Nigeria in ambitious fuel subsidy replacement by Sweetcrude reports

Trust us to deliver on deregulation benefits â&#x20AC;&#x201C; FG begs

Privatisation, local content keys to power sector reform

A Vanguard Monthly Review Of The Energy Industry VOL 03

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Brent ends 2011 at record average

JANUARY, 2012

Nigeria in ambitious fuel subsidy replacement FG advances SURE Programme N1.134trn re-investible funds 3 tiers of govt to split funds Labour threatens showdown N/A rejects subsidy removal

rent crude is set to end the year up nearly 14% and at a record high annual average, as political tensions in Opec member states help negate a global economic slowdown that has dampened oil demand growth.

We thank you, our esteemed readers and energy industry enthusiasts for your patronage through 2011 and wish you a bountiful and rewarding 2012, while counting on your continued patronage.

Management

Contents 4 8 12 15 17 18 22 35 38 41 44 48 50

COVER

Nigeria in ambitious fuel subsidy replacement

OIL Joint effort helped contain Bonga oil spill

FOCUS

Trust us to deliver on deregulation benefit-FG

GAS

Shtokman’s Gas FID delayed

FEEDBACK

Environment activists conduct investigation on Bonga spill

POWER

Privatisation, local content keys to power sector reform

FINANCE

Italy sells 7 billion Euros bonds as yields fall

INSURANCE

Inadequate capacity continues to plague insurers

LABOUR Electricity workers laud privatisation probe

SOLID MINERALS

Artisanal mining: huge potential for wealth creation

FREIGHT

West Africa shipping industry will boost development

TECHNOLOGY

Petroleum product supply and distribution through pipelines and trucks

COMMUNITY DEVELOPMENT SEOF, BFA to distribute 640,000 books in Nigeria

Sweetcrude is a publication of Vanguard Media Limited

Happy New Year is in order, but how merry it remains is matter of time, as 201 only a 2 is opening with a lot of gloom in the pet industry, primarily roleum because 2011 was a litany of woes. First, the long awa ited Petroleum Ind ustry Bill, PIB, nev National Assembly er left the despite the plethora of promises made by Government represe Federal ntatives; according ly, there was hardly investment in the ind any new ustry by the time the year ended. Secondly was the revelations made by the United Na Environment Progra tion’s mme Report, which uncovered over 50 environmental poll years of ution and degradatio n in Ogoni land on account of oil spills. Tagged the worst scenario and the most expensive programme in the clean up world that would last for 30 years, and ma Ogoni people literall ke the y mobile corpses, as government has faintest idea where not the to begin. Then, was the kno tty issue of the dow nstream sector der and the removal egulation of fuel subsidy , which occupied the discourse for mo national st of the last qu arter of last year. For years, government has stru ggled with deregu lation in an attemp the wastages and t to block corruption that cha racterised the subs idy regime. But each attempt merely ended in strengthening the between governme mistrust nt and the people. Again, the legislators uncovered the can of worms that is Nig privatisation progr eria’s amme, and everyone awaits what govern do with the rot. ment will Shell’s Bonga oil spil l couldn’t have hap pened at a worse per thus, crowning the iod, woes. Not only bec ause of the environ implications, but mental more because Sh ell has remained the biggest protagonist in Nige ria’s oil history and some of it not too salu tary. However, we at Sw eetcrude, do not be lieve Year 2012 is all and doom, and as gloom such, our cover focu ses on government’s Programme – th SURE e Subsid y Re-inv estible and Emp owerme nt Programme, which government believe s will surely bre “Cabals” and deliv ak the er on its promises of better life for all through the provis Nigerians ion of infrastructur e and massive job creations for the youths to douse restiveness and rest lessness in the country . Accordingly, we brin g you the A-Z of wha t the programme is about. all Since the year is just unfolding, the rest of the conten resonance of what t is a 2011 heralded as earlier enumerate d, and cuts across our regular fea tures – Oil, Focus, Gas , Feedback, Power, as Finance, Insura as well nce, Labour, Solid Minerals, Freight, Technology, and Community Dev elopment. Welcome to 2012!

NigerDock

Cover Story

Nigeria in ambitious fuel subsidy replacement President Goodluck Jonathan

HECTOR IGBIKIOWUBO

N the face of i m p a s s i o n e d a r g u m e n t s surrounding the removal or otherwise of petroleum products s u b s i d y, t h e N i g e r i a n government has come up with an ambitious scheme tagged Subsidy Rei n v e s t m e n t a n d Empowerment Programme, SURE, to replace the current fuel subsidy regime. The total projected subsidy reinvestible fund per annum is N1.134 trillion based on average crude oil price of US$90 per barrel. Out of this, N478.49 billion accrues to Federal Government, N411.03 billion to State Governments, N203.23 billion to Local Governments, N9.86 billion to the Federal Capital Territory (FCT) and N31.37 billion as Transfers to Derivation and Ecology, Development of Natural Resources and Stabilization Funds. The federal government had last year given a January, 2012 target date for removal of fuel subsidy pleading it was not targeted at the right

segment of the populace; abuse of the processes by the operatives; impediments to enthronement of an environment conducive for investment in the midstream to thrive; inability to keep up with mounting costs; smuggling as a result of price disparity; among others. But organized labour, civil society, other groups and individuals have been quick to join the argument for and against government•fs intentions. Organised labour represented by the Nigeria Labour Congress, NLC, and the Trade Union Congress, TUC, in particular have been very vociferous in their opposition to government•es proposal noting that the removal of subsidy is antimasses. SURE Programme: The SURE programme is focused on utilization of Federal Gover nment•fs s h a r e o f t h e s u b s i d y, projected at N478.9 billion, while every State and Local Government is expected to design its own programmes utilizing its portion of the subsidy reinvestment funds. The subsidy reinvestment f u n d s f r o m t h e

discontinuation of the fuel subsidy will be used for the implementation of the programme and to reduce government•fs borrowing needs. Under the programme, the Federal government plans to

of the subsidy regime on the poor can be mitigated through properly targeted safety net programmes including public works and employment schemes, maternal and child health, mass transit programmes

The total projected subsidy reinvestible fund per annum is N1.134 trillion based on average crude oil price of US$90 per barrel channel its own share of the resources into a combination of programmes to stimulate the economy and alleviate poverty through critical infrastructure and safety net projects. •gTo transform the economy and in line with the Vision 20:2020 objectives, critical infrastructure projects in the power, roads, transportation, water and downstream petroleum sectors will be executed. The potential impact of the discontinuation

and vocational training and skill acquisition schemes,•h a SURE Programme document obtained from the presidency outlined. The entire project will be overseen by a Board to be constituted by Mr. President and consulting firms with international reputation will be appointed to provide technical assistance to the Board in financial and project management. Relevant MDAs will set up Project Implementation Units

(one for each project sector) to drive implementation and an independent body will be responsible for monitoring and evaluating the implementation and will report directly to the Board. The SURE programme focuses on the portion of these resources that the Federal Gover nment is responsible for administering and 7 components: A - H are targeted for intervention and improvement over the next 3 to 4 years. These components includes‚ Social Safety Net Programmes; Maternal and Child Health Ser vices; Public Works/Women And Yo u t h E m p l o y m e n t Programme; Urban Mass Transit Scheme; Vocational Training Schemes. The component deals with Niger Delta Development Projects. This component will focus on a developmental project aimed at improving the lives of residents in the Niger Delta region and promoting economic growth in the region, by providing access to the refineries, seaports as well as access to agricultural areas of the CONTINUES ON PAGE 5

Cover Story

Nigeria in ambitious fuel subsidy replacement

Fuel scarcity

CONTINUED FROM PAGE 4

Niger Delta. The component deals with roads infrastructure projects across the country and this component will focus on the completion of core road projects that will enhance transportation of passengers and goods in the country to enhance economic activities and social integration as tangible benefits of the subsidy gains. The roads that are to be completed under this programme will cover a total distance of 1,326 km. The component of the programme deals with rail transportation projects and this component of the programme will entail the rehabilitation and restoration of Nigeria’s abandoned railway infrastructure and the construction of new standard gauge railway lines, thereby providing alternative means of transportation of people and goods across the country. It is expected that the rail

routes will open up the hinterlands of the country to the coast, facilitating trade by improving access to markets by those in remote rural areas. This will facilitate increased tonnage of goods through ease of haulage and reduction in costs of transportation. The •eE•f component of the programme deals with water and agriculture. This programme component will harness Nigeria’s abundant water resources for national development through sustainable food production and water conservation. Specifically, this component will actualize the current policy thrust towards selfreliance for rice and other food crop production and enable the agricultural value chain transformation to be achieved. Specifically ear marked under this component are irrigation projects and rural and urban water supply projects. The •eF•f component of the

These components includes‚ Social Safety Net Programmes; Maternal and Child Health Services; Public Works/Women And Youth Employment Programme; Urban Mass Transit Scheme; Vocational Training Schemes programme deals with selected power projects. This component will contribute towards the power sector reforms by improving the generation capacity through hydro and coal power plants. The programme will provide counterpart funding for the construction of the large Mambilla hydropower project that will generate an

additional 2,600 Megawatts of electric power. The programme will also provide funding to complete a total of 17 Small and medium hydroelectric power projects with a cumulative capacity of 140.275 MW. Given the small size of these projects, they will be isolated and embedded in agricultural development economic

corridors, which will contribute to enhancing the agricultural value chains for increased production, in line with the Transformation Agenda. The programme will provide counterpart funding for PPPs with the private sector for the development of Coal Power projects in Enugu, Benue, Kogi and Gombe, with a potential to generate 1000 MWs of power. The •eG•f component of this programme deals with petroleum/NNPC projects and the main objective here is to restore and improve domestic refining capacity and prevent shortfalls in supply of petroleum products. The integrity of the petroleum pipeline system will also be enhanced through additional investments and protective security. The targeted projects under this component are Greenfield CONTINUES ON PAGE 6

Cover Story

Fuel scarcity

Nigeria in ambitious fuel subsidy replacement CONTINUED FROM PAGE 5

refineries and pipeline reinstatements. Three new refineries will be built under a counterpart funding arrangement with the private sector in Bayelsa, Kogi and Lagos States with a combined processing capacity of 400,000 barrels per day. The SURE programme anticipates that thousands of workers will be employed at each of these locations, the refineries will be completed 3 years after contract award and upon completion, the refineries will contribute about 30 million liters of PMS to the domestic market, thereby making Nigeria a net exporter of value added

The SURE programme anticipates that thousands of workers will be employed at each of these locations, the refineries will be completed 3 years after contract award and upon completion, the refineries will contribute about 30 million liters of PMS

petroleum products. In addition, approximately 2,500km of petroleum products pipelines have been heavily vandalized in the southern, north central and north eastern parts of the country. This has resulted in the need to move products by truck from the south to the north. Approximately 1,500 trucks convey these products on the highways on a daily basis, causing severe damage to the already bad roads. The re-instatement of these pipelines will improve availability of petroleum products across the country, eliminate bridging and r e d u c e h i g h w a y maintenance costs. During the pipeline repair works,

employment will be generated for youth from communities that are traversed by the pipelines Right of Way. The component deals with ICT projects targeted at supporting the Federal Ministry of Communications Technology to facilitate the build out of a critical aspect of ICT infrastructure in the country. The fund will be used specifically to boost broadband connectivity at the transmission layer of the national infrastructure using f i b e r, w h i c h u n l i k e microwave delivers higher bandwidth and enable higher broadband speeds at the access networks. This will lead to more affordable and better quality of communications services and increase the use of such services to bring about economic and social development. This component also anticipates the extension of ICT connectivity to all tertiary institutions in the country through the CONTINUES ON PAGE 7

Cover Story

Nigeria in ambitious fuel subsidy replacement

NNPC building, Abuja

CONTINUED FROM PAGE 6

establishment of e-teaching and e-learning platforms and the initiative can potentially generate 70,000 new jobs spread across the country and create another 350,000 spin off jobs over the next 4 to 5 years. Seventy percent (70%) of the jobs are low skill and whilst these job opportunities will be experienced in all geopolitical zones, over 60% will be concentrated in the Northern parts of the country that has higher connectivity disadvantage. Labour threatens showdown: The NLC and TUC have at different forum stated and restated their opposition to government’s planned removal of petroleum subsidy and indications are that member bodies such as the National Union of Petroleum and Natural Gas workers may have adopted a middle of the road approach towards opposition to the move. In a statement recent statement outlining its position, the NLC advised the Presidency to learn from the October 15 Global Day of action against corporate greed and cut in social spending, rather than orchestrate endorsement of its fuel subsidy removal

gambit. The statement noted protests in October is a red card for the ruinous programme of subsidy removal and cuts in social spending and an indication that the North African uprising is spreading. •gThe Federal Government should face this reality and address growing poverty, hunger and anger amongst the masses. Hijacking the private sector forum and smuggling a fake endorsement removal will not make Nigerians accept s u c h a c a l a m i t y. S a v e beneficiaries of government largesse, no employers utilizing petroleum products will endorse subsidy removal.•h Speaking also on deregulation, National President of the National Union of Petroleum and Natural Gas, NUPENG, Comrade Igwe Achese, said the timing for deregulation was wrong in view of the fact that the Petroleum Industry Bill, PIB, which embraces all activities of the oil sector had not been passed into law. He said the union would vehemently resist any form of deregulation that was import driven, stressing the need for government to come up with

We have already given government conditions for deregulation and part of it is that the refineries must work optimally; government must make the depots to function properly

specifics on how to ensure that the local refining capacity was increased over a period of time. He also stressed the need for government to engage all stakeholders in the economy and state categorically how it

intends to use the proceeds from the removal of fuel subsidy and how that decision would reduce poverty and unemployment. NUPENG is not against deregulation; our position is that if government must deregulate, it should not be import-driven. What we are against is import-driven d e r e g u l a t i o n . We h a v e already given government conditions for deregulation and part of it is that the refineries must work optimally; government must make the depots to function properly. Currently, we are still moving products by truck when we have depots but because of pipeline vandalism the depots are not functioning. Before government comes up with deregulation policy, it must first pass the PIB which is all encompassing into law•h, he said. N/A rejects subsidy removal: I n f o r m a t i o n a t Sweetcr ude•fs disposal indicates that months of intensive lobbying by the presidency may have failed to sway members of the national assembly, prompting the federal government to move the target date for subsidy removal from January 2012, to April 2012.

In a report submitted to a committee of the whole, three Senate standing committees mandated to review the President’s proposal on petroleum subsidy removal, rejected the move. The three committees, which worked on the 2012-2015 Medium Term Fiscal Framework (MTFF) and Fiscal Strategy Paper (FSP), warned against removal of fuel subsidy, while other members of the Senate Committees on Finance, National Planning and Appropriation, which worked on the document, equally urged the Presidency to jettison petroleum subsidy removal.. The Senate has still not subjected the committees•f recommendations on the MTFF to debate and indications are that whenever it does, it might get downright heated and disruptive given the impassioned arguments making the rounds. Sweetcrude checks revealed that the presidency may have sort the endorsement of the national assembly as a courtesy and not a constitutional requirement, especially since funds for subsidy are taken from the Consolidated Revenue Fund.

Oil Joint effort helped contain Bonga oil spill - Shell

igerian CONTENT INITIATIVE Dr. Ibilola Amao

Reversing Nigerian Content from Negative to Positive

Oil spil

CLARA NWACHUKWU

he year could not have ended on a sadder note for the Shell Nigeria Exploration Production Company, SNEPCo, a wholly owned subsidiary of the Anglo-Dutch Shell Group in Nigeria, when oil leaks were discovered in the process of loading a crude vessel on December 20. In view of Shell’s antecedents in oil spills in Nigeria and the Niger Delta, the particular, (the United Nations Report on 50 years of oil pollution in Ogoni land is still very fresh, as both the Federal Government and Shell is yet to rise to the challenge of the urgency of the situation has done nothing yet), nothing much was expected to be done. However, Shell surprised the industry, as the cleanup of the spill, which the Minister of the Environment, Hajia Hadiza Ibrahim Mailafia, estimated would last for at least six weeks, when she led a team of ministry and agencies representatives to visit Bonga, took only a few days. Generous support team Shell may be laundering its image, some analysts argued, but the company told Sweetcrude that “What made the difference to the management of the spill was the speed of response. On noticing an oil sheen on the surface of the

UK-based Oil Spill Response flew in with a Hercules aircraft, assisted by another plane from Ghana, which sprayed dispersants on the oil along with five seaborne vessels

water around the Bonga Floating Production Storage and Offloading, FPSO on December 20th, 2011, we shut down the export lines thereby stopping the flow of oil; i n f o r m e d l o c a l government/regulatory authorities and mobilised emergency operations crews. We set up a Country Crisis Team and Emergency Response centres in Lagos and Warri who were in 24hr connection with a support team at our Group offices in The Hague. We also got the support of many third parties including Clean Nigeria

Associate (National tier-2 response agency), other IOCs – ExxonMobil, NOAC and Govt Agencies – DPR, NOSDRA. UKbased Oil Spill Response flew in with a Hercules aircraft, assisted by another plane from Ghana, which sprayed dispersants on the oil along with five seaborne vessels. In addition, we deployed booms to stop the spread of the oil and skimmers to recover spilled oil.” It explained further that ,”The oil was largely dispersed by Sunday, December 25, 2011 due to natural processes (dispersion, spreading and evaporation) and the integrated efforts of SNEPCo, government and our industry partners. Initial modeling suggested that 50% to total spill was gone via natural processes by December 22, 2011. Oil disperses naturally though evaporation and biodegradation. Dispersants speed up natural dispersion. Main benefits are that they remove concentrated oil from water surface and disperse oil into the water column where it naturally degrades. The magic you refer to is the combination of all these efforts and timely support from Government agencies including Customs and Immigration. The Minister of Environment acknowledged these efforts when she visited Bonga.” Paying damages But environment groups are

CONTINUES ON PAGE 9

Local Content Measurement traditionally covers a multitude of individual, independent or collaborative efforts, designed and geared towards national development and socio-economic transformation of the host community where business related activities are being undertaken. It covers international content, national content, community content, socio economic development initiatives and sustainable development programmes. Commencing with the viability of domiciliation and attraction of Foreign Direct Investment, FDI, Nigeria is not on any list of areas or regions where businesses are being moved to by investors by virtue of its regional potential for business viability or the delivery of quality goods and services at a reduced cost. Nigerian SME’s and businesses score very low on International coverage and provision of very competitive rates. The Nigerian workforce scores very low in performance with Small and Medium Enterprises, SMEs, compared to their counterparts in other regions. This can be linked amongst others, to the problems of poor infrastructure, low morale and unfavourable investment climate. Also, the activities of multinationals and foreign investors have been reduced considerably due to funding issues, delays in contract award, non-guarantee of the minimum base work load and the unfavourable fiscal terms. For the effective implementation of the Nigerian Content, there is a need to establish a business bureau that can shield entrants from common teething problems. The bureau would manage stakeholder’s interests and stimulate growth of business activities through warehousing of business activities in the Oil and Gas industry. In the implementation of the Nigerian Content, a good mix of companies is required. Oil and gas businesses require a healthy balance of multinationals and indigenous players to stimulate global competitiveness. Management of service providers is thus necessary to encourage the delivery of quality human capital, service providers and vendors. A bureau must exist that encourages the entry of multinational leaders who can challenge the competency of and transfer technology to local players, stimulate networking amongst companies that can compete or collaborate depending on the job size and market share as well as manage the mode of entry and flexibility of collaboration amongst all players. This element of Local Content implementation is critical and important to ensure that business sustainability through management of resources and promoting the goals and objectives of all stakeholders is well managed. The bureau should be charged with the responsibility of Local Content measurement and performance monitoring. The NIPEX tool for this process must be utilised as a matter of urgency. In the past, various models of money or spend focused Nigeria Content measurement matrices have been suggested and in some cases, implemented sparingly because of the cumbersome nature of data gathering, compilation, analysing, presentation, measurement, monitoring and tracking. The appropriate measurement of Nigerian Content should be international acceptability and global competitiveness of Nigerian goods and services. Nigerians and Nigerian companies need to take their goods and services out of Nigeria so that we achieve international competitiveness. Nigeria should become a high-value business environment. These indices are the real Nigerian Content measurement parameters. It is all well and good to ensure domiciliation of Nigerian projects and stipulate a whole bunch of percentages that should be attained by government fiat. Nigerian Content is supposed to be a commonsense business case and company growth strategy. Until we arrive at the point whereby the cost of doing business in Nigeria is competitive enough to attract businesses to establish regional offices and facilities in Nigeria, on the basis of sustainability, we don’t have a viable Nigerian Content strategy. For this to happen, government would have to address quite a number of things, including, Infrastructure, Power, Human Capital, Taxation, Good Governance, Honesty, Transparency and Accountability.

