sweetcrude august 2012

Disputed oil wells: Nigeria may lose territorial waters – Reps P\8

Nigerian Content Act:

Strengths, weaknesses

P\10 President Goodluck Jonathan

A Vanguard Monthly Review Of The Energy Industry VOL 03

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AUGUST, 2012

Derivation fund and development issues in oil communities

Abia calls for fresh boundary delineation Pipeline vandalism impacts on states revenue allocation State deploys 30% of derivation to oil communities development

92 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12

Nigeria may export 70 oil cargoes next month

T

HERE were indications that Nigeria could export about 70 cargoes of crude oil in September, down from 77 cargoes in August, representing a sharp decrease in daily crude exports.

According to shipping schedules, the country will export 70 cargoes totaling 64.1 million barrels, or 2.14 million barrels a day, the least loading schedule since March 2012.

Disputed oil wells: Nigeria may lose territorial waters – Reps 8

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Contents 4 8 12 16 18 19 30 34 37 38 40 42 44

COVER

Derivation fund and development issues in oil communities

OIL Disputed oil wells: Nigeria may lose territorial waters

FOCUS

Our problem in Abia is poor funding—ASOPADEC Chairman

GAS

Nigeria can save $1.25bn from LPG

FINANCE

Fuel subsidy scandal and NEITI audit report

FEEDBACK

The trouble with onshore/offshore dichotomy

POWER

Electricity privatisation: Companies hopeful of winning multiple bids

SOLID MINERAL

Fidelity Bank to fund mining projects

TECHNOLOGY Wind Energy Technology basics

INSURANCE

Insurers target 100% oil, gas participation

LABOUR

Our expectations from new PIB—PENGASAN

FRIEGHT

Local Content: LADOL freight wins N2.5bn rig deal

COMMUNITY

Work resumes on abandoned roads

Sweetcrude is a publication of Vanguard Media Limited

THE TEAM Ag. EDITOR Clara Nwachukwu CORRESPONDENTS Victor AHIUMA-YOUNG Godwin ORITSE Yemie ADEOYE Jimitota ONOYUME Samuel OYANDOGHA Oscarline Onwuemenyi Emma Arubi Rosemary ONUOHA MANAGER, MARKETING Ubong NELSON PAGE LAYOUT/DESIGN

Francis AYO & Johnbull OMOREGBEE

Printed and Published by Vanguard Media Limited.

Vanguard Avenue, Kirikiri Canal, P.M.B. 1007, Apapa.

Enquiries Call: 08098051103 WEB:

www.vanguardngr.com www.sweetcrudereports.com All correspondence: P.M.B 1007, Apapa, Lagos.

F

rom this edition, Sw eetcrude begins a series on the 13 percent De rivation Fund throu gh which additional hundreds of billions of Naira accrue to nine states from the Federation Account.

The series is with a view to determini ng what State Governments that b enefit from the fund do with the fund with regard to dou sing tension in the restive oil communities in Nig eria.

Accordingly, this edit ion takes off with Ab ia State, one of the few states tha t have a development commission to deal with agitation s and development issues in the oil communities.

The State Governor , Chief Theodore Orj i, in our focus seg me nt exp re s sed con ce rn ove r t h e co n tin u e d marginalisation of Ab ia in revenue alloca tions on account of losing many of it s oil wells which he sai d should have belonged to the stat e.

The Chairman of AS OPADEC, Mr.Samu el Nwogu, on his part explained that Abia allots 30% of its derivation fund for development purposes in the oil com munities.

In the wider energy industry, a lot of dev elopments had taken place in the va rious sub-sects.

The Petroleum Ind ustry Bill was rece ntly sent to the National Assembly , even as some PIB Technical Committee member s noted that there w ere significant changes in what the y submitted and wh a t wa s sent to the legislators.

In the power sector, Canada’s Manitoba recently took over management control of the Tran smission Company of Nigeria, while the Bureau of Public E ntreprises, last week published a list of 25 bidders for th e 11 distribution companies unbund led from the Power Holding Company of Nigeria.

In keeping with our tradition, we also bring you developments in the gas, solid min erals, labour, insurance, maritime and communities.

EXXONMOBIL AD

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Derivation fund and development issues in oil communities

Abia calls for fresh boundary delineation Pipeline vandalism impacts on states revenue allocation State deploys 30% of derivation to oil communities development

Clara NWACHUKWU

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he introduction of the 13 percent Derivation Fund in 1999 for oil and gas producing states in Nigeria has continued to generate issues both for and against the policy.

Indeed, differences on the issue a couple of days ago pitched the northern region coalition, the Arewa National Congress, ANC, against their South South peers, Ijaw Youth Congress,IYC, with both parties throwing mud at each other.

The furore continues to rise despite Federal Government’s declaration through the Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, that every natural resource rich state in the federation is equally entitled to the same amount of derivation to douse tension in the polity.

Beginning with this edition, Sweetcrude in its series on the 13 percent derivation tries to x-ray, the issues surrounding the controversial derivation, and in particular, how the beneficiary state governments are utilising these addition funds to enhance the standard of living in the oil producing communities in their respective states.

Hydrocarbon derivation Experts describe the use of derivation as “a criterion for revenue allocation is associated

with changes in the social state of welfare that results from production activities and the compensation of losers by gainers in production activities.

As production takes place in any society, value is created for some members of the society while some members suffer losses due to externalities.”

Accordingly, nine states in the federation, including Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, and Rivers were originally

legally recognised to benefit from the derivation fund.

However, it is uncertain under what circumstances Sokoto and Ona/Asaboro, were included in the 13% derivation, as revealed in the revenue allocation for the sharing of over N990.266million in February and March 2012, respectively.

The funds were derived from the Nigerian National Petroleum Corporation, NNPC’s 6th and 7th tranche refund which were withheld from the Federation

Abia State experience It was difficult to access current statistics on how much each of the states receive every monthly, as electronic search on the Federal Ministry of Finance, www.fmf.gov.ng; and its subsidiary, Office of the Accountant General of the Federation, www.oagf.gov.ng official websites could not offer much help, despite assurances given by their officials.

B

ut past statistics from the Finance Ministry, Distribution of Revenue Allocation to FGN by Federation Account Allocation Committee, FAAC, showed that Abia

State received the sum of about N444.56million in January 2011, and N343.61million in the same corresponding period of 2010.

The amount accruable had since dropped significantly, due to restiveness and insecurity in the host communities, which are compounded by crude oil theft and pipeline vandalism.

In spite of these menace, the Abia State Governor, Chief Theodore Orji (Ochendo), told Sweetcrude that if revenue allocations were done equitably and based on crude production, the state will have more funds at its disposal to execute development projects to boost community and state economies.

Oil Commission Against this background, the Abia State Government through an Act of Parliament instituted the Abia State Oil Producing Areas Commission, ASOPDEC, to tackle these issues by deploying at least 30 percent of the 13 percent derivation fund accruable to it for development projects in the host communities.

The ASOPADEC Chairman, Mr Samuel Nwogu, explained that, “The primary objective of the commission is to alleviate the suffering of the oil producing communities and Abia State in general. Oil was found in Abia State in commercial quantity in 1958 in Owaza community in Onikwa LGA of the state.

He revealed that since the inception of oil exploration in the state, and the derivation fund in 1999, only the administration of Governor Theodor Orji, dimmed it fit to provide this umbrella to support and alleviate poverty in the oil communities.

“The Commission derives its funding from the 13 per cent derivation. If Abia State gets 13 per cent, the law permits the state

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Derivation fund and development issues in oil communities

Oil spillage

CONTINUED FROM PAGE 4 government to give ASOPADEC 30 per cent of the derivation fund. So it is with this 30 per cent from the derivation fund that the Commission did all we have achieved since 2010.

From inception, the governor directed the Ministry of Finance to release our funds as at when due because it is statutory,” he added.

Initial challenges Nwogu revealed that the Commission was faced with a number of teething challenges, associated with start up in view of the crisis in the state at the time of its inauguration in 2010.

He said, “As at 2010 when we came on board, Abia was in crisis, associated with kidnapping, and it was predominantly in the oil producing areas and we were challenged on how to start. The Governor called us and asked us what we planned to do because no one could go near those areas. However, but we thank God for the intervention of the military.

“We made use of 11 Opara Avenue Government House Umuahia. After renting the office, we furnished it to taste as you can see today. We also faced the challenge of purchasing our official cars; we bought nine Toyota Camry cars, two Hilux and one bus.

We also purchased a 100KVA generator, and then we were good to go.”

Wealth distribution Just as the state allocates 30 percent of the fund to the Commission, the ASOPADEC boss disclosed that management also devised a formula for redistributing the welth.

He said, “Note also that the law permits us to give 60 per cent from the 30 per cent that is given to us to the oil

producing local government which in Abia is only Ukwa West. That is why if you go to that area you have more of what we are doing than what we are doing in other areas.

“We also have what we call 10 per cent pipeline. The communities that have pipelines running through their areas like fuel pipelines that go to the north, those pipeline communities are part of it.

“We also have what we call Equality share. Because it is a state law, for it to go through the House of Assembly, members insisted we must carry them along; so we have 20 per cent for Equality for all the local governments, and that is why you can see our projects in all the local governments in Abia State.

“There is also have another 10 per cent for “NICOIL Oil” and in this area we look at Ugwunagbo Ukwa West and Ugunagbo Ukwa East.

Development projects To start off, Nwogu said, “We came up with an idea after we carried out a survey in the areas and found out that almost all the school buildings in the oil producing areas were highly dilapidated. We decided to embark on schools renovation.

But because we could not send any contractor to that area due to the kidnappings, as the money we will use to do the renovation will be used to bail the persons, we adopted a direct labour approach, under the Community Development Committees, which we constituted in those communities. So what we did was use those boys to start up the projects.”

Education We started by renovating 55 schools, and between that time and now, we have embarked of 72 school renovation projects in Abia State in

We also have what we call Equality share.

Because it is a state law, for it to go through the House of Assembly, members insisted we must carry them along; so we have 20 per cent for Equality for all the local governments, and that is why you can see our projects in all the local governments in Abia State general. About 41 of these have been completed, and the rest 31 are still ongoing and almost 70 per cent completed.

While we were doing this, the kidnapping issue was seriously on and there was a high level of poverty where people could not feed, and we came out w i t h t h e A S O PA D E C Yo u t h s Empowerment Artisanship Programme Scheme.

Our target was the down trodden indigenes, those who could not afford to feed themselves, because during that period, people were not going to their farms, all farms were abandoned for years; and there was no food anywhere. This Programme was taking from us almost N25million every month, and it lasted from September 2010 till last year October.

The people were paid this amount, and they were selected from various communities, but Ukuwa West was getting almost N15million.

The people were selected by commissioners because every commissioner knows his people and when they were selected; their names were submitted to the Welfare

Department along with their passport photographs, before identity cards were made for them. These monies were paid into various bank accounts and at the end of the month, members of the communities will go with their IDs which will be verified by the banks, to withdraw various sums that were approved - N10,000, N20,000 to help them in feeding.

We had to stop it because we could no longer fund it anymore due to low funding from the Derivation Fund.

What was coming to us was not coming anymore because our people were now vandalizing the pipelines and as a result, our crude oil was not received at the terminals. From December last year, we could hardly pay salaries due to oil bunkering.

Kidnapping was stopped, and the people went into bunkering.

Water When we could not afford to pay the monthly N25million, we looked for another project to replace it with, and we went into construction of water boreholes. We received letters

from oil producing communities that they don’t have water and their aquatic life were highly destroyed because of oil pollutions. And In Owaza, which is the biggest oil producing community we sunk some boreholes.

In Abia State, we have what is called Motorised Choke Solar system. Our aim is to put generator and also put solar panel. Since the people look at the generator as government property, nobody cares to look after them but with the solar panel, the power automatically pumps water for the people. We did four in Owaza communities, we are d o i n g t h r e e i n U k w a We s t community, three in Ukwa East and each one is 100,000 gallons.

We did one at Ikem-Ubosi in Isiala Ngwa South; we also did one at Centercus Secondary School in Umuahia North. In the schools that we are renovating, we intend to provide water and toilets so that the students don’t go into the bush to ease them and get beaten by dangerous animals. But because of funds, we have not been able to provide these things but we will start doing it in schools like Central School in Olokoro, Umuahia South, we have one there now. In Umuowa Alaocha Central School in Umuahia North, we also have one there.

Environment We have also been able to provide drainages. We have a problem, there is a place called Ukuwado in Aba Jos Road, the road has not been used for over 20 years now, but we have intervened. Because the road is a flooded area, we carried out a survey and discovered that we cannot channel the flood to anywhere, so we were advised to drill wells; we drilled 30 boreholes of 13 inches.

We bought a plot of land there and did the well, we have commenced work there, which is ongoing but the governor has commissioned it that is the only road that leads to the Ariaria Market. We also reconstructed Our Lady of Love East by Aba Road about 500 meters and it has been handed over to the governor for commissioning.

We rehabilitated the Amieke water project, they came here to inform us that they don’t have drinking water and they share water source with cattles, which led to an outbreak of cholera that took the lives of about 13 persons. We helped them to rehabilitate the only water pump they have in their village and it has touched a lot of lives and they cherished it a lot.

Traditional institutions The traditional rulers in Unukuwa West requested His Excellence to buy them cars which is their entitlement, coming from that local government so that they can look like other traditional rulers in the oil producing local governments of other states. Because it falls on our budget to do that, the governor directed that

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distributed 100,000 exercise books with bags and pencils and other writing material to almost all the schools in Abia State, (350 schools).

We organised quiz competition for Science schools in Abia State, the fisrt prize winner was given a Hummer bus which was Government College Umuahia, the second prize winner was given N2million that is Aba Girls Seconday School, the third prize N1million went to All Secondary School, and they will use it to equip their labs. The N2million was given to them to equip their school libraries.

We were directed by the governor to build two six classroom blocks in Ezebubele Primary School to enable Asa High school to move to that place. We are also building two six classroom blocks at Igiruki autonomous community.

