would create 5000 direct jobs for and an additional 50,000 indirect jobs for Nigerians.
According to her, the facility which will be completed in the next 36 months as the LADOL phase II is in fulfillment of government’s desire to attract the volume of Oil & Gas projects that were only hitherto carried out outside Africa, to now take place in Nigeria.
She pointed out that Nigeria currently expend over $100 billion USD on deep offshore oil and gas venture in Afr ica as indicated in a World Oil Report without having much to show for it since most of the jobs go to foreign companies.
Dr. Jadesimi noted that the development at LADOL will further encourage fabrication in the country taking advantage of the e n s u i n g t e c h n o l o g y t r a n s f e r a n d s k i l l acquisition since most of the massive fabrications that would be needed at the
Godwin ORITSE
Foreign Partners
FPSO platform would be carried out within the Niger Delta region of Warri, Port-Hacourt and Yenagoa, where they will be shipped to the base in Lagos.
The LADOL boss, who attributed the investors’ courage in embarking on the project to government’s
institution of the Local Content Act, maintained that the industry and the nation’s economy would be the better for it.
“We are now talking to a lot of foreign partners and because the Local Content Act mandates that the foreign company has to work here in the country, we anticipate that more than one of them may actually end up working here with us on the development.
“The beauty of having this development in Lagos by an
i n d i g e n o u s N i g e r i a n facility built on NPA land is that it will now be available f o r m a n y f o r e i g n companies to use in the future. So, we are not tying ourselves to a situation where we can be held to ransom by one foreign company…hence we are opening the doors for a n u m b e r o f f o r e i g n companies fo r wider technological transfer and wider investments” she added.
S h e d e s c r i b e d t h e
investment as a necessary development adding that, the only reason why it was delayed was as a result of lack of infrastructure to support the initiative.
She lauded the efforts of Government, which she noted, has already provided the enabling environment by setting up the Local Content Development and M o n i t o r i n g B o a r d (LCDMB) which she said has added to the boosting of opportunities in the oil and gas industry.
Oil refining i s t h e process that t a k e s u s from crude
oil to refined or finished products through an oil refinery such as high-o c t a n e m o t o r f u e l (gasoline/petrol), diesel oil, liquefied petroleum gases (LPG), jet aircraft fuel, kerosene, heating fuel oils, lubricating oils, asphalt and petroleum coke.
A petroleum refinery is therefore a factory where crude oil is transformed into
45Technology
PETROLEUM REFINING:
Jim-Rex Lawson MOSES petrol and hundreds of other useful products or a factory where crude oil is broken down into its various components, which then are selectively changed into new products like the ones mentioned above.
A n o i l r e f i n e r y i s considered an essential part of the downstream side of the petroleum industry.
Re f i n e r i e s c o m e i n various sizes. The range from small topping and reforming refineries to sophisticated complex refineries, but perform three basic steps which are Separation ( fractional distillation), Conversion
(cracking and rearranging t h e m o l e c u l e s ) , a n d Treatment.
A t y p i c a l l a r g e [conventional] refinery costs billions of pounds to build and millions more to run and upgrade. It runs around the clock 365 days a year, employs hundreds of people and occupies as much land as several hundred football pitches.
A modular refinery as the name implies, is a refinery whose parts or equipment are constructed in modules designed to be transported q u i c k l y a n d e a s i l y anywhere in the world and comes in a variety of sizes with capacities that range from 500 to 20,000 barrels per day.
Picture of a typical large scale petroleum refinery at night
PREFERENCE FOR MINI REFINERIESMini Refineries are ideally suited for:
Remote locations Rapid production of
p r i m a r y f u e l s ( f o r consumpt ion)and raw materials or feed (for the petrochemical industries)
G r e a t e r p r o c e s s flexibility (Refining units may operate independently o r l i k e w i s e b e i n t e r c o n n e c t e d i n combinationas determined by the processing needs).
Limited refinery project land space
L o w o r m i n i m a l nstallation cost (using skid-m o u n t e d d u r i n g construction)
Quicker investment recovery
Two operators can restart the plant from a cold start and have the plant in full operation in a matter of hours.
Completely automated and once an operator sets all the controlling points, all product temperatures and flows can be controlled automatically.
Only a flat support area or concrete slab without anchor bolts is required to support the plant.
Fuel supply can be natural gas, naphtha, diesel , fuel o i l or a combination of these fuels.
C O N V E N T I O N A L versus MODULAR REFINERIES
CONVENTIONALConstructed in place
(on site)Configuration could be
any of topping, coking, cracking, hydroskimming etc
Caters for all range of products
Could Process all crude t y p e s d e p e n d i n g o n processing severity
MODULARS k i d - m o u n t e d o n
modulesMostly installed as
topping or hydroskimming plant
P r o d u c t m o s t l y restricted to production of middle distillates, naphtha, and lights.
Utilization of heavy c r udes ’ y ie ld h igher proportion of low value residual fuel oils
A typical modular petroleum refinery
46Technology
In the oil and gas Industry, invested capital declines in v a l u e u n l e s s machiner ies are
properly maintained. Experts say that corrosion
and wear of machinery parts are a major problem in the offshore drilling business. Offshore oil and gas platforms are subjected to hostile corrosive marine e n v i ro n m e n t s , w h i c h r e q u i r e c o n t i n u o u s preventive and corrective maintenance to ensure p r o l o n g e d a n d s a f e operations. Millions of premium pipes
and couplings are used in oil fields every year. Many of these connectors suffer galling due to a combination of extreme tensional and compressional forces. The galling of the threads of the connectors is at best a nuisance resulting in a leak, but at worst a disaster as the pipe and connector weld together causing expensive time wasting and the loss of p i p e l e n g t h s a n d connectors.
Jim-Rex Lawson MOSES In realization of the foregoing, Tricontinental Technologies Limited, a d i v i s i o n o f t h e Tricontinental Group has d e v e l o p e d a n e w technology called the DALIC Selective Process - f o r r e b u i l d i n g w o r n components and for filling i n d a m a g e s u c h a s corrosion or erosion of expensive or badly needed p a r t s – t h r o u g h electroplating, on site, on oil and gas platforms.