Oil Joint effort helped contain Bonga oil spill - Shell

Oil spill

CONTINUED FROM PAGE 8 not happy that Shell is being left off the hook so lightly without even paying any damages, especially as Mailafia noted that the spill will affect aquatic life. In fact, at a recent Town Hall Meeting on the removal of fuel subsidy, human rights activist Femi Falana, urged the Federal Government to, “Go after Shell for the Bonga oil spill, see how BP made the Americans richer with the Gulf of Mexico spill; they got $20billion.” The Environment Rights Action/Friend of the Environment Nigeria, in their findings argued that the Bonga spill may have affected some riverrine communities in Delta, Bayelsa and Akwa Ibom states However, Shell defended, “It is important to understand that the Bonga FPSO is 120km offshore, about one hour by a helicopter flight from Warri. There are no communities near the facility. As part of our emergency response planning, we envisage the most likely emergency response scenarios and plan accordingly. To ensure no oil from the Bonga leak reached the beach, we leveraged assets from around Shell’s global portfolio. We also worked with and benefited from the assistance of our industry partners. Our main goal was to ensure the oil was fully dispersed and that none of it reached the shore. We were successful. “In addition to natural processes, our primary strategy

However, Shell defended, “It is important to understand that the Bonga FPSO is 120km offshore, about one hour by a helicopter flight from Warri was to disperse all of the oil offshore with dispersants. We attempted to install protective booms in the event any of the oil came close to shoreline areas. We per for med continuous surveillance using aircraft and satellite to track and target the oil. We believe the oil on the beach is not from Bonga. We made significant progress every day to disperse the oil that leaked from Bonga We were disappointed to see images of a third party spill which appeared to be from a vessel, in the middle of an area that we had previously cleaned up. We are confident that any oil of that age, color and consistency that hits the beach is not ours. We are taking samples as part of the joint investigation which will be reviewed to provide evidence that this is not Bonga oil on the beach. We advise all parties to wait for the outcome of the investigation of the oil sample which will be handled by a reputable lab

overseas.” Members of the Senate Committee on Environment which also visited Bonga last week said further investigations would be conducted to determine the source of the third party spill observed around the shoreline. Just as Shell said, “When we saw the leak we immediately began to clean it up – we believe this is what any good corporate citizen would do in the circumstances.” The whole truth But the environment groups are convinced Shell is not has not told the whole truth, and demanded that: * The Nigerian government compel Shell to state the actual amounts of oil spewed from its facility. * We demand that Shell also reveal the names and types of chemical dispersants used in fighting the spill. * More importantly, the Nigerian government, in

addition to carrying out an independent investigation of Shell’s claims that only 40,000 barrels of crude was spewed, should make the company pay adequately for the damage done to Odioma Community folks and other communities along the Atlantic coast of the Niger Delta affected. * An independent verification and cleaning up of existing mess (all over the Niger Delta) onshore and offshore should be the focus of NOSDRA and other regulatory agencies. Responding, Shell said, “We estimate that the volume of oil that leaked was less than 40,000 barrels. As you might be aware, the spill occurred during a routine operation to transfer oil from the Bonga FPSO to a loading tanker. To be clear, this was not a well failure, where oil will be gushing out without control. The Bonga leak was quickly brought under control as we shut the line on noticing the oil sheen on the surface of the water around the FPSO.” With regard to the type of dispersants used, the company said: “We used Corexit 9500 and 9527 (which were also applied in the Gulf of Mexico) and Slickgone NS. Dispersants were specifically formulated for use in marine environments and they have low toxicity. They are less toxic than many products that people use at home every day in the bathrooms or kitchens. Dispersants are about five times

less toxic than oil and they are applied in very low volumes (15% of oil volume). By dispersing oil from high concentrations on surface of sea into water column where there is essentially unlimited dilution and microbial breakdown, exposure is reduced to the greatest extent possible. This process takes place in about a month and the waters recover quickly to background levels.” Despite the scepticisms regarding its prompt response, which some analysts insist was “to avoid paying damages since they already have a lot of suits pending against on oil spill, even more so following the damning revelations of the UN Report, Shell insisted, “As pioneer of deepwater oil production in Nigeria, SNEPCo possesses significant capability to deal with offshore spills, and has often tested the relevant systems in rigorous routine drills. This helped in our response. And as a global company, Shell reviews its processes and systems, bringing to bear lessons and insights from its operations worldwide, including in Nigeria.” Some previous spills by Shell *1979, a rupture at Shell’s Forcados Terminal dumped 570,000 barrels into the estuary and adjoining creeks. * Between 2008 and 2009, Shell’s trans Niger delta pipeline spewed close to 400,000 barrels of crude oil in Bodo City, Ogoni in two spills.

Oil

Bonga spill: Senate Committee satisfied with clean up T

‘Non-passage of PIB is an embarrassment to Nigeria’

KUNLE KALEJAYE

h e S e n a t e Committee on Environment has e x p r e s s e d satisfaction with the prompt and effective way that the Shell Group responded on the Bonga oil spill, which occurred on December 20. The Committee, led by its Chairman, Senator Bukola Saraki, gave the clean bill of health after the team inspected the oil facility which lies 120km Southwest of the Niger Delta, in a water depth of over 1,000m. He told journalists that “lots of work has been done by Shell to contain the oil spill,” adding that such a prompt response is what is expected of other oil companies operating in Nigeria. The Shell Nigeria Exploration and Production C o m p a n y, S N E P C o , t h e operator of the facility said at the time of the incident that the spill occurred a tanker was loading oil, led to the shutdown of the 200,000 barrel per day Floating Production Storage Offloading facility. Shell, Nigeria’s largest producer said a week after that it had successfully contained the spill but not before close to 40,000 barrels had leaked into the Atlantic, which forced “The oil spill has now been dispersed and contained. We had five ships working to disperse it. It was dispersed over the weekend and that was completed before it hit the shore,” Precious Okolobo, a Shell Nigeria spokesman said in a statement. “It did not wash up on the shore,” he said, adding that chemical dispersants had combined with natural dispersion to clear the spill. But environmental groups, Environmental Rights Action, ERA, and Friends of the Earth Nigeria, FoEN, said in a statement on its website that local communities in Odioama in the Bayelsa State in the Niger Delta region had spotted suspected slicks from the Bonga spill near the coast.

National Assembly, Abuja

The group said its monitors visited the Atlantic shoreline in the company of some local fish farmers on December 26, where spreading spill was sighted. “In the course of the visit, spreading slick was sighted close to the coastline of Odioama and along St. Nicholas.” Confirming the other slick spill, Saraki said, “We have also witnessed a third party oil spill but we cannot say if it is from Bonga or not. The third party oil spill has reached the shore line and we want to appeal to the communities that are affected to allow for a proper investigation and test to be carried out in order to ascertain the source of the third oil spill. We want to ensure that as a committee that we bring home the best international standard in dealing with issues like this.” The Vice Chairman of the committee, Prof Ben Ayade, noted that oil spills on the shoreline of the Niger Delta region are necessarily crude, as some of them are refined products, adding that Shell should be commended for responding promptly. The early containment of the spill came as a big surprise to the industry especially as the

We want to ensure that as a committee that we bring home the best international standard in dealing with issues like this

Minister of Environment, Hajia Hadiza Ibrahim Mailafia, who visited Bonga on December 24, estimated that the clean up would last for six week. “For a complete clean up, we are looking at six weeks and to put things under control. We have brought in experts and we currently have seven vessels, two air craft and two helicopters that are making use of dispersants to clean the massive oil spill at the Bonga deepwater offshore facility and to ensure that the spill does not reach the shore line,” she said. Mailafia led a joint ministerial team comprising Shell; the National Oil Spill Detection and Response Agency,NOSDRA; Nigerian Maritime Administration and Safety Agency, NIMASA; Nigeria Immigration Service,

NIS; Nigeria Customs Service, NCS, and other technical partners. The minister also admitted that the spill will affect aquatic life, saying that measures were being taken to ensure that the spill does not reach the shore l i n e . T h e m i n i s t e r, t h e Director-General, NOSDRA, Sir Peter Idabor, and the Deputy Director, NIMASA, Captain Warredi Enisuoh, flew offshore to review clean-up efforts on the spill. The spill comes four months after a United Nations report criticised Shell and the Nigerian government for contributing to 50 years of pollution in the Niger Delta region, which it described as the world’s largest ever oil clean-up, costing an initial $1 billion and taking up to 30 years.

he continued delay in the passage of the Petroleum Industry Bill, PIB, has become an embarrassment to Nigeria, and poses a lot of credibility problem for the government, the Nigerian Association of Petroleum Explorationists, NAPE, has said. The policy instability, it further argued has caused a lull in the industry, as investors have become skeptical about the country and waiting for the passage of the bill to determine where to put their money. These and more were part of the business and industry assessment made by NAPE, which President, Mr. Afe Mayowa, at a recent interaction with journalists in Lagos, noted that there was also the need to embark on an aggressive policy on reserves addition. Also chipping in, the NAPE Vice President, Mr. Seye Fadahunsi, noted that the oil majors have suspended further investments in the industry, pending the passage of the PIB. He said the association has made its views known to government on knotty industry and economic issues, adding that NPE was currently preparing its members to take advantage of the benefits in the bill when passed. “Next year (2012), we will engage in a lot of education of both the executive and the legislature on the need to pass the industry bill.” Mayowa also noted that in the renewed thrust in exploration in which there is a serious competition for capital and supply preference, “an allencompassing enabling environment will be required to ginger renewed exploration activities in major hydrocarbon heartlands and frontier basins.” In this regard, he commended the federal government for its Amnesty Programme, while pleading for it “to make it allencompassing and also begin to use this opportunity to create a solid platform for a sustainable development and education of the youth in the Niger Delta.” He further argued that government should do more in the area of infrastructure provision especially in the host communities, saying that oil companies were doing their best in this regard and government should complement their efforts.

Oil

NEITI strategises to sharpen impact on extractive industry OSCARLINE ONWUEMENYI

h e N i g e r i a E x t r a c t i v e I n d u s t r i e s Tr a n s p a r e n c y Initiative, NEITI, said it has developed a strategic plan to guide its annual work plans over the next five years. At the heart of the strategic plan are four Strategic Goals, which t a ke n t o g e t h e r a n d f u l l y implemented, will lead the extractive industry transparency watchdog to impact more robustly on accountability in the sector. It is often hard to measure the impact of an agency, especially one engaged in the business of holding others accountable. More so, given the entrenched corruption and various interests in the nation’s oil and gas industry, the job of keeping operators on their toes, and be seen to be doing so, is indeed herculean. Over the years, the management of NEITI has faced the question of what has been the noticeable impact of its activities on poverty reduction in the land. Many citizens anxiously wonder about the efforts of the agency in generating more revenue for the national coffers, thereby making more money available for poverty reduction and wealth creation. Ingrained in the urgency of these questions is the fact that the impact of an agency in the mold of NEITI would most probably be measured mainly in its ability to create the necessary environment to make poverty reduction interventions more efficient and effective. But the impact of the NEITI on the Nigerian society can be measured indirectly. First, through its core function of disclosing and publishing company payments and government receipts of revenues from the extractive industry, the government and Nigerians are ‘empowered’ to demand their rightful share from the Federation Account, in accordance with the law. In addition, through its financial, physical and process audits of the industry, NEITI monitors and publicises the extent to which gas penalities are paid by oil and gas companies, and the degree to which the penalties serve as disincentive to continued gas flaring in the Niger Delta.

An Extractive industry

Oil platform The underlying philosophy of the Extractive Industries Transparency Initiative, EITI, is the belief that strengthened transparency of natural resource revenue can reduce corruption, transform economies, reduce poverty and raise the standard of living in resource-rich countries. Nigeria’s voluntary decision to embrace the EITI was in the context of the comprehensive socio-economic reform programme embarked by the Federal government in 2003. NEITI is therefore, part of the institutional and governance reform. The primary objectives of the NEITI are to ensure due process and transparency in the payments made by all extractive industry, EI companies to the Fe d e r a l G o v e r n m e n t a n d statutory recipients. Others include monitoring and ensuring accountability in the revenue receipts of the Federal Government from these companies, eliminating all

forms of corrupt practices in the determination, payments, receipts and posting of revenue accruing to government from the companies’ operations. NEITI is equally expected to ensure transparency and accountability in the application of resources from payments received from EI companies and promotes conformity with the principles of the EITI. NEITI’s output is represented mainly by three comprehensive audit reports, covering financial flows, physical volumetric data, governance or management processes on issues in the oil and gas sector for the period 1999 – 2008. During this period, the country has produced three reports which are not only disaggregated but are in three inter-related parts – financial, physical and process. The Executive Secretary of NEITI, Mrs. Zainab Ahmed, explained at a recent workshop to discuss the five-year strategic plan, that in terms of the scope of

the value chains, the depth of information and data disclosed, and the number of years covered, the NEITI audit reports are unparalleled in the history of the EITI globally. Indeed, the audit reports revealed very weighty issues which when addressed would significantly improve governance and revenue management in the industry. According to Ahmed, “The issues include poor institutional linkages between the technical and the financial aspects of the industry, poor information

The primary objectives of the NEITI are to ensure due process and transparency in the payments made by all extractive industry, EI companies to the Federal Government

system exemplified by much reliance on paper-based data and information storing, retrieval and sharing system. Other lapses include inefficient system of financial management, poor metering infrastructure and grossly inefficient measurement for crude oil production accounting. Besides, there was no precise, clear and workable basis for determining production volumes, royalty purposes and reliable fiscal regime.” Ahmed stressed that the NEITI reports exposed inadequate capacity of the relevant regulatory agencies to confidently and rigorously verify royalty and petroleum profit tax computations prepared by companies in a manner that checks the large discretionary p o w e r s o f t h e Pe t r o l e u m Minister. “These deficiencies revealed by NEITI in all its audits have over the years cost the Nigerian government dearly. They were the key sources of waste, fraud and monumental corruption,” she said. On his part, the Chairman of the National Stakeholders Working Group, NSWG, of NEITI, Prof. Assisi Asobie, argued that there are several benefits that have accrued to Nigeria from implementing the EITI, including the creation of a new ‘consensual framework’ for reporting and disclosure of payments and receipts in the extractive industry sector. He pointed out that by embracing the EITI principles, “the sector is now becoming open for public participation and scrutiny.

Focus

Trust us to deliver on deregulation benefits – FG begs The removal of fuel subsidy is a hard sell for the Federal Government. So it was punches and defences as representatives made their points at the Town Hall Meeting on Petroleum Subsidy Removal, organised by the Newspapers Proprietors Association of Nigeria, NPAN, which sought to find out: “Whose Interest Does it (removal) Serve, as captured by Kunle Kalejaiye. Excerpts:

Coordinator of the Economy and Minister of Finance – Mrs Ngozi Okonjo-Iweala I want to urge the citizens of this country not to despair but to have trust in the Federal Government believing that they will deliver this time in spite of past broken promises. This policy (subsidy removal) will bring about a significant reduction in government’s borrowing and save the country N1.12trillion, next year. But if retained, the Federal Government would borrow heavily to fund subsidy and recurrent budget next year. The sum of N3.7trillion was used to fund fuel subsidy between 2006 and 2011, and N1.35trillion between January and October, 2011, which amounted to 30 per cent of total budget, 118 per cent of capital project and 4.18 per cent of the Gross Domestic Product, GDP. Last year, we borrowed about N852billion to finance the deficit in the budget. In 2012, we will be forced to borrow about N1.12trillion, almost the total of our capital budget. It is not healthy that we should be borrowing money for capital and recurrent expenditure.

I want to assure Nigerians that the funds saved from subsidy removal would be judiciously utilised. The government is setting up a programme and a committee of credible and eminent Nigerians that will bring about transparency in the management of the resources and effective implementation of designated projects. The price of premium motor spirit, PMS or petrol in the country is currently not determined by the forces of demand and supply. The current landing cost of PMS is about $133 per litre with additional N15.72. Letting markets determine the pump price of petrol in Nigeria would push it up to N120 ($0.74) per litre from N65, but it will save over N1 trillion ($6.13 billion) in subsidies in 2012. President Goodluck Jonathan wants to phase out subsidy as soon as possible next year, but previous attempts have been caught up in rancorous debates. The major issue is the lack of trust. Under the leadership of the Vice President, a programme has been developed on how the resources are to be used, in a way that every Nigerian can monitor and assess for themselves the way government is utilising the resources saved from fuel

President Goodluck Jonathan

The price of premium motor spirit, PMS or petrol in the country is currently not determined by the forces of demand and supply

subsidy removal. The government is setting up a committee comprising eminent Nigerians. This is to demonstrate to Nigerians that the savings made will be used for the benefits of all Nigerians and for the intended purposes. The committee will oversee the fund and the programme. Instead of Nigerians asking the president, this committee will tell Nigerians what the funds are being used for and how the

programme is being run. People should give us the chance to build this country. We have to rebuild this trust that has been broken, and we have to rebuild it by starting with issues that are difficult. We know this issue of fuel subsidy is a difficult one. We need to prove a point; we need to help the poorest of the society to survive. We are willing to work with Labour and everyone to move this country forward.