Oil spillage

Derivation fund and development issues in oil communities CONTINUED FROM PAGE 5 we provide them with cars.

As at present we have provided them with about 20 sport utility vehicles, SUVs, that is traditional rulers in Unukuwa West, we are still buying another 28 vehicles, and we have been directed to buy for Unukuwa East that is oil producing community. And we provided four buses for the traditional rulers in Abia South, Abia North and Abia Central and one other bus for the traditional ruler that we call Unguwa Supreme Council of Traditional Rulers.

We also had a request from the Abia State University, to provide them with generating sets. We got approval for their request and we installed a 1000KVA Caterpillar generator. I spoke about East by Unguwa Road it is 500 meters, it is in Aba South local government area and it has been commissioned by the governor.

areas and it is our duty to ensure that they have motorable roads by grading the road. So in 2010 November/December, we built about 100 roads in all the local governments of Abia State, and last year December we graded about 50 roads. But from November last year the allocations went down and we had no option than to manage ourselves.

Then we did one major intervention on Port Harcourt/Enugu Express Road, we paid a courtesy visit to NEMA office here in Abia State, and we informed them that the road is totally bad and we pleaded with them to help us fix the road but they said they don’t have money. At that point we sought the approval of His Excellence and we used between N15billion and N20billion to buy mixed materials to fill the road from Nntiga junction which is in Isiala Ngwa to Aba Road.

Roads Rehabilitation We have also rehabilitated Umoge Road, church and Mosque in Michael Road and Oceanic Bank junction. All these are in Aba including Park Road by Saint Michael Road, old cored by DanFodio to Unguwa Road Aba, Kent Road, from Cameroon junction through Eyin Road to School Road Aba. Old cored Road by Eyin Junction Aba, Unguwa road by Ohakuru Road Aba, Fox Road by Airline to the Express road is 1.2 km.

You know Abia State is made up of 17 local governments; we only have two towns here which are Aba and Umuahia. Others are in the rural

Electricity provision The Commission ensured that the Owaza communities have electricity supply. They were not connected to the national grid but they had power supply from Shell generating set.

They beckoned on the Commission to hook them to the national grid and we did that by providing them with high tension poles and as we speak, Owaza community is on the national grid.

Because they are the highest oil producing communities, we want to ensure that they don’t suffer much, we decided to be paying N200,000 monthly bill for their power consumption because they don’t

We were directed by the governor to build two six classroom blocks in Ezebubele Primary School to enable Asa High school to move to that place. We are also building two six classroom blocks at Igiruki autonomous community have any meters, so the PHCN officials come with their bulk bills and we paid for them.

Ibere community is in Ukualo in Abia State. We also hooked them to the national grid, because of the nature of that place almost all the electricity poles were swept away by flood. We supplied them with 100 electricity poles with cables and insulators in order to connect them to the national grid, and as we speak they have power supply.

Umuiku-Isiasa in Ukwa West we did an extension of resuscitating job in the community. In Ugborogbe, which is in Unukuwa East we also embarked on a security job there that on three occasions after doing one, storms will come and destroy them then we will go back and fix it again.

Unukuwa also have internal problems they have areas where their poles were destroyed by storms and we have been able to fix them. By God’s grace when our funds increase we will go back there.

In Udide-Ibeku in Umahia North of Abia state we did an electricity

project there and it has been completed, they now have electricity.

We are also rewiring the Faculty of Law ABSU, we are also constructing solar power street lights at Emehin Housing Estate Umahia area, and it is ongoing. We donated one 33KVA transformer to Uzakoli in Mbede local government.

There is a community called Nndia k u - O w u w a - Ay a n w u t h e y beckoned on us to give the electricity because they don’t have electricity due to a faulty transmitter, we donated one transmitter to them and they now have power.

We also donated a 200KVA generator to Principal F1 in Umahia.

We donated the generator to them they are part of Abia state even dough it is a Federal government property.

In this year we have donated four number of split units to Abia State Broadcasting Commission.

Education In the education sector, we registered and paid for the exam fees of 500 indigene students for WAEC and NECO for 2010/2011. We also

Waste management Abia State like you all know generates a lot of waste in places like Aba, Umahia and Obe. We don’t leave the whole job to the Waste Management Commission; we too are also into environment clean up, we spend so much money to ensure that our state is clean, mostly in the oil producing areas.

Security To enable our oil flow, we have to put security in place and as we speak, we have military personnel in place to ensure that the state doesn’t suffer from oil bunkering, military personnel are securing our pipelines and we bought utility boats for them.

Security in any state is very expensive to maintain; security in the state is to help the governor to secure our pipelines, which is solely our business and to ensure that our oil producing communities are in peace. We went into partnership with the Kings, the youths and the women organisations to ensure that there is peace in the state that also takes a lot of money, security is indeed very expensive.

I want to say that Abia State is one of the safest states in the Federation because of what the governor and the President is doing on behalf of the state.

We built two six classrooms block at Asa High school. The school was to be used for Amnesty Camp for hoodlums who were involved in kidnapping but the hoodlums rejected the offer, then the school was turned into a full military base now.

We also partnered with Police Officer Wife Association (POWA).

There is this school that POWA was handling TPS Umahia, and they beckoned on us to assist them and we donated a cash of N5.8million to enable them complete the building and they completed and the former IG wife came and commissioned it.

Project Office Our law makes provision that provide what project offices where oil is produced, so we have project office at Unukuwa West, at Obehe and we furnished it to give them a sense of belonging. So every petition, every complaint goes to the office.

We also decided to have our own office, about seven plots of land were acquired where we built a two story building and it cost us about N75million. Our rents for our current office will expire in 2014, but we intend to move into our permanent site before that time.

SWEETCRUDE PROMO

Oil Disputed oil wells: Nigeria may lose territorial waters – Reps … Urge FG to call NBC to order over border delineation

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B U J A – Legislators representing Cross River State in the National Assembly have raised the alarm over the possible loss of Nigeria’s internal waters to international territorial sea due to the current proposal by t h e Nat i onal B ound ar y Commission to The Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC, had at a retreat in August 2008, redefined the maritime boundary between Cross River and Akwa Ibom states.

The Commission also d e c i d e d o n t h e declassification of Cross River state as a littoral state and the transfer of 76 oil wells from Cross River in favour of Akwa Ibom state. The implication of this is that Cross River is no longer an oil producing state.

According to the legislators, these far-reaching decisions were taken without the participation or any recourse whatsoever to Cross River state. They also lamented the plight of the people of Bakassi Peninsula in the hands of Camerounian gendarmes, since the peninsula was

ceded to Cameroun by the International Court of Justice, ICJ. The legislators, who spoke on at a Roundtable on Oil, Politics and Security organized by the Oil Justice Movement (OJM) in Abuja, regretted that the International Court of Justice’s decision to hand the peninsula to Camouroun in 2006 had opened a can of troubles for the neighbouring states of Cross River and Akwa Ibom.

Speaking in a paper, Oil and Conflict in Communities and States: A Historical Perspective, Senator Bassey Ewa Henshaw, observed that much of “maneuvering that has gone on in Bakassi can be traced to the resources in the peninsula, namely the seafood, but more especially the oil.”

H e a d d e d , “ T h e Camerounians and their masters the French, and indeed the Germans long before them, have always had their eyes on the territory and nothing was going to stop them from taking it.

“Having now taken Bakassi ‘legally’ in the eyes of the world, Cameroun is determined and unrelenting in imposing their will and authority on the Efik people who live in Bakassi in complete violation of Article 3 of the Green Tree Agreement. There is constant harassment,

igerian CONTENT INITIATIVE Dr. Ibilola Amao

Can we update the NOGICD Act and pass the PIB simultaeously

Nigerian Oil Well

Oscarline ONWUEMENYI

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seizure of fishing gear and catch, imposition of tax, and rape by the gendarmes.”

Noting that the Bakassi people are ready to take their fate into their own hands, Bassey said, “You know that at some point when they can’t take any more, they will be prepared to fight back.”

On her own part, the member r e p r e s e n t i n g Calabar/Odupkani constituency in the House of Representatives, Hon. Nkoyo Toyo pointed out that the delineation of the border between Cross River and Akwa Ibom states by the National Boundary Commission, may lead to loss of territorial sea by the country.

Toyo noted that the ICJ judgment that ceded Bakassi to Cameroun clearly established the baseline for the demarcation of internal waters from the territorial sea at the mouth of the Calabar estuary using the outermost southern tips of the land mass on both sides of the estuary as coordinates.

She said, however, that the National Boundaries Commission (NBC), in a bid to show that Cross River is not a littoral state, has moved the baseline inwards to the mouth of the Calabar river.

Sunday, March 4th, 2012 04 March 2012, Sweetcrude, Lagos - The delayed passage of the PIB has a grievous impact on the psyche of all players in the Nigerian Oil and Gas industry. The passage of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, almost two years ago, heralded a gust of activities, plans and pronouncements most of which can not be actualised without the appropriate projects. With Fiscal Terms set to change with the PIB, most investors have shied away from Nigeria and turned their Foreign Direct Investment to more stable and predictable countries such as Ghana and Angola.

As we begin to look at clause 102, that states: “subject to the approval of the Minister, the Board shall conduct a review of the Schedule to this Act at such intervals as it may determine but not later than every two years with a view to ensuring a measurable and continuous growth in Nigerian content in all projects, operations, activities and transactions in the Nigerian Oil and gas industry for onward transmission to the National assembly” This implies that we should expect some positive changes that would not only correct the gaps in the schedule but also correct the anomalies in the letter of the Act by the time that the Ministers amendment has passed through the legislature.

Indeed these are exciting times for the Oil and Gas industry. We should as a minimum expect: 1. The schedule to capture: man-hour, tonnage, volume, area, liters, length, numbers, usage, contract, numbers as secondary to spend. All the independent units of measurement save spend must be secondary to and tracked alongside spend. Spend must be maintained as the primary yard stick for measuring Nigerian Content as “in-country” spend is critical to value addition. All other units can be slashed and measures as secondary values for historical and analytical references.

2. Harmonisation of the line items in the schedules of the Act with that on the NIPEX portal and the DPR activity categorization is critical for performance tracking in license reissue and vendor development.

3. Inclusion of areas that critical to the general wellbeing of Nigeria and Nigerians Products Transportation, Marketing and Trading is necessary.

A good question that we should be asking ourselves is when would Nigeria begin to trade finished products in its own spot market? Neither has Nigeria so much as exported barrels of finished products nor traded crude on the spot market for the maximum value and return on investment possible?

The Act must go beyond first consideration to auditing the usefulness of first consideration. What have been achieved by those that were awarded blocks in the past to alleviate poverty and create jobs through effective and efficient optimisation of our natural and human resources?. We would like to see more of Iinvestment opportunities and asset ownership (factories, industries, machines, equipments etc.), marine vessels, Rail, waterway that are privately owned with the ownership tied to the execution and successful completion of Oil and Gas projects and contracts. The need to track spend, “in-country” investment, visible assets etc can not be over-emphasised in the implementation of Nigerian Content.

The long awaited PIB must provide tax incentives and fiscal terms that would encourage expenditure on infrastructure (Fabrication Yard, roads, bridges, water, electricity, residential estate, schools, hospital), Education and employment of youths, linkages to critical sectors of the economy such as IPP (Gas utilization), Downstream (Refining, Petrochemical, Chemical, fertilizer), LNG, LPG. We need to tie Schedule of the Act to the development of the iron & steel (Ajaokuta & Aladja) industries in Nigeria or we have not started expanding the envelope of growth and development for the application of any strategic thrust.

Oil

9

PEF to end manual loading of products

by New Year Oscarline ONWUEMENYI

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B U JA – T h e Petroleum Equalisation F u n d (Management) Board, PEF(M)B, has announced the achievement of a 48-hour claims payment to marketers for distribution of petroleum products across the country months after the launch of the electronic claims management solution termed ‘Project Aquila’ which is designed to enhance tracking of the movement of products in the downstream sector.

The original plan was to ensure payment of claims after a couple of weeks, but PEF(M)B said the 72-hour payment for claims was achieved after only a few months of operating the electronic solution platform, even as plans are already afoot for the launch of the next level of e-loading system appropriately tagged Aquila 2.

The General Manager, Corporate Services of the Board, Mr. Goddy Nnadi, who disclosed the milestone achievement to Sweetcrude in an exclusive interview in Abuja, also noted that over 200 staff of the Fund have been trained on the application of the software, while more than 500 marketers of petroleum products have also been trained in application of the e-loading technology.

Nnadi also disclosed plans by the agency to end manual loading of petroleum products at various depots across the country by the end of the year, adding that effective from January 1, 2013, all marketers are expected to fully embrace the e-loading platform.

He added that until date, more than 12,000 trucks carrying products nationwide have been tagged in the Project Aquila platform, with more being tagged every day.

In a recent briefing to announce the launch of the project in Abuja, the Executive Secretar y of PEF(M)B, Mrs. Adefunke

Kasali noted that the new electronic solution would bring more transparency in the products distribution in the sector. She pointed out that one major advantage of the e-loading system is that it will enable the industry to generate accurate data on the petroleum consumption patterns across the country, a phenomenon that will greatly enhance distribution and marketing trends for the downstream sector.

According to her, “The Aquila project is expected to enhance monitoring of distribution of petroleum products and speed up the processing and payment of marketers’ claims. Project Aquila will bring about s p e e d , e f f i c i e n c y, transparency and accuracy in product movement and claims settlement.

“It is outstanding in its effectiveness in determining the volume of petroleum products bridged across the country, including accruals to the marketers and transporters and also

Electronic loading of fuel

transparency in processing and easy release of funds to support marketers,” Kasali stated.

The training for marketers

The Board has also started an enlightenment programme across the nation to educate marketers and transporters on the benefit of the new system to their businesses facilitate accordingly.”