W H A T I S D A L I C TECHNOLOGY?DALIC Technology is a
mobile system for adding metal to metal. The process is, in fact, a special type of metalizing but with far bet ter adhesion, less porosity and more precise thickness control than spray, flame, or plasma types of metalizing or welding techniques, no h e a t i s g e n e r a t e d . Therefore, no internal stresses are imparted to the part. The end result is the user is concerned with neither thermal distortion nor cracking.
DALIC Technology works like an arc welder. A DC power pack has two flexible leads, one going to the work and the other connecting to one of a number of working tools “styli”. Anodes of different sizes and shapes (round, flat, concave, and convex) are connected to the end of the styli. The anodes are wrapped with an absorbent material. The covered anodes are dipped into the DALIC solutions or the solutions are flow-fed to the area when mechanized operations are used. A positive (+) connection from the DC power pack is connected to the work tool and the negative (-) is connected to the work piece. An electrical circuit is completed either when the wrapped tool is moved over the metal work piece or by moving the work piece under the wrapped tool. With the completion of this electrical circuit, metal deposits from the liquid
solutions onto the base metal. The deposition rate is very rapid, often times at the rate of 0.05mm per minute.
WHERE IS THE DALIC TECHNOLOGY USED?Anywhere industry needs metal build-up for repair, resizing, metal restoration, or replacement coatings for mechanical, electrical, or c o r r o s i o n r e s i s t a n t p r o p e r t i e s . D A L I C installations are now used in service world-wide in Aircraft overhaul; Marine maintenance; Offshore oil drilling; Plastic, Rubber, or G l a s s m o u l d i n g ; calendaring; Offset & Gravure printing; Power generation and Turbine r e p a i r ; R a i l w a y maintenance.
HOW MANY COATINGS MAY BE APPLIED?Over 100 primary metals or binary or territory alloys can be deposited with the DALIC Technology. Examples are: Babbitt, Cadmium LHE, Copper, Cobalt, Gold, Lead, Lead-Tin, Nickel, Nickel-
Tungsten, Rhodium, Silver, Tin, Tin-Indium, and Zinc. The end-user’s application governs which coating is selected.
WHAT IS THE COST JUSTIFICATION FOR THE DALIC TECHNOLOGY?Most DALIC customers save the cost of their DALIC installation within the first six months of application. A D A L I C Te c h n o l o g y installation is possibly the most cost effective capital equipment any company will ever purchase.
W H A T A R E T H E CHARACTERISTICS OF DALIC’S DEPOSITS?First and foremost, an excellent bond. In contrast to spray type metalizing where a mechanical bond is ach ieved , the DALIC Technology results in a molecular bond. This bond is achieved on any base metal such as aluminum, cast iron, cast steel, stainless steel, t o o l s t e e l s , c h r o m e , beryllium copper, brass, or bronze.
Pictures showing the DALIC technology in process
47
FORMER national president of the I j a w Y o u t h Council, IYC, Dr. Chris Ekiyor, has
called on President Goodluck J ona t han t o f o l l ow h i s conscience in taking decisions that affect the country, and not a l l o w “ s t u p i d p o l i c y formulators” to make his government unpopular.
Speaking to Sweetcrude in Rotterdam, The Netherlands, on the plan by the Federal G o v e r n m e n t t o r e m o v e petroleum subsidy, Ekiyor wondered why President Jonathan, who won the support of the masses in the way he managed the fuel crisis in his early days in power, would now want to do exactly the opposite by removing fuel subsidy at such a critical point in time.
“Instead of removing fuel
Emma AMAIZE
(Just back from The Netherlands)
subsidy, the President should concentrate on the many challenges facing the country, including issues on state creation, which should benefit all Nigerians; the fight against corruption , which should ordinarily tackle the cabals’ benefitting from the subsidy scam. Others include infrastructure development especially in the Niger Delta, to address the very cause of t h e a g i t a t i o n ; s l o w per forming Mil lennium Development Goals, MDAs; the Ministry of Niger Delta; Niger Delta Development C o m m i s s i o n , N D D C ; education, aviation and health sector,” he asserted.
He added, “Nigeria, with its current financial muscle and fuel subsidy in place can tackle all these frontally if only President Jonathan will follow his mind rather than l is ten to stupid pol icy formulators, who in between the line of such policy have
hidden agenda to either steal further from the system or p l u n g e t h e G o o d l u c k administration further down the ladder.
“Why should it be President Jonathan that should be removing fuel subsidy knowing that it will adversely affect the ordinary man and why at this crucial time of our national life? As far as I am concerned, those who advised him on this policy, indeed, are not in tune with the reality on the happenings in the country.
“Even military junta as much as possible used the subsidy to attain cheap popularity, what is it the Jonathan administration intend to achieve by this issue? There are already too many challenges confronting the nation and President Jonathan is the centre of them all.”
Ekiyor further argued the president “should focus on the small possibilities and deliver on them, rather pursue big impossibilities. Nigeria is not
there yet to implement certain American models in isolation, we must consider at all times the reality on ground, even though we seek the ideal.”
The youth leader also pointed out, “The three new refineries are still on paper, while the old three are barely struggling. The coastal road project is perhaps in the pipeline and crying for attention now, as not much has been heard after the fight between the ministry and N D D C o n w h o a w a r d s consultancy for its design. The price of cement is still yet to drop to the prescribed N1000 per bag, even though the big importers promised to respond to Mr. President’s orders, so what are we talking about?
“How can you increase fuel price while trying to drop cement price. Certainly, we are double speaking. More so, if we build refineries, there will be nothing to subsidize on imported petroleum products since we can meet our domestic consumption and would have also created jobs for our team unemployed young graduate.”
ARRI- NIGER
Delta activist , WComrade Paul
Bebenimibo, weekend, said the
support for President Goodluck
Jonathan by the masses was
waning across the country
because of his planned
removal of petroleum subsidy
and non-fulfillment of his
electoral promises.