Constitutional Lawyer, Mr. Olisa Agbakoba— I have nothing against the removal of fuel subsidy. Conceptually, there is nothing wrong with subsidy. But how can we ensure that subsidy removal will benefit Nigerians. Why must we remove subsidy tomorrow? Why can’t we say we will remove it in a year’s time? Some people have talked about government being sanitised. When you want to put a burden on us, show us the one you are carrying because I have not seen what the government has done for me. I had my eyes broken, I was imprisoned and many more. Government should put in place institutional and legal frameworks to guide and control the downstream sector after the subsidy is removed. Minister

Petroleum

CONTINUES ON PAGE 13

Focus

Trust us to deliver on deregulation benefits – FG begs CONTINUED FROM PAGE 12 Resources, Mrs Diezani AlisonMadueke I want to appeal to the likes of Agbakoba to give the government a chance to do something for them by supporting deregulation. Clamoring for fixing of refineries before the policy would kick-off would not yield dividends because the government had been on the task in the last 10 years without success. New refineries could also not be built because there was no return on investment. There are other subsidies the government is funding in the area of agriculture and ongoing people- oriented projects. Government has invited the original builders of the nation’s four refineries to do the Turnaround Maintenance, TAM, and getting them working up to 90 per cent capacity within 12 to 24 months.

the debt. So it is our responsibility to pursue the popular policy or the policy that is right for Nigeria.

Pe o p l e s a i d w e s h o u l d subsidise. Yes, subsidy is good, but the question we should be asking is, if we should be subsidising consumption or production. Should we subsidise the poor or should we subsidise those who are making illegal gains from the system? We always complain that government makes promises and do not meet up with its p r o m i s e s . We h a v e a n opportunity every four years to change that government.

Subsidy removal will not address the issue of corruption, inefficiency and bad governance, but if the subsidy is not removed, the burden would be too much for the government.

If the government removes this subsidy and it does not do anything tangible with the funds, when the government later come for re-election, people have the opportunity to assess if the government delivered on its promises and the people have a chance to take their destiny into their own hands. That is why we must strive to deepen and strengthen democracy.

About one million jobs would be created if the planned investments in refineries, fertilizer and Liquefied Petroleum Gas, LPG, are brought to fruition.

NNPC building, Abuja Secretary General, Nigeria Labour Congress, Comrade Isa Aremu— There is already a problem with this policy. Our fear is that the planned removal of the fuel subsidy will not be a win-win situation for the people. The challenge is that the drivers of this policy should make the deregulation process a win-win situation for Nigerians, because it is hard enough that we are importing fuel, and it is even worse that the products cannot be distributed across the country. The reality on ground is that Nigerians have not known the market forces responsible for the declining economy.

removal to channel their energy towards campaigning for increased local production of fuel.

challenge for government. I think we need to build on the ideas that have been generated here. Nigerians are desirous of good governance. I want to add that all of us need to work together and the Nigeria Labour Congress must be factored in all of government’s policies. Central Bank of Nigeria, CBN Governor, Mallam Sanusi Lamido Sanusi— The issue around subsidy is not ideological but that the rent seeking practice that had characterised the downstream sector of the oil and gas sector must be stopped in the interest of the majority of Nigerians.

I believe that the Federal Government need to dialogue with the people of Nigeria because petroleum is an important product to be compared with other sectors that have so far been deregulated. We have been too ideological about the deregulation process and it is important that we must be pragmatic about it. For me, there is nothing terribly wrong about subsidy.

The situation in the sector had encouraged corruption to thrive, and to put a stop to this practice the country must free or open up its resources, otherwise the government would incur so much debt to the extent that the next government after 2015 may not be able to operate when it comes on stream.

What labour is saying is that there is need for good governance. For me, building more refineries is the major

The country cannot continue to fund consumption instead of production, but I want to urge opponents of fuel subsidy

I believe that the Federal Government need to dialogue with the people of Nigeria because petroleum is an important product to be compared with other sectors that have so far been deregulated

When oil prices crashed in 2008 from $147 per barrel to $37, the only reason the country’s economy was still growing was that there was a $62billion reserve. Today, there is no such shock absorber. If the oil price crashes again by about 30-40 per cent, and Naira exchanges at the rate of N200 to the dollar, while inflation rises to 18 per cent, that will be the end. I am willing to guess that this policy will never be a popular policy. If people are paying N65 per litre, and government is saying they should pay N140 per litre, it is not going to be popular. Nigeria spent $16 billion of its foreign exchange on costly imported fuel in the first 11 months to this year - $8 billion sold by the bank to petroleum importers and a further $8 billion spent by the Treasury on the subsidy itself. You don’t need rock science to tell you that marketers are making money. It is a business that a stupid person will go into and make money. Removing the fuel subsidy is not some magic silver bullet that can solve all the problems of Nigeria, but the burden is unsustainable on the government’s finances. We can keep paying the subsidy into 2015, but the next government will be saddled with

Human Rights Activist, Mr. Femi Falana— The Federal Government must listen to “alternative suggestions” and allow for more time to engage Nigerians before going ahead with the plan to remove fuel subsidy. The country will not come to this cross road if the government had implemented extant laws in the nation’s statute books that would have dealt with those holding the country to ransom. Fuel cabals should be prosecuted because they had brought us to where we are today. They have benefited from the non-removal of subsidy because the government has refused to implement all the necessary laws that would have prevented them from ripping off Nigeria. Don’t impose further punishment on Nigerians. They cannot afford to pay for the corruption and inefficiency of government. Edo State Governor, Adams Oshiomhole— We must be sure of what we want to achieve; we must have the courage to do what we want to do. I do not want my colleagues in the labour to be shocked by the views I am going to express. The truth of the matter is that beside petroleum price, which other price has remained what it was five years ago? Can we therefore conclude as rational human beings that there are certain forces that could have guaranteed stable N65 per litre, and yet every other price in the system has been changing? I think that you can’t argue that every other price can change except petroleum. Should subsidy be removed? Yes! But Nigerians must rise and insist that the proceeds must be judiciously utilised. Again, the facts and figures presented by government are not real and we need to get these things clear. When you say that

Focus

CONTINUED FROM PAGE 13

they are not capable to sustain, let us allow the Federal Government to move forward in the direction it has chosen. If President Jonathan does not take the decision to do the right thing now, Nigeria will crash in no distant future.

the pricing for petroleum products so far are not market determined, we need to find out why the prices are not market determined. I think there are a lot of inefficiencies in the system. It is bad enough that government is importing petroleum products, but worst that it cannot deliver the product due to its own inefficiency. So these prices we are talking about are the prices Nigerians will pay for government.

Chairman, Silverbird Group, Mr. Ben Murray Bruce— His arguments took a slightly different turn, as it was precede with the playing of late fro beat maestro’s song: “Shuffering and Shmiling” and later with the late solo king, Barry White’s, “Practise What You Preach” to underscore the impoverishment and deprivations of Nigerians, yet, the ruling class calls for more sacrifice while they ride on N20 bullet-proof sport utility vehicles, SUVs is pushing the people too far. He argued:

The removal of the fuel subsidy does not address the issue of who benefits from it or not. Who are those benefitting from the subsidy? These are the issues that must be addressed we have not subsidised production and therefore, there are no jobs being created. If jobs must be created, the alternative is that production must be subsidised. For me, we have subsidised the oil sector and with that, few people are helping themselves by feeding fat at the nation’s expense. Nigerians must commend the federal government for not increasing the prices of fuel despite the current oil prices. Every other thing has changed except the oil sector. Unfortunately, my own pain is that we have since as a nation resolved not to subsidise production, when diesel was deregulated; when LPFO – the black oil, which was used in my own industr y, the textile industry, to run the boiler was deregulated, those who are responsible for production of goods and services procured their diesel at market rate. Therefore, production is no longer subsidised. Unfortunately, those of us in the civil society did not address that issue. So, today, job creation is not being subsidised, unfortunately The question is what are we subsidising and what are we not subsidising. Today, we are not subsidising cost of production. We a r e n o t s u b s i d i s i n g employment but we are subsiding cost of consumption. I think we should credit both Yar’Adua and Jonathan for not taking arbitrary position as it affects subsidy removal by throwing it to public discourse. If it is about five years ago, we all know what would have happened, even though I won’t like to mention names. Public policy is never valueneutral. You consciously choose your policies. You target who to benefit and you also target who pays for it. There is no free lunch.

The money derived from the removal of fuel subsidy should be used to subsidise transportation for the masses. The funds will also enable

Sanusi Lamido

Trust us to deliver on deregulation benefits – FG begs When a government plans to provide free benefits to a certain class of people, it must at the same time, target those who will pay for it because it is for the people. There is no free lunch; whether in a socialist economy or capitalist economy or both and when public officers give an undertaking and fail, the wages for that is to be retired. Who will not like to steal $4billion and then be retired? Who wants to die on the job? If, as the Minister of Petroleum said, people diverted kerosene that was subsidised with tax payers’ money; the guy should go to jail. I think confidence building to me means that Nigerians want to see their president dealing with these guys called cabals Don’t push the people to do what

If you want to remove subsidy, go ahead and remove it but this is what you must do. You must subsidise the transport sector 100 per cent

transporters to buy energyefficient buses and taxis. The Standards Organisation of Nigeria should make it a policy that only vehicles that are energy-efficient can come into Nigeria. We also ask that energyefficient vehicles should be brought into Nigeria duty-free, so that the average person can buy these vehicles. H o w e v e r, t h e f e d e r a l government should also develop a transport policy to check the use of unsafe and unhealthy vehicles. The importation of tricycles for the masses to use while ministers drive in N20million worth of SUV should be discouraged. Now, if you bring those tricycles to Nigeria, a minister or a commissioner must ride in it himself. You cannot

bring it to us to ride. You must ride it yourself. Do not use N20million SUVs and provide tricycles for the rest of us. You can’t do that. It is estimated that Nigerians spend between N30billion and N50billion yearly on transportation I want to appeal to the federal government to provide $500 million yearly to subsidise the transport sector as part of the $2billion intervention. The government must give us hope by providing a $500 million intervention fund for the transport sector. We want another $500 million to subsidise those going by bus. We want another $500 million for infrastructure, such as bus stops. Then, finally, we want another $500 million for the trucks, instead of these broken down trucks that destroy all our roads, making it impossible for us to get to places we want to. In all, we want $2 billion every year for the next five years. Now, we make a deal; if you want to remove subsidy, go ahead and remove it but this is what you must do. You must subsidise the transport sector 100 per cent. Trade Union Congress, TUC President Comrade Peter Esele, It is regrettable that the government had not implemented various reports of committees it set up on this issue. The government has failed to yield to our demands for the refineries to be handed over to labour for management and we will fix the refineries within six months. People talk about cabals, the cabals cannot survive if they do not have people in government. The NNPC must be allowed to r u n l i ke a m u l t i n a t i o n a l company as observed in other parts of the world. If we do not see any action, we will not support the removal of the oil subsidy. Publisher/Chairman, Vanguard Media Ltd, Mr. Sam Amuka It seems this has been the most worthy meeting,.both sides have benefited. It is clear to me that the removal of subsidy is a matter of time, when or how, the government must get the citizenry to trust government by reducing cost of governance, tackling corruption, reducing hardship and assuring the people that benefits would accr ue from fuel subsidy savings.

Gas

evelopment of Ru s s i a ’ s Shtokman, one of the world’s largest gas fields, will remain in limbo for a few more months as a Gazprom-led consortium pushes the government for tax breaks to help ensure the project is profitable. Shtokman Development AG, in which Norway ’s Statoil and France’s Total are shareholders, aims to develop the 3.9 trillion cubic metre field, the world’s 10th largest, as a rising supply of shale gas and global economic uncertainty cast a pall on demand and prices. The group said its board met on Thursday, two days before its deadline for a final investment decision (FID), and ruled that the shareholders could continue working toward a decision through the end of March. A source close to the consortium earlier named April 1 as the new deadline. “Shtokman is a strategic project for all the partners,” Alexei Miller, chief executive of Gazprom and chairman of Shtokman Development AG (SDAG), said in a statement. “In this context the FID must be well prepared, taking into account (the) scale and complexity of the project. The shareholders and SDAG are determined to continue their good and close cooperation.” Gazprom has already had one false start on Shtokman, when an earlier consortium collapsed over costs and payments. The field was discovered in 1988. The project’s backers say the sheer volume of its reserves - more than Norway’s continental shelf holds, by one estimate - mean that development is inevitable but add that the project could be doomed to losses if it is rushed into production. Under current plans, the gas is to be extracted from a depth of 340 metres by a vessel anchored at sea and then pumped 550 km to shore for processing and liquefaction. By contrast, Yamal LNG, a rival project led by independent producer Novatek in partnership with Total, will be fed by gas from onshore fields, albeit in harsh Arctic conditions. “There needs to be an appropriate fiscal framework for such a pioneer project in a

Shtokman’s gas final investment decision delayed

Gas plant

In the weeks running up to the deadline, Statoil CEO Helge Lund and Total CEO Christophe de Margerie made public pleas for tax breaks

harsh environment,” Statoil spokesman Baard Glad Pedersen said, adding the company agreed on the deadline change because it continues to believe in the project. In Paris, a Total spokesman said the additional three months would be sufficient to reach a final decision. A second source close to the consortium said that taxes remained the single largest outstanding issue. In the weeks running up to the deadline, Statoil CEO Helge L u n d a n d To t a l C E O Christophe de Margerie made public pleas for tax breaks. The consortium has yet to receive formal tax exemptions, particularly from the 30 percent export duty Russia charges on pipeline gas. Liquefied natural gas

can be exported duty-free. L ast month, a senior Finance Ministry official told Reuters that the current regime was favourable enough. Russia’s government relies on oil and gas for half its budget revenues. Formally, Shtokman is due to begin pipeline deliveries to Europe via the Nord Stream pipeline in 2016 and start shipping more costly liquefied natural gas (LNG) from 2017. But the boom in alternative gas output in North America has effectively closed the United States as an export market that Shtokman’s backers had hoped to supply and has led to a wider gas glut. Gazprom is now seeking a home for the project’s LNG in Asian countries such as Japan and India.

Ghanaian oil workers locked out for demanding salary raise

bout 22 Ghanaian workers of Weatherford – an oil and gas company in Takoradi – have been locked out of their office premises. The workers for some time now have been calling for salary adjustments and other benefits but were hit by a lockout by their employers. The We ster n Regional Manager of the General Transport and Chemical Workers Union of the TUC named only as Sallah told Joy News that the local content policy of the country is not being adhered to. He alleged the behavior of the expatriates smacks of discrimination. Sallah told Joy FM’s regional correspondent the company sacked the HR M a n a g e r, J o s e p h i n e K . Ewusi, while negotiations were ongoing for an improvement in the conditions of service of the workers. The workers, according to Kwake Owusu Peprah were demanding a 25 per cent increase in salary and 8.6 for inflation but the management of the company offered them 16 per cent and 4.3 respectively. The local workers who work on the oil rigs offshore were also demanding two days offduty for every seven days they worked just as their expatriate counterparts enjoy but that has been rejected. They say they are discriminated against because there are two canteens – one for expatriate workers and one for local staff – a situation they deem despicable. The Chief Finance Officer of Weatherford, Alan Sehand, declined to comment when he was reached for his side of the story.

Ghanian Oil Workers

Gas plant

Gas

16 India seeks crude, gas from Persian Gulf

Oil rig in Cyprus

Turkey may complicate Noble’s Cyprus gas find

oble Energy I n c . N B L’ s plans to develop as much as 8 trillion cubic feet of natural gas off the coast of Cyprus may be complicated by a dispute with Turkey over development of the field. The discovery may hold 5 trillion to 8 trillion cubic feet of gas, Houston-based Noble Energy said today in a statement. The field, which lies in the Mediterranean Sea between Cyprus and Israel, covers 40 square miles (100 square kilometers) and requires more appraisals before development, the company said. Turkey doesn’t recognize the Greek Cypriot government and in September sent an exploration vessel accompanied by warships and fighter jets to the area after Noble started drilling. Cyprus is divided after Turkey invaded the northern third of the island in 1974. Development projects should await resolution of the island’s political status, Turkey

has said. “The politics are going to get more and more complicated as you get closer to development,” said John Malone, an analyst at Global Hunter Securities LLC in New York. United Nations SecretaryGeneral Ban Ki-Moon summoned Cyprus President Demetris Christofias and Dervish Eroglu, the leader of t h e Tu r k i s h C y p r i o t community, to New York for a new round of talks in January to reunify the island. The gas discovery is in his nation’s “exclusive economic zone,” Christofias said at a press conference in Nicosia today. “Cyprus is coming into Europe’s energy map with prospects of substantially contributing to the EU’s energy security.” Levant Basin The U.S. Geological survey estimates that the Levant Basin, a triangular slice of the Mediterranean lying between Cyprus and Israel, may hold 122 trillion cubic feet of gas. Noble Energy discovered

Cyprus is coming into Europe’s energy map with prospects of substantially contributing to the EU’s energy security

about 9 trillion cubic feet of gas at the Tamar field in 2009 and as much as 20 trillion cubic feet at the Leviathan field in 2010, both off Israel. The Cyprus field is the first discovered off the nation’s coast. At current gas prices of about $4 per million British thermal units, the find would be valued at $32 billion, said Constantinos Hadjistassou, an energy researcher at the University of Cyprus. Noble Energy operates the Cyprus well and owns a 70 percent share. Delek DrillingLP and Avner Oil Exploration LLP (AVNRL) each hold a 15 percent stake, it said. Noble Energy fell (NBL) 1.7 percent to $94.02 at the close in New York. Expectations for the Cypr us field were high, Michael Hall, an analyst at Robert W. Baird & Co., wrote in a note to clients, and “ were recently increased following the upgrade of Leviathan potential and rumors that Cyprus could represent Noble’s largest eastern Mediterranean prospect.”

ndia is seeking additional volumes of oil and natural g a s f r o m Pe r s i a n G u l f suppliers, while sanctions against Iran pose “practical difficulties” to supply, said the country’s oil minister S. Jaipal Reddy. “O u r s i s a g r o w i n g e c o n o m y, ” R e d d y t o l d reporters today at the World Petroleum Congress in Doha, Qatar. “Wherever there is an opportunity we ask for more supply,” he said, referring to crude, liquefied natural gas and liquefied petroleum gas. India is boosting energy imports as the country builds refineries and petrochemical plants to meet domestic and international fuel demand. The country’s oil refining capacity may rise to 232 million metric tons in 2012 from 193 million tons this year, according to the minister. The nation is in talks with Qatar about buying increased volumes of LNG, he said. “We are requesting LNG,” he said. “We need more as a cushion.” Kuwait is in discussions with India to supply about 200,000 barrels a day of additional crude oil under long-term contracts, Farouk Al-Zanki, chief executive officer of Kuwait Petroleum Corp. said in Doha today.

