Double Wahala for the President

I was not exactly a Fela fan. But whether you loved or hated Fela, you could not miss the genius in him – his sense of organisation in apparent chaos during the hey days of “Kalakuta Republic”. I always marvelled at how much control he had over his orchestra and the harmony of the diverse instruments and the rather vulgar choreography of his queens wriggling and gyrating in elevated boxes framing the stage. If you could stand the thick haze or should I say fog from smoke streaming from several fat wraps of you know what, the music that emerged from the stage was breathtaking!
And then you take in the sobering lyrics of his songs! I remember songs like Beast of No Nation, where he castigated the western developed nations for their hypocrisy in supporting apartheid and then preaching human rights to Africans. There is another song – I don’t remember the title or the lyrics. But it spoke about a poor man who was saving to buy a fan so that his windowless, damp “face-me-I face you” room became a little more bearable. Each time the poor man saved up to the price he was told the last time he went window shopping, the price would have gone up – and the vicious cycle continued. The poor man never bought that fan.
But the Fela song I remember in the wake of the failed premium motor spirit subsidy removal strategy of the President was the one in which a funeral convoy had an accident – and there was confusion everywhere: double Wahala for dead body and the owner of dead body!
Imagine the dismay and aggravated sorrow of the chief mourner as he tried to contain the situation and restore some order in the well choreographed last rites of his loved one. Fela did not tell us what happened thereafter, but certainly this did not go according to the plans of the chief mourner.
I sympathise with President Jonathan and his field troops particularly Petroleum Minister Deziani Alison-Madueke and Finance Minister Ngozi Okonjo Iweala. The three of them got the most bashing from Nigerians at home and abroad and were at the receiving end of some of the most unprintable things ever written about a Nigerian leader.
I know that it may not be popular to say this. But I am convinced the president and his economic management team were on the right track. The government cannot be wilfully funding corruption and borrowing money to pay for a profligate venture. The subsidy as it plays out is like putting your savings in a blender and pulverizing it and because some people would be angry if the practise was stopped, we needed to keep doing that.
Now everyone is an expert on subsidy – annoying talking heads on television with pedestrian arguments. The two arms of the National Assembly have weighed in with public hearings, which obviously derived most of the information being enquired into from the KPMG audit of the oil industry commissioned by the Federal Government. One wonders if there may be any new findings, apart from the entertainment and sensational news headlines the hearings have provided. And even if there are radically new findings, the National Assembly exercises legislative and not executive powers of government. The same forces that delayed action on the KPMG report are still in play because the reality is that change intended to remove patronage and corruption will always be resisted by powerful vested interests. And they can only be chipped away one block at a time in a steady and determined effort.
Let us even set aside the story about the average poor man not getting the benefits of subsidy (if we want to be honest, PMS hardly sold at N65 per litre outside Lagos and Abuja. Ironically, at no time in the last five years did fuel sell less than N90 per litre in most of the South-South and South East geo-political zones which produced most of the oil and hosts three of the four refineries in the country).
We should all ponder how we want to create the investment environment to attract the huge capital and managerial skills required to develop a modern downstream oil and gas industry. Achieving this enabling environment is the only route to Nigeria’s industrialisation. As a nation blessed with huge reserves of crude oil and natural gas, the most effective and fastest route to industrialisation is the petrochemical, power generation and other derivative downstream industries. Distorting the system with subsidy and patronage is cosmetic, compared to the millions of jobs we are exporting by exporting liquefied natural gas and crude petroleum. Imagine the refining 2.5million barrels of crude oil per day in Nigeria – at least 150 refineries employing millions and paying taxes to government and developing the communities where they are located et cetera. Or imagine complete processing of 200 trillion cubic feet of gas into electricity generation, industrial chemicals, plastics and thousands of other manufactured products in factories spread across the country.
America’s wealth today rests on employment of her citizens and all the government does is to create the environment and encourage American corporations and others from around the world to invest in factories and plants that will employ millions of her citizens. The telecommunications and aviation industries in Nigeria have demonstrated this well founded economic management philosophy.
Jonathan is by far more patriotic than many of those who rained insults at him for daring to correct an anomaly that MUST be corrected if Nigeria is to move forward. Just like the owner of the dead body, he must have been very disappointed with our attitude to his intentions. But like Moses understood while leading the Jews through the wilderness, being misunderstood is the price of leadership. The President must organise his troops and focus on the economic transformation he has promised. There is nowhere in the world where change is welcomed. The celebrated Korean leader... ; the founding father of the city state of Singapore, and even recent Chinese leaders including Chairman Mao tse Tong were all dictators loathed by their people and attacked by activists while there were laying the foundation for their countries to prosper. Today they are celebrated and revered by their compatriots.
As for the Minister of Petroleum, I have a feeling that the various Ad-hoc committees set up by her derive directly from the frustration and the subsidy removal fiasco and the confusion from the “double Wahala”. There are enough government agencies and departments to execute all the functions of those committees. It is way better to strengthen institutions, rather than building additional layers of red tape and possible corruption.