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payment

he noted that in the past, processing of claims was done manually with the physical movement of files from one location to another, thereby causing delays which impacted the marketers’ businesses a d v e r s e l y. “A l s o , t h e movement of petroleum products has gone unmonitored, thereby making it difficult to confirm or certify deliveries at designated depot areas. The new solution will result in faster claims processing, faster payment of claims,

and operators which lasted several weeks and across the six geopolitical zones of the country covered technical areas including application roles, charging of the Radio Frequency Identification (RFID) Moble System/CN3 System and truck registration and tagging.

“Staff of the Fund and marketers were also trained on Loading Transactions Data Entry and Truck Dispatching, local National Transportation Average, and other important applications which they would encounter as the project rolls out,” Kasali explained.

According to her, ‘Project

Aquila’ would be applied in i m p r o v i n g t h e q u a l i t y, consistency and speed of reports generated from the supply and distribution of petroleum products for both internal and external uses, as well as for forecasting and long term planning.

She explained that the new system will process claims in a computerized framework which minimizes the need for human intervention, thereby reducing delays and enhancing products distribution, availability and sale at government approved prices.

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h e s a i d t h e inauguration of the project and its deployment would begin in May, 2011, adding that it would become operational at the fund’s 51 depots nationwide by the first quarter of 2011.

“Aquila is a Latin word for Eagle, a bird renowned for its strength, speed and swiftness,” she explained.

“The Board has also started an enlightenment programme across the nation to educate marketers and transporters on the benefit of the new system to their b u s i n e s s e s . T h e implementation programme will require marketers to

register their outlets, and truck owners to register all trucks used for the distribution of petroleum products,” Kasali further explained.

She pointed out that with the project in place, transporters claims will be processed on First-in-Firstout (FIFO) basis and all claims documented by the system forwarded immediately for payment.

The PEFMB Chief Executive stressed that the system would eliminate wastages, and encourages greater service delivery.

“Project Aquila would also bring about a reduction of human errors in processing the national transportation allowance for products bridged as well as ease tracking of transactions,” she added.

She noted that under the scheme, however, marketers and transporters would be required to register their details with the Corporate Affairs Commission (CAC), the Department of Petroleum Resources (DPR) and the Nigeria National Petroleum Corporation (NNPC), as well as provide the addresses of their retail outlets and trucks for tagging.

Oil

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Nigerian Content Act:

Strengths, weaknesses Yemie ADEOYE

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he Nigerian Content Act was signed into law on April 22, 2010, thus signaling the first most significant achievement of President Jonathan after his reelection. Two years down the line the story has been one of success and great expectations, as several indigenous players agree that the Act was long overdue.

However there are still some challenges being faced by indigenous operators in the oil industry, Yemie Adeoye, takes a detailed look into some of the achievements of the Act in the period under review as well as pointing out areas for review and improvement.

WHEN the Nigerian Content Development Act was signed into law in 2010, not a few people in the industry hailed the Goodluck Jonathan-led Government for such a swift response upon assumption of office as the Acting President, even as some see the move as a little too hasty, especially as the Petroleum Industry Bill, PIB, supposed the single piece of document regulating the entire oil industry was yet to be passed.However, two years down the line, the C o n t e n t Ac t h a s b e e n established as a welcome development, as Nigerian companies now play a significant role in oil and gas activities across board, even as engineering plants and

President Goodluck Jonathan

companies, which were hitherto dormant have all bounced back with several activities to keep them in business.As a result of this Act, American energy giant, ExxonMobil, pioneered the use of made in Nigeria pipes in the oil and gas industry.

The company is also set to deploy Helical Submerged Arc Welded (HSAW) pipes fabricated locally by SCC Pipe Mills for its Usari-Idoho pipeline replacement project in Akwa Ibom State.The E x e c u t i v e S e c r e t a r y, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Earnest Nwapa, said that the project was in the shallow water oil fields of ExxonMobil and that the pipes would be used to replace the 24-inch oil pipeline connecting the Usari and Idoho platforms, which in water depth of 21meters.

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his will be the first time made in Nigeria pipes are used for an oil and gas project in the country by any international or local operating company and is expected to unlock investments in pipe mills and other oil industry support facilities,” said an excited Nwapa, who expressed optimism that the next FPSO integration would happen in Nigeria, as over five years of studies have been carried out in this regard.According to him, a number of investors have made plans to establish

pipe mills and related facilities in Calabar, Koko and Gbaran Ubie, and this can only be attributed to the existence of an existing law, which stipulates all that investors need to know regarding their operations in the oil sector.

Not a few industry watchers acknowledged that besides the PIB, which is yet to be passed by the National Assembly, the Nigerian Content Act remains the single most important piece of legislation in more than 50 years of oil production in the country. Mr President himself already noted that Nigerians and the national economy can only derive maximum benefits from the oil and gas industry if the Nigerian Oil and Gas Industry Content Development Act is implemented to the letter.

Speaking recently while commissioning the Abang & Itut Satellite Field Development Project Platforms-designed and fabricated at Nigerdock Island Integrated Free Trade Zone for Mobil Producing Nigeria, President Jonathan explained that merely earning money from the sale of crude oil to pay salaries and build infrastructure is not helping the economy in the desired way. According to him, “Until we make sure that the requirements of the industry; at least a reasonable per cent are produced in the country, Nigeria as a nation cannot benefit from the industry.”Our gross national earning from

Mr President himself already noted that Nigerians and the national economy can only derive maximum benefits from the oil and gas industry if the Nigerian Oil and Gas Industry Content Development Act is implemented to the letter the sector is more than 80 per cent, so it is from the oil sector that we can become industrialised.

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he President noted that it was through the development of local capacities and owning of assets used in industry’s operations that the sector can increase employment opportunities, produce and utilize more locally manufactured goods and components.He expressed dismay at the failure to attain the targeted 70 per cent local content in the industry by 2010, a development he blamed on limited indigenous capacity, adding that the accomplishment by Nigerdock will boost capacity building in other companies.The President described the completion of the Satellite Fields Development Platforms- the first to be achieved completely locally-as a proof that the Nigerian Content Act

was already yielding the expected transformation results. According to him, “What we have witnessed today is a demonstration of the rightness of the local content law. When you consider that oil and gas sector accounts for over 80 percent of the country ’s income then you will appreciate the importance of what the law can do to t r a n s f o r m o u r e c o n o m y. ” C o m m e n d i n g Nigerdock for the feat, the President also reassured investors and other stakeholders of his administration’s commitment to the full implementation of the Nigerian Content Act.The M i n i s t e r o f Pe t r o l e u m Resources, Mrs. Diezani Alison-Madueke, on her part recalled that for several decades, similar ceremonies were celebrated in yards located in Asia, Europe and the Americas where the Nigerian oil and gas industry

Oil

Alison-Madueke dismisses investors’ worries over PIB

11 FDI: Cakasa boss tasks govt on Security

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Oscarline ONWUEMENYI

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he Minister of Pe t r o l e u m Resources, Mrs. Diezani AlisonMadueke on Tuesday described the draft Petroleum Industry Bill recently sent to the National A s s e m b l y b y Pr e s i d e n t Goodluck Jonathan as a viable document capable of providing a win-win scenario for all stakeholders in the oil and gas industry in Nigeria.Alison-Madueke, who was speaking at a high level Investment Summit organised by the Ministry of Trade and Investment in conjunction with the Bank of Industry, BOI, in London, called on investors around the globe to take full advantage of the enormous opportunities the proposed oil industry reform law has to offer.In a presentation titled: Investment Opportunities in Nigeria’s Downstream Oil and Gas Value Chain, the Minister noted that apart from providing a healthy deregulated environment for private sector participation in the downstream sector, the PIB offers a refreshing fiscal regime with strong incentives for production.”We have a fiscal regime by royalty and tax which is now predicated on production as opposed to terrain and investment as was previously done. Royalty by production as we have outlined in the bill will capture the output of company as opposed to its location; it will create a fair balance between small and big operators operating in the same terrain, it will give operators the opportunity to make fair returns during field decline, and it proposes lower rates on condensate from large fields as well as ultra deep water fields,” Mrs. Alison-Madueke said.She explained that the royalty by price ensures a trigger mechanism which provides

Mrs. Alison-Madueke

the existence of fair and balanced pricing which is fair to all irrespective of the terrain of the operator since it comes with a self adjusting rate based on the price of crude oil and the natural gas price.She further noted that the new bill provides for a robust and efficient tax regime based on CITA (Corporate Income Tax), the Natural Hydrocarbon Tax and Production Bonus based regimes. On the reported concerns raised by some operators over the proposed increase in government take from 61 to 72 percent in the deep and ultra deep offshore, the Minister stated that in ar riving at the figure, Government considered all the variables taking into

a r o u n d t h e w o r l d l i ke Norway, Indonesia and even Angola. You recall that the 1993 Production Sharing Contract term (PSC) was based on $20 per barrel crude oil prices real time but since the start of production in the PSC fields crude prices have been upwards. So it was very necessary to look at the terms again,” Mrs. AlisonMadueke submitted.She noted that the new regime offers an avenue for fresh investments due to its incentive for production which is designed to attract extra investment in that regard.”In all, the proposed Petroleum Industry Bill 2012 comes closest to what we consider a win-win situation for the Nigerian Government, the Nigerian economy and people as well as other stakeholders and potential investors in the oil and gas industry,” she stated.The event which was attended by a large number of would be investors also drew a large number of Nigerians in Diaspora. They include key Nigerian business men, the Minister of

Mrs. Alison-Madueke submitted.She noted that the new regime offers an avenue for fresh investments due to its incentive for production which is designed to attract extra investment in that regard account the interest of the nation as well as what is obtainable in other jurisdictions across the world.”The proposed increase of Government to 72 percent is competitive when we look at the scale of other entities

Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo -Iweala, Minister of Trade and Investment, Olusegun Aganga, Governor of Ekiti State, Kayode Fayemi.

new storage facility, being constructed at the Lekki Free Trade Zone by the Pinnacle Oil and Gas Limited, is capable of generating up to 20, 000 new jobs upon completion, the Managing Director and Chief Executive, Mr. Peter Mbah, has said.

Mbah disclosed this at the weekend during the facility tour and opening of the 2012 Eko-Expo and the Lekki Free Trade Zone Investors’ Forum, which was declared open by the Executive Governor of L a g o s S t a t e , M r.

Babatunde Raji Fashola (SAN).

The Pinnacle boss said the project, expected to gulp about $250million, which will comprise a 400,000 Metric tonne, MT tank farm for storage on the shore that will be connected to a Single Point Mooring, SPM and Conventional Buoy Mooring (CBM) facilities.

The facility also includes an 11kilometer sub-sea and onshore pipeline network with a capacity to handle up to 80 percent of the total national refined petroleum products demand, According to Mbah, the facility when in place will eliminate any need for lightering or other transshipment operations as the norm in the Nigerian downstream industry today, and will also negate any need for investment in the construction of a shore side jetty. Furthermore, the mooring facilities will enable petroleum cargo vessels of between 5,000MT DTW and 155,000MT DTW capacities to anchor and discharge products with minimal vessel congestion as compared to the current situation on the Apapa/Kirikiri axis.

In line with the above, Mba stated that Pinnacle Oil has entered into a Joint

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13% derivation should be based on oil production – Gov. Orji

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ow did your administrati on come up with the idea of the Abia State Oil Producing Areas Development Commission, ASOPADEC? A committee was set up to look into the creation of the commission in 2010, and with the bill the committee came up with specifics. The chairman of the Commission is from an oil producing area of Abia state, and since we created the commission, we are keeping to the dictates of the law.

How are the accruable funds disbursed or utilised?

From the 13 per cent of what we derive we give 30 per cent of it to ASOPADEC; we don’t add we don’t remove. Once the 13 per cent comes, 30 per cent goes to the Commission’s account and it is a standing order and we have been religiously being doing that.

The chairman of the commission has been doing very well, and I am sure they must have shown you projects they have carried out in every sector of the state economy - is it education, water or electricity, security, construction of roads and youth empowerments.

Paying of school fees and WACE fees for indigent students in SS3 class? To be honest with you, I’m proud of

Abia State Governor, Chief Theodore Orji, tells Sweetcrude team, Clara Nwachukwu, and Ubong Nelson, in an exclusive chat on the 13 percent derivation fund for oil and gas producing states is not equitably distributed, as derivation should be based on production capacity.

Excerpts: preferential treatment is that oil comes from Ukwa West, all Gov. Orji the traditional rulers there were given sport utility vehicles, SUVs, from that money so that they can have a what the Commission has must have told you that we sense of belonging, and for done so far. have sent kidnappers packing them to say, yes, this is what In terms of power, we have and they have devised a we a gaining from the money evacuated power from Ohia means of making money and gotten from our communities. sub-station; it is from the 13 that is by attacking the The gesture was also meant percent we got the money to pipelines, stealing the crude to boost their energy and the do the project. We also use 30 o i l , s e l l i n g t h e m , a n d passion to chase away per cent on infrastructures, sometimes refining them anybody that is destroying empowerment, and we gave which affects our allocations N100million to the state at the federal level and this the pipelines, and they can University, Polytechnic and allocation is based on what we also provide us with useful information about the people College of Education. produce. who carry out the act of We a r e r u n n i n g f r e e When these boys engage in pipeline vandalism and education from primary to these nefarious acts, there are kidnapping. secondary school levels here, at times that we receive very When we are paying for so the students don’t pay l i t t l e f r o m t h e f e d e r a l anything. We have to show example that we are an oil producing state, and it is from our 13 per cent derivation that we fund most of our projects.

We a l s o s u p p o r t o u r students for external competitions which they attend and perform very well.