Bolivia eyes $2bn oil push

olivia is hoping for record investments in oil and gas projects of $2 billion next year, according to a report. State-owned oil company YPFB is to chip in 64% of the total with more coming from private partners, Dow Jones reported, citing YPFB. The vast sum would be almost double the 2011 investment, itself a record, the news wire reported. YPFB is working on the architecture for a megalicensing round in 2012 as President Evo Morales tries to lure new explorers to the country and reverse its declining natural gas fortunes. The company is seeking 42 new areas spread out between traditional and non-traditional hydrocarbon zones to bolster its stockpile of reserved areas — special tracts of land set aside for the company to develop new oil and gas production.

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Bonga oil spill: RA/FoE findings

ocation: Odioama Community, Brass Local Government Area of Bayelsa State Following an alert from fisher folks in Odioma community on the discovery of oil slick suspected to be from Shell’s Bonga Field, ERA/FoEN monitors visited the Atlantic shoreline in the company of some of the fishermen where spreading spill was sighted. Odioama, a Nembespeaking Ijaw community is on the fringes of the Atlantic Ocean in Brass Local Government Area of Bayelsa State and its people have a large number of fisher folks who derive their livelihood from the Atlantic Ocean. Areas visited by ERA/FoEN monitors in the company of three community folks - Elder James Sampson aka Ovie Kokori, Danyo Ogoniba and Ayeomane Ayela, included Fish Camp 2 opposite the Va r n i s h I s l a n d a n d S t . Nicholas. In the course of the visit, spreading slick was observed close to the coastline of Odioama and along St. Nicholas. More quantity was observed spread out at the Varnish Island. Fishermen testimonies Lucky Tema I have been in this fishing camp here in Odioama for about 12 years now. I am an Ilaje man and fishing is my main occupation; that’s what I do here. As you can see I am just returning from the ocean. If you go into the ocean you will find the thick slick of crude oil floating, tossed here and there by the waves. It is spreading according to the direction of the current. That is what we are seeing even right here at the waterside on St. Nicholas. As a fisherman, one of the things I know about this crude oil is that, apart from killing aquatic life, it chases away the fishes that used to be around. If our nets get in contact with the crude oil it will stain the nets and, because of the smell and colour, fish will notice and avoid such nets in the water. You can see the little catch that I returned with. This is not how it used to be. Our efforts are yielding far below expectation these days.

NNPC building, Abuja

Ayeomane Ayela Actually we started noticing this crude oil on the Atlantic a week ago. But it came ashore about two days ago. Oil spills affect our fishing and, this one is not an exception. We used to catch enough fish before but it is difficult now. I go into the ocean almost every day and, since we began experiencing this spill we have been unhappy. If you had come when we had full tide, you would have noticed the crude oil slick all around the waterside. Now the water has ebbed, though you can still see signs of crude oil at the water front. We are not happy because it takes extra effort to avoid the slick from contaminating our fishing nets. Once your net has stains of crude oil fishes will run away from the net because they will see it. As you can see we are powerless; we cannot order the government on what to do. But I think a responsible government should be able to appreciate our plight and assist us. Because of this kind of situation we are becoming debtors as we hardly even meet up the payment of the fuel we use for our ocean-going boats. We want Shell to clean up the

spill and compensate us for loss of livelihood. Our business has been impacted. Bonga fish that used to come to the surface are no more. The company should not deny us of our Bonga with their Bonga Facility. Observation/Conclusion In the course of the field visit, ERA/FoEN noticed the spread of the spill continued to Fish Camp 2, behind the community and by the entrance of St. Nicholas. St. Nicholas joins the Atlantic Ocean from this point. However, even before visiting Fish Camp 2, the surface of the river showed signs of the slick sheen everywhere. Apart from what was observed in the Ocean, crude oil slick was noticed coming into St. Nicholas. Daily Updates December 26 Our field monitors have confirmed that the Shell Bonga Field oil spill is presently in the waters of Odioma Kingdom and it has also reached River Ramos near Warri, Delta State. There also appears to be another Shell unreported oil spill that has been on for about two weeks now at Otumara in Escravos in Ugborodo area of Delta State. As we investigate,

Our field monitors have confirmed that the Shell Bonga Field oil spill is presently in the waters of Odioma Kingdom and it has also reached River Ramos near Warri, Delta State

we will update you once we get more details. December 24 Through our contacts we received information that the deep sea fishing folks from Odioma Kingdom. A Nembe speaking Ijaw settlements on the fringes of the Atlantic Ocean in Brass Local Government Area, Bayelsa State sensed a pungent smell of crude of crude yesterday. New information(today 24, Dec. 2011)to ERA indicates that some of the fishing folks

have seen thick crude oil slick, about 2km to the shores/coastline this evening. These folks also have reported that some of their fishing nets are clogged with crude. December 23 The reported spotting of crude oil by fishermen in Inanga location within Qua Iboe oil field, believed to have leaked from Shell’s Bonga Oil Field, opens a new chapter in the catalogues of environmental impacts wrought by the oil industry in the Niger Delta. Shell had on Wednesday (21 December 2011) announced that some 40,000 barrels of crude had leaked into the Atlantic Ocean from its Bonga Deep Offshore Oil Fields and subsequently shut down the facility. The spill is said to have occurred while a vessel was being loaded with crude oil. While the fishermen in the Qua Iboe area were pondering over their findings on Friday 23 December 2011, at a meeting it hastily organized for community folks in Warri, Delta State, same day, Shell was peddling new figures. This time, its officials disclosed that 50,000 barrels of crude oil had actually spewed from the Bonga Field. While Shell is still busy trying to convince the world that the spill had naturally thinned out due to chemicals and dispersants it deployed, the alert of the fishermen during a fishing expedition near Inanga location within the Qua Iboe oil fields, is a cause of worry. Unconfirmed report of unusual quantity of oil sheen discovered by another set of fishermen at the eastern Obolo Beach in Ikot Abasi is no less worrying. Chairman, Akwa Ibom chapter of Artisan Fishermen Association of Nigeria, Samuel Ayadi, said: “We saw the oil at Inanga and initially thought it came from Mobil because Inanga Oil Platform belongs to them, but we later heard of the incident in Shell, so we assumed it is coming from there... This news is a sad blow to fishermen because we are just beginning to recover from the impacts of previous spills before this one took us back to square one.’’.

Power Oscarline Onwuemenyi

BUJA – The Minister of Power, Prof. Bart Nnaji, said the Federal Government is ready to support the development of local c o n t e n t i n t h e manufacturing of equipment and components for the growth of the power sector. Nnaji, who spoke at a recent power conference in Abuja, sought for private sector support to effectively drive the nation’s power reform, saying that the private sector stands to benefit more in the quest to improve power supply to about 40,000Mega watts MW in the next 10 years. He pointed out that the private sector and private suppliers of various components needed for the sector to move forward will be the main beneficiaries of the power sector reform. He said, “Local content is going to be very important in our reform agenda; we want to encourage local manufacturers and support those who are making their equipment locally in Nigeria. “Right now the country has about 4,000MW of e l e c t r i c i t y a n d government’s plan is to have 10 times that amount in the next 10 years. 40,000MW of electricity in 10 years time would mean huge investments; it would require huge equipment input in generation, transmission, distribution and supply. The importance of the private sector in this nation’s power revolution cannot be overemphasised.” Nnaji noted that to u n d e r l i n e t h e administration’s commitment to improving power supply in the country, the President holds biweekly meetings on power with select members of his cabinet to assess developments and issues in the sector. He added, “We have all come to the agreement that our commitment should not merely be in terms of finance, because the problem of power in Nigeria is mainly that of structure.

Privatisation, local content keys to power sector reform —Nnaji … Insists on competition in meter supply

Oil Workers

This is why one of the key p r o g r a m m e s t o revolutionise the power sector is privatisation of major assets in order to get them working to full capacity. He said further that, “There is a growing understanding on the part of government that distribution companies must be credit worthy so that they will be able to purchase power from generating companies and pay their bills. “Generating companies cannot have confidence to generate power unless they see that they can get paid for the power the produce. The same applies to suppliers who supply the fuel or gas for the running of the thermal plants. “Unless that chain is totally incentivized to

It is very important for competition to thrive in the sector that is what the reform is targeting; therefore, it would not be proper or helpful to begin to dictate a monopoly when all we are trying to do is to ensure more private interests

perform, meaning if the distribution companies are credit-worthy and are able to pay bills to generating

companies who in turn are able to pay their bills to gas suppliers, the system cannot work.” The minister also opined that “My job is to ensure that the entire value chain is fully aligned and performing effectively to p r o v i d e adequate power to Nigerian homes and industries. He further explained that government’s privatisation effort does not mean complete abandonment of the power sector, but to ensure minimal government involvement in the business of

Prof. Bart Nnaji producing and distributing electricity in the country. “It means that the 11 distribution companies would be privatised, the transmission company will CONTINUES ON PAGE 19

Power

Men at work

Privatisation, local content keys to power sector reform —Nnaji CONTINUED FROM PAGE 18

be private-sector managed; the hydro stations will be concessioned and the thermal plants will be privatised The minister further stressed that government is deter mined to ensure competition in the provision of electricity meters, saying, “The issue of metering is very critical for the power sector because it ensures that consumers pay commensurate prices for the power they consume. We have heard complaints from consumers that when they receive estimated billing, it more often does not reflect the power

consumed at that particular period. “What we would like to see happen is that we provide guidelines as to how the meters should work. I do not think it is in the place of this government to prescribe any specific meter for use by the entire industry. “It is very important for competition to thrive in the sector that is what the reform is targeting; therefore, it would not be proper or helpful to begin to dictate a monopoly when all we are trying to do is to ensure more private interests come into the nation’s electricity sector.”

While the programmes and policies introduced by it are yielding some positive results, it has become more obvious that this drive can no longer be left alone to government alone

Nnaji commended the organizers of the conference noting that through such expos, companies would be able to learn of the latest trends in the sector, and thus be in a position to benefit their businesses as well as promote development of the sector. Meanwhile, the Chairman of the organizing committee of the conference, Mr. Ifeanyichukwu Agwu, commended government for “its doggedness in tackling the challenges in the power sector.” According to him, “While

the programmes and policies introduced by it are yielding some positive results, it has become more obvious that this drive can no longer be left alone to government alone. “This is the time to m o b i l i z e s t a ke h o l d e r s especially in the private sector to muster the professionalism, expertise and efficiency which is the hallmark of private enterprise to devise a lasting solution to the power situation in the country.”

Power

he Minister of Power, Prof Bart Nnaji, at a r e c e n t interactive session with journalists in Lagos, said the privatisation of the power sector will see the removal of government’s control on management, while also giving an update on developments in the power sector, especially with regard to improving the quality of electricity supply to Nigerians. Clara Nwachukwu, captures it all for Sweetcrude. Excerpts: Preamble Our reform which is a derivative of the Power Sector Reform Act of 2005, and to which we developed a firing map which I am sure most of you were here last year when we came to register it in August here in Lagos, and the reason why we chose Lagos to launch it, is to demonstrate the fact that the fuss about the private sector within the power is going forward and that is what power is going to be, that the government will tend to get away from being the pivot of power sector because government is never a good runner of business to begin with, and how much more in the power sector. So there are aspects of the power sector that will now be undertaken by the private sector and the process of handing this over to the private sector is what the privatisation programme is about; and the structures that will make the system take it and work well is what the reform initiative is all about. I am happy you mentioned the Power Roadmap, and given the benchmarks contained in the road map to deliver sustainable power to Nigerians, would you say that we are following them to the letter, and if we are not; what are the issues? The Roadmap has Nigerian Independent Power Plants, NIPPs specific expectations in terms of what should be done. So what we have is that we are following a chart, we are off in some areas in terms of timeline but we are not off in terms of others. If we look at the targets of power delivery in the short time, we are off in terms of target. A lot of

Prof. Bart Nnaji

‘Power privatisation is removing government control’ things we are doing, we must be able to offer time limit in everything; this government is about transparency, and we are not trying to forge figures and facts. The Roadmap was developed with special intentions and developed in such a way that will rigorously implement the Power Sector Reform Act. So in terms of the short term, yes, we are off but not so much because when you

look at the recovery of the federal government power assets, we are on target. But with the implementation of the NIPPs we’re off, that’s where they have major short fall in the energy they are delivering. But when we look at the other areas in the reform like the privatisation programme, we are on target. So I think overall, there are some areas where we are off and there are some areas where we are on. I

will say that even though we are off in energy delivery, that does not mean we will not deliver. That seems to me we have more offs than on course? That does not mean that at all, I said the federal government power plant is not doing as well as expected, I have also said that the reform itself is on target... That suggests that the whole timeline may not be met judging from what you have just said? That is not what I said. I am saying that there are certain t h i n g s o n t h e Po w e r

Roadmap; one is Short term delivery, short term delivery towards long term delivery. Now I am saying that in short term delivery, we are off, what I mean is that we are off in those things that make short time delivery. But on the federal government asset recovery that we are ok, and that the power sector privatisation programme reform and those that have nothing to do with the NIPP power, those we are on. What are these assets that have been recovered? We have turbines that are being repaired like Sapele, Egbin and Kainji; those and even Afam, so as we affirm they are on. Some have already been recovered, rehabilitated and some that we expect to be completed soon. But what are they generating presently? When the PHCN Roadmap was launched, I’m not sure if you recalled we were less than 3,000MW but now we are over 4000MW, about 300MW is being preserved and it is what we have and there is every possibility that we will improve on that once the NIPPs deliver Recently there was a story on a price tag in one of the dailies and that investors are being scared away by this. Secondly, in view of the f a c t t h a t t h e re v e n u e estimates for the distribution companies, DISCOs, fall short of expectations; Ikeja Zone is the highest with about N20billion in 2010, how do you justify the price tags put on the DICOs? It may not be correct but according to the figures, revenue estimate N20billion 2010, Eko N17 billion, Jos N1.5billion, Ibadan N13 or N14 billion. They performed given the number of staff that re in those units. The estimated revenues are not encouraging enough and if you are supposing revenue plus the five cards you will discover there is a lot of disparity in those things and watch your comments on those things they are not. The revenue that we talked about today is true but I’m not sure about the exact figures but the revenue generation by the various distribution companies CONTINUES ON PAGE 21

Power

Rural Electrification CONTINUED FROM PAGE 20

cannot possibly justify the price tag put on it, that is what the investors are lamenting on. But really what they were looking for is not just to base price on the current revenue, we are expecting the people that are coming in should be able to do better. We are looking at future projections rather than just current because if we look at how the system is functioning then there will be very little to attract investors. There is an allegation that because of the failure of an agreement between the union, BPE and the ministry, government decided to send soldiers so that it will facilitate access to investors to enter into the plants and carry out their evaluation and due diligence. How true is this? First of all, on the issue of evaluation, the evaluation was done by the Nigerian Electricity Regulatory Commission. But that first evaluation has not been optimised and what is the optimisation that they want to do? If for instance, you come to this building and install 1mb and this building costs N500, you should expect that the building be paying for the cost of one mega byte on earth. What you should be

‘Power privatisation is removing government control’ charging the building because of the value of what it is using is the N500, so what they are doing is optimisation because there are so many things they are optimising on, like what they did before, they simply had the price tag on it, then ok let’s just remove 25% out of it; that is not how you deal with it. There is an appropriate verification all over the world, it has never been done so, so they have to look at it again, come up with an evaluation that will be reasonable, the goal is to ensure there is no lost of value, so whatever they put as the price tag is what the price should be and should attract investors. If investors don’t come after that then we will know that we have over valued ourselves or because Nigerian target combined with the value did not attract investors. The goal is to see that we have achieved appropriate evaluation that will make sense, a balancing act and at the same time ensure the target is linked to

the value and also will be looking at the Act. With regard to the soldiers, what we have to think about is in which part of the world would power assets be left insecure? Is it in America, Britain, Germany or wherever? Whenever power goes out for one hour billions are lost, that is what Nigeria should be about because if the government decides that privatise power assets it should also maintain appropriate security for them. Yo u p e o p l e s h o u l d b e applauding the government, so what I would suspect is why would someone want to remove security at these power stations, and you should ask why do you want the security removed? Then on the issue of the Chinese investors, I don’t know what the BPE has done, but the full essence of privatisation is to bring in investors, if they, the BPE, brings in Chinese investors in the power plant then that is fine. I think the goal is to bring in these investors so

they can be able to see it, if you are going to invest in anything or buy anything would you not want to see it, When you go to the market to buy tomato don’t you want to look at the tomato? Do you just say you want tomato, and they just bring tomato blindly? There is privatisation programme and that part of reform is on and therefore, for anybody to look at what should be privatised, they must go there whether it is Chinese or Indian or American, it doesn’t matter, they have to go there. I don’t think any Nigerian will buy anything without going there; they must go there, I don’t know how many of you have seen, Ugheli power plant or Afam power plant or Kainji dan power plant, because you are energy reporters so you probably have and might have gone to some places with us. But other than that, ordinary Nigerians may never have seen these places. In

I would like to know if you have kept to all the agreements, and I will like to also know why the soldiers are guarding the plants since soldiers are for war not for security? If you remove soldiers from there (plants) I will not go there. Beyond that, in the Catholic Church I worship in Asokoro, Abuja, it is soldiers that give us protection, so it is a general thing all over because of the security situation in the country. But I’m surprised that all of a sudden, people are talking about the soldiers, but you see them every day; please let us not be unduly emotional about things like this. Young lady what do you have against soldiers? (I don’t have anything against soldiers after all there have been soldiers there but why the increase in number) I have explained to you that if previous government did not deploy appropriate security, this administration will. I thought everybody is saying we should be protected and why are you complaining about appropriate security and I’m worried if anybody is saying federal government should not protect assets very well.