The Cow Will Die

By Ikechi Ibeji

Typical of us Nigerians, we have already forgotten a very embarrassing controversy which took the nation by storm, less than two weeks ago. The Minister of State for Finance, Remi Babalola jolted all of us by telling a meeting of the Federation Account Allocation Committee that Nigeria’s National Oil Company was “insolvent” and therefore not able to pay what it owed the Federation Account Committee from crude oil sales. NNPC fired back that the Ministry of Finance owed to it several multiples of what the Federation Accounts Committee was claiming. The embattled Babalola claims (and rightly too) that the payments NNPC was demanding as money it spent on petroleum products subsidies were nebulous and could not just be accepted by government with no verification.
It is understandable that the government needed to cobble together a response to a “blunder” by one of its own, with the comic sight of the Ministers of Finance and Information sitting next to Babalola after a Federal Executive Council meeting to state “the true position” of things with the NNPC. (By the way, the man is still keeping his job).
Theoretically, if NNPC owns all the oil and gas assets of the Federal Government, it cannot be said to be insolvent on account of a mere N400 plus billion it owes (and has been unable to pay for a long while now). But that is where it ends.
The NNPC started its downhill trek when the good work done by Chief Philip Asiodu, Chief Festus Marinho and Chief Meshach Feyide was thrown out of the window, with the organogram and long term strategic plans totally distorted and bastardised. It then became usual for specially anointed unskilled fellows to be ferried straight to top positions in NNPC, with no hint about what to do with their positions (other than convert the plenty money they saw into their personal use!). Corruption thus became official and promotion was no longer based on skills and merit but on where you came from or which Oga slept with you. More damage had to be inflicted on the organisation when fine gentlemen and outstanding professionals were forced out – in several cases penniless, laying the field open for total loss of decorum in a free for all. The Military rulers threw out “obstacles” in the likes of Festus Marinho, Aret Adams, Thomas John, Edmund Daukoru and Chambers Oyibo among others, quite prematurely, robbing the organisation of the immense skills and training possessed by these gentlemen.
Those were the boom years when pepper too much. Now the golden hen or should we say the fattened cow has been milked dry and it no longer can stand without first aid. The mago mago in NNPC can no longer be supported by its diminishing resources and if something drastic is not done quickly, the cow may drop dead any moment.
As I said earlier, it was incumbent on government to defend the corporate integrity and financial standing of NNPC. It is the responsible thing to do under the circumstances, given that a sustained perception of NNPC as an insolvent institution would erode confidence in the Nigerian investment climate. But action needs to be taken quickly to arrest the accelerated downward spin through vigorous pursuit of the passage of the Petroleum Industry Bill and its full implementation. In this day and age when younger National Oil Companies are performing exploits in far flung corners of the globe, Nigeria can no longer afford to pamper her underperforming NOC.