Recently, the chairman of the commission told me about a presidential essay competition/debate organised in Abuja, in which we came second, and Bauchi came first. There is another competition and our students are doing extremely well. g o v e r n m e n t , a n d w h e n examination fees, we also money does not come like that give preference to that area In your opinion, would you 30 per cent of 13 per cent even though it is for all say the funds are being derivation fund that we give Abians; we still give them utilised judiciously and are t o A S O PA D E C w i l l b e preference so that they don’t the host communities given drastically be affected. become restive, and start preferential treatment in the Yes, the oil producing areas saying that they are not disbursement of the funds? a r e g i v e n p r e f e r e n t i a l seeing anything from the oil We are indeed very prudent treatment because that is c o m i n g f r o m their in the utilisation of this 13 per where the money is coming communities. cent oil derivation. But of recent, I’m sure the chairman from. An example of such

In terms of power, we have evacuated power from Ohia substation; it is from the 13 percent we got the money to do the project. We also use 30 per cent on infrastructures, empowerment, and we gave N100million to the state University, Polytechnic and College of Education

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We understand that there is no particular formula for arriving at the derivation, is that true?

Yes, there is no particular formula in allocation sharing and that is why we are asking for the restricting of the partner of revenue allocation at the federal level.

You cannot imagine Abia that is producing oil receiving less revenue allocation while a state that is not producing oil is getting more than the oil producing states; maybe their population is bigger than Abia. In revenue allocation, population is included when the sharing is done, and by the last census, we were 2.8 million people.

What we are saying is that if the revenue is to be shared, it should be done very well, equitably distributed and based on what we produce.

Like I said earlier, when the issue of pipeline vandalism started in our state, it affected our revenue allocation drastically because they check the quantity that comes from your oil wells, and based on that they do the allocations. So if you don’t produce anything, nothing comes to you from the federal level.

Akwa Ibom, Rivers, Delta and Bayelsa are states that are wealthy because of the number of oil wells they have.

Speaking about oil wells, what is the situation with the disputed oil wells is the state still pursuing the case?

The truth is that they (Boundar y Commission) have to come and streamline the whole thing as they use demarcation in determining oil wells. The oil wells have already been shared that is why Rivers State is protesting, and we too are protesting. Some oil wells are for us but other states are c l a i m i n g i t . We , t h e governors have discussed it severally so that they can come and do proper delineation of boundaries, and the federal government should do it to resolve all these boundary issues.

Looking at other government agencies such as the NDDC and Niger Delta Ministry, set up to assist in the development of the oil region; do you collaborate with them to CONTINUES ON PAGE 13

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13% derivation should be based on oil production – Gov. Orji CONTINUED FROM PAGE 12

support your development projects?

We are a member of the two bodies, since we produce oil we belong to Niger Delta D e v e l o p m e n t Commission, NNDC, and the Ministry of Niger Delta also takes care of Abia and we partner with them. In terms of their projects we are there and some projects are allocated to Abia. They do road projects; they build bridges, housing, education, scholarships etc.

We see the adverts on the pages of newspapers, although, preference is also given to some states because you cannot, for instance, compare Abia State with Akwa Ibom in terms of production and in terms of money. Since the money that is used for the projects is gotten collectively, common sense demands that it should be shared that way. If you produce 90 per cent and when you are doing a project, they give you one percent, will you be happy? And give somebody who is producing 30 per cent and they him 90 per cent for his project. They give preference to the quantity of oil you produce.

What about your relationship with the oil companies like Shell that is operating in your state?

Usually we have to force them (oil company) to come and do something. Also, they give the local governments preference and say the oil is in control of the local government chairman; because those are the people that battle them. And I believe once the money comes whether it is given to us or the local government it comes to Abia State.

You will not believe that all the revenue that comes, Shell pays to the local government

goo d at pay ing we will keep bec ause the oil well is located within the local government territory. In terms of projects too, the communities have to force them to come give them good roads, electricity and other basic amenities.

Would you then say the oil companies are living up to their responsibilities?

Not at all, not at all compared with the advantages they derive from here. And that is why you have these agitations and restiveness in Niger Delta area, and kidnapping; it is because of this. The oil companies that is operating here don’t perform as expected. If they gave performed as expected, the youths here will be happy and every other person will be happy, but because they are performing you will find the youths fighting and kidnapping.

In view of dwindling resources on account of pipeline vandalism, what are your plans to continue to support the various projects in the oil communities?

We have alternative plans and that is to increase our Internally Generating Revenue (IGR) because that is where the salvation will come from. Even if they are not good at paying taxes, they have to pay; we cannot say that because they are not

quiet.

In Abia, especially in Aba, go and ask who is paying tax, they will start laughing because when we go on sensitiasation programmes or rallies, we will ask them to show us their tax receipts, and they start to laugh because they have none. But we have to make them to be conscious of their civic responsibilities that they have to pay tax. We have to get the money from

If t h e expected revenue comes in, we will not be worried that much but because the state is not generating enough revenue, we have to depend on the allocation at the federal level.

Energy is identified as key to development, what policies have you put in place to boost the sector?

Energy is the key to good governance. If we don’t have it nothing will work; production will be zero, factories will not run, there will be nothing moving and that is one of the reason why we are moving on a slow rate

Not at all, not at all compared with the advantages they derive from here. And that is why you have these agitations and restiveness in Niger Delta area, and kidnapping; it is because of this.

the people through tax, which is legitimate and they, in turn, will see what we have used them for, in providing their basic needs. We have to achieve this by shouting and we have to be aggressive about it on generating internal revenue.

We have also employed consultants that will help us and we are seeing results, as we now get money from IGR.

in terms of development because of lack of energy.

Conscious of that, in Abia we have this energy project in Alaoji which is close to completion. When it is completed, the whole of Aba and beyond will be energized. In that same Aba, Osisioma local government which is very close, we have another private power project

by Geometric Power that will

inject 188, MW, (mega watts) into the system which is about to be completed. It is also targeted at Aba and environs and even Onitsha, in Anambra State because these are productions areas.

When that one comes on stream and the one in Alaoji comes on stream too, the issue of power will have been solved. There is one 32KVA Sub power station, there is power there but our problem was how to evacuate them to the feeder station to feed the people. That has been done and it was commissioned by the Minister of Power, Prof.

Barth Nnaji, and that is why wherever you are staying, be it in an hotel or anywhere, there is constant power supply. It was not like this before, if it was before since we started this interview, power supply will have gone off about two to three times and we will be battling with our generating sets.

But now there is no noise from the generators, which indicate that the source of the power is direct from the transmission we have done.

We want to extend it because this one has captured the whole of Umuahia and environs, it has also been extended to Mbaino, that is in Imo state and they are enjoying it, we will extend it to Isiala Ngwa North and South which we are currently working on.

When we have achieved that then we will know that we have taken care of the whole of this place, and will be waiting for Geometric to take care of Aba, and then we will be home and dry.

Apart from that also, we are discussing with a foreign firm that wants to come and put a power plant in Abia, but we are still discussing on that, the ones we have seen is the one that we are sure to work with.

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Abuja and approached the National Economic Reconstr uction Fund, NERFUND, and they agreed to partner with us. So they are bringing in 50 per cent of whatever we can bring to equip these people after the training.

Samuel Nwogu

Our problem is poor funding

-ASOPADEC Chairman

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amuel Okezie Nwogu, is the Chairman of Abia S t a t e O i l Pr o d u c i n g Development Area Commission, ASOPADEC, the Commission created by Governor Theodor Orji, in March 2010, to alleviate poverty in the oil producing communities.

In this interview with Clara Nwachukwu and Ubong Nelson, Nwogu, tells Sweetcrude how Abia State, has been able to execute development projects both in the host communities and the state in general, despite its meager allocation resources.

Excerpt:

S u r p r i s i n g l y, y o u r C o m m i s s i o n h a s i n a u g u r a t e d n u m e ro u s projects in Abia State so much that one wonders if you get additional funds to execute these projects?

Sometimes we get about N150million, but the highest we have gotten since inception of the Commission is N160million. If the state gets N400million, we receive 13 per cent of it. Most of the things we do here are through direct labour. If a school needs zinc, we give them the money; they go to the market and get the items.

We are also working with charity organisations, and we are partnering with widows.

We have also done a lot of

If we have more money we will do more. Our people are really suffering, and there are lots of projects we can still execute to alleviate their sufferings things including social welfare by buying wheelchair, assisting people in hospitals like feeding them, taking some sick people to India for treatment.

Our team is really devoted to the course of helping the people in the oil producing communities. The youth

programme which we initiated was backed with skills acquisition programme, and we are partnering with Smiting and MPE to provide the skills and provide them with start up funds after they have acquired the skills. Due to lack of fund, we went to

The 13 percent is derived from crude oil production, what is the situation with some of your disputed oil wells?

We have almost 47 oil wells that went to Rivers State. But t h e y ( B o u n d a r y Commission) said they have returned 42 oil wells back to us; and if they have, Abia should have been the fourth largest oil producing state in the county. If that is the case, why is Abia State the poorest in terms of allocation. Cross River gets more revenue than us every month. It is there on the website. Next month sharing formula will be on the website, you can go to www.economyconfidential.c om or www.fmf.gov.ng. These two websites will give you what is shared.

That is why we have been crying to know the yardstick, if Abia is the fourth producing and they share N114 billion.

Was there no agreement on the sharing formula?

It is purely based on the federal government’s decisions. If they do the sharing according to how we produce, there is no way Ondo State will get more revenue than us. Our major problem is that the allocation to Abia State is too poor.

If we have more money we will do more. Our people are really suffering, and there are lots of projects we can still execute to alleviate their sufferings.

How much oil does Abia produce?

Abia has about 130 oil wells, we have three flow stations, one associated gas plant, we have Abia/NNPC gas plant, it is the gas plant that will supply gas to PHCN to generate electricity, and it will supply gas to Geometric in Abia and to Abia Industry.

We produced 36,000 barrels of crude oil per day, Imoturu produces 23,000 barrels per day and Isimili flow station produces over 8,000 barrels CONTINUES ON PAGE 15

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Our problem is poor funding -ASOPADEC Chairman

Umuahia, capital of Abia of crude oil per day. Then four oil wells in Izaku go to Obigo flow station. About 30 oil wells from my village go to Umuri and about eight oil wells from Umurie go to Afam.

So what then are you doing to stop pipeline vandalism?

We have improved on internal security, and local surveillance. But we found out that the military and local surveillance cannot handle the situation independently because the military does not know who is who, so we needed the services of the local surveillance to work with the military.

Is pipeline vandalism in Abia more of sabotage or integrity failure?

It is more of sabotage because Shell on their own has been trying to replace their pipelines with a more durable pipe.

Since you mention Shell, how is the oil company helping to sustain peace in Abia?

The oil company is doing totally nothing about it. As a former youth leader from an oil producing community in Owaza, I know most of the issues.

We had very bad roads; Shell did not construct any road. Every year, Shell will come with a budget but they will not tell you that they want to do business with you

or what they have for us in the New Year. But Shell will wait until there is crisis before acting.

All that Shell does is to stay in their offices and come up with a policy and impose it on the communities. Apart from the Uwaza community road that links to the Ring Road that was constructed in 1996, Shell has not done anything else in that community. The water that they supply to the c o m m u n i t i e s i s contaminated, and their staff don’t drink the water because they come with bottled water.

Research carried out on the water showed that it is dangerous to health.

Besides, they don’t employ our people, they don’t give us preference. This thing they call Local Content is not working for us because they don’t award us contracts.

Shell normally gave the excuse that we don’t have qualified people to do, but I argued that we do, and on one occasion some of our people went for tests and they came out tops, but still nothing happened.

I know how Shell operates, their policies and other things about them. But thank God for Uchendo (Governor), all the people in our oil producing communities are being empowered by the Commission – the traditional rulers, our youths; we now have good houses, good roads and we are embarking on scholarships, we want to

send some of our students to Malaysia to study.

What about the NNPC, are they doing anything to help the communities?

NNPC is the worst of them; but if you touch their pipelines you will go prison. … But it was reported that

shuts in. Oil does not flow like water, it comes from a r e s e r v o i r, s o w h a t e v e r happens to the pipelines, it sends a signal immediately to the Christmas tree and the tree regulates what flows through it.

Also, where is the map that provides the line for these pipelines that they are doing?

You will see that there is no Awaza community in the map. So when it comes to revenue that is meant for the state you will find out it does not come to us because our oil producing communities are not on the map, and it is the same map they use to give other states their allocations.

The governor is on top of the situation to ensure that what is meant for the state is what the state gets in the allocation of 13 per cent derivation.

What about other agencies like NDDC and Niger Delta Ministry?

A p a r t f r o m t h e Commission, we also have

All that Shell does is to stay in their offices and come up with a policy and impose it on the communities. Apart from the Uwaza community road that links to the Ring Road that was constructed in 1996, Shell has not done anything else in that community the kind of oil spill that occurs in Abia will soon over-run that of the Niger Delta?

Whoever said that does not know what he is saying. Let him tell you which pipelines the spills are coming from.

They stay in their offices and say things they don’t really know about. But the truth remains that it is very difficult to break the pipelines, some of which are between 8 and 11 inches thick.

Let me explain something many people don’t know; when you go to a Christmas tree that is not producing you cannot take oil from it because it has an automatic valve that

t h e N i g e r D e l t a Development Commission, NNDC, and the Niger Delta Ministry. But we all know the politicking that goes on there.

They will do big projects yet they will not commission them, especially the NDDC. For instance, there are more than 20 water projects with that have not been commissioned in my community. But the Niger Delta Ministry is doing their best because they are constructing good roads.

Back to the derivation fund, is there a forum where

stakeholders meet to decide which community gets what?

Our people are happy with the little they see because in previous years we did not see anything. Also, there are lots of things the oil communities are benefiting from the state because they have commissioners from those communities. They get other state appointments, and youth empowerment programmes. They also have their share of state contracts; that is why the governor is happy with the work we are doing because we are complementing the job he is doing for these communities.

The state government is really trying with the little that comes from the 13 per cent derivation allocation.

After the Commission has made all the necessary payments, it will still have to fund so many other projects; meanwhile the people are not willing to pay tax.

Lagos State can do without allocation from the federal government but that is not the case with Abia.