Financing

Euro bill

Italy sells 7 billion Euros of bonds as yields fall

taly auctioned 7 billion euros ($9 billion) of debt to bring the total raised this week to almost 20 billion euros, underscoring how the European Central Bank is

helping the world’s fourthbiggest borrower tap markets. Today’s sale by the Treasury in Rome fell short of the 8.5 billion-euro target even as borrowing costs declined from last month. Italy sold 9

billion Euros in bills last week at about half the rate of the previous sale last month in its first auction since the ECB loaned 489 billion Euros to banks to ease credit amid the region’s debt crisis. “Italy was not able to raise

the maximum amount they wanted to, but the fact that they managed to sell this much at the end of the year should be taken as a positive sign,” said Eric Wand, a fixed-income strategist at Lloyds TSB Bank Plc in London. “The level of excess liquidity from the ECB will remain elevated for a while and some of that may get recycled into sovereign debt. That should support short-

dated peripheral bonds.” With an economy sinking into its fourth recession since 2001, Prime Minister Mario Monti’s government expects to raise almost half a trillion Euros from bond and bill sales next year. It has to repay about 53 billion Euros in bonds in the first quarter from the region’s total maturing bonds of 157 billion Euros, according to Swiss lender UBS AG. Monti’s Defense A t a y e a r- e n d p r e s s conference in Rome, Monti said Italy’s borrowing costs, more than triple Germany’s for 10 years were unjustified. He said he was preparing measures aimed at cushioning the economic slump, including deregulating labor markets and lowering fuel prices. “I’m an economist and realize that the measures we’ve adopted have many negative points,” said Monti, calling for a “European” solution to the debt crisis. “We aren’t the ones who set goals like balancing the budget in 2013; it’s a goal that was accepted by the previous government” and agreed upon “ with European institutions.” Monti, a former European Union commissioner, pushed through a 30 billion-euro package of austerity and growth measures last week after taking over in November from former Prime Minister Silvio Berlusconi, who lost his majority in Pa r l i a m e n t a s I t a l y ’ s borrowing costs soared to record highs amid the worsening debt crisis.

Japan, India seal $15bn currency swap to shore up rupee

apan agreed to make $15 billion available to India in a currency swap arrangement as Europe’s deepening debt crisis threatens to curtail developing Asia’s access to dollar funding. Japanese Prime Minister Yoshihiko Noda, renewed a bilateral swap agreement with Indian Prime Minister Manmohan Singh, in New Delhi last week. The two nations had signed a $3 billion accord in June 2008 that has since expired. The recent agreement may

help India battle this year’s more than 16 percent decline in the Rupee, as Europe’s sovereigndebt turmoil prompts investors to reduce Asian investments on concern global growth will slow. Japan gains another avenue of using its $1.2 trillion of currency reserves as it seeks to bolster its presence in inter national finance and foster a closer trade relationship with Asia’s thirdlargest economy. “Japan is helping India to provide stability to the Rupee,” said K. V. Kesavan, who specializes in Japanese studies

at New Delhi-based think tank Observer Research Foundation. “It is an attempt to increase their influence in Asia which has been down for the past many years.” With a current-account deficit, slowing domestic growth and increased international financial stress stemming from Europe, investors have driven the rupee down, forcing the central bank to tap its reserves in defense. India’s holdings slid $14 billion in the four weeks to Nov. 25.

China Pact Japan has pursued currencyswap accords with other nations, including one with South Korea that it expanded to $70 billion in October to stabilize Asia’s financial market. Japan also has bilateral swap deals with Indonesia, the Philippines and China. This month, Noda also oversaw a deal with China to expand use of the yuan and yen in bilateral trade and purchase Chinese bonds. At home, in an effort to take advantage of the yen hovering near a record-high

against the dollar, officials have prepared 10 trillion yen ($129 billion) in a fund for companies to pursue more overseas acquisitions. Japanese efforts to support regional neighbors are longstanding. In October 1998, Japan unveiled $30 billion in aid under the so-called Miyazawa Initiative, named after Finance Minister Kiichi Miyazawa, designed to help countries obtain funds at a time when emerging-market bond issuance had largely dried up amid the 1997-98 financial crisis.

NNPC Ad Investors forum

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Electricity Transformers

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Electricity Workers laying power cables

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NNPC Ad OSCARLINE ONWUEMENYI

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Insurance Inadequate capacity continues to plague insurers in the energy sector 35

Oil Refinery

he argument all along is that local insur ers have inadequate capacity to play actively in the oil and gas s e c t o r. R O S E M A RY ONUOHA asks if the trend will continue or will capacity grow in 2012? After the enactment of the Local Content Act in April 2010, there was a consensus that Nigerian insurers will begin to smile. The implication of the Local Content Act is that no insurance risk in the Nigerian oil and gas industry can be placed overseas without the approval of the National Insurance Commission, NAICOM, which must first ensure that Nigerian local capacity has been fully exhausted. But so far, even in 2012,

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 insurance operators are still trying to build up both human and financial capacity to be able to play actively in the wide oil and

gas market. Managing Director of Law Union & Rock Insurance Plc, Mr. Yinka Bolarinwa said that underwriters and Nigerians in general have not positioned themselves strategically in reaping from the benefits which the Local Content Law provides. Opportunities in the Act Commissioner for Insurance, Mr. Fola Daniel, stated that the Act has given insurance operators a huge leverage as well as a rare opportunity to participate in the oil and gas sector. According to Daniel underwriters should avail themselves of the opportunities in the Local Content Act and carve a niche for themselves. For insurance brokers, Daniel said “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. Challenges confronting insurers In as much as Nigerian underwriters will like to play actively in the oil and gas sector, there are still some

challenges that they have been grappling with. Chairman, Royal Exchange Plc, Kenneth Odogwu said that the opportunities presented by the implementation of the local content policy of the government are enormous; however, the ability of players in the industry to exploit the opportunities is hampered by lack of capacity to cover risk internally. Although local insurers are expected to retain 70 per cent of oil and gas risk before ceding the rest abroad, Odogwu stated “It is estimated that only five percent of such risk are retained locally.” In other to maximize the potential presented by the local content policy, Odogwu noted that additional capital raising is imperative. And this leads to yet another challenge because even as most insurers are willing to raise additional capital, the meltdown in the capital market has prevented them from approaching the Nigerian Stock Exchange for such venture. Since underwriters are constrained by the development in the capital market, Odogwu lamented that the lack of capital raising alternatives and poor economic conditions are also challenges for the industry. Chairman, Standard Alliance Insurance Plc, Alhaji Aliyu Sa’ad, said that since the Local Content Act also has the implication that insurers will be expected to carry larger credit risks which may drive down profit or at worse increase failure of insurers to meet claim obligations, a lot of players choose to stay away from the business in the face of inadequate capacity. Another challenge confronting insurers is the inability of government to enforce its own laws. A Local Content Act is in place yet the oil majors still carry their CONTINUES ON PAGE 36

Insurance Inadequate capacity continues to plague insurers in the energy sector CONTINUED FROM PAGE 35

risks abroad under various guises and in the process flouting government directives at will. Mrs. Justin Omekere, an insurance practitioner stated that the International Oil Companies in Nigeria, IOCs, still carry their risks abroad under the guise that the local players don’t have international credit ratings. With such actions, Omekere reiterated that the oil majors have continued to disregard the laws of Nigeria thereby depriving local insurers’ opportunity to expand their human and financial capacity. Former Managing Director/Chief Executive of UnityKapital Assurance Plc, M r. Mohammed Kari accused the NNPC of fr ustrating the Nigeria content policy by not patronising local insurance firms and encouraging them to participate in the operations of the country’s oil and gas industry. K ari said though the Nigerian Content Act expects that at least 70 per cent of all oil and gas industry businesses should be domiciled in Nigeria as from 2010, the NNPC is still channeling all its insurance businesses to an offshore firm that it has registered for that purpose. In his words “The coming of the local content law is a good development. It was an attempt by government to redress the problem of lack of capacity in the insurance industry by encouraging oil and gas operators to insure in the Nigerian market. With the law, Nigerian insurance sector should be underwriting at least 70 per cent of all insurance businesses in Nigeria. But, it is highly doubtful if the local market retains up to 4 per cent today, whereas about 96 per cent of the businesses are channeled out of Nigeria, because of lack of capacity. The NNPC, which represents government in the industry, is

36 Insurance operators develop competencies for PIB

Oil Rig

the biggest problem against the success of the local content policy.” According to him, the action has denied local insurance companies of the opportunity of making its impact felt. He pointed out that this arrangement, which generates huge foreign earnings through net retention of revenues to the international insurance market, had denied the local market the opportunity to be involved in even renewal of oil policies. The way forward In the course of last year, shareholders of some insurance companies lambasted the management of their companies for failing to capitalise on the opportunities presented by the local content Act after the companies posted unimpressive results for the last financial year. These shareholders who decried the low profit margin from oil and gas businesses by their various companies

These shareholders who decried the low profit margin from oil and gas businesses by their various companies charged them to re-strategise in the next financial year

charged them to re-strategise in the next financial year. President of Independent Shareholders Association of Nigeria (ISAN), Mr. Sunny Nwosu lamented that the returns from oil and gas business of some insurance companies have little or no impact on their overall bottomline; stressing that management of these companies should restrategise and employ better business models that will

translate to higher gains in the coming years. Mrs. Shodipo, another shareholder charged underwriters to carry out training and retraining of staff on the rudiments of oil and gas risk underwriting which will lead to enhanced human and financial capacity in the sector. Mr. Oladimeji Alo, former Managing Director of Financial Institutions Training Centre (FITC) said that underwriters should consider their strengths and capacity before they decide to do oil and gas business. According to Alo, because of the varying capital base levels of insurance operators, not every insurer can go into oil and gas business. Bolarinwa said that underwriters should collaborate and work together as one team to develop capacity, human capital as well as skills that will be able to match the demands from the oil and gas sector.

perators in the insurance industry have said that they are gearing up to take advantage of opportunities in the Petroleum Industry Bill, as such all relevant authorities should fast-track the enactment of the bill into law. These operators said that they have been developing competencies to take advantage of the PIB. Managing Director of Law Union and Rock Insurance Plc, Mr. Yinka Bolarinwa, said that, passage of the petroleum industry bill could unlock additional investment in the oil sector which will truncate down to the insurance industry. Bolarinwa therefore called for a shift in government spending towards capital formation and planned reforms in the power sector as such move is capable of boosting growth. Also, Chairman of Regency Alliance Insurance Plc, Hon. J u s t i c e K a r i b i -W h y t e , appealed to insurers to particularly focus on d e v e l o p i n g m o r e competencies on oil and gas insurance to take advantage of local content law as well as the much awaited oil industry bill. M r. S u n d a y T h o m a s , Director General of Nigeria Insurers Association (NIA) on his part, noted that the PIB holds good prospects for the insurance industry, charging relevant authorities to fasttrack its passage into law as the localisation of oil assets will enhance the benefits being accrued to insurers in the business of oil and gas risk underwriting. In his words “For the Petroleum Industry Bill, as far as localisation is concerned , I think the insurance industry has a lot to gain because the more oil and gas assets that are owned by indigenous firms, the more we benefit from it as an industry.” On whether local underwriters have the capacity to underwrite oil and gas risk, Thomas noted that there is capacity but it has to be improved upon.

Nigeria takes gas revolution agenda to global petroleum meet The 20th edition of the World Petroleum Congress, WPC, has come and gone, but some memories are still left behind as captured by Sweetcrude in these pictures:

Chief Executive Officer, CEO, Royal Dutch Shell, Mr. Peter Voser; Qatari Minister of Energy, Dr. Mohamed Al Sada; and CEO ExxonMobil, Mr. Rex Tillerson, in one of the sessions

Nigeria’s Minister of Petroleum Resources, Mrs Diezani Alison Madueke cuts the tape to declare the Nigerian stand open, supported by the Director of DPR, Mr Osten Olurunshola (r).

Members of the House of Representatives , Yusuf Shittu Galambi, and Mashood Mustapha, also spared some time to participate in the congress For Minister of Petroleum Resources, Mrs. Diezani Allison Madueke, there was also time for a birthday bash, as she cuts her cake supported by Nigerian industry chieftains

he Federal Government’s drive to attract global investment funds to the Nigerian gas industry was taken a notch higher at the World Petroleum Congress, WPC, in Doha, Qatar with the spirited search for more willing investors to partake in the burgeoning Gas Revolution Agenda set sail by President Goodluck Jonathan earlier in the year. The WPC, which is largely referred to as the Olympics of the global oil and gas industry teed-off with a remarkable ceremony under the watch of His Highness Sheikh Hamad Bin Khalifa Al-Thani, the Emir of the State of Qatar The spokesman for the Nigerian National Petroleum Corporation, NNPC, Dr. Levi Ajuonuma, who also doubles as Chairman of the Publicity SubCommittee of Nigerian National Committee for WPC, said the central objective of the country’s participation in this event is to offer the nation’s huge gas reserves to investing multinationals and other corporate entities. He said Nigeria was seeking more investments to grow its global position as prime source of liquefied natural gas (LNG), synthetic gas diesel also called gas to liquid as well as natural gas export pipelines. According to him, though the host, Qatar, currently leads the world in natural gas export and associated technology in converting gas to liquid fuels, it is envisaged that the Nigerian contingent would also come back to Nigeria with better plans for commercialisation of the nation’s gas resources. He said that the plan to position natural gas as the nation’s prime fuel source for internal utilisation and export was key in the Gas Revolution programme of the present administration. He said the whole package of the programme was to provide opportunities of growth for the nation’s industrial sector through provision of cheaper, cleaner and more reliable supply of fuel. Ajounuma also said the envisaged investments in the natural gas development, processing, distribution and utilisation will trigger massive employment opportunities for the local people. “The whole programme would impact positively on the life of Nigerians when all the investment opportunities being created are utilised in production of fertilisers, methanol, petrochemical and other products that would also serve as feedstock to manufacturers in the country,” he said. . Under the programme, gas fuel conduits will provide incentives for cheaper, cleaner and more reliable fuel supply for industries.

Minister of Energy and Industry of Qatar, HE Dr. Mohammed Bin Saleh Al Sada being received by members of the Nigerian Committee for WPC at the opening of the event in Doha

Some Qatalum senior executives at the company’s stand

Labour

38 Labour accuses power ministry, PHCN of employing cronies

Electricity Worker

Electricity workers laud privatisation probe Victor AHIUMA-YOUNG

LECTRICITY workers in the country have praised the courage of the Senate over the adoption of its committee report on the probe of the privatisation programme in the country, and urged that the report be implemented within the next three months. A statement by the workers through Comrade Reuben Orlu, Head of information and Research Unit of the National Union of Electricity Employees, NUEE, called for immediate halt of any further attempt on the sale of public

asset. The statement read in part, “We commend the Senate on the adoption of the Senate Committee Report on the Privatisation Exercise that has taken place in the country over the years. We thank and appreciate the hallowed chamber for commencing the implementation of the recommendations of the committee. The approval for the sack of the DirectorGeneral of the Bureau for Public Enterprises (BPE) – Miss Bolanle Onagoruwa, is a step in the right direction, and it is hoped that within the next three (3) months, implementation of all other

ingredients as contained in the Report would be concluded. This singular bold step taken by the Senate demonstrates a willingness to curb corruption in our polity especially as perpetrated by the ruling class. “The exposition by the Senate committee that investigated the privatisation exercise and the privatised firms has proven that privatisation in Nigeria is done without transparency, fraught with deceit and fraud and most importantly with ‘negative individualism’ by the gladiators. In fact, privatisation in Nigeria is not working. Therefore, we posit that every act or intention

geared towards further privatisation of other firms should be halted in order to stop further looting of our common wealth by the privileged few in power. What the Senate has demonstrated is in tandem with democratic practice where the philosophy of checks and balance is employed. In order to curb the spate of corruption and fraud in our socio-economic life as a nation, the three arms of government must assert their positions and not concede to the other as being more superior.” The statement added that “A s w e a w a i t t h e implementation of the Senate Committee Report, we are also asking that further privatisation of other firms be halted until every other issues are fully harnessed and resolved.”

ATIONAL U n i o n o f Electricity Employees, NUEE, has a c c u s e d t h e Po w e r Ministry and the management of the Power Holding Company of Nigeria, PHCN, of employing cronies as staff of the electricity company, even as more than 10 casual workers who have put in not less than 10 years, have not been engaged. NUEE in a resolution at the end of its 4th Quadrennial/9th National Delegates conference in Benin city, Edo State, expressed shocked that the Ministry, which claimed that PHCN was over staffed could connive with the management to employ their social/personal aides. The resolution issued by comrades Mansur Musa and Joe Ajaero, President and General Secretary of NUEE, respectively, read in part; “The conference in-session regrets the inability of PHCN Corporate Management to honour and implement agreements voluntarily entered into with labour Unions in the sector, as well as lamenting the docile nature of the MD/CEO. It therefore calls on management to as a matter of urgency conclude some isolated cases on monetization and biometrics. That Management should faithfully implement all outstanding issues agreed upon especially, the payment of 50% salary increase along with monthly salaries and the three months arrears on or before 20th December, 2011 as agreed and s i g n e d w i t h Government/PHCN Labour Unions.” It is not certain if this was met and labour has not given any update in this regard.

Labour

‘Subsidy removal will kill informal sector’

Civil group protesters

Victor AHIUMA-YOUNG

N what can be described as a rehearsal ahead of t h e F e d e r a l Government’s planned fuel subsidy removal this year, the civil society allies of labour in the Labour and Civil Society Coalition, LASCO, the Joint Action Front, JAF, recently held a mass protest against fuel pump prices increase. The group is also protesting against the privatisation of public assets in the country and the planned privatisation of the Power Holding Company of Nigeria, PHCN. The group therefore, called on Nigerian workers, students, traders, professionals, women, unemployed youths, farmers, artisans, Muslims, Christians, traditional believers, and compatriots to arise and use mass action to reject and resist any increase in the prices of fuel. Leaders of JAF implored Nigerians to immediately stay at home and boycott as well as shut down any filling station that sells petrol above N65 per litter once LASCO gives the directives. At a briefing to announce the mass action, the group leaders declared that the continuous and fraudulent enrichment of

Civil society groups hold anti-subsidy removal the few ruling cabals in Federal, State and Local Governments and their cronies through the anti-people policies of privatisation and deregulation as well as the u n p r e c e d e n t e d mismanagement and looting of public funds through so-called fuel subsidy and security votes since 1999, must not be allowed to continue. Speaking on behalf of the group, Dr. Dipo Fashina, and Comrade Abiodun Aremu, JAF’s Chairman and Secretary r e s p e c t i v e l y, s a i d “ t h e scandalous revelations from the Senate probe on Privatisation and the arrogance with which the ruling class of looters insist on continuing with such failed IMF/World Bank economic policies that are responsible for job losses and collapse of the local industries, growing rate of millions of unemployed, mass poverty and sufferings, commercialised education and lack of access to basic necessities of life are clear

testimonies of the desperation by this band of profiteers and looters to perpetuate corrupt gangs in power. “The time to act is now. The Inspector General of Police has been reported to say that the police and security operatives are trigger-happy to crush all protests against hike in fuel prices. The IG of police and the political rulers should be reminded by recent events across the world that those leaders who repress their people and violate their rights will sooner or later be brought to justice. “The time is now, the sufferings must stop. Boycott and shut down filling stations that sell fuel above the current prices (petrol at N65/litre, kerosene N50/litre and diesel N70/litre). Use mass actions to enforce stay-at-home and strikes whenever labour and its allies in Labour and Civil Society Coalition (LASCO) declare such. Make the four refineries to work and build new ones and make petroleum

products cheaper and affordable to all. Reverse the fraudulent handover of public enterprises such as NITEL, Nigeria Airways, Nigerian Ports Authority, Ajaokuta Steel, Osogbo Steel Rolling Mill, Itakpe Iron and Ore, Ta f a w a B a l e w a S q u a r e , National Arts Theatre, Trade Fair Complex, ALSCON, Nigerian Newsprint Manufacturing Company, Daily Times, etc. Ensure heavy public investment in industrialisation and infrastructure (energy, rail, road, and mass housing) to enhance employment opportunities and wealth creation. Stop the privatisation of PHCN and ensure that it is kept public and made efficient under the democratic control and management of elected c o m m i t t e e s o f w o r ke r s , c o n s u m e r s a n d representatives of the government in order to ensure that public resources invested are not mismanaged or looted since 1999.”