Bebenimibo, who described
the planned removal of the fuel
subsidy as a betrayal of the
confidence of the masses and
an indication of gross failure by
the gover nment , u rged
President Jonathan not to
succumb to the anti-masses
agenda.
His words, “The masses’
support for Jonathan is
d w i n d l i n g b e c a u s e t h e
electoral promises are not
forthcoming, but are veering to
a harsh economic hardship.
Jonathan should listen only to
the masses to avoid chaos and
total collapse of support for his
government. He should not
listen to crooks and the
business people who are only
after profit to the detriment of
the masses.”
“The issue of fuel subsidy
was at its peak before President
Yar’Adua died, Jonathan came
and stabilised the price of
petroleum products, and that
was why the masses loved him
and voted for him. To remove
the subsidy now will be a total
disservice to the masses and
making money available for
the governors and the private
businessmen who do not have
the interest of the masses at
heart. It is taking Nigeria back
and it will make nonsense of
the minimum wage which they
just implemented, as cost of
living will skyrocket,” he
added.
Bebenimibo argued that the
problem with Nigeria is not
really a lack of funds, but
improper u t i l i sa t i on o f
available funds, pointing out
that huge sums of money have
been appropriated for various
projects with nothing tangible
to show. The activist cited the
Benin-Ore and the East-West
roads, which have gulped
several billions of naira but
remained impassable.
He, therefore, urged the
National Assembly not to yield
to the temptation of removing
the fuel subsidy if the members
were really representing the
peoples’ interest.
‘Jonathan’s image diminishing over subsidy’
Emma AMAIZE and Akpokona OMAFUAIRE
President Goodluck Jonathan
48
The Sir Emeka O f f o r F o u n d a t i o n , S E O F , h a s commenced the
second phase of the donation of study materials to schools in Niger ia , cut t ing across p r i m a r y , s e c o n d a r y , polytechnic and universities.
The education materials are courtesy of the United States n o n - g o v e r n m e n t a l organisation, NGO, Books for Africa, BfA, and are being shipped into the country and distributed to beneficiary schools by SEOF.
Receiving a delegation of Books for Africa, BFA, at the Chrome Group Headquarters in Abuja for the signing of M e m o r a n d u m o f Understanding, MoU recently, the Chairman of thee oil and gas group, Sir Emeka Offor, said SEOF and BFA will collaborate with the NGO to distribute the education materials within the next 24 months.
According to him, “This s e c o n d p h a s e o f t h e distribution of the education materials, which include books, computers and a host of other equipment, is mainly for the South-South region. In the third phase we will go to another region and even beyond Nigeria to other ne ighbour ing count r ies because education is key to national development.”
He recalled that the first donations were made in June, and promised that the books will not be sold and will get to the target beneficiaries.
The Project Manager, SEOF, Mr. Inno Anoliefo, who introduced the guests, said that SEOF will be the major partner of BFA in Nigeria and the West African region, as the foundation will be responsible for the distribution of the study materials and other facilities in the sub-region.
He said the intension of the partners is to enhance the quality of education in its entirety in Nigeria as well as the sub-region, adding that if a long term improvement is to be achieved in the education sector, then there has to be access to study materials.
As he put it, “If we make books and o ther s tudy materials available to pupils across all education cadre, then the quality and standard of education will rise. All schools will be equipped with enough study materials to relieve government of some of the burden of education
Clara NWACHUKWU
Study room
development.” He also explained that the
BFA team is on a fact finding and consolidation mission with a view to identifying other areas of need in the education sector and easing supply issues.”
He said that education is at the heart of the foundation’s
corporate social responsibility, adding that SEOF has made educational donations to many tertiary institutions worth hundreds of millions of naira.
A l s o s p e a k i n g , t h e C o o r d i n a t o r , S E O F, Honorable Tony Obi, who revealed that the value of the expected materials to be distributed in this phase is about $7million, also said that by the end of next year, the p a r t n e r s w o u l d h a v e distributed materials worth $21million.
The Executive Director, BFA, Mr. Pat Plonski, who led a five-m a n t e a m , w i t h representatives from the International Foundation for Education and Self-Help, IFESH, said, said the goal of the American NGO is to
provide Africa with as many book as possible to help the education system in the continent.
H e n o t e d t h a t g i v e n Nigeria’s huge population, BFA expected the country to get more books, but pointed out that this can only be facilitated with the support of local partners like SEOF.
Plonski said, “Nigeria is getting the single largest donation this time around, as SEOF has agreed to pay for the shipment and freight of the e d u c a t i o n a l m a t e r i a l s . Hitherto, Ghana and Ethiopia used to get the largest donations. We have already sent one consignment of eight conta iners and we are planning to send a second consignment of 16 containers.”
He revealed that the BFA
team will also meet with the US ambassador to Nigeria, Mr. Terence McCulley, to intimate him the NGO’s activities in Nigeria, adding that the organization is a grassroots one and that book and materials donated are from individuals, schools, libraries, corporations and publishers.
H e s a i d t h a t B F A partnership with SEOF will last for as long as there was an education need and partners continue to cooperate, adding that the mission of the latter “is to end the books famine in Africa and we will continue until this is achieved.”
Commenting, Dr. Mike Essien, also from BFA, commended the Sir Emeka O f f o r F o u n d a t i o n f o r accepting the responsibility of shipping the books to Nigeria, noting that the country has produced excellent students who have been able to hold their forte in various fields of endeavour.
49
SAPELE-L ARGE q u a n t i t y o f bitumen allegedly from pipel ines
belonging to Asca Bitumen C o m p a n y l o c a t e d i n Ogorode, Sapele, Okpe
h e K E F F E S communities in Bayelsa State may T
be heading on collision course with the Nigerian affiliate of American oil c o m p a n y, C h e v r o n , f o l l o w i n g a l l e g e d disagreement with the managements on social issues.