Sometimes, the governor will tell us to manage what we have. When we started constructing roads, he was surprised, but I told him that with the funds that we get we can construct good roads. We are not here to build houses for ourselves overseas; personally, I have not travelled out of this country since I became chairman of the Commission. All we want to do is to give back to the community and make them feel comfortable and to have a sense of belonging.

Is there anything your Commission is doing toward conflict resolution?

Yes there is. We are partnering with Civil Society Organisations, Women’s groups because mothers are affected more by their children’s vices. We provided funds to train some youths in non-violence system. Those of them who were trained now realise that they were being used to carry out nefarious activities within the state.

Gas

Cooking Gas

public and private companies with the capacity to produce”.

He also said that the regulation of the LPG final price should be the responsibility of the government.

He said that if Government can encourage the use of LPG, it would reduce the huge foreign exchange spent on kerosene yearly and also prevent irregular supply of kerosene, which had always created hardship.

Venkatapathy said that most of the challenges confronting LPG consumption in Nigeria include: the decline in the demand of the product; roadside LPG cylinder to cylinder transfer; and lack of specific regulations.

He said that for home use, the challenges include high cost of LPG to the common man.

He suggested that government should pass a legislative bill that LPG cylinders be marketed by approved big LPG marketing companies.

Mr Chima Ibeneche, President of NGA, in his

Nigeria can save $1.25b from LPG Kunle KALEJAYE

E

xperts in Nigeria’s oil and gas sector have expressed optimism that the country can save up to $1.25 billion (N200 billion) if kerosene consumers switched to the use of Liquefied Petroleum Gas (Cooking Gas).

It is believed that Nigeria consumes about 11 million litres of kerosene daily, out of which eight million litres are consumed by Nigerians who were under-privileged.

One such experts, is the Managing Director of The Nigerian Independent Pe t r o l e u m C o m p a n y

(NIPCO), Mr Venkataraman Venkatapathy, who urged the Federal Gover nment to formulate a policy that would promote use of Liquid Petroleum Gas (LPG) as cooking gas in the country.

The NIPCO boss stated this during the Nigerian Gas Association (NGA) 2012 First Quarter Business Forum in Lagos.

Venkatapathy said that the Nigerian cooking gas market is very large with high demand potential, but yet to be tapped, adding that LPG could substitute imported kerosene for domestic energy use.

H e , h o w e v e r, u r g e d government to waive taxes,

duties and levies on imported LPG kits to reduce cost and increase affordability. “The rural poor need an additional income of N800 million per day to meet their kerosene consumption needs,” he said.

As a result, he urged government to “ waive VAT on domestic LPG sources; remove all forms of duties and levies on LPG imported kits, cylinders and accessories. All levies like land tax, DPR Levies, and other government taxes be waived for setting up LPG kits and bottling plants in the country,” he said.

Venkatapathy said that for massive LPG growth programme, “government needs to approve capable

remarks, said that “The association has come a long way in its quest to contribute to the development of Nigerian gas industry.

“I am delighted to state that NGA have been part of the evolution of a vibrant gas industry characterised by high energies in building consensus between the private and the public sectors in fashioning out Nigerian gas structural plan,” Ibeneche said.

He added that, “the task today and in the years to come is to ensure sufficient gas supply to industries and homes in Nigeria in line with the gas revolution declared

by President Goodluck Jonathan.

16

Ghana announces more oil discovery

T

he state-owned Ghana National Petroleum Corporation (GNPC) has announced that another oil discovery has been made in the West African state. In said in a statement issued in Accra that the Wawa-1 exploration well, located in the DeepwaterTano (DWT) Block offshore Ghana, discovered 20 metres (65 feet) of gas-condensate column and 13 metres (42 feet) of oil. Samples of oil recovered from the well indicate that it was of ‘high quality of API values of between 38 and 44 degrees’.

GNPC said pressure data i n d i c a t e d t h e Wa w a discovery was separate and distinct from the adjacent Tweneboa, Enyenra and Ntomme (TEN) cluster of discoveries.

It said further evaluation of this well would be conducted after which the well would be suspended for possible future use in appraisal and development operations.

According to Mr. Thomas Manu, Director of Exploration and Production a t G N P C , “ t h e Wa w a discovery is a confirmation of the prospectivity of the offshore Western Basin. The discovery has enhanced the value of the TEN (Tweneboa, Enyenra and Ntomme) complex, for which the plan of development is currently being discussed among the partners.’

He hinted that further ex p l o r a t i o n d r i l l i n g i s planned within the block before the end of the year.

GNPC has 10 percent carried interest in the DeepwaterTano Block and has the option to acquire additional paying interest of 5 per cent upon declaration that the discovery is commercial.

The other Partners in the Block include Tullow Oil plc (49.95 percent working interest and operator), Kosmos Energy (18 per cent working interest), Anadarko (18 per cent working interest) and Tano Block Sabre Oil & Gas Holdings Ltd (4.05 per cent working interest).

Gas FG targets 250 exhibitors for Onne oil, gas forum

Brent rises above $106 B

Onne port,

T

he Federal Government said it is targeting about 250 local a n d international exhibitors in the 2012 oil and gas forum slated to hold at Onne Free Trade Zone, FTZ, Rivers State.

Chairman, Organizing Committee, Director (Trade) in the Federal Ministry of Trade and Investment, Mr. David Adejuwon, said in a statement that the mandate of his committee is to organize an international Trade and Investment Forum on Oil and Gas, and also to showcase the success story of the Onne FTZ, to attract more investors both locally and internationally.

He said the Committee has inspected the facilities that will be put in place for the Forum, adding that lots of activities have been identified with timelines and responsibilities assigned to various organizations that will midwife the success of the event.

He promised that his committee intended to mobilize over 150 investors operating in the zone, as well as investors from Middle East, Europe, and America and all over the world, adding that over 4000 square meter space has been made available within the Onne FTZ for the event.

Adejuwon said that the committee intended to attract more investors to the FTZ to complement the companies already operating in the zone, which occupied about 30% of the space.

“We have had good discussions with a good number of participants from Doha and Asia, and we intend to attract more companies for this event through our foreign Embassies”. Already, the Nigerian Embassy in South Korea, is in touch with South Korean Chamber of Commerce in ter ms of mobilisation, and we intend to maximize Nigeria's participation at the ongoing Yeosu Expo in South Korea to attract more companies."

He further said that the forum will provide a good platform to showcase the successes that have been recorded by the present administration in growing the e c o n o m y, b y a t t r a c t i n g credible investors to the downstream and upstream sectors of the oil and gas industry.

The Chairman pointed out that despite the security challenges, Nigeria still had a lot of credible investors that are doing good businesses and taking advantage of the high rate of retur n on investment in the country.

“They never closed shop for a single day even in the volatile region and this underscores the fact that Nigeria is a very safe investment designation."

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rent crude inched above $106 a barrel on Friday on concerns over supply from the Middle East and the North Sea, though worries over a slowing global economy capped gains.

The US Congress passed a new package of sanctions against Iran that aims to punish banks, insurance companies and shippers that help Tehran sell its oil.

This builds on oil trade sanctions signed into law in December that prompted buyers in Japan, South Korea, India and others to slash their purchases of Iranian oil.

Brent crude had gained 43 cents to $106.33 per barrel early on Friday, while US rose 36 cents to $87.49. Both prices are on track for their second weekly loss.

“The fighting in Syria, tensions in Iran, the North Sea maintenance plan and reduced Opec daily supply are all coming together and providing support to Brent (prices),” said Nick Tr e v e t h a n , s e n i o r commodities strategist at ANZ Bank in Singapore.

Maintenance work in the British sector of the North Sea will cut oil production in September.

The Brent contract is based on four North Sea crude oils -Brent, Forties, Oseberg and Ekofisk - and export programmes for September were expected to show a sharp drop.

Seaborne oil exports from Opec, excluding Angola and Ecuador, will fall by 120,000 barrels per day in the four weeks to 18 August, UK consultancy Oil Movements said.

Adding to supply uncertainty, Iraq’s semiautonomous region of Kurdistan plans to halt oil exports on 31 August if the central government does not make all outstanding payments, the region’s minister of natural resources said.

Middle East tensions increased with former UN S e c r e t a r y- G e n e r a l K o f i Annan quitting as international peace envoy for Syria, frustrated by “fingerpointing” at the United Nations, while the armed rebellion against President Bashar Assad becomes increasingly bloody.

Also providing support, US crude stockpiles last week fell by their most since December, while cr ude imports dropped and oil products also posted unexpected declines, federal government data showed on Wednesday.

Domestic stocks of crude, excluding oil held in the Strategic Petroleum Reserve, fell 6.52 million barrels to 373.59 million barrels in the week to 27 July, the Energy Information Administration reported. Analysts polled by Reuters had forecast a much smaller drop of 700,000 barrels.

Nigeria hits record high oil output

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igeria’s crude oil production hit a record high of 2.7 million barrels per day on Wednesday, the state-run oil company said on Thursday.

The results come despite ministers and oil companies saying recently that oil theft had caused output to fall.

“I am glad to report to you that in crude oil production, yesterday, we recorded an all

time high of 2.7 million barrels. This has not been recorded before,” Andrew Yakubu, Managing Director of the Nigerian National Petroleum Corp (NNPC), said in a statement, according to Reuters.

Nigeria is a member of the oil producing group Opec, which has set the West African country a crude oil output limit of 1.67 million

bpd.

Nigeria’s oil and finance ministers and the central bank governor have said in recent weeks that rapidly rising oil theft and the damage it causes to infrastructure is significantly cutting oil output.

Shell and the Nigerian government estimate somewhere between

150,000 and 180,000 bpd is being stolen, while an unknown amount is deferred due to pipeline sabotage.

Loading schedules showed Africa’s top oil producer was set to export 1.81 million bpd in September, its lowest in 11 months.

Financing

Fuel Station

Fuel subsidy scandal and NEITI audit reports Oscarline ONWUEMENYI

T

HE recent furore that engulfed the nation over the mismanagement of more than a trillion naira of public funds through fuel subsidy scam – and the alleged bribery of House Committee members who are supposed to be investigating the scam – has thrown up numerous issues with regards to the fight against corruption in the nation’s oil and gas industry.

Most strikingly is the blatant inability or handicap of different administrations to apply the steel when it comes to implementing reports by local and international agencies.

In this case, many stakeholders have blamed the current bribery mess in the National Assembly and the fuel subsidy fraud on the refusal of the government to act on several reports of corruption in the nation’s oil and gas industry presented

before it over the years, especially the ample audit reports from the Nigeria Extractive Industries Tr a n s p a r e n c y I n i t i a t i v e , NEITI, which has covered more than a decade of oil and gas production in the country.

The former Chairman of the National Stakeholders Working Group, NSWG, of NEITI, Prof. Asisi Asobie, who spoke to SWEETCRUDE at an E x p e r t Wo r k s h o p o n Developing a Module on Training of Corruption Risk Assessors, organised by the Independent Corrupt Practices and other Related Offences Commission (ICPC), in Abuja, asserted that issues of corruption revealed in the fuel subsidy probe by the National Assembly was “the first time that Nigerians were made aware of the presence of huge reports that have been in the public domain already about the issues in the nation’s petroleum industry, which was produced by NEITI over the years.”

According to him, “NEITI has diligently produced

The most important government body in the anti-corruption fight is the Office of the AuditorGeneral of the Federation, and NEITI regularly submits its reports to that Office

information that covers over ten years of the issues in the industry, but the problem is that Nigerians did not know about it until the oil subsidy probe came.

The problem we see today is partly because the legislature itself refused to act on the reports over the years that the problem persisted.

“NEITI reports are supposed to be submitted to the National Assembly; in other words, they should have been holding public hearings on these reports since 2006, when the first report was published and they should have been holding it every year since then. If they had done that, there would be no need for

this probe and the attendant scandals,” he added.

H

e stressed that if the right things were done years ago, what the industry would be dealing with presently is the remediation aspects of the report, which were also enumerated by the NEITI audits.

According to Asobie, a lot Nigerians were mistaken in their perception that the anticorruption agencies including the EFCC and ICPC were the last bastion in the fight against corruption. “The most important government body in the anti-corruption fight is the

18

Office of the Auditor-General of the Federation, and NEITI regularly submits its reports to that Office. The AuditorGeneral’s office compiles every report about corruption in the public sector every year since 1999, and they have been putting that before the National Assembly. The National Assembly has not acted on these reports.”

Over the years, the management of NEITI had 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.

The Executive Secretary of NEITI, Mrs. Zainab Ahmed, explained at a recent workshop to discuss the fiveyear 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.

She further explained that the impact of the NEITI on the Nigerian society can be measured indirectly. First, she notes, through its core function of disclosing and publishing company payments and government receipts of revenues from the ex t r a c t i v e i n d u s t r y, t h e governments and people of Nigeria are ‘empowered’ to demand their rightful share from the Federation Account, accordance with the law. “In addition, through its financial, physical and process audits of the industry, the NEITI monitors and publicizes the extent to which gas penalties 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,” she added.

Feedback

Fee dback

The trouble with onshore/offshore dichotomy

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r a t h e r intriguing game of muscle flexing has been quietly going on between President Olusegun Obasanjo and the governors of the nine oil-producing states over the actual quantum of naira that the 13 per cent derivation translates to. While the governors claim entitlement to 13 per cent of proceeds from total crude oil and gas production, the President insists on applying the derivation formula based on onshore production only, which in his estimation amounts to 60 per cent of total production. The argument that is often thrown around to support this computation is that offshore oil belongs to the Federal Government and not the state. Therefore, the argument goes, oilproducing states cannot derive any extra income from this offshore production to which they have no title in the first place.