NFORMAL sector workers in the country have warned that the planned removal of subsidy on petroleum products would kill the sector, while declaring the 2012 budget proposal by the Federal Government as anti- people. Under the aegis of the Federation of Infor mal Workers of Nigeria, FIWON lamented that they were conspicuously excluded from the budget. Analyzing the budget proposal, General Secretary of FIWON, Comrade Gbenga Komolafe, said the estimated 55 million Nigerians toiling in the informal economy were disappointed by the Federal Government’s indifference to the plight of the masses if the fuel subsidy is removed, adding that even the 2012 budget gives no hope for a reprieve. According to him, “At a time when most Nigerians clamour for a more balanced and equitable public spending through a major restructuring of the budgeting architecture that would give priority to physical and social infrastructural provisioning, what we are presented with are a marginal reduction in recurrent expenditure from 74.4% to 72% and a prioritisation that defy logic. With a paltry 28% of the budget outlay committed to capital expenditure and the vast bulk of this percentage committed to ‘security’, it would appear that the federal government has abdicated all responsibility towards infrastructure provisioning. The budget presentation and subsequent analysis has not shown any clear response to the demands of the Academic Staff of Union of Universities (ASUU) for government to significantly increase funding for education, while provision for healthcare will merely scratch the surface of the decay and malfunction that have bedeviled public healthcare system in the country.

Labour

Health workers in West Africa fault planned subsidy removal

Conference Meeting

Labour calls for collaboration in power reforms Victor AHIUMA-YOUNG

lectricity workers have suggested that instead of the outright sale o f t h e Po w e r H o l d i n g Company of Nigeria, PHCN, government should consider the adoption of public private partnership model that will guaranty the reform of the sector. Operating under the aegis of the National Union of Electricity Employees, NUEE, the workers also urged the National Assembly to critically review the 2005 Power Sector Reform Act and re-jig the Road Map such that it is Nigerian oriented and eliminate the bitter pills from t h e I M F / Wo r l d B a n k prescriptions which failed countries like Brazil. In a communiqué issued at the end of its 9th National Delegates Conference in Benin City, Edo State, the union argued that the 2005 Power Sector Reform Act and

the Power Road Map are designed and operated by the elite to stripe PHCN assets. In view of the failures of other privatised parastatals like Ajaokuta Steel Company, NAFCON, Nigeria Airways and Daily Times fail, as well as the balkanisation of NITEL, which has no core investor, NUEE therefore, demanded an immediate halt on the planned privatisation of PHCN. The communiqué signed by the President and General Secretary of NUEE, comrades Mansur Musa and Joe Ajaero, r e s p e c t i v e l y, s a i d t h e conference recommended for the establishment of an Electric Power Trust Fund (EPTF) to be managed by selfless Nigerians with integrity and track record of proven/genuine interest to develop Nigeria. According to communiqué “This EPTF should be charged with the responsibility to work w i t h P H C N o n Po w e r development especially the Power Development Plan of 1995-2005 that was aborted by

successive regimes. The plan to build hydro power stations at Mambila (4000MW), Zungeru (900MW), Ikom (500MW), and Coal Power Station at Enugu (500MW). “In addition to the 750KV transmission super grid that would ensure adequate evacuation of power to the ultimate end users. Gover nment should use Nigerian resources, ingenuity and know-how to design, plan, build and run her power system. The conference insession therefore admonish Mr. President to “fix his house don’t sell it”. Government should adopt the option of public private partnership model that would guaranty the reform of the sector without the sale of PHCN installations. “Government should have the political will to expose and prosecute political officers, both past and present indicted in the corruption scam in the sector and sundry agencies. The Elumelu’s Committee report and the present revelation by the Senate on

the evil/corruption called privatisation is a pointer to this resolution. The conference in-session concludes that BPE has lost focus and therefore, call on government to either abolish or re-organise and refocus the agency with the appointment of patriotic Nigerians that has track records of proven interest to build the Nigerian state and economy and not looters. Nigeria must survive. The madness to wind down P H C N C o r p o r a t e Headquarters should be h a l t e d a s Labour/Government negotiation is yet to be c o n c l u d e d w i t h implementable agreements.” It added that “the use of military/para-military and graft agencies (EFCC) to harass and intimidate labour officers in PHCN is undemocratic and barbaric it should be stopped forthwith. The conference in-session strongly condemns the attempt to remove fuel subsidy because it will further impoverish the masses of this country and therefore join other progressive Nigerians and the Civil Society Group to vehemently resist the removal.”

EST African Health Sector Unions Network, WA H S U N , h a s f a u l t e d Nigerian government’s plan to remove subsidy on some petroleum products, saying it is “an ill wind that blows no one any good.” At its 8th plenary session at Lome, Togo, members also called for a halt at privatizing the electricity in the country and condemned the recent militarisation of power stations in the state’s attempt to intimidate electricity workers in the country. According to a communiqué issued at the end of the meeting, which was also attended by the leaders of Medical and Health Workers of Nigeria, MHWUN, “WAHSUN considers the proposed deregulation of the downstream sector of the petroleum industry in Nigeria as an ill wind that blows no one any good. The consequent fuel price hike would have negative impact on virtually every aspect of life for the working people in the country and the plan is being rightly resisted by the working class in the country.” “ WA H S U N - i n - s e s s i o n resolved on standing in solidarity with its Nigerian affiliates and the entire working people in Nigeria to resist any attempt at increasing fuel prices and thus worsening the livelihoods of

Reliance, BP plan 3 LNG terminals

ndia Gas Solutions Pvt., a venture of Reliance Industries Ltd. (RIL) and BP Plc (BP/), may set up three liquefied natural gas terminals in India, the Financial Chronicle said, citing an unidentified company official. Each terminal may have a capacity of 5 million metric tons a year, the newspaper said. Possible locations for the fuel import facilities include Dhamra, Mangalore, Kakinada and Paradip. The company has yet to firm up plans for the LNG facilities, a Reliance spokesman told Bloomberg News.

Solid Mineral Oscarline Onwuemenyi

he issue of illegal mining is one that continuously haunts mining operations in the country, simply because it is mainly driven by poverty and unemployment. It is a paradox that a sector that has been touted for its ability to create millions of wellpaying, full-term jobs that will create enormous wealth for the economy having failed to do so in a r e s p o n s i b l e w a y, h a s unleashed an ar my of thousands poorly-paying and environmentally ir responsible activities, which has caused death and decadence in the society. In order for Nigeria to ensure that its mineral wealth remains a blessing to its people, it is essential that the focus on developing the Artisanal and Small scale Mining (ASM) sector is on pro-growth and poverty reduction. Lack of understanding of poverty issues and social drives will reduce the economic trickledown down effects of ASM as the prop-poor growth stimulant which will not be widespread and possibly many of the current constraints to the sector may remain. The issue of illegal mining in most parts of the country is one that has given the government a lot of worry. And for a country that is blessed with abundant commercial deposits of solid minerals including barite, bitumen, tantalite, limestone, kaolin, gold, aquamarine and topaz, among others, illegal mining activities have become rampant in the face of growing poverty and unemployment. Activities of illegal miners, usually with the encouragement of some foreign mining pirates, has inflicted so much damage and pollution of the environment and led to several deaths from poor handling of these mineral resources. It has been argued that where it is well managed, ASM has the potential to generate wealth for local communities through increased local investment and job creation. In many

Artisanal mining: Huge potential for wealth creation

In search of Minerals

communities, the ASM is essential to promoting much needed poverty alleviation. However, the extent to which ASM generates wealth for communities is very much dependent upon the support structures and agreements put in place between the regulators (government) and the small time miners, and the effective monitoring an evaluation of the process. R e c e n t l y, t h e n a t i o n witnessed the unfortunate death of hundreds of children and women in two communities in Zamfara State from lead poisoning, which happened as a result of improper milling of goldbearing ore using mercury to amalgamate gold which generated dust and fume that was inhaled and ingested by the local

inhabitants. Investigations conducted into the deaths by the Federal government and international agencies revealed further contamination of the soil in these communities. Consequently, remediation of the contaminated soil and valuable surface water has begun in these villages and in several other communities in the country notorious for illegal mining activities. A few months ago, the Governor of Niger State, Dr. Muâ&#x20AC;&#x2122;azu Babangida Aliyu had cause to write the Minister of Mines and Steel Development on activities of illegal miners in the state. The governor noted that in view of the security challenges in the country and the desire of the state government to work with

relevant agencies to ensure more vigilance and security consciousness, it feels that there is need for urgent action proliferation of illegal mining in the state. Another area of concern of the state government was the manner few mining companies covered almost all the gold fields of the state without making any effort to develop them, even as it requested the Ministry to look into the matter. It is no gainsaying that the Federal gover nment in recent years has worked really hard to effectively streamline activities of artisanal and small scale miners in the country, which ultimately led to the creation of the Artisanal and Small Scale Mining Department in the Ministry of Mines and

Steel Development. Indeed, the Minister, Arc. Musa Mohammed Sada has consistently expressed frustration over the activities of illegal miners in most parts of the country and the attendant environmental degradation and social problems associate with such activities. The Ministry has, therefore, sought ways to project its regulations for the sector and to ensure effective coordination of activities of artisanal and small scale miners by forming them into co-operatives. That way, the Minster noted, illegal operations would be curtailed drastically and the miners would be able to benefit from intervention programmes such as access to loans and equipment pool.

Solid Mineral

World Class Minerals

Oscarline Onwuemenyi with Agency report

igeria today is in a wave of market reforms in m a n y segments of its economy including the privatisation of government-owned companies and mining assets. After years of dithering and being weighed down under squandered oil revenues and rising debt levels, the gover nment finally demonstrated the political will to implement market friendly policies. To that end, Nigeria, over the past couple of years has began privatising the country’s mineral and steel resources, and has initiated a programme of reform and mining regulations. For long, West Africa has been a destination of choice for mining executives the world over, with countries like Burkina Faso, Ghana, Ivory Coast and Niger, being actively explored and mined. Now, Africa’s most populous nation, Nigeria, fortuitously located in this remarkably prospective region, is opening up its mining sector and taking aggressive steps to woo foreign mining companies as it seeks to become an alternate mining destination. Gold has been the predominant mineral of choice in the region. But Nigeria, thus far known for its oil and gas deposits (10th largest reserves in the world and third – largest within the Organisation of the Pe t r o l e u m E x p o r t i n g Countries, OPEC ,with 36 billion barrels), is now offering a whole range of 34 solid minerals including precious metals, base metal, rare earths and minerals such as uranium to prospective miners for development. More recently, the country has attempted to modernize the mining and minerals sector, improve international best practices through the institution of well thoughtout regulations as well as the establishment of the Mining Cadastre Office, to ensure efficient management of mining licenses for exploration activities. Nigeria is also undergoing a political transformation of enormous proportion. In the

Gold dust

Mining: Going for Gold, but the future holds a lot more last decade, the country has seen uninterrupted civilian rule, which is the longest since independence. One of the major failures of the previous military regimes was the inability to diversify the economy away from its dependence on oil revenues. Developing the country’s solid minerals wealth promises to have a considerable impact on the economy since mineral deposits are geographically spread across more than 450

communities in the country. The oil industry on the other hand is concentrated in the swamps of the Niger Delta. According to Steve Vaughn, a partner at Heenan Blaikie Business Law Group and a leading expert on international mining law, Nigeria’s mineral sector has not historically received “enough attention as other countries in the region did from investors, but that is changing now.” Some potentially serious

investors, however, have sounded a note of caution on the type of companies that may be attracted to Nigeria’s new liberal mining e n v i r o n m e n t . H o w e v e r, according to J. Howard Bills, senior exploration manager, Axmin Inc, a Toronto-based g o l d m i n i n g c o m p a n y, “Nigeria will have to derive rules to keep out the suitcase companies, i.e. those that simply enter to acquire lucrative licenses only to sell them later at a huge profit.”

The mineral spread in Nigeria is significant with evidence of 34 different minerals distributed in Nigeria’s richly endowed geology. Though not all the mineral occurrences will ultimately have enough reserves to be of viable interest to mining companies, the Federal government is leaving no stone unturned in its efforts to delineate and objectively demonstrate the potential and encourage investments in all. “Nigeria has excellent and very significant deposits of tantalite, which are world class. It also has good quality lead and zinc properties with good commercial potential”, said Barey Guarnera of Behre Dolbear & Co Ltd, a consulting company dedicated to the minerals industry. However, the West African geology is replete with gold deposits. Gold is a miner ’s dream right now considering the huge spread between gold prices and production costs and that is precisely the mineral that is attracting the most attention as far as Nigeria is concerned. The government is also keen on following a strategy that would bring in the miners quickly. “We have to be realistic about focusing on the most promising minerals,” says Nigeria’s Minister of Mines and Steel Development, Mr. Musa Mohammed Sada. New Greenfield mines are not the only option; Nigeria has several previously explored mines that could be re-opened. The gold mining opportunity in Nigeria could be very much like that of Ghana, where abandoned mines could be redeveloped. Sada argued, “Nigeria has several high grade gold mines but with modern technology we could also work the low grade mines, thus significantly increasing the country ’s mining potential.” The biggest investment that Nigeria needs to make is in it’s infrastructure. Without adequate power, roads and ports, the development of the mining industry is going to remain a pie in the sky. Power shortages are endemic in CONTINUES ON PAGE 43

Solid Mineral

Bars of Gold

CONTINUED FROM PAGE 42

Nigeria and the gap between peak demand and production is 7,000MW. The government’s energy plan for the next few years has been worked out and the contribution from coal-fired plants is put at 25 percent of the total energy requirement. The gover nment is making efforts to ensure that the energy sector needs are addressed parallel to developing the mining opportunities.

Coal Mining: A Key Focus Given the implications that continued power shortages have for the Nigeria economy, coal mining seems to be an area of immediate development concern, especially considering that Nigeria has proven deposits of over 1.5 billion tonnes, after only partial exploration. The advantage of coal mining is that although it is open to mining companies,

Mining: Going for Gold, but the future holds a lot more the gover nment is not dependent on them. Thermal power-generating companies would happily takeover the responsibility of developing coal mines since it would automatically, build fuel linkages with their power generating plants. The focus on developing coal mines will also speed up the development of the power infrastructure, since plants will come up at the pithead to avoid haulage costs and the national grid will also get built up to transmit power across the country. Rapidly developing the coal industry is in Nigeria’s best interest but the interest of foreign investors is in exploiting the most attractively priced mineral, gold. The price of gold in the

international market today is nearly three times its production cost. “Coal should be a key target given the energy aspect and the opportunity for large coal mining projects for power generation exists, especially since there are handsome coal properties in Nigeria,” said Guarnera. He added, “Coal mining will remain critical because of the peak load deficit factor. But the focus on industrial commodities is critical for the development of the metals and mining sector. The focus on industrial commodities will broaden the universe of mining companies interested in investment in Nigeria.” Clearly the message is that the government has to look over the long term and focus

on what is important for its overall development and not be swayed by short-term market factors. That said, the opportunity is clearly waiting for those mining companies willing to take the plunge into Nigeria. And to do that, many companies willing to overlook most shortcomings. “There is no need to convince mining companies about negative issues, they are experts at assessing this risk for themselves,” said Rizwan Haider, regional manager, for Canadian Government sub-Saharan Africa, Export Development Canada, which works with Canadian companies doing business with other countries especially in the emerging markets. Putting up the infrastructure will be a

prerequisite for large scale investment. Nigeria’s Sada reminded that “if you build it they will come”. So if the opportunity is there and the bottom line looks favourable, miners are notoriously hardy and they will not necessarily be deterred by infrastructural constraints and other confluence of factors. The high risk appetite of miners is evident in their persistence in active conflict zones where they have records of catering to relevant infrastructural needs. While Nigeria opens its mining industry, it also seeks to battle negative perceptions that have bedevilled it through years of military rule and socioeconomic crisis. The present government’s reform commitment is progressively boosting the confidence of investors. A mining industry always existed in Nigeria and prior to independence in 1960, it was the dominant industry controlled by British firms. But investors were left with a bad taste after the mining sector was completely nationalised in the 1970’s as the country sought to recover from a devastating civil war. All the foreign investors left the country and many of them have strong reservations about reengaging with the country until the recent past, when they saw a steady path of growth and unflinching political support to attract foreign direct investment. Understandably, the years of dormancy meant that the mines deteriorated and production fell sharply, especially since the state owned companies were neglected with neither technological equipment nor conditions for efficient performance. After the discovery of oil in the 1960s, the government’s focus swung to developing its oil resources and that focus has remained to date to the continued detriment of the mining sector. But with the recent unprecedented boom in commodity prices, especially for solid minerals, the Federal government’s decision to revisit the mining sector and emphasize the opportunity there to global investors is a very welcome one.