KEFFES an acronym for Koluama I & II, Ekeni, Fish Town, Foropa, Ezetu I &II a n d S a n g a n a r u r a l communities.
The communities, which are situated on the Atlantic fringe of the state, have threatened to disrupt explorat ion and gas drilling activities at Oil Mining Lease, OML 86 located in their area.
Representatives of the communities also want Chevron Nigeria Limited, CNL, to make public the Environmental Impact Assessment, EIA Report, it conducted before work commenced on the drilling project.
The representatives of communities who met in Yenagoa, the state capital, expressed disappointment at CNL’s management over the exploration and gas drilling of OML 86, North-Apoi, Funiwa in their territory without recourse to making public the EIA report.
The communities in a letter addressed to the m a n a g e m e n t o f t h e c o m p a n y s i g n e d b y Bravery Salgbe, Oweizidei Abaka, Uriah Idon, Job Co le among o thers , demanded for copies of the EIA Report as well as 50 per cent of the vacant positions from the Agbami oil field, which they claimed fell within the KEFFES territory.
The letter was also c o p i e d t h e S t a t e C o m m i s s i o n e r f o r E n v i r o n m e n t , t h e Commander of the Joint Task Force, Director of the State Security Service, S S S a n d t h e S t a t e Commissioner of Police
Emma ARUBI
Council Area of Delta State was late Tuesday night spilled into the sprawling residence of Nigeria’s first Finance Minister, Late Chief Festus Okotie-Eboh.
The spill , which was
discovered in the night by the wife of a tenant in the compound, has allegedly devastated living things such as fowls, frogs, rats and lizards and non living things around and within the
premises. The bitumen company runs
some of its pipelines and loading bay right behind the building of late Okotie-Eboh’s home, even as some of his children have dragged the company to court over the location of their bitumen plant.
The spill was allegedly caused by a leakage from one of the pipeline joints, which the General Manager of Asca, Mr. Karten Asher, described as “unfortunate” in view of the loss of bitumen worth millions of naira to “acts of vandalism”.
He alleged that the pipeline was deliberately vandalised to sabotage and discredit the company’s reputation.
Asher, who spoke with newsmen, revealed that the incident is the second time Asca’s installation was being vandalized in recent times, thereby, causing the bitumen spill.
Although he could not confirm the quantity of bitumen lost so far, he, however, denied knowledge of the death of animals or fowls belonging to the late Okotie- Eboh’s family as a result of the spill, and sued for the protection of the company’s installations.
On his part, Mr. Godfrey Okotie- Eboh told journalists that his attention was drawn to the spill by a tenant at about 7pm on Monday, and immediately called on the company’s accountant who later came with some engineers to clamp the pipeline.
He claimed that animals like goats, fowls, lizards and rats had died as a result of the spill, adding that movements in and out of the premises have also become restricted due to the spread of the product and called on the Federal Ministry of the Envi ronment , and the Department of Petroleum Resources, DPR, to come to their aid.
KEFFES Communities demand transparency in EIA
Samuel OYADONGHA
Bitumen spilage
50
Th e B a y e l s a S t a t e G o v e r n m e n t has called on the Ijaws in
Diaspora to return home and invest in the cause of transforming the state from a resource based economy into a knowledge-driven one, so as to catch up with the rest of the world.
Such investments, it said is aimed at revitalising the ailing educational sector and prevent the state from r e l a p s i n g i n t o y o u t h militancy.
Governor Timipre Sylva, made the plea in a paper entitled, “Ijaw Nation: A Time to Reflect,” delivered in London on the occasion of the 2011 Isaac Boro Day Celebration, organised by t h e I j a w P e o p l e ’ s Association, IPA of Great Britain and Ireland.
The governor said the desired transformation of the Ijaw nation would be a m i r a g e w i t h o u t t h e d e v e l o p m e n t o f i t s educational sector and collaboration of its sons and daughters in foreign lands.
Sylva also said, “The principal challenge of our
Samuel OYADONGHA time is how to get our people t o a c q u i r e t h e r i g h t knowledge and ideas to make them productive and competitive in the global economy. We must get education, the right kind of education, backed up with technological skills to transform Ijaw land into an industrial hub renowned for q u a l i t y p r o d u c t s a n d service.”
According to him, “Ijaws in Diaspora have a significant role to play in the effort to protect and improve our collective legacy. Our people all over the world must be on the same page with the government and people of our native land in the work of educating the current and next generation of Ijaw citizens and preparing them t o c o n t r i b u t e t o t h e productivity that we need to sustain our civilisation.”
Continuing he said, “As a government, we have made the education of our people a priority. We have launched a campaign to educate our people to know the things we need to do now and those we must avoid in this generation in order not to endanger the next generation. We have tried to position our people to appreciate the changing t imes, understand the
science of change and how to harness change for societal benefit.
“Our people in foreign lands must endeavour to be committed partners in the collective effort to build a m o r e i n f o r m e d a n d responsible society. I am confident that if we roll up our sleeves and get to work right away, we can achieve the Ijaw land of our dream by individually contributing our quota in the propagation of this gospel.”
H e c o m m e n d e d M r. President for thinking along this line by approving the establishment of six federal
universities, one in each of the six geo-political zones with the one for the South South zone already cited in the heart of Ijawland in Otuoke, Bayelsa State.
As part of the amnesty programme, the governor added that a number of the youths who were fighting from the creeks were sent abroad for training to enable them acquire skills so that they can stand on their own and be useful to the society. He, therefore, called the Ijaws in Diaspora to support in whatever way they could to make this dream a reality.
He pleaded, “I urge you to come home and invest in this cause of transforming our community from a resource-based economy into a knowledge-based economy so that the Ijaw man can sit among those who own the future and not be among those left behind to regret lost opportunities.”
In h is remarks , IPA President of Great Britain and Ireland, Mr. Isaac Namabiri, reiterated the willingness of the Ijaws in Diaspora to assist the government in its effort to r e v i t a l i s e t h e s t a t e ’ s educational sector.
He said plans were afoot to dispatch some of the best b r a i n s i n t h e U n i t e d Kingdom to help in drawing up a sound curriculum for the planned model schools in the state.
ARRI-THE Tax
regime currently Win operation in
Delta State is within the ambit
of the tax law in the country,
just as those grumbling over
same have been advised to
take their case to the National
Assembly.
The State Commissioner for
Higher Education, Prof. Hope
Eghagha, stated this recently
during an official visit to the
Delta State Polytechnic,
Otefe-Oghara, adding that
the Delta State Board of
Internal Revenue, DBIR, is
working in tandem with the
tax law in the country.
He, however, advised
aggrieved parties to pursue
their grievances at the
National Assembly, with a
view to reviewing the tax law.
He insisted that the state has
looked critically at the
deductions being made by
D B I R a n d c a m e t o a
conclusion that the Board is
operating within the confines
of the Personal Income Tax
Act, PITA.
Eghagha, who commended
the Revenue Board on its
effort towards raising the
Internal Generated Revenue,
IGR of the state, observed that
the increase in the wage bill
of the state government
required corresponding
i n c r e a s e i n r e v e n u e
generation and that strict
adherence to tax laws is not
an exception.
According to him, “People
need to know this in the state.
The wage bills of Institutions
in the state are quite
enormous. Del ta State
University alone every month
gets about N368million. I
know that in Ogun State all
the tertiary institutions take
home about N300million
monthly and that is what
c o m e s t o D e l t a S t a t e
University alone here, not to
talk of the Polytechnics, the
Colleges of Education and the
different parastatals. The civil
service takes N2.1billion
every month. So that is the
reason why the state is
looking at Internal Generated
Revenue and that takes us to
the current tax regime, which
some workers have raised a
loud cry.”
Tax regime in Delta is within law —Eghagha
Emma ARUBI
51
WARRI-THE
W a r r i
R e f i n i n g
a n d
Petrochemi
cal Company, WRPC, in Delta
State has been commended by
the traditional ruler of Uvwie
kingdom, HRM Emmanuel
Sideso, Abe 1 for donating a
100kva Mikano sound proof
generating set to the Ekpan
General Hospital in Uvwie
Council area of the state.
The traditional ruler said that
the gesture would certainly
uplift the standard of medical
care delivery in the council area,
even as he noted that it is the
function of the state government
to provide such facilities for the
smooth operations of the
hospital.
He, therefore, appealed to the
relevant authorities of the state
to rise up to the challenges of
lack of infrastructure and
equipment in the hospital.
S p e a k i n g d u r i n g t h e
installation and commissioning
of the power generating set, the
Emma ARUBI
Managing Director of WRPC,
Mr. Simon Itua Ehiemua ,
charged the management of the
hospi ta l to embrace the
maintenance culture. He said
this would ensure a longer
service life from the generator,
saying that the donation is in
fulfillment of his promise to give
electricity to the hospital light as
requested by the royal father
when he visited him on
assumption of office early this
year.
The hospital has been without
a power generating set for long,
making medical operations
extremely difficult to both
doctors and patients who have to
put up with the epileptic public
power supply from the Power
Holding Company of Nigeria,
PHCN.
The President-General, Uvwie
Improvement Development
Union, Chief Tuesday Onoge,
noted that doling out cash for
developmental projects to
community leaders is the
primary source of crisis and
violence in most Niger Delta
communities.
He also commended the WRPC
for the provis ion of the
generating set, adding that “this
one will not bring any in-
fighting.”
The management of the
hospital thanked the company
for the gesture, but reminded
them that unless they go the
extra mile of providing at least
5,000 litres of diesel monthly to
power the set, it would make no
meaning to them as their
monthly allowance cannot
sustain a regular supply of diesel
to power the plant.
The hospital is also said to be
in need of some medical and
office equipment, building of
more structures, paintings of the
e x i s t i n g b u i l d i n g s a n d
landscaping/interlocking the
water logged hospital premises.
People in Hospital
Emma ARUBI
A R R I - F O U R
suspected armed Wr o b b e r s w e r e
allegedly set ablaze at different
spots in the oil city by angry mob
along the ever busy Airport Road
and Ajamimogha Road in Warri,
Delta State,.
The suspects, who had allegedly
been terrorising Warri and
Effurun residents, met their
waterloo during their nefarious
activities on Sunday and Monday
respectively.
Two of the thieves were caught
on Sunday when they snatched a
lady’s handbag and attempted to
escape on motorbike, while the
other thieves were caught on
Monday along Ajamimogha
Road and roasted alive.
52
The Joint Task Force, JTF in t h e N i g e r Delta code-n a m e d ,
Operation Restore Hope, has arrested over 100 suspects in the last three months for crude oil theft and operation of illegal refineries.
T h e s u s p e c t s w e r e n a b b e d i n s e p a r a t e operations launched in the creek of Bayelsa, Delta and Rivers States. Interestingly, the largest haul was made in the creek of Bayelsa around the Akassa enclave on the Atlantic fringe of Brass.
I n f o r m a t i o n a t SweetCr ude disposa l showed that the men of the Joint Task in a single operat ion swooped last Thursday on 46 suspected illegal bunkerers including three women opera t ing in several Cotonu boats along the Akassa River in the m a n g r o v e s w a m p o f Bayelsa State.
This is aside, the fifteen t h a t w e r e a r r e s t e d penultimate week also along the Akassa flank of the state.
Also reportedly nabbed in the latest haul alongside the suspects along the Akassa river according to security sources was a giant cargo vessel, MV O m i e s a m w i t h International Maritime Organisation registration no 7048611 which was about to receive illegally refined petroleum products from the Cotonu boats before a patrol team of Joint Task Force swooped on them.
The Cotonu boats it was learnt destroyed by the security operatives as would be difficult towing them to Yenagoa while the vessel MV Omiesam and its eight man crew was escorted to Government Jetty Yenagoa by JTF gunboats.
Sometime in March, 2011, the Joint Task Force it was learnt intercepted two Cotonu boats along the Nun River carrying about 700 drums of illegally refined petroleum products which translate to about 1 8 7 , 5 0 0 l i t r e s o f adulterated fuel.
Parading the la tes t suspects in Yenagoa, the Media Coordinator of the Joint Task Force, Lt. Col
Samuel OYADONGHA
Illegal crude oil
Timothy Antigha said they were nabbed by a patrol team of the Joint Task Force along the Akassa river in Brass local government.
According to him, they w e r e a t t e m p t i n g t o
d i s c h a r g e t h e i r consignment of illegally refined petroleum products into a ship, MV Omiesam, an International Maritime Organisation IMO vessel w i t h r e g i s t r a t i o n n o 7048611 when security operatives swooped on them.
But the captain of the impounded vessel MV Omiesam, who gave his name as Fidelis Roland in an interview said, “Our company identified as Geo Fluids Marine Ltd sent us to Brass to load AGO and on getting there, we have not started loading before we were arrested by the soldiers.”
Lt Col Antigha who spoke to newsmen said the security the outfit would not relent in its crusade against crude theft and illegal refineries operators until the scourge is stamped out.
The JTF Spokesman said, “these suspects, who were nabbed by our patrol teams along the Akassa river were in the process of loading this vessel (MV Omiesam)
with il legally refined p e t r o l e u m p r o d u c t s . Presently, the oil vessel is d e t a i n e d a t t h e Government Jetty, in Yenagoa.
“The intercepted vessel has a crew of 8 and the other 38 suspects were found with 13 Cotonou boats and 1 speed boats that had assembled beside the vessel, with the plan to load it with the illegally refined products.
“The 13 Cotonou boats contained about 13 GP Tanks of various capacities, ranging from 500 to 1,000 litres, including numerous plastic drums that were a l r e a d y f i l l e d w i t h petroleum products.”
He said such products were sourced through s t o l e n c r u d e o i l o r vandalised pipelines and subsequently process in a crude manner.
“These suspects have contributed in no small measure to the destruction of the nation’s economy and the environment,” he said.
The JTF, he said, would not relent in its efforts to ensure adequate security of the country’s oil facilities and installations.
“The inimical activities of oil thieves and vandals w o u l d n o t o n l y b e contained, but also nip in the bud,” he assured.
He explained that with the latest arrest no fewer than 100 suspects had been nabbed in the last 3 months by JTF in Bayelsa, Rivers and Delta states on criminal a c t i v i t i e s o f i l l e g a l bunkering.
Aside, he disclosed that the JTF had destroyed over 2000 illegal refineries in the region in the last couple of months which operators relied on stolen crude from the nation oil facilities.
Some of the equipment allegedly used to pump stolen crude oil and other harbour engines being utilised to carry out their i l l e g a l a c t i v i t i e s o f siphoning oil from ruptured p i p e l i n e s w e r e a l s o recovered by the security operatives.
53
WA R R I -
D E L T A S t a t e Governor, D r .
Emmanuel Uduaghan, has charged community leaders in the state to assist in securing public properties in their areas of authority, even as he maintained that the myriad of problems confronting the education sector in the state cannot i n t i m i d a t e h i s administration.
The Governor made the c h a r g e a t t h e commissioning of a Science L a b o r a t o r y b u i l d i n g donated to Zik Senior Secondary School, Sapele, b y A g b a m i Pa r t n e r s , insisting that there was no going back in his plan to t a c k l e t h e p r o b l e m s confronting the education sector.
The Governor, who spoke t h r o u g h t h e S t a t e Commissioner for Basic and Secondary Education, Prof. Patrick Muoboghare, held that his administration was poised to leave a lasting legacy in the education
Emma ARUBI
sector.In his words; “We shall
tackle the problems and we shall not be intimidated by any problem. If schools are dilapidated, we shall rehabilitate them. They are dilapidated we know, but one thing I am certain of is that the brains of our t e a c h e r s a r e n o t dilapidated because in spite of these problems we are having our teachers are still putting in their best.
“Now we appeal to them
to continue to put in their best because no matter what the government says, if the teachers are not there to convert our expenditures to student’s product there is a hitch. I am happy to hear from the principal that with t h e i n t e r v e n t i o n o f Chevron and with the use of the laboratory even before the commissioning that the performance of the science students improved greatly at the current e x a m i n a t i o n s . I congratulate you and Chevron,” he stated.
According to him; “What Chevron has done is a call for partnership. They have partnered with us to build this laboratory and our counterpart contribution is to provide the teachers who will use the laboratory. I promise you, in the next
few weeks, we shall provide science teacher for this school so that the facilities g i v e n t o u s b y t h i s intervention will not be put to waste.
“I must appeal to community leaders, if after the laboratory is put to use for the next five to seven months and if we observe that the facilities are stolen, i t can be very, very d e p r e s s i n g a n d demoralising. Just as Chevron is partnering with us by providing this facility, the community must also p a r t n e r w i t h u s b y providing security for the things we are able to put in place, and the principal alluded to that when she w a s s p e a k i n g . S o community leaders and p a r e n t s / t e a c h e r s association, I appeal to you
to help and partner with us by providing security for whatever we are able to put in place.”
He further disclosed that this “School was one of the schools that was chosen by the Delta state government for complete overhauling and not just patching of buildings. And all those schools in that set, about eight of the contractors have mobilised to site and I am expecting that any moment from now the contractor handling this one will mobilise to site. Because if the interest shown by the community, I want a situation whereby w h e n t h e c o n t r a c t o r mobilises to site, I want a small ceremony like this to let the world know that we have started work.”
Public Building
54
Pe r e m a b i r i
community in the
Boma clan in the
Southern Ijaw
L o c a l
Government Area of Bayelsa
State, is on the throes of being
washed away by erosion, as a
large portion of the community
has already been eroded.
Last month, two persons, one
of them a graduate of the state
owned Niger Delta University,
identified as Ikioudo Abel, and
a secondary school leaver,
Stanley Dominic, lost their lives
when a landslide hit a section of
the community waterfront.
Indiegenes of the community
who are host to the Shell
Pe t r o l e u m D e v e l o p m e n t
Company, SPDC Diebu Creek
oil facility and the multi billion
naira moribund Peremabiri Rice
Farm, have launched a fresh
a p p e a l t o t h e f e d e r a l
government to save their
community from extinction.
Several homes are already
under water in the community
with a large portion of the land
lost to the rampaging Nun
River, as a result of what they
b lamed on the ongoing
dredging work by the oil giant
in the area.
The Peremabiri Community
Deve lopment Commit tee
Chairman, Dickson Peresuote,
while lamenting the plight of his
people said unless urgent
remedial steps were taken the
ancient settlement could be
wiped out.
According to him, “where we
are standing right now may be
inside the river sooner than we
can imagine. We have lost so
much of our community to the
River Nun. Even yesterday, as
some youths were playing
football in the field when they
chased the ball to the water
front, the ground on which they
stood collapsed into the river.
And, if you watch you can see
with me that the river has
advanced too close to the
c o n c r e t e r o a d i n t h e
Samuel OYADONGHA
community.”
He blamed SPDC for the woes
of the community saying, “If we
take a tape and measure, I am
sure the space between the River
and the concrete road is now less
than three meters in that section
of the town. Everyone in the
community is worried about this
threatening ecological issue.
When we were young, this
community was very far from the
football field. That is why
community leaders are not
happy with the way Shell has
continued to carry out dredging
a c t i v i t i e s w i t h i n o u r
e n v i r o n m e n t . S P D C h a s
continued to dredge at some
sections of the River Nun and
along the Diebu Creek every
three years or so without
recourse to Environmental
Impact Assessment.
“We are of the belief that what
Shell is doing is having a direct
relationship with this loss of land
to the river in our community.
And we want solution to this
problem. As a peaceful people,
we want the authorities to
prevail on SPDC and also
intervene on this matter. I should
use this opportunity to call on the
F e d e r a l G o v e r n m e n t
intervention agencies like the
Niger Delta Development
Commission, NDDC, and the
recently created Niger Delta
Ministry, to come to our aid.
Unless urgent steps are taken to
arrest the rapidly advancing
river, this community will
disappear soon. Yes, behind our
community is a swamp and, we
cannot go and build our houses
in the swamp. This is our
predicament.”
Another indigene of the
community, Maurice Jonathan,
said, “To tell you the truth no one
is comfortable with way the River
Nun is expanding while the
community land is shrinking by
the day. It is like a story now
when we tell strangers that this
community has lost over
50meters of land in the last few
years. And, if the trend should
continue unchecked, we may
join the monkeys in the swamps
very soon. We are of the view
that the dredging activities of
Shell around us also have
negative effects that is leading
to the collapsing river banks and
expansion of the River here. We
are calling for assistance from
government before we are
wiped out from this location.
What are we going to tell our
children coming behind?”
The Field Coordinator of the
Environment Rights Action,
ERA, Mr. Alagoa Morris, who
was in the community to assess
the impact of the erosion
menace called on the federal
government to, as a matter of
urgency, take positive steps to
address the ecological threat in
Peremabiri and other Niger
Delta communities facing
similar conditions.
While calling on the people to
remain peaceful as they draw
attention of the authorities to
their plight, he pleaded with the
State and National Assembly
members representing the area
not to rest until something is
done to address the ecological
threat confronting the people.
Golly created by erosion
55The
The first point
to note about
t h e
downstream
sector of the
oil and gas industry is that it
is heavily deregulated and
just lightly regulated. Over
the years the NNPC got wise
to the fact that it could not
refine, warehouse, wholesale
a n d r e t a i l p e t r o l e u m
products all by itself. The
deregulation by legislation of
the downstream sector
produced new generation
operators such as Addax Oil,
Oando Plc, Capital Oil,
Masters Energy, Zenon,
Sahara Oil, etc, all multi-
million dollar concerns. The
Nigerian government and
her sympathisers would have
us believe that the regulation
ONLY of the pump prices of
Premium Motor Spirit ,
referred to on the streets as
‘petrol’ and Kerosene is
bringing down the Nigerian
economy. This argument is as
mathematically inaccurate as
it is fraudulent. The pump
prices of diesel and LPG are
deregulated and we have
neither seen nor enjoyed the
b e n e f i t s o f t h e i r
deregulation.
W h a t t h e N i g e r i a n
government seeks to achieve
is not deregulation but the
removal of the ugly tic in the
industry that is petroleum
price subsidies by the
insensate surgical means of
i m m e d i a t e l e g i s l a t i o n
instead of a gradual phasing
process that would take into
account the all important factor of
the purchasing power of the
consumer. Petrol and kerosene
a re cur ren t ly pegged by
government at N65.00 and
N50.00 per litre; according to an
International Monetary Fund
Staff Position Note published on
February 25, 2010 that advances
the reduction of subsidies,
“a pr ice subsidy is the
difference between the price
facing consumers and a specified
“optimal” benchmark price.”
The optimal benchmark price is
of course different from the
marginal supply cost which is
computed from the bare cost of
production and handling. The
specified optimal benchmark cost
is computed from production,
h a n d l i n g , p l u s n i c e
imponderables such as natural
disasters, speculative buying,
wars, reduced production by a
competitor, etc. Don’t be fooled,
all the rumpus over deregulation
in Nigeria is not about the
inability of the operators in the
downstream sector to access the
specified optimal benchmark
prices of petrol and kerosene
because they do thanks to the nice
facility called subsidy differential
which gets paid to them through
the facilitation of the Petroleum
Products Pricing and Regulation
A g e n c y, t h e t r u s t e e a n d
administrator of Nigeria’s
Petroleum Support [Stabilisation]
Fund. Thanks to this price
balancing mechanism Nigerian
companies make as much profits
as their counterparts in other
climes. The snag and the reason
f o r a l l t h e f u r o r e o v e r
deregulation is that government
feels unduly burdened by the cost
of the subsidy, something it
claims amounted to about
N1.3trillion in the last fiscal year.
The government argues that
this sum which accounted for
about 30% of its budget could
have been put into some other
p r o d u c t i v e v e n t u r e s l i ke
education, road construction, the
refurbishment of the refineries,
etc. Pray, what did government do
with the monies it did not defray
as subsidy payment before the
coming into being of this regime
of subsidy payments? Nigerians
stood by and watched members of
the National Assembly who
constitute less than 0.5% of the
country’s population appropriate
25% of our national budget to
cater for their welfare and all hell
is about being let loose because
80% of the people will continue to
enjoy the relatively stable pricing
of two very basic and yes, already
very expensive products. The
IMF, that meddling predator and
the motley of confused local
economists have argued on the
side of government that subsidies
have slowed our economic
growth, specifically the rapid
development of the downstream
sector. They argue that though
Nigerian authorit ies have
approved about 18 licences to
private companies to establish
and operate refineries, none has
commenced because of the
subsidy regime; the idea is that
with the removal of subsidies,
private investors would have the
incentive to commence private
refinery operations, employing
young school leavers, creating
sub-sector investments, promote
further diversification of the
sector for the overall benefit of the
Nigerian economy.
First of all, oil subsidies are not a
Nigerian peculiarity; if anything
we came late into the game we are
trying to exit before getting a
proper hang of it. According to the
IMF Staff Position Note quoted
earlier in this piece, “G-2O
countries account for 70% of tax
inclusive [oil] subsidies.” In April
2002, India, a country that
sources 75% of i ts crude
r e q u i r e m e n t s e x t e r n a l l y,
abolished its Administered Price
Mechanism and its Oil Pool Fund,
the counterparts of our PPPRA
and the PSF. India has since
reversed the policy and provides
heavy oil subsidies for its citizens,
the same as China, Mexico and
Indonesia. The United States
provides heavy oil subsidies to its
citizens by giving tax breaks to
every level of oil production. It is
elementary economics that a tax
that is below its optimal level
generates tax subsidies. Russia,
Trinidad and Tobago, Venezuela
and many other countries
subsidise oil. The Canadian
government paid between $3b
and $8b to the forest industry in
2000, $6b to mining, $700m to
fishing and $2b to the nuclear
industry, among many other
subsidy payments. It was only in
2004 that Libya removed about
$5b of subsidies from electricity,
fuel and basic food, leaving more
than three times that amount on
the same items. Qatar subsidises
nearly the whole existence of her
c i t i z e n s i n c l u d i n g l o c a l
telephone calls made via private
GSM carriers like Etisalat!
Nigeria subsidises nothing
except the pump prices of
kerosene and petrol; having
mismanaged this facility through
corruption and cronyism, we seek
the first point of exit in the face of
our first set of challenges and it is
on record that the government
has extended direct subsidy
payments to private operators for
only two years through the
PPPRA. Instead of investigating
the abuse that brought the
situation to such a desperate
level, we seek to abandon this
first attempt at reducing the
suffering of our people, forgetting
that about 80% of our population
live on less than $2 per day.
Let me also opine with the
boldness that the statistics accord
me that the removal of oil
subsidies in Nigeria would not
add a single refinery to the
Nigerian industry and economy.
Anybody who invests in a
refinery, a long term project, in
the present energy situation
would truly require a psychiatric
evaluation because with the
current pace of research efforts in
the industry, that party may be
left with a facility that refines
nothing. And it is simply not true
that banks will not invest in a
business that is dependent on
government subsidy payments.
After all, banks are financing the
importation of products for the
promise of subsidy payments
because of short term returns.
Subsidies are paid for products
not for the manner in which the
products hit the market.
The Nigerian government
should be equally hysterical
about the beautiful volumes of
sales recorded as excess crude
sales. Should we not know what
tiny percentage of the upstream
earnings account for the subsidy
payments? If Nigerians enjoyed a
g o v e r n m e n t s h e l t e r o f
N1.3trillion over petrol and
kerosene usage what did the
country make in the sale of
crude in the last fiscal year
or in the taxation of LPG,
diesel, bitumen, high and
low pour fuels, lubricants,
e t c ? I n s t e a d o f
undermining our economy,
subsidies have defined the
p o t e n t i a l o f t h e
d o w n s t r e a m s e c t o r,
stabilised supply and
promoted credit security in
the sector. And government
acts as though the money
p a i d t o m a r k e t i n g
companies and importers
as subsidy differential is
lost to the economy. Were
the monies dumped in the
Atlantic or in a real
serviceable sector of the
economy? Wouldn’t some
of that money go back to
g o v e r n m e n t a s t a x ?
Haven’t the banks been
boosted with deposits,
commissions, interest
p a y m e n t s , f o r e i g n
exchange earnings and
new jobs by virtue of the
injection of these funds into
the economy? What is the
level of the sale of the
s u b s i d i s e d p r o d u c t s
compared to the former
situation? We forget too
quickly that government,
the economy, political
activities and power is
about the welfare and
security of the people.
One is very mindful that
in canvassing the opinions
articulated in this piece,
one may have unwittingly
given support to the rabble
i n P E N G A S S A N ,
NUPENG and the other
trade unions that enter into
any and every fray for
vocational reasons. I would
like to dissociate myself
from that crowd; I have
found over the years that
within these unions are the
most unpatriotic set of
N i g e r i a n s w h o c a r e
nothing about driving us off
a cliff in so far as their
allowances and salaries are
in issue. They would not
accept pay cuts or sacrifice
their luxuries for corporate
survival. They are like the
unions that gave corporate
America the need for and
lexicon of outsourcing,
turning round to envy the
Asians their good fortune in
i n h e r i t i n g A m e r i c a n
manufacturing lines. They
use the masses both as
weapon and as shield, as it
suits their needs. Our views
may have found a point of
convergence on this issue
but they are no friends of
mine or of the Nigerians
whose interest they pretend
to serve.
John OWUBOKIRI
Refinery
Bristow Ad