Three Federal statutes and the constitution of the Federal Republic of Nigeria (1999) all contain unambiguous provisions on the ownership, management and control of all minerals, oil and gas in place. Section 44 (3) of the constitution “as well as the Petroleum Act Cap 350, Exclusive Economic Zone Act Cap 116, Territorial Waters Act Cap 428 and The Te r r i t o r i a l W a t e r s (Amendment) Act of 1997 all expressly vest the ownership and control of “minerals, mineral oils and natural gas in, under or upon any land, territorial waters or Exclusive Economic Zone of Nigeria in the Government of the Federation. Therefore, unless a constitutional amendment is effected, there can be no contest as to who owns the oil and gas in Nigeria, be it onshore or offshore.

However, Section 162 (2) of the constitution states, inter alia, that in determining the revenue allocation formula of the Federation Account, “the principle of derivation shall be constantly reflected in any approved formula as being not less than 13 per cent of the revenue accruing to the Federation Account directly from any natural resources.”

Read in conjunction with Section 44 (3) and the Extant Statutes earlier referred to,

what this Section 162 (2) simply provides for is to the effect that, even though all oil and gas wheresoever it is found belongs to the Federal Government, in distributing the revenue accruing therefrom, 13 per cent of it should be shared among the states from which this federal revenue accrues. When we recall the socio-political antecedents that gave rise to this thoroughly negotiated clause in the federal constitution, it is not surprising that a clear, unambiguous distinction between onshore and offshore resources was avoided. Thus the emphasis is on rewarding the states that host these revenuegenerating oil and gas activities and not some complex legal definition of state and federal geographic boundaries. In the circumstance, ownership is irrelevant while the intent is to ensure equitable distribution.

By Austin Avuru

In the circumstance, ownership is irrelevant while the intent is to ensure equitable distribution

T

he history of the derivation principle in revenue sharing in Nigeria is particularly interesting for its illustration of the political nature of the exercise.

Between 1951 and 1970, five revenue allocation arrangements by colonial and post-colonial governments emphasised derivation. The HicksPhillipson Commission of 1961 and the Binn Commission of 1964 both recommended 50 per cent derivation proportion to the area generating the resource, 35 per cent to the Regions and 15 per cent to the Central Government. By contrast, the Chick Commission of 1953 had recommended 100 per cent derivation for resourcesbearing areas. In 1958, the Raisman-Tree Commission

disco ntent a n d protests from oilproducing communities during the Babangida regime, the derivation factor, which had fallen to 1.5 per cent from 45 per cent in 1970 was increased to 3 per cent. When OMPADEC was set up in 1992 and allocated twothirds out of the 3 per cent derivation, Section 2 (2) (1) of the enabling decree provided that funds from the allocation received by OMPADEC are “to be used for the rehabilitation of the oil mineral producing areas on the basis of their production ratio and not on the basis of the dichotomy of offshore or onshore oil production.”

This provision was interpreted as conferring oil producing status on littoral states and effectively abolished the dichotomy introduced by the 1971 Act. Thus Akwa Ibom and Ondo states joined the club of oil producing states. Following further escalation of community crises in the Niger Delta, particularly the Ogoni crises and the Kaiama declaration, the constitutional conference in 1995 recommended further increase in the derivation factor from 3 to 13 per cent.

This was adopted and engraved in the 1999 Constitution.

My suspicion, however, is that the actual computation of the full value of the 13 per cent derivation was only done for the first time by the present government who found the sum involved to be far beyond their wildest estimation. Every unconventional effort is therefore being made to reduce the sum due these states to a figure that is

recommended derivation (50 per cent) Regions 30 and the Central Government 20. At the end of the civil war the offshore revenues act of 1971 was enacted which reserved revenues from offshore oil exclusively for the Federal Government while pegging derivation at 45 per cent of onshore proceeds. This was the first time a clean distinction was made between onshore and offshore proceeds in our revenue allocation formula.

The Aboyade Technical Committee of 1977 and the Okigbo Commission of 1979, in fact, recommended that the derivation principle be abolished altogether. But following widespread

19

acceptable to the central government. Unfortunately, under the current dispensation, the only viable options open to the Federal Government is to pay what is constitutionally stipulated or seek a constitutional amendment.

The political implications of the offshore/onshore dichotomy make the legal arguments pale into insignificance. To expunge offshore production from the derivation calculation is to expel Akwa Ibom and Ondo states from the club of oil producers. Their membership of NNDC, including their stout representation at the board of NNDC, would have to be annulled. In the face of such an action, can Mobil continue to operate its offshore fields? Will their Qua Iboe Terminal continue to function? Will the Itsekiris and Ijaws of Delta State allow Chevron to operate their offshore fields from Escravos? How will you tell the restive Ijaws and Ilajes of Ondo State that their modest oil-producing privileges have been severed and still expect Chevron, Conoco, Consolidated oil and Cavendish to continue their western offshore operations?

And in the face of all this, how will Obasanjos campaign train be welcomed in these states come 2003?

I

believe the true spirit of revenue sharing, especially in the mold contemplated by the constitution is an astute balancing of political and economic considerations. If commercial quantities of crude oil were eventually discovered in Lake Chad, I don’t know who would convince Borno State that they are not an oil-producing state. A littoral state that is bearing the full burden of hosting oil exploration and production activities cannot be said not to be resource bearing. To do so would be to open a Pandoras box of grave political and community crises that will make nonsense of the efforts of the past 10 years to bring stability to oil and gas operations. This would amount to the proverbial act of throwing the child away with the bath water.

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Insurance

18

T

he actions of the Boko Haram sect has led to e c o n o m i c paralysis in some Northern states of the country, however experts are of the opinion that collaboration between the government and the insurance industry can salvage the situation going forward. Rosemary Onuoha reports As terrorism daily assumes a widening dimension, international reinsurance companies no longer extend reinsurance cover for terrorism to developing economies battling with the menace. The reason for this trend, according to findings, is that these international reinsurance firms are of the opinion that most developing economies cannot afford reinsuring their terrorism risks in the international market due to the huge cost involved.

As worrisome as this may seem, experts are insisting that insurance against ter rorism is necessar y; therefore, countries affected by this development must either choose to combat the rising threat of terrorism or sink with it as the case may be.

In Nigeria, the fear of Boko Haram has adversely crippled economic activities in some Northern states even when the federal government, on daily basis, insists that it is on top of the situation. Even while government claims to be on top of the situation, investigations reveal that there is no concrete insurance plan for providing compensation for loss associated with terrorism. To this end, stakeholders are calling for collaboration between the government and the insurance industry in the fight against terrorism.

Chairman of New India Assurance Company Limited, Mr. Annur Sekar said that terrorism is a serious cause for concern in Nigeria, as such, the insurance industry must wake up to the challenge with the full support of the government.

Chairman of Nigerian Insurers Association, NIA, Mr. Olusola Ladipo-Ajayi , stated that with collaboration between all stakeholders, terrorism can be defeated.

For the Former Managing Director of Financial

Terrorist attack

Salvaging economic risks through insurance Institutions Training Centre, FITC, Mr. Oladimeji Alo, there is no better time for terrorism insurance to be put in place than now.

A l o s a i d “A s o u n d understanding of the Nigerian environment should propel the government to embrace insurance to guard against losses which could emanate from terrorism.”

The collaboration If only the insurance industry can get the backing of the government, Sekar said that operators in the sector can come together and create a terrorism pool.

He said “In India we have gone through similar situations in the past.

Following the 911 incident, the overseas market

withdrew the terrorism cover to the Indian market. And what we did in India is that we came out with our terrorism pool with the backing of the regulator and we have a reinsurance corporation. The reinsurance company became the pool manager and the rest of the market players became participants. So we started operating a terrorism pool in India and over the years it has become bigger and bigger and it has been able to meet the domestic requirement of the insured.

But if the risk is very large, what we do is that we go to the overseas market and try to obtain a standard terrorism policy. But the pool is working very satisfactorily and I think in Nigeria, something like this can be taught up by the

regulator here. The local reinsurance company can become a pool manager and the rest insurers can participate in that pool and we find out that this kind of arrangement works very well and one doesn’t have to look to the outsiders.”

The challenge As elaborate as the call for collaboration in the fight against terrorism may sound the biggest challenge to the growth of the Nigerian insurance industry is the government itself.

Managing Director of Custodian and Allied Insurance Plc, Mr. Wole Oshin stated “In other economies, gover nment picks on insurance for progress. Unfortunately gover nment in Nigeria

doesn’t even know insurance.”

He stressed that the government needs to recognise insurance, adding “A situation where budgets are discussed and insurance industry is not even invited means that government does not understand the importance of insurance.

Our primary and fundamental objective as an industry is to stabilise the economy, produce savings and stabilise the risk of government. But government has not looked at insurance because they don’t understand it because if they do, then the will give priority to insurance because. In advanced countries, the government can’t do anything without the insurance industry. They can’t even make policies without insurance. Here insurance is not in the centre stage yet and I think it is a critical thing,” Oshin stated.

Insurance Experts task insurers on local content law

P

r o f . J o e Irukwu, an insurance expert has called on insurance operators to take advantage of the local content law and participate actively in the oil and gas sector.

Irukwu who said this in Lagos regretted that the level of discipline on the part of insurance operators have dropped drastically despite enabling laws which they can capitalise on.

Irukwu said “Presently there are enabling laws to guide the practice of insurance, but it is so sad that the level of discipline has dropped drastically despite these laws.”

Irukwu, who is one time Managing Director of Nigeria Reinsurance Plc noted that the high level of discipline in the insurance industry in the 60s and 70’s spurred the industry to growth and development despite the absence of enabling laws.

Irukwu who decried the dearth of discipline in the insurance industry now, lamented that the sorry state of affairs in the sector presently was not the case when they were still very much active.

Irukwu therefore called on insurance practitioners to ensure that they abide by the laws guiding the profession adding that the popular saying by international oil companies that Nigerian insurance companies lack capacity to underwrite oil and gas risk has been described as a false statement as they are merely talking for their pockets just to encourage capital flight.

The insurance expert stressed that the country truly have the capacity to do the 70 per cent oil and gas business which the local content law permits her to cover.

According to him, the insurance operators must ensure that they actually underwrite oil and gas

Prof. Joe Irukwu

The country truly have the capacity to do the 70 per cent oil and gas business which the local content law permits her to cover business and not fronting for international underwriters as has been the case all along.

In his words “These people

that keep saying that we don’t have capacity are only talking for their pockets and we the operators in the insurance sector must actually underwrite and not front for the captive insurers of these oil majors.”

He charged insurance practitioners to desist from aiding oil companies operating in the country to defy rules and regulations guiding oil and gas risk underwriting for their selfish gains.

According to him, ordinarily the oil majors want to play by the rules but some insurance practitioners who want to cut corners force them to do otherwise.

In his words “Sometimes

these oil majors operating in the country want to obey the laws guiding oil and gas risk underwriting, but we always find a reason for them not to.”

According to Irukwu, the development is not encouraging because the oil companies have tended to see the practice as the standard norm in the industry, thereby throwing crumbs to Nigerian insurance companies while taking the huge chunk of oil business abroad.

Irukwu lamented that it is the high rate of indiscipline in the insurance industry that has made the practice to go on unabated for a very long time, calling on practitioners in the sector to imbibe the character of discipline.

19 Board to submit risk management declaration to NAICOM

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s sweeping reforms continue in the insurance industry, the Board of Directors of companies in the sector must now be involved in the risk management process and must submit a risk management declaration to the National Insurance Commission, NAICOM, at the end of every financial year.

The declaration relating to each financial year of the company shall be signed by at least two directors along with the annual returns and accounts of each company.

According to the guideline for developing a risk management framework for insurers and reinsurers in Nigeria recently issued by NAICOM, from 1st July, 2012, any company that does not comply with the guideline will be duly sanctioned by NAICOM. A risk management framework is the totality of systems, structures, policies, processes and people within the company by which the company identifies, assesses, mitigates and monitors all inter nal and exter nal sources of risk that could have a material impact on the company’s operations.

The guideline sets minimum standard required from each and every insurer and reinsurer by which they can provide a reasonable assurance to the C o m m i s s i o n , p o l i c y h o l d e r s , shareholders and other stakeholders that the risks to which they are exposed are being soundly and prudently managed.

As a result, the Board of all insurance and reinsurance companies must provide NAICOM with a Risk Management Declaration stating that, to the best of its knowledge and belief, having made appropriate enquiries that the company has systems in place for the purpose of ensuring compliance with the guideline.

Labour

Industrial unrest looms in power sector …Labour accuses FG of violating agreement

Protesters Victor AHIUMA-YOUNG

I

NDICATION of a looming industrial unrest in the n a t i o n ’ s Po w e r sector over claims by three workers’ unions in the sector that the Federal Government through the Ministr y of Power, has breached agreement reached with them.

The unions have already petitioned the Minister of Labour and Productivity, C h i e f E m e k a Wo g u , intimating him with the perceived breaches and the impending industrial unrest should their grievances remained unaddressed after March 31st.

Sweet Crude gathered that if urgent steps are not taken to address the grievances of the unions, days ahead could witness industrial action by workers raising fears of further worsening of the

power situation in the country.

The three unions; of Electricity Employees, NUEE, Senior Staff Association of Electricity and Allied Companies, SSAEAC, and the Nigeria Union of Pensioners, NUP, Electricity sector, listed not less than areas where they claimed their agreement with the Federal Government was breached.

In the petition, NUEE, SSAEAC and NUP, lamented that it was quite unfortunate that they had subsisting collective agreements with Government on several issues yet they (unions) were still being trivialized, arguing that “it is worrisome that Government is running away from abiding with product of social dialogue/ negotiation.”

In the petition by Joe AJaero and Mansur Musa, General Secretary and President of NUEE,

respectively; Abiodun Ogunsegha and Bede Opara, General Secretary and President General of SSAEAC, respectively and Olukayode Ogunbiyi and Temple Ubani, Secretary and President of NUP Electricity Sector respectively, said “agreed in the last round of negotiation that the Corporate Headquarters of PHCN shall remain with full complement of staff until the final liquidation of PHCN when all the labour issues would have been resolved. Barely one week after this agreement was reached, the Power Ministry directed t h a t L P C s ( L a s t Pa y Certificates) of employees purportedly transferred to new companies be raised and issued. This remains one of the very disturbing issues discussed at the Negotiation and we maintained that it would be inappropriate to transfer staff from one company (a holding company)

to another (successor company) without determining the status of employment of the concerned employees.”

“Though, Government agreed that PHCN cannot be liquidated without complying with the required legal process but it amounts to inconsistency if action is being taken to wind down its headquarters by transferring its workers out, without concluding the negotiations and its implementation. Status quo ante should therefore be maintained to uphold the sanctity of PHCN Corporate Headquarters in line with the collective agreement reached in this regard.” ”Though 50% salary increase was a g re e d t o a s fi na l settlement of the balance of 137% negotiated salary increase, effective 1stJune, 2011, it is distasteful to report that it is yet to be fully implemented.

20 INSECURITY: PENGASSAN calls for immigration policy review Victor AHIUMA-YOUNG

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ETOLEUM and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, has i m p l o r e d t h e Fe d e r a l Government to review the nation’s immigration policy to check influx of illegal immigrants into the country.

Speaking on the spate of gunmen attacks and worsening security situation in the country, President of PENGASSAN, Comrade Babatunde Ogun, said that the review of the immigration policy would help in reducing crime rate especially the involvement of aliens.

According to Ogun, many people from Nigeria’s neighbouring countries come into the Nigeria without proper papers or documents and without purpose, lamenting the porosity of the nation’s borders and lack of commitment on the part of the officers and men of the Nigeria Immigration Service, NIS. He said “There have been several reports of cases of attacks on the Nigerians in the Northern part of the country by herdsmen from some neighbouring countries. More worrisome is the Al Quada dimension to the insecurity in the country. I think the review of the immigration policy needs to involve reorientation, training and retraining of the officers and men of the Nigerian Immigration on protecting our borders.”

He argued that the laxity of the policy also allowed foreigners to take jobs are meant for Nigerians, all in the name of expatriates, stating that whereas “Some of the foreigners who parade as expatriates have no specialization that can qualify them for being in the country. With this, they take our jobs and increase unemployment in the country and violate the Nigerian law on expatriate quota.”

Labour

21 NANDS advise government on labour issues Gabriel ENOGHOLASE

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PHCN Workers outside the office premises

Union challenges BPE on PHCN ghost workers Victor AHIUMA-YOUNG

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RGANISED Labour has described t h e leadership of the Bureau of Public Enterprises, BPE, as a serial liar that must not be trusted by any right thinking Nigerian.

Speaking against the backdrop of statement credited to BPE that no less than 17,000 ghost workers have been uncovered in the Power Holding Company of Nigeria, PHCN, the National Union of Electricity Employees, NUEE, Senior Staff Association of Electricity and Allied Companies, SSAEAC, and the Nigeria Union of Pensioners, NUP, Electricity sector, challenged BPE to

This is a high level of insensitivity that an employer/govern ment could deny its workers their legitimate remunerations and in-turn referred them as ghost workers publish the names of purported ghost workers.

Leaders of NUEE, SSAEAC and NUP did not stop at daring BPE to publish the names of the so-called ghost workers in PHCN, but to also to immediately forward the names of the supposed ghost workers to the appropriate agencies for arrest and

prosecution.

Pr e s i d e n t o f S S A E AC , Comrade Bede Opara whom spoke on behalf of other leaders, linked the purported ghost workers to the biometric verification exercise conducted by BPE and argued that not even all the regular employees that participated in the exercise were captured and cleared by the consultant saddled with the responsibility of verifying all employees in the power sector.

Opara expressed disgust with the whole process and noted that the affected staff had not been paid their monthly salaries and allowances since the controversial verification exercise because they were been refer red as ghost workers.

According to him, “Several of such staff which included chief executive officers,

general managers, national officers of the in-house union etc who are visible in their various work locations during the verification exercise were not captured and have been denied their monthly emoluments for over three months.

“This is a high level of insensitivity that an employer/government could deny its workers their legitimate remunerations and in-turn referred them as ghost workers. This is just an attempt to call a dog a bad name in order to hang it.

Definitely it would be an exercise in futility,” he said.

Corroborating Opara, General Secretary of SSAEAC, Mr. Abiodun O g u n s e g h a , a L a w y e r, alleged that many names were imported by the ministry of power during the verification exercise.

ATIONAL Association of Niger Delta Students has called on President Goodluck Jonathan to prevail on his M i n i s t e r o f P o w e r, Professor Bath Nnaji, to concentrate on how to address the issues raised by the unions in the power sector or get him sacked.

The students in a statement in Benin by their President, Comrade Grant Gbeloba, also called on the Minister to call his aides to order and stop harassing or intimidating the General Secretary of the National Union of Electricity Employees, NUEE, Comrade Joseph Ajaero, saying that they would no longer fold their hands and watch him being harangued for just no cause.

They said that they had watch with dismay series of newspapers sponsored publications alleging the roles purportedly played

by Comrade Ajaero in the ongoing power sector reform.

According to the statement, “ We have also noted with dismay the way and manner some job seekers who have becomes overnight patriots, sudede3nly made the workers’ struggle for labour issues to be fully resolved before the privatization of PHCN an Ajaero affair. One thing is clear; Comrade Ajaero is an employee of NUEE and therefore must carr4y out every instruction given to him by the union to the letter. It is therefore, unfortunate for anyone to single him out as an enemy o0f the reform programme of the power sector.”

“When the President forwarded the name of Prof. Bath Nnaji to the National Assembly for consideration as Minister, PHCN workers under the aegis of NUEE protested it. However, the President went ahead to appoint him.

Solid Minerals

22

Nigeria targets 3mt/yr of liquid steel Liquid Metal

Oscarline Onwuemenyi

A

buja – THE F e d e r a l Government says Nigeria would be producing 3 million tons per annum of liquid steel by the year 2015, in its determination for the minerals and metal sector to contribute meaningfully to the government’s transfor mation agenda.

Minister of Mines and Steel Development, Arc. Musa Mohammed Sada, disclosed this during the official commissioning of the African Foundries Limited billet mill plant in Ogijo, Ogun state.

T h e m i n i s t e r commissioned the plant, which is capable of producing 500,000 tonnes per annum of billet, as part of his official tour of the Southwest part of the country.

Sada pointed out that despite the role played by the

Our current target is to create an investment friendly environment towards the development of steel raw materials reserves of the nation to ease problem of raw materials

metal sector in any industrialised economy, the Nigerian metal and minerals sector was yet to reach its full potential, particularly in the development and

consumption of key metallic products such as iron, steel and aluminum. He said the sector is faced with several challenges such as nonavailability of requisite legal and regulatory frame work, non- completion of required infrastructure, roads, rails, waterways, mines, limited raw material sources, in adequate power supply among others.

Arc. Sada reaffirmed the present administration’s quest for Nigeria to become one of the twenty most industrialized nations by the year 2020.

H e s a i d t h e Fe d e r a l government would continue to partner with development partners in the sector for a viable option to move the minerals and metal sector forward.

According to him, “In view of the quest of the present administration to become one of the twenty most industrialized nations by the year 2020,it has become compelling to engage all

stakeholders in the sector in search for a viable option to move the sector formed.”

He urged the development partners in the nation’s minerals and metal sector to take advantage and invest in the recently discovered iron ore deposits around the country to enable them integrate their facilities for more sustainable operations.

He said government was determined to “provide necessary infrastructure and industrial service clusters through collaboration with relevant ministries such as ministries of transport, power and works to promote policies aimed at catalyzing indigenous capacity expansion of steel production.”

He added that, “Our current target is to create an investment friendly environment towards the development of steel raw materials reserves of the nation to ease problem of raw materials, promote competitiveness of value

added product so as to stimulate domestic and export demand of minerals and metal products.”

The minister commended t h e A f r i c a n Fo u n d r i e s Limited for the huge investment in the minerals and metal sector of the country, adding that, it was a clear demonstration of their faith and support for policies and programmes of the present administration.

While fielding questions from newsmen , the minister disclosed that President Goodluck Jonathan had approved the establishment of board for the solid minerals development fund, he explained that the legal and regulatory frameworks in the nation’s minerals and metal sector has provisions for the establishment of the solid minerals development fund.

He added that international donors like the World Bank were also ready to give financial support to solve some of the militating problems facing the sector.

Solid Minerals

23 Stakeholders urge utilisation of coal for power

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Solid Mineral

Nigeria to partner private investors in minerals dev’t Oscarline Onwuemenyi

A

BUJA - The F e d e r a l Gover nment has said it was willing to work with private development partners to ensure that the minerals and metal sector contributes significantly to the nation’s economic development.

The Minister of Mines and Steel Development, Arc. Musa Mohammed Sada dropped the hint during his visit to Dangote Cement Group in Ibese, Ogun State as part of his official tour of the South West part of the country.

T h e M i n i s t e r, w h o expressed delight at the progress made so far by the

cement company, pointed out that due to the level of involvement of mining operators such as Dangote cement Group, they are not just stakeholders but development partners in the sector.

Arc. Sada said government as a regulator in the minerals and metal sector of the country would continue to partner with development partners so as to move the sector forward.

According to him, “I believe with partners like Dangote Group, our economy will grow. The Group’s level of involvement in the sector is great; it is not just stakeholders but development partner, we will continue to partner and encourage Dangote Group,

until the country gets to where it is supposed to be by the year 2020.

The minister said his official tour of the south west of the country indicated that some of

the mining operators were willing to take up the challenge of growing the minerals and metal sector of the country.

Y O Stakeholders in Nigeria’s power sector have asked the government to utilise the nation’s coal deposit as source of power generation.

In a communiqué at the end of their bia n n u a l j o i n t generation/operation planning meeting in Uyo, Akwa Ibom State capital, Friday, the stakeholders, who were mainly managers at the various generation and transmission stations across the country, said the nation’s huge quality coal deposits should be exploited for the benefit of power generation.

They stated that Nigeria had a lot of energy resources hence the need to harness the unexploited sources of power generation capacity to boost power supply in the country.

Specifically, T h e f o r u m , specifically, harped on the need for the diversification into coal thermal stations in areas of abundant coal deposit like Enugu, Benue, Nassarawa and Kogi States.

The communique raed: “Also, it has been observed that the country has the potentials for additional hydro plants at various locations.

“These should be harnessed as hydro plants have proved to be highly reliable in our h d r o - t h e r m a l generation mix”.

Coal

Freight

24 Topher Marine builds first fiber boat Godwin ORITSE

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Pirates

Pirate attack: Nigeria named ‘high risk area’ Godwin ORITSE

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H E Inter national Bargaining Forum (IBF) a b o d y o f seafarers has warned its members to steer clear Nigerian waters as they declare the country ‘high risk area’ following the incessant attacks on vessels and crew members.

The categorization which has a damaging cost implication on shipment into Nigeria came as result of what the body called increasing number of attacks on vessels and kidnap of crews.

Vanguard gathered last week that the designation will come into effect on April 1, 2012 in order to allow ship operators to make any necessary preparations.

It will afford the same benefits and protections to seafarers in those areas as the High Risk Area in the

Gulf of Aden and around Somalia, including: the need for enhanced security measures; advance notice of intent to enter the area; the right to refuse to enter it; and a doubling of the daily basic wage and of death and disability compensation while within the area of risk.

The High Risk Area provisions apply to all ships operating under an IBF agreement.

The ITF’s Fair Practices Committee Steering Group will decide on whether to also apply them to all ships under non-IBF ITF agreements.

IBF agreements on high risk areas also provide an indicator of good practice to national flag registers. The provisions are set out in full below.

The IBF provides a forum for discussion between the Inter national Transport Workers’ Federation (ITF) and its member unions, and the maritime employers in the Joint Negotiating Group (JNG).

It covers waters of Benin and Nigeria, including: ports, terminals and roads anchorages, the delta of the Niger river, other inland waterways and port facilities, except only when the vessel is attached securely to a berth or SBM facility in a guarded port area.

Under the declaration, all companies operating vessels or installations on the waters around the duo of Nigeria and Benin should have sufficient security arrangements to safeguard their personnel, given the nature of the risk, and should provide adequate protection, advice and compensations to the crews.

Details of the declaration that were made available to Shipping Position Dailyindicate that: Upon the vessel’s entry into and, further, throughout the entire stay in the Area as specified above, seafarers must be protected by increased security measures that will provide adequate levels of safety and security on

board, such as the Best Management Practice.

In the ports of the above listed countries and inland waterways and approaches to these ports, including offshore installations, extra security measures for reducing the vessel’s vulnerability to an unsanctioned approach and boarding should be adopted.

Such measures should, inter alia, provide for an enhanced look-out and an emergency alert/action plan securing sufficient safety for the crew and reliable contact with the authorities. The sufficiency of such extra security measures should be determined depending on the vessel’s type, size and freeboard.

Prior to approaching a port, detailed local advice about the security situation should be obtained and arrivals and departures timed to coincide with security patrols operated by respective government forces, if available]

OPHER marine services has s u c c e s s f u l constructed the first ever made in Nigeria fiber boat that can be compared to any other boat in the world.

Showcasing the newly constructed boat at the ongoing Nigerian Maritime Exposition (NIMAREX), Managing Director of Topher Marine, Mr. Chris Ajayi stated that it took the company four months to put the boat together adding that with the experience gathered so far, it will lesser time to build another boat.

He disclosed that the company has about 3 Naval architects working in his boat yard and are currently working on the orders of some of their clients who came to NIMAREX. Besides the construction of boats, Topher Marine is also into boat trading, boat repairs, water hyacinth clearing, supply of marine equipment and maritime vocational training.

Topher Marine which has technical partners in SriLanka is also into maritime education as the company in collaboration with the University of Lagos to start courses in boat building, while driving marine welding and out-board engine repairs.

He explained that his firm has been able to demystify the science of boat building adding that the technology is open to every Nigerian who wants to make a career of it.