Freight

he Chairman of t h e L e g a l Committee of the International M a r i t i m e Organisation, IMO, Mr Kofi Mbiah, who also doubles as the Managing Director of the Ghana Shippers Authority, GSA, in this interview with Sweetcrude’s Godwin Oritse, held at the World Maritime University in Malmo, Sweden last month, said that a flourishing shipping industry in the West African sub-region will also develop other ancillary industries. Mr. Mbiah, you have gotten to the pinnacle of your career having been appointed the Chief Executive of the Ghana Shippers Authority. What informed your decision to acquire a Doctorate Degree? Thank you very much. I am very grateful , but when you say that I have gotten to the pinnacle of my career, I do not think I have gotten to the pinnacle yet, not even as Managing Director of the Ghana Shippers Authority and presently, I am also the Chair man of the Legal Committee of the International Maritime Organisation, IMO. To me, I think that is the pinnacle as it were and I think it is important for me to underscore that and to your question why PhD. There are a number of reasons, some may be very flimsy I would say, firstly let me proffer a reason why I thought it was important for me to do a PhD. In fact for quite some time now, I have had a keen interest in research and I have been trying to research into various areas of maritime law and I realise that, there was the development of a new international instrument for the carriage of goods by sea and I have all along made an obligation to get the best of knowledge as far as the carriage of goods by sea is concerned. I also happened to have been involved as the leader of Ghana’s delegation to the UNCITRAL negotiation for the development of the Rotterdam rules, therefore, it became very imperative for me having the desire to do research and realising that, there was a new convention in the offing, I could conduct some research in this area which I could bring to bear not only on Ghana, but on

‘West Africa shipping industry will boost development in other sectors’

Mr Kofi Mbiah Africa and other developing economies in terms of what transpired during the negotiations. What Africa stood to benefit as a result of the negotiation, what Africa lost as a result of the negotiations, all with a view to trying to show that, there are two key players in the carriage of goods by sea, that is the carrier and the shipper and how my research can lead to a situation where I fathom whether indeed there is a balance as far as the risk and responsibility factors for these two key players are concerned. In fact, that was one of the driving motive of why I under took the

I have had a keen interest in research and I have been trying to research into various areas of maritime law and I realise that, there was the development of a new international instrument for the carriage of goods by sea

research because like I said, I have been involved in the carriage of goods by sea. It is also important to mention that a lot of changes have taken place in the world over the last decade or so, it has been phenomenal, it has been tremendous; they have had a significant impact in the way in which the business of shipping is carried. Fo r a l o t o f Af r i c a n economies, some 20-25 years ago, the container trade was barely growing, but today, the level of container penetration in our ports is up about 70% to 80% and consequently, that has changed the dynamics in the

44 way in which the business of shipping is conducted and that therefore calls for more knowledge in terms of the new developments that have come up and that consequently is part of quest/crave of further knowledge that led towards a research in order that I could get a PhD not a PhD for the sake of it, but that to conduct research that leads us to an understanding and appreciation of the things which have happened in terms of the development in the industry. Why is it so difficult for an institution like the World Maritime University to be situated in Africa? Honestly, I do not have the answers, but I can only proffer an opinion as to why these things have happened looking at some of the international maritime institutions. I can tell you that it is not easy to run these international maritime institutions, remember that the two principal institutions one for the study of maritime l a w, w h i c h i s t h e international maritime law institute situated in Malta and then the World Maritime University situated in Malmo, Sweden, are institutes which were given birth to by the International Maritime Organisation. It shows that the IMO has been concerned all these years about its development and progress and it will not sit idly by to see these institutions perish. If you take our African economies, I am sure you will realise that for a very long time, study of shipping as a shore base maritime event was really not one that existed in almost all of Africa until very recently. Therefore we are bound to face difficulty, if we did a body like the IMO which could be instrumental in ensuring that they are rooted deeply and firmly in the ground in order that they would thrive. If you take Ghana for example, the Regional Maritime University today started off as Nautical College, it was meant to train only seafarers but overtime, it has strived to expand and consequently even though it has an affiliation with the World Maritime University CONTINUES ON PAGE 45

Freight ‘West Africa shipping industry will boost development of others’ CONTINUED FROM PAGE 44

and also the IMO and gets support from time to time, you cannot place it on the same level in terms of the support that the institutes in Malta and Sweden do enjoy. I am sure you can take also the issue of Maritime Academy of Nigeria in Oron , which you are very familiar with, because Oron started quite a long time ago and again if you remember if you go to the genesis of the academy in Oron, it was also established to train seafarers and a lot has changed in the last 30 years when the academy was established. You need therefore to see the changes that has taken place over the period and then try to imbibe that kind of curriculum that will enable people not only restrict themselves to sea-going but to avail themselves to a broad spectrum of other areas of maritime law and international transport and logistics . And this to me I think is key if the African maritime institutions would grow, they should not be limited as it were to looking at training only of seafarers or only in terms of the pure and classical maritime curriculum, but to look broadly beyond the pure classical maritime curriculum to matters of international transport and logistics. E v e n t o d a y, t h e s e institutions I am talking about are now also widening their field and are now talking about logistics, transport economics and all that and that is what Africa maritime institutions should be looking at. They need to broaden their horizon, they need to broaden their scope, and they need to look at new fields so that they can then tap into knowledge that is not circumscribed to the maritime field, but broadly transport economics, maritime economics, ship financing. Things that hitherto were not part of the curriculum are things they

Mr Kofi Mbiah should be looking for the future. The dearth of shipping lines in the sub-region has also resulted in the dearth of manpower, what is your reaction to this? If you like, I will say yes and no, yes, because if indeed our countries were having vibrant shipping lines which were always afloat and therefore the tendencies for us to therefore have manpower in that regard to man these ships, run these ships and also to do the ancillary things that goes with the running of ships. It is not only the training of seafarers who are at sea, but there are other ancillary services including ship financing, ship chartering, manning, brokering of vessels and all that this we all grow with the industry. So, in that respect, I will agree with that school of thought, which says that if African countries did have vessels of their own that will add an impetus for the growth of manpower in the regard. But having said that, I think I also need to quickly point out that if you look around globally, there are a number

Information has become very significant in terms of the way you will develop, information sharing, strong collaboration, building an effective network has become the critical ingredients one obviously needs to look at of countries as well which even though lost its shipping line, are still very instrumental when it comes to issues relating to maritime trade and transport. And they have been involved at various levels either they are own tonnage which is not registered in their own country or they may not own tonnage at all. Take Switzerland for example, which do not own tonnage at such, but they have a key role to play when it comes to matters of international transport. Ghana seems to have a

more organised maritime sector than Nigeria what in your opinion could be responsible for this? I do not think I will say that, I look at Africa within, more of a regional framework than individual countries. Take for example, the scourge of piracy, one cannot isolate it and say it relates to ‘A’ or to ‘B’ because the oceans are vast and this can happen anywhere along the coast. If you take issues of environmental degradation in terms of maritime pollution, in terms of ballast waters, these things affect the whole coastline and Ghana cannot raise its head and say it is better organised in terms of these more than Nigeria, it cannot. At the same time if you take international transport and the development of ports and port facilities, in the same vein, one cannot because you may be looking at size and volumes. While Ghana is talking about 16million metric tonnes of cargoes, Nigeria is talking about over 50million metric tonnes of cargo a year. In fact these are ver y significant in trying to draw correlation between the two countries, so I would not say Ghana has got its act together. What I would rather say is that there is a need for greater collaboration between both countries and sharing of information. Information has become very significant in terms of the way you will develop, information sharing, strong collaboration, building an effective network has become the critical ingredients one obviously needs to look at. Why did Ghana not support Nigeria in the last IMO elections? Ghana supported Nigeria fully, more than hundred percent (100%) I, sitting here, I was at the forefront of the campaign to support Nigeria. Were you at the meeting? I was present, I campaigned massively for Nigeria and I know my Minister was present, we met with Nigeria’s Minister of Transport, we gave our support to Nigeria more than hundred percent.

45 Why do you think made Nigeria lose the election? I must say that even though the members of the Council are 40; remember that twenty of those seats are permanently occupied. The point is that the contest was for twenty seats and you have 26 countries contesting for 20 seats. Each powerful, each strong, each capable, each qualified and also the geographical distribution that is required in terms of representation was also considered and that was why Ghana stepped down for Nigeria because we are two stalwarts in the West African sub-region and if both of us do contest there is a tendency for us to split votes. So there was a decision between Ghana and Nigeria that Nigeria will contest and Ghana will step down, unfortunately that decision could not be arranged with Liberia. Liberia is country which is qualified to be a category ‘A’, Nigeria contested in category ‘C’ and Liberia also contested in category ‘C’ and that indeed was the bane of Nigeria’s short-coming because, a country like Denmark despite its size, its capacity, I mean Mearsk line comes from Denmark also contested in category ‘C’ and obviously against Nigeria coming from West Africa. And Liberia is also in West Africa and Liberia has a large fleet under its flag, so you can understand that these things will affect the final outcome when the rest of Europe is voting en-block for a European country. I do not think Nigeria should be worried losing by a vote and I do not think that the outcome was a disgrace or humiliation. H o w p re p a re d i s t h e Ghanaian maritime sector in the transformation of Ghana with regards to discovery of crude oil and considering the synergy between the oil and gas and maritime industries? In fact you are quite right, there is a strong synergy and correlation between the oil & gas and maritime industries, especially in Ghana where our off-shore development of oil and gas is in the Exclusive Economic Zone. Obviously it is essentially a maritime event and Ghana has put in place structure, measures and mechanism to ensure that it gets the best out of its oil and gas resources.

Freight

NIMASA moves to mitigate Bonga spill effects Godwin ORITSE

HE Nigerian M a r i t i m e Administration and Safety A g e n c y , NIMASA, has commenced moves to cushion the effect of the massive oil spill from the S h e l l Pe t r o l e u m Development Company Bonga operation. Speaking to news men in Lagos recently, NIMASA’s Director-General Mr. Patrick Akpolobokemi said that the agency has deployed personnel to areas where the

presence of the spill is creating negative effect on aquatic life. Akpobolokemi who was represented by the Executive Director, Marine Safety and Shipping Development, Dr Ishaku Shekarau, said that the spill is a tier three spill which has spread over 115 nautical miles of Nigeria’s coast. He stated that samples of the damaged waters have been taken by scientists from the agency as analysis of these samples is currently on-going. “The agency ’s team

comprising of officers from the Marine Environment Management and Maritime Safety departments visited and collected samples at Forcados area to ascertain this claim. “The samples taken are being analysed, furthermore, we are arranging for independent overview coverage of the Bonga field environment to ascertain the level of response effort and degradation to the environment and marine life in totality” he added. Besides taking the samples, the agency also sent out

warnings in form of marine notice to all mariners via VHF radio channel 16 with a view to restricting navigation along the affected area. The spill is estimated to to have hit about 40,000 barrels subsequently making it, the biggest oil spill in more than ten years in Nigeria. Akpolbokemi also stated that sanctions if need be will meted out to Shell in line with local laws and international conventions. The NIMASA boss added that the agency has been in touch with Shell and the Nigeria Oil Spill Detection and Response Agency to ensure that adequate measures are put in place to prevent further degradation of the marine ecosystem.

Oil spilage in the Niger Delta

Vale’s giant iron-ore ship reaches China Port

ne of the world’s largest commodity ships operated for Vale SA ( VA L E 3 ) r e a c h e d a Chinese port for the first time, after the nation’s refusal to allow such vessels delayed by more than six months the Brazilian miner’s plan to control shipments with giant carriers. The Berge Everest, one of the four vessels BW Group will use to haul iron ore for Vale, has reached the Dalian port fully loaded from Brazil, T.S. Ang, a technical executive at BW Fleet Management in Singapore, the vessel’s owner, said by phone t o d a y. H e d i d n ’ t elaborate as the company is awaiting further details. Vale is spending at least $8.1 billion on the valemax vessels, including buying 19 very large ore carriers and leasing another 16 in long-term contracts, as it seeks lower freight costs from Brazil to China, its biggest market. The plan has spurred opposition f r o m C h i n e s e shipowners who say it will worsen overcapacity and cause industrywide losses. BW Group will operate four vessels for Vale, the miner said in 2007. The ship, with a draft of 21.3 meters, is moored outside Dalian, according to data on Bloomberg. The vessel, built by Bohai Shipbuilding Heavy Industry Co., left Brazil in early November, the data showed. C a r o l y n Ta n g , a spokeswoman at Vale China, didn’t answer calls to her office today. A man who said his surname is Wang and is the office secretary of the Dalian port, said he wasn’t aware of the ship.

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Technology

A petroleum transport trailer

Jim-Rex Lawson MOSES

eeting energy supplie s goes beyond cr ude oil exploration, production and refining because refined petroleum products availability plays a key role in stabilizing our m a r ke t s , e c o n o m y a n d regions. The foregoing is true since oil and natural gas are the lifeblood of the Nigeria economy. Together they account for more than 70 percent of the energy consumed in Nigeria. In 2006, total energy consumption for Nigeria was approximately one quadrillion Btu. The country ’s energy consumption mix was

Petroleum products supply and distribution through pipelines and trucks dominated by oil (53 percent), followed by natural gas (39 percent) and hydroelectricity (7 percent). Coal, nuclear and other renewables are currently not part of Nigeria’s energy consumption mix, with the exception of biomass often used to meet rural heating and cooking needs. The Nigerian economy is heavily dependent on the oil

sector which, according to the World Bank, accounts for over 95 percent of export earnings and about 85 percent of government revenues. Petroleum products are used across the entire economy in every country. Gasoline and diesel are the primary fuels used in road transport. Oil is used in power generation. Adequate and reliable supply of

transport services and electricity in turn are essential for economic development. Households use a variety of petroleum p r o d u c t s : ke r o s e n e f o r lighting, cooking, and heating; liquefied petroleum gas (LPG) for cooking and heating; and gasoline and diesel for private vehicles as well as captive power generation. Globally and regionally,

the oil market’s infrastructure moves oil from the producing regions to the consuming regions. In the United States of America, Pipelines are the irreplaceable core of the U.S. petroleum transportation system and hence the key to meeting petroleum demand. Without oil pipelines, petroleum products would not reach the millions of consumers in all the states across Nigeria including the Federal Capital Territory (FCT). Pipelines are most costeffective but require large upfront capital investments, a reliable supply of electricity—Alternative transportation in the form of a technological breakthrough: long distance, large diameter pipelines. The new capability to transport large quantities CONTINUES ON PAGE 49

Technology

Petroleum products supply and distribution through pipelines and trucks Continued from page 48 of oil over long distances. Trucking costs escalate sharply with distance, making trucking the most expensive mode of petroleum transportation. In addition, of course, the logistics of truck transport for high volume/long distance shipments are so daunting as to be impractical. Assuming each truck holds 200 barrels (8,400 gallons) and can travel 500 miles per day, it would take a fleet of 3000 trucks, with one truck arriving and unloading every 2 minutes, to replace a 150,000-barrel per day, 1,000-mile pipeline. Consequently, in spite of the fact that trucks are ubiquitously available, trucking should generally be limited to short haul movements where alternatives are often unavailable: between product terminals and retail outlets or consumers, and to small crude shipments from marginal producing areas to storage points where crude is aggregated into pipelinesize volumes for shipment to a refinery. However, despite generally being small in terms of both volume per shipment and distance, such truck movements are essential to both the completeness and the competitiveness of the overall oil distribution system. To u n d e r s t a n d t h e importance of pipeline transport, one must understand the role of logistics hubs. Logistics hubs serve as gateways for regional supply. They are characterized by interconnections among many pipelines and, often, o t h e r m o d e s o f transportation – such as tankers and barges, sometimes rail, and usually trucks, especially for local transport – that allow supply to move from system-tosystem across local governments, states, and regions in a hub-to-hub progression. These hubs are also characterized by their substantial storage capacity. The availability of storage and transportation options at these hubs enhances supply

An elevated section of the Alaska Pipeline opportunities and increases supply flexibility, both essential ingredients for an efficient market. M O V I N G T H E PRODUCTS Petroleum products can be generally propelled through pipelines by centrifugal pumps. The pumps are usually sited at the originating station of the line and at 20 to 100 mile intervals along the length of the pipeline, depending on pipeline design, topography and capacity requirements. Most pumps are driven by electric motors, although diesel engines or gas turbines may also be used. Pipeline employees using computers remotely control the pumps and other

aspects of pipeline operations. Pipeline control rooms utilize Supervisory Control And Data Acquisition (SCADA) systems that return real-time information about the rate of flow, the pressure, the speed and other characteristics. Both computers and trained operators evaluate the information continuously. Most pipelines are operated and monitored 365 days a year, 24 hours per day. In addition, instruments return real-time information about certain specifications of the product being shipped – the specific gravity, the flash point and the density, for example – information that are important to product quality maintenance. Supply Side Finished gasoline product

should leave the refinery and reach consumers through one or more bulk transport services. Pipelines, tankers, or barges typically transport gasoline from refineries or ports to terminals that provide storage and dispensing facilities. A variety of downstream gasoline marketing arrangements (i.e., wholesale and retail) ultimately should deliver gasoline to the consumer. A broad overview of these sectors of the gasoline supply chain has been provided below. Bulk Transport of Gasoline The amount of gasoline being transported from refineries to ports or ports to storage terminals within Nigeria has to change significantly if we must meet our nations’ energy supply in

the nearest future. Pipelines should by far remain the most important form of bulk transport of refined petroleum products within the Nigerian State .Transfer from refineries or from ports to storage terminals by pipeline must be increased. Other important forms of bulk transport which include tankers and barges must also be developed and improved upon because there is no doubt that t h e s e f o r m s o f transportation have declined over the years. Downstream Marketing Arrangements for Refined Petroleum Products Once the refined petroleum products leave the refinery, they should reach consumers through one or more marketing channels. This final step in the supply of refined petroleum products includes two components: wholesale distribution (from product terminals to retail outlets) and retail distribution (to final consumers). Truck transportation in this case should be the most common delivery method of gasoline to retail outlets. There are four primary gasoline marketing channels for wholesale distribution. Three of these constitute direct distribution of product: Re f i n e r- o p e r a t e d r e t a i l outlet: Refiners directly distribute gasoline to their own retail outlets. Lessee dealer: Retail outlets owned by the wholesale distributor but leased to a gasoline dealer. Independent retailer: Retail outlets owned and operated by independent “open” dealers. The fourth channel comprises indirect distribution of product: Jobber: Distributors that purchase directly from refiners and then sell products to retail outlets. The variety of marketing channels illustrated above indicates that firms should not only be vertically integrated; that is, they must not be involved in all stages of finished petroleum production, distribution, and ultimate sales to consumers.

50 Vale’s giant iron-ore ship reaches China Port

Clara NWACHUKWU

he Sir Emeka O f f o r Fo u n d a t i o n , SEOF, and USbased, Books for Africa, BFA, have signed a Memorandum of Understanding, MoU, to distribute about 640,000 books and other study materials to Nigerian schools. The books are valued at approximately $7million, while the shipment will cost approximately $400,000. They are to be delivered and distributed to the beneficiaries between November 1, 2011 and November 1, 2014. The beneficiaries include primary, secondary and tertiary institutions in all the geo-political zones in the country. A copy of the MoU made available to Sweetcrude, revealed that the partners anticipate to ship the books in a 32, 40-foot sea containers. “More containers may be shipped under this agreement, if desired by the recipient,” the MoU read in part. Under the terms of the a g r e e m e n t s , B FA w i l l “provide 32 or more 40-foot sea containers each carrying approximately 20,000 textbook (20 tonnes) to the ports of Onne in Rivers State or Lagos, Nigeria, with books category selections made by SEOF or its representatives.” The shipment of the materials will be done in batches, as 16 containers will be sent in the first year, eight in the second, and another eight in the third. “Each 40-foot container shall carry a valuation of approximately $219,000. Under this agreement, up to 20% of the containers may include university books at an additional cost per container of $4,500. Donated, refurbished computers may also be provided as ordered at a cost of $150-$240 per unit depending upon the type of computer requested. Encyclopedias may be ordered at a cost of $150 per set. School supplies may be provided based upon availability on a case-bycase basis with cost estimates by BFA,” the MoU stated. Furthermore, the non-

From Right; Chairman Chrome Group, Sir Emeka Offor, Project Manager Sir Emeka Offor Foundation, Mr. Inno Anoliefo, Executive Director, Books For Africa, Mr. Patrick J. Plonski, Director, Books For Africa, Dr. Mike Essein During The Signing Of $7million Dollar Mou For Books Between Sir Emeka Offor Foundation And Books For Africa, United States In Abuja.