STRIKING WHEN THE IRON IS HOT

As the Americans would say, it was a big deal for Nigeria last month, when Yayale Ahmed, Secretary to the Government of the Federation, the equivalent of Cabinet Secretary, (representing Nigeria) and Senator Hillary Clinton (representing the United States), signed in Washington DC, the instrument establishing the United States/Nigeria Bi-national Commission.
The Americans see this as “a strategic dialogue designed to expand mutual cooperation across a broad range of shared interests; a collaborative forum to build partnerships for tangible and measurable progress on issues critical to the shared future of the two countries”.
The commission will have four working groups – on Good Governance, Transparency and Integrity; on Energy and Investment; on Food Security and Agriculture; and on Niger Delta and Regional Security.
Let no Nigerian be deceived. The raproachment with Nigeria, which Obama ignored in his first visit to Africa and instead visited small Ghana (45 minutes by air from Nigeria!) is simply anchored on the USA’s energy security policy strategy, which has started shifting dependence for her energy imports from the Middle East to the Gulf of Guinea. (By the way the other countries that will soon have Bi-national Commissions with the US are Angola and Equatorial Guinea- the second and third biggest oil producers in the GOG after Nigeria; and South Africa, the economic powerhouse of the continent).
By all indications, Nigeria may have, as of the second quarter of 2010, assumed the number two spot among foreign nations supplying US foreign oil imports, behind only Canada. As is typical of the US, the more her oil supplies come from the Gulf of Guinea, the more important it becomes to engage the nations in the region, of which Nigeria is the dominant player in every sphere. The US has therefore initiated the bi-national commission as a platform to help Nigeria stabilise her politics, her economy and reduce poverty and injustice. In return it will be guaranteed uninterrupted energy supplies at stable prices.
If the Nigerian government can for once not bungle this opportunity, the advantages acruing to her for sustained economic expansion are enormous. One such advantage is that environmental regulations in Europe and the US currently make it difficult for new refineries to be built. Building on the economies of scale from sustained US imports, the new relationship can be exploited to make Nigeria a major petroleum products refining hub for supplies to Europe and the United States, as well as China and India.
Another strategic advantage is that the same environmental regulations and the huge cost of installing desulphurisation plants in Western refineries has made demand for Nigerian light “sweet” crude very high in the US. Preference for the light crude is also driven by the growing demand for diesel as opposed to gasoline. Continued growth of diesel distribution and retail outlets will sustain Nigeria for some time as the supplier of choice to the US.
Nigeria needs this type of guaranteed long term consistency in revenues to expand and diversify her economy. One way of sustaining this new strategic position of the GOG in global energy security calculations is consolidation of the Gulf of Guinea Commission and creating the platform for collective and inter-dependent management of the maritime security of the region along with consumer nations of oil from the region, so that securing the region's energy resources and territorial waters become more effective and cheaper for individual littoral countries.
Luckily for President Goodluck Jonathan, there is a new groundswell of goodwill and general goodfeeling towards Nigeria after his recent American visit. Add this to some of the best hands now in place to manage the Nigerian petroleum industry, and the stage is set for success if he remains focused. Take for instance the duo of Mrs. Diezani Alison Madueke who oversees the Ministry of Petroleum Resources and Dr. Emmanuel Egbogah, his Special Adviser on Petroleum. The lady, though relatively young, has been exposed to the oil business, having risen to the position of a Director at the Nigerian unit of Shell - Shell Petroleum Development Company of Nigeria. She understands some of the armtwisting and blackmail tactics employed by the IOCs in manipulating policy decisions of a government desperate to squeeze out every dollar it can from petroleum sales.
As for Dr. Egbogah, his credentials are quite intimidating, with wide experience in the oil and gas business in all the major oil producing regions of the world. But his most interesting citations were his work as Adviser to many governments including Libya and Malaysia; and as “Technology Custodian” of Petronas - the Malaysian NOC, which helped fast track that country’s economy phenomenally from petroleum revenues. Little wonder Egbogah is the driving force of the new Petroleum Industry Bill being pushed by the Nigerian government, which will rewrite the E&P operating terms; dictate the rules for the IOCs and reign them in from their opaque and profligate ways.
Combining the breakthough from the US with an effective reform of all the segments of the Nigerian energy industry will no doubt set her on a long term growth path and leave a lasting legacy for the Jonathan Presidency.