Meanwhile, the Nigerian Maritime Exposition has endorsed the boat built by Topher Marine saying that the construction of the boat is one of the biggest maritime potentials waiting to be exploited.

Speaking to newsmen at the end of the three day event, NIMAREX chair man Mr, Collins Egwuagu said that the ingenuity of the owners goes to show vast maritime potentials in the country.

Freight Godwin ORITSE

25

PORTS DEVELOPMENT:

N Nigeria may lose African

IGERIA has been described a s potentially endowed to serve as hub station for seaports in the African continent, but experts have warned that such opportunity may sleep away due to a mirage of bottlenecks bordering on infrastructural decay and legislative inadequacies.

Participants who spoke at the on-going Nigeria Maritime Exposition NIMAREX 2012, noted that just as the energy sector has been in the doldrums due to protracted delay in the passage of the Petroleum Industry Bill (PIB), the ports system is similarly in chains owing to the neglect of the Ports and Habour Bill.

In a paper titled “Development of the Hub Port Concept for the African Atlantic Coast: Nigeria as a Focal Point”, Managing Director of the Lagos Deep Offshore Logistics base (LADOL), Dr. Amy Jadesimi, warned that the time had come for a realistic approach to the situation in the nation’s interest.

According to her, the issue of a hub status for the African states had become a “sink or swim” paradox for now, adding that “Nigeria has no choice” than to act fast in the face of challenges currently posed by SouthAfrica, Ivory Coast and Ghana.

She noted that with all the advantages enjoyed by the country such as the control of over 25 per-cents of the African population, a 25 percents market share of the ECOWAS ports activities as well as being the second highest host of the container traffic in the sub region, the country is no doubt a natural hub station.

The LADOL boss also noted that the need to create a general Maritime plus Oil & Gas Integrated hub for the sub region is further boosted by the realization that 26 major ports in West Africa handled a total of 250 million tons of cargo in 2000 of which 66 percents were oil exports.

“Deep offshore market is a time limited opportunity for Nigeria to overcome the

hub status

Containers natural resource course.

Over 100 billion USD will be spent on deep offshore projects in West Africa.

“Nigeria risk losing out to its near and far neighbors, and become increasingly s e r v e d b y transshipment…just as well developed ports will receive the larger ships (while) others will be served in transshipment in feeder vessels”, she said.

Dr. Jadesimi however pointed out that despite these arrays of endowments, the country is nonetheless faced with strong competitors who may grab the opportunity to shine, should Nigeria slack in taking her rightful position in this regard.

To attain the status and keep it, she opined that Nigeria must take steps to sur mount “ well known

national challenges” such as “absence of deep water container transshipment terminals, lack of adequate berthing capacity, as well as lack of an integrated land distribution system, particularly for transit traffic”.

Other challenges which must be surmounted, according to her, included the lack of essential supporting infrastructure such as rail system, congested road network, bureaucratic bottlenecks and high maritime and freight charges.

She however raised the hope noting that the Nigeria Ports Authority (NPA) had commence the dredging and wreck removal to allow the free movement of large container vessels currently calling at the Lagos ports, courtesy of Maersk lines.

She said on its part, LADOL had competed and currently

operating a 100 per-cents indigenous facility with which it provides a fully integrated rig repair platform, just as the organization had taken steps to address manpower shortage by partnering with Samsung of South Korea to establish a training institution for the industry.

Speaking in similar vein, Managing Director of NPA, Omar Suleiman, noted that if the country fails to take the bull by the horn, other countries with far less advantages will rule the waves to the detriment of Nigeria.”With a population of just three million people, Togo is trying to establish a deep seaport. If they bring in a 10,000 TEU vessel, where is the content going, if not Nigeria?” he asked rhetorically.

The NPA boss who raised

the hope that deep seaports will soon emerge with developments at Akwa-Ibom, Olokola and Lekki, however lauded the establishment of L ADOL base in L agos, saying, “ with indigenous organizations such as this springing up in Nigeria, I can say that all hope is not lost”.

Chairman of the Ports Consultative Council (PCC), O t u n b a Ku n l e Fo l a r i n , warned that for the hub station to be a reality in Nigeria, all hands must be on deck to improve services such as ships turn-around, ports and cargo security and a codified tariff structure.

He called on more investors to take a leap from the LADOL initiative by establishing facilities which would promote local content and development in line with government’s aspirations.

Technology

Phone: 08027181717,

26

e-mail: jimlaw2004@yahoo.com

the transmission of power more efficient.

Common types of alternative energy 1. Biofuel and ethanol: Biofuel and ethanol are plant-derived substitutes of gasoline for powering vehicles.

2. Solar energy: Solar energy is generating of electricity from the sun. It is split up into two types, ther mal and electric e n e r g y. T h e s e t w o subgroups mean that they heat up homes (and water) and generate electricity respectively.

3. Wind energy: Wind energy is generating of electricity from the wind.

4. Geothermal energy: Geothermal energy is using hot water or steam from the Earth’s interior for heating buildings or Diagram showing how Biofuel is produced from Algae. Source: dailytech.com electricity generation.

5. Hydrogen: Hydrogen is used as clean fuel for airplanes, spaceships, and vehicles.

BIOFUELS: Production, Benefits and Technology Jim Rex-Lawson MOSES

Intro

T

he idea of alternative energy is nothing new to society. In fact, humanity

has always grappled with the need to use alternative sources of energy especially when current resources are running low.

During medieval times, people realized that the main source of fuel, which

was wood, was becoming an increasingly scares resource. This led to the use of coal as an alternative source of energy. Likewise, before the 1800s, whale oil was the most favored source of lamp and lubrication oil. But by mid-

Neat ethanol on the left (A), gasoline on the right (G) at a filling station in Brazil.

Source: Wikipedia

century, the stock was heavily depleted, and fossil fuel became a v a l u a b l e c o m m o d i t y.

Because of these changes in the past, the carbon emission levels in the atmosphere increased to record levels.

What is Alternative Energy?

Based on the foregoing, Alternative energy Sources could be referred to as any source of energy designed to limit or r e p l a c e a n environmentally harmful form of energy. Today, climate change is the primary motivation behind modifying energy sources. Through science, new means are being developed to harness power from untapped resources and even create cleaner ways of using some of the old resources.

Also, an effort to reinvent the power grid has made

BIOFUELS Biofuel and Types.

Biofuels are fuels made from recently living organisms. They can be divided into three categories:

*First-generation biofuels - made largely from edible sugars and starches,

*Second-generation biofuels -

made from

nonedible plant materials, and

*Third-generation biofuels which are made from algae and other microbes.

Biofuel is one of the most promising types of alternative energy source.

In fact, there are actually several different types of biofuel. The different types of this fuel also vary partly depending on the different types of applications that they are intended for. For example, CONTINUES ON PAGE 27

Technology

Phone: 08027181717,

27

e-mail: jimlaw2004@yahoo.com

Diagram showing how biofuel is produced.

Source: Google Images

Above is an excellent beginner tutorial on producing biodiesel.

Source: Google Images

BIOFUELS: Production, Benefits and Technology CONTINUED FROM PAGE 26

this includes the distinction made between biodiesel and biogas.

These are obviously intended for use with different applications, such as diesel engines versus standard car engines.

However, perhaps what proves to be even more of an important distinction as to how these special types of fuels are categorized is based on the type of materials and resources that they are derived from. First, all

types of biofuels are derived from some type of biomass. Biomass refers to a wide variety of organic and natural resources that include solid biomass, liquid fuels and different types of biogases.

Biofuels can actually be extracted or derived from both living and nonliving materials. However, all of these materials and original resources must have been organic and not synthesized in order for them to truly be considered as a biofuel.

As stated above, some of the more prevalent origins that are common in regards to biofuel

derivations are algae, decomposed wood and vegetable oil.

Another special type of biofuel is bioethanol. It is an alcohol which is produced through the process of fermentation of sugars from plant materials, such as sugar and starch crops.

Benefits *Does not require any radical changes to switch to the use of biofuelsunlike the difficulties in switching to other renewable energy sources such as solar and wind power. *Are cheaper than fossil fuels. Many governments

are now offering tax incentives to buy greener cars that run on biofuels (ethanol being one example). *Are considered ‘carbon neutral’ by some people.

This is because the carbon dioxide they release when burnt is equal to the amount that the plants absorbed out of the atmosphere. Therefore, they don’t contribute to global warming. However, it does require some fuel to power the machinery on the farms where biofuels are produced. Still, they are better than fossil fuels!

Research suggests that they reduce carbon emissions by 50-60%. *Reduce dependence on foreign oils. Oil fluctuates i n p r i c e r a p i d l y, s o changing to biofuels will help buffer against the change. *Emit less particulate pollution than other fuels, especially diesel. *Are renewable sources of energy as you can just keep producing more. *Ethanol is very inexpensive to produce. *Can help prevent engine knocking.

Topher zang

29 Samuel OYADONGHA

Y

enagoa - The a n c i e n t settlement of Sagbama in the Sagbama local government area of Bayelsa State is facing one of its worst environmental degradation in recent times.

U n l i ke s e v e r a l o t h e r communities in the state being devastated by oil spills including the self inflicted spill by illegal refinery operators in the deep mangrove swamp the ancient settlement of Sagbama is being terrorized on large scale by marine erosion.

About four hundred families whose homes are located on the bank of the River Forcados may be rendered homeless at the peak of the flood season in September when the velocity of the river would be high.

Also, a private housing estate in the community located a few metres from the troubled river bank is being threatened.

Already, a large portion of the community land including part of its access road and market has been lost to the surging river with more on the verge of being eroded.

Interestingly, Sagbama is

Marine erosion threatens Bayelsa community Recent attempt by the government to tackle the erosion menace by rehabilitating the troubled spot ended in fiasco when the mass of rock use in protecting the river bank collapsed one of the few communities that could be access by road in the predominantly oil and gas rich state.

Some of the natives whose homes are on the throes of being washed away are now living in constant fear especially with the flood

season fast approaching.

When Sweetcrude visited the community it was learnt that a recent attempt by the government to tackle the erosion menace by rehabilitating the troubled spot ended in fiasco when the mass of rock use in protecting the river bank collapsed and further ate into the already narrow road.

It was reliably gathered that the control measure failed because a proper environmental impact assessment was not conducted before the job was done.

The troubled area, a source told Sweet Crude used to be the opening to a creek that linked the River Forcados in the Sagbama flank and River Nun in Opokuma several years ago before it was sand filled in the course of the dredging of the river in the eighties by the administration of late Chief Melford Okilo when the Bayelsa was in Rivers State as part of

measures to protect the community against erosion.

Troubled by the renewed erosion threat, the terrified people of Sagbama have expressed concern over the fate of their community.

Chair man of Sagbama Community Development Committee, Chief Simeon Suoyo, who conducted Sweet Crude round the devastated area, warned that unless urgent steps are taken to save his people from the erosion threat, about four hundred families stand the risk of being sacked when the river level rises.

“As you can see, our people are in grave danger and living in constant fear,” he said pointing at the collapsed area which was recently rehabilitated.

“It was a miracle that no life was lost the day the place collapsed,” he noted, adding, “it could have been worse if people or vehicles were passing that fateful night.”

Erosion threatened community

SPDC hands over N10m school block Emma ARUBI

W

ARRI-IN furtherance of h e r determination to enhance quality education in its areas of operations, the Shell Petroleum Development Company, S P D C , Wa r r i h a s commissioned and handed over a N10m renovated four class room block to the Or ugbo community in Warri South council area of Delta State.

At the commissioning ceremony held at the school play ground, SPDC representative, Dr. (mrs) Coker charged the management and the community leaders to ensure that the structure be maintained and the school kept clean, saying that the renovation was part of her desire to enhance quality education in the country.

She noted that education is the best legacy to bequeath to our children who are the future leaders o f o u r c o u n t r y. S h e charged the pupils of the school to take their studies very seriously, adding that it is only when they are educated that they can be useful to themselves in life and self sustaining.

Earlier, the management committee secretary of the Orugbo community, Mr. Stephen Ejejigbe express appreciation to and commended SPDC for the gesture but requested that more recreational facilities and empowerment programme be granted to them, assuring that the renovated classroom block would be well guarded.

30 only picked the amnesty programme from the long list of other steps recommended by the Niger Delta Technical Committee that should go with the amnesty towards achieving lasting peace in the region.

Mitee said the recent report released by the UNEP on Ogoni was a classical documentation of the threat to live in the region.

Earlier, one of the authors of the book published by Centre for Advanced Social Science, CASS, Dr. Sofiri Peterside said the book was a critical appraisal of the amnesty programme in the region and its implication for the future of the area. He said findings while working on the book showed that even with the amnesty programme the psychology of peace had not been taken care of, the people were still b i t t e r w i t h t h e underdevelopments and poverty in the region.

Jimitota ONOYUME

Gas flare in the Niger Delta

Mitee, Sofiri task FG on N’ Delta issues P

O R T HARCOURT F O R M E R president Movement for the Survival of Ogoni People, MOSOP, Ledum Mitee has called for a more concrete approach towards addressing c h a l l e n g e s o f underdevelopment in the Niger Delta region.

Mitee who spoke in Port Harcourt at the public presentation of a book “Presentation and Reality: Documenting the amnesty process in the Niger Delta region of Nigeria” said the ongoing amnesty programme of the federal government was yet to address challenges of underdevelopment and

p ove rt y i n t h e re g i on.

Ac c o r d i n g t o h i m , t h e programme had only created unhindered oil exploration and operations in the region.

He said to effectively tackle problems of the region the government should go beyond the amnesty and take steps to address infrastructural and poverty problems in the region.

“Uninterrupted flow of oil seems to be the focus of the federal government in the region. The people of the region are poor government is only getting more revenue with the amnesty programme which has not translated into development for the region”, he said.

He said it was worrisome that the federal government

Petroleum products flood Delta Emma ARUBI

A

SABA-Delta S t a t e a n d environs is now flooded with petroleum products following massive loading of fuel at Matrix Energy