Pills of books

SEOF, BFA to distribute 640,000 books in Nigeria … To be distributed to schools within 3years governmental organisation agreed to “provide high quality new and used books with all containers packed to order under specifications provided by SEOF,” while the Foundation will inform BFA if and when packing specifications should altered. According to the MoU, all

the costs for customs, ports and others charges for the books and equipment will be borne by the Foundation. “The SEOF also agrees to pay all customs, ports, and related import charges above the cost of packing and shipping, and shall process all clearing documents i n c l u d i n g Fo r m M , a s

necessary with the Nigerian government.” The Foundation, which is the premier distribution partner for BFA in Nigeria, will during the three year period, also serve as the Nigerian partner consignee and to distribute the books and materials to libraries, schools and universities

throughout Nigeria. The MoU also provided room for future amendments, as the agreements could be “extended by mutual agreement beyond its current terms and duration if both parties agree that such an extension is advantageous and beneficial to the educational progress in Nigeria.” The agreements could also be terminated by mutual agreements. SEOF is a limited guarantee non-profit charitable organisation, which has undertaken a multi-year project to help revitalise the education sector in Nigeria. BFA on the other hand, is a non-governmental organisation, NGO, dedicated to ending the critical need for books in Africa. “Books shipped are new and previously owned books donated by individuals and organisations.”

WRPC trains 48 community youths in Delta State

ARRIT H E manage ment of the Warri Refining and Petrochemical C o m p a n y, W R P C , a subsidiary of the Nigerian National Petroleum Corporation, NNPC, in Delta state yesterday graduated another batch of 48 youths from her five host communities in various skills with starter packs worth millions of naira. Managing Director of the WRPC, Mr. Simeon Itua Ehiemua who was represented at the closing ceremony by Chief Rapheal Amabebe, the Executive Director Services, EDS, told the successful graduates to put their various acquired skills into practical and profitable use, emphasizing that they have automatically become self- employed and employers of labour. The MD who said their success story would spur the company into further training of more youths, charged them not to indulge in the unwholesome habit of selling their starter packs to the highest bidder, saying that “these items are very costly

A R R I C H E V R O N Nigeria Limited, CNL, yesterday donated drugs and consumables worth millions of naira to the Ekpan General Hospital, in Uwvie council area of Delta state with a charge to the management to put the drugs into good use. Presenting the items, the General Manager, Policy, Government and Public Affairs, Engr. Femi Odumabo, represented by Mr. George

Emma ARUBI

Youth training programme

and meaningful for their successful take-off ”. The trainees who also went home with an undisclosed amount of take-off grant were trained in Auto-mechanic; We l d i n g / F a b r i c a t i o n ;

Photography/Video C o v e r a g e ; H a i r Dressing/Barbing; Fashion/Textile Design and Catering and Hotel Management respectively, which course programmes

Chevron donates drugs and consumable to Hospital in Delta State Emma ARUBI

Uduaghan gets confidence vote from Ijaw Hostcom

Illuwa, said the provision of medical drugs and consumables to the hospital is part of Chevrons’ larger efforts to support the state to improve health care delivery to the good people of Delta state. He further disclosed that the NNPC/Chevron Joint venture has a robust partnership with the state government that has led to improvement in health delivery through investment in health and social infrastructure, sponsorship of manpower development

programme in the health sector and provision of other health facilities. “We view health care as a crucial social investment as there can be no meaningful development in a society where the people are plagued by ill-health”, Mr. Odumabo stated. He revealed that their partnership with the state government has led to the deworming of about 22,000 school children and the training of over 30 staff of the state ministry of health and teachers drawn from different schools across the state.

lasted for between six- nine months. The WRPC MD revealed that the company sponsored community skills acquisition programme which started since 2005 has so far produced 114 Community graduates who are in turn expected to train others in their various communities, even as he charged the host communities to continue to provide the needed conducive working environment for the smooth operations of the WRPC. While thanking the management of the company on behalf of the host communities of Ubeji, Ijalla, Ifiekporo, Aja-Etan and Ekpan in both Warri South and Uwvie council areas of the state, Chief Victor Otomiewo urged the WRPC to increase their in –take of trainees from each community as the percentage ratio per community is not a very encouraging or edifying one for the company’s public image.

ARRI-THE y o u t h leadership of Ijaw Host community, oil and gas has passed a vote of confidence on the Delta s t a t e G o v e r n o r, D r. Emmanuel Uduaghan over his security network with credible Ijaw sons on t h e s t a t e Wa t e r w a y s Security Committee. In a statement by Comrade Atijere Cliford, President; Ipopo, Secretary Present and Emmanuel Igetei, P.R.O respectively, the Hostcom said, they were comfortable with the appointment of Hon. Boro Pudu, an illustrious Ijaw son into the security committee, saying that he has been doing a wonderful job in keeping the waterways safe for all legitimate seafarers.

Iranian Lavan chemicals complex needs $20bn —Report

he construction of a petrochemicals complex on Iran’s Lavan Island would require $20 billion in investment, the Islamic Republic News Agency reported, citing an official at Iranian Offshore Oil Co. A single petrochemicals plant on Lavan would cost $5 billion, Mahmoud Zirakchianzadeh, the company ’s managing director, told the official news agency. Iranian offshore awarded a $1.9 billion contract to Sepehr Energy Co. to develop the Lavan gas field and build a chemicals complex on the island, state-run Mehr reported yesterday.

Tohpher Ad

Samuel OYADONGHA

ears that the parley on the transition from the project to operations phase of the multi billion naira Gbaran-Ubie Integrated Oil and Gas Project between the Shell Petroleum Development Company (SPDC) and stakeholders from the project area would be stalemated has turned out to be a mirage. The meeting, a close-out event to mark the successful execution of the GMoU phase I cluster development of the Gbaran-Ubie project, which was held recently at the Government House Banquet Hall in Yenagoa, attracted prominent indigenes of the four clusters led by their royal fathers. Though the Bayelsa State Deputy Governor, Rt. Hon Werinipre Seibarugu was invited as a special guest to witness the epoch event, he was nonetheless absent due to urgent state matters and was represented by his Special Adviser on Oil and Gas, Mr. Idisi Tovie Bello. The message from the D e p u t y G o v e r n o r, w h o incidentally is from one of the host community to the Gbaran-Ubie project urging the chiefs and community leaders to partner with SPDC to sustain the existing peace and socio economic development in the host communities may have calm frayed nerves. SweetCrude reliably learnt that in the old order, the elites had overwhelming influence as against the new order which represents an important shift in approach, placing emphasis on more transparent and accountable process, regular communication with the grassroots, sustainability and conflict prevention. This, it was further learnt, makes the interface more manageable, and sets out the roles and responsibilities of all parties as well as making it possible for the community people to take driver’s seat in the SPDC Corporate Social Responsibility to it’s host community. In the process, the community people now decide what they want, determine the contractor and execute the projects with the help of the mentoring NGOs. It is against this backdrop

Gbaran-Ubie integrated Oil and Gas Project: Bayelsa communities sign new GMoU with SPDC ...we have invested N3.911bn in host communities in Gbaran-Ubie project area- SPDC

Bayelsa Community

that the state Deputy Governor called on the host communities to sign the new GMOU with the company to enable them benefit socially and economically from the oil giant, stressing that any community that refuses to sign the agreement stand to lose a lot from the firm. Earlier, the Shell Petroleum Development Company (SPDC) said it had invested N3.911bn in communities hosting the Gbaran-Ubie Integrated Oil and Gas project in the state. This, the company said is in addition to other projects implemented by the contractors and subcontractors that handled the multi-billion naira project,

the first of its kind in the Niger Delta. Vice President, HSE & Corporate Affairs, Tony Attah, who spoke at the event, said it marked another milestone in the mutually beneficial relationship that exists between SPDC and the host communities of the Gbara-Ubie Integrated Oil and Gas Project. Represented by the Manager Government Community Relation Affairs, SPDC, Mr. Evans Krukrubo, Attah said the project has been successfully completed and is achieving its objectives of increasing Nigeria’s oil and gas production capacity and at same time delivering real

benefits to host communities. According to SPDC, in 2006, the company signed M e m o r a n d u m o f Understanding MOU with f o u r c l u s t e r s n a m e l y, Gbaran/Ekpetiama, Okordia/Zarama/KoloCreek and Epie/Attissa clusters as they chose projects to be executed with funding provided by Shell. He lauded members of the Project Advisory Committee PAC o f t h e c l u s t e r s , including community leaders and Nongovernmental organization, NGO for their commitment and hard work in ensuring the fulfillment of the community development projects which resulted in the

delivery of the Gbaran –Ubie project. According to him, SPDC signed Project Global M e m o r a n d u m o f Understanding with Gbaran/Ekpetiama, Okordia/Zarama, Kolo Creek and Epie/Atissa. Under the terms of the agreement, he said the clusters chose and executed their own projects with funding provided by the company under the project. M r. A t t a h s a i d , ” w e commend members of the Project Advisory Committees of the four clusters, community leaders as well as the implementation of NGOs for their commitment and hard work.

54 Dapo AKINREFON

n this interview with a select group of journalists, Chief Robert Enogha, Commissioner for Environment in Bayelsa State, spoke on the battle by the government to rescue the environment and make it safe for everyone. Excerpts: The Bayelsa State government is organising a summit on the environment. What is it all about? I welcome you my friends to this media forum. As you must have been aware, the environment is our heritage and as individuals, we are duty bound to make sure that we do everything possible to protect the environment. As corporate bodies, we are duty bound to make sure that in the course of our oil exploration activities, we do not endanger the lives of the host communities through gas flare and oil spills. And, as a government, the onus is on us to make sure that the laws are obeyed, to make sure that the residents keep their environments clean and to make sure the oil companies perform their corporate social responsibilities to the communities. We decided to organise the summit which is holding between December 14 and 15 so that stakeholders will have the opportunity to brainstorm on the environmental challenges of Bayelsa State and then find a lasting solution to the problem and at the event, we shall be launching what we call the Fresh Air Initiative, a campaign tool that is aimed at sensitizing the people and corporate citizens in the state on the gains of a clean, green

Environmental challenges in Bayelsa State are surmountable â&#x20AC;&#x201D; Commissioner The environment is our heritage and as individuals, we are duty bound to make sure that we do everything possible to protect the environment and pollution free environment. You will recall that Mr President talked about this same fresh air during his campaigns. The government of Chief Timipre Sylva has therefore decided to expand the agenda of Mr President and has thought of using that slogan in contemplating the campaign for an era of fresh air in our state. Of course Mr President is from Bayelsa State and he should be proud that the fresh air dream is being actualised in Bayelsa State. We a r e e x p e c t i n g M r President and other stakeholders, including the oil firms, NGOs, environmentalists, community leaders, the host oil communities, fellow commissioners of environment from the southsouth, et cetera.

Chief Robert Enogha, Commissioner for Environment in Bayelsa State, As you may have known already, many pollution sources, including cars, manufacturing and chemical plants and products used in homes release smog-forming pollutants. Winds blow the pollutants away from their sources and the heat of the summer sun causes chemical reactions that form ground

level ozone-a principal component of smog. Hours after the smog-forming pollutants are released from their sources; smog pollutes the air, often many miles away from where the pollutants were released. Our mission in the Ministry of Environment is to protect human health and the

environment of Bayelsa and its neighbours. To achieve this, we are implementing a variety of programmes. The campaign is to help us in reducing outdoor, or ambient concentrations of air pollutants that cause smog, haze, acid rain, and other problems, promote the protection of health and environment and to conserve valuable material and energy resources, move against the action of oil exploiting c o m p a n i e s a n d multinationals that flare gas and degrade the environment through oil spillages and slits as well as the operations of illegal refineries, discourage the deforestation and illegal burning of bushes and other rubber substances, reducing e m i s s i o n s o f t ox i c a i r pollutants that are known to, or are suspected of causing cancer or other serious health effects; and phasing out production and use of chemicals that destroy stratospheric ozone. Why the concentration on Air Pollution? We a r e n o t j u s t concentrating on air pollution. But we are mindful of the fact that you could go days without food and hours without water, but you would last only a few minutes without air. On the average, each of us breathe over 3,000 gallons of air each day. We all need air to live. However, do you know that breathing polluted air can make you sick? Air pollution can damage trees, crops, other plants, lakes, and animals. In addition to damaging the natural environment, air pollution also damages buildings, monuments, and statues. It not only reduces how far you can see in national parks and cities, it even interferes with aviation. Breathing polluted air can make your eyes and nose burn. It can irritate your throat and make breathing difficult. In fact, pollutants like tiny airborne particles and ground level ozone can trigger respiratory problems, especially for people with asthma. Today, nearly 32 million adults and children in Nigeria have been diagnosed with asthma. Asthma sufferers can be severely affected by air pollution. Air pollution can also aggravate health problems for the elderly and others with heart or respiratory diseases.

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The Question

Ihiala LGA people to honour power Minister, Gov Obi on January 2

Oil subsidy and a government’s credentials

he people of Ihiala Local Government A r e a i n Anambra State will on January 2, 2012, honour the Minister of Power, Professor Bart Nnaji, and Governor Peter Obi for their remarkable contributions to the development of the area and the empowerment of her people. In a statement in Abuja t o d a y, t h e m e m b e r representing the Ihiala Federal Constituency in the N a t i o n a l A s s e m b l y, Engineer Fort Dike, said that the two top public officers will be conferred with chieftaincy titles, “the first time the people of the 10 towns which make up the local government area will ever honour non-indigenes with traditional titles”. The federal legislator noted that though “Professor Nnaji is from Enugu State, he has over the years displayed a remarkable interest in the progress of our place, which is the largest local government area in Nigeria”. Hon Dike said that long before Nnaji became the Minister of Power, he had awarded private scholarships, up to the doctoral level, to indigenes of Ihiala in top universities in the world, and the beneficiaries are today university lecturers and entrepreneurs contributing impressively to national growth”. The lawmaker continued: “No sooner he became last year, the Special Adviser to President Goodluck Jonathan on Power and Chairman of the Presidential Task Force on Power, than he provided distribution transformers to communities in Ihiala Local Government Area and took concrete steps to get the transmission sub-station located in our area by the National Integrated Power Project (NIPP) started, six years after the contract was

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Gov. Peter Obi awarded.” According to the legislator, who is a former Director General of the Bureau of Public Utilities of the Anambra State government, Gov Obi will be honoured for constructing roads to places like Lilu “ which hitherto had never benefitted from tarred roads. “We are honouring the governor also for his interest in the development of the Anambra State University in Uli, one of the major towns in Ihiala LGA. “It is most appropriate that a university p r i m a r i l y devoted to the study of science and technology should have its headquarters in Uli because Uli is synonymous with indigenous technological advancement.” Uli, observed the lawmaker, “ was where the famous Biafran Airport was located, and this airport was built within a few

months by Biafran architects and engineers during the Nigerian civil war. “All the immense relief materials which the Biafran people received during the unfortunate fratricide of 1967 to 70 came through this airport, the same airport the Biafran leader, Chief Emeka OdumegwuOjukwu, used to travel to Cote d’Ivoire in search of peace in Nigeria”.

aiwo Ekundayo and I were both surprised at how fast we closed the deal. At the time neither of us knew that we’d not see the end of the transaction. It was a simple enough business transaction: take me to the Port Harcourt International Airport from my Trans Amadi neighbourhood. N2,000.00 sir! Done! The man told me later he’d made only N600.00 all day. Having benefitted from his dire situation, I was too ashamed to confess to him I’d paid twice the amount on my last trip. We drove into a filling station, then another and another. “I’m sorry sir but I can’t take you to the airport,” he told me with resignation. “And why is that?” I asked him with my coolest baritone. “Oga , they all have fuel but they won’t sell. They said government told them to co-operate. Sorry sir but my fuel is too low to take us to the airport.” The matter is that simple; the government of Nigeria, faced with stiff opposition to its planned withdrawal of the only subsidy it grants the people, resorts to cheap blackmail to coerce their will. It tells you everything you want to know about the present national leadership, that is, if its handling of the two major crises it has faced were not sufficient testimonials of its credentials. President Jonathan happily hid behind cabinet members like Dora Akunyili to do his bidding when the Yar’Aduas would not hand him the reins of power. With Boko Haram, there was no longer a place to hide and unfortunately for Nigeria, the man who could not muster the trade mark chivalry of the Ijaw to fight his own battles against the wife of his former boss also lacks the courage, what Mexicans call cojones, to face up to the Boko Haram challenge. The truth is that subsidising the energy needs of a hundred and fifty million people is a massive economic issue that cannot be downplayed no matter one’s convictions on the subject. But another truth so simple that it reveals the incompetence of the Nigerian government is that it is just another economic challenge like the ones currently faced by Greece, Italy, the United States and almost all the member countries of the EU. Nigeria, like all the other countries facing economic crises, has clear choices that must exclude blackmail in the form of hoarding. Several months ago, Nasir El Rufai published statistics that showed how much Nigerians were bleeding to maintain the executive and legislative arms of the federal government. Instead of getting technocrats and giving them the independence to fix the subsidy problem as the Italians and Greeks have done, instead of embarking on a national campaign and attempting to sell the benefits (or learning credible lessons on how to live with the reality) of subsidy removal to the Nigerian people like President Obama did with his unpopular Health Care Reform Bill and instead of making adjustments in the economy to accommodate this social stabiliser, President Jonathan’s government is playing games that may finally test the ability of Nigerians as a collective to converge at a Tahrir Square to challenge its legitimacy. Jonathan’s government must come to terms with the reality that it is answerable to much more than the PDP represents, that Nigeria is a country of diverse interests too dynamic to bottle into a definition or an attitude on the strength of its short national history. Leaders of Arab societies are just coming to the realisation in the 21st Century that passiveness is a recessive allele in the Arabic persona. Nigerian leaders have forever formulated policies on the assumption that Nigerians can and would endure any suffering, that Nigerians cannot come together to act against an oppressive government because of the divergent array of interests represented by its ethnic nationalities. If the quest for political freedom (a modern necessity that was a luxury in the past) could inspire Arabs who are well fed, tolerably housed and heavily subsidised in almost every sphere to suicidal protest, no African government should attempt to confine its people into an attitude for all time.

Prof. Bart Nnaji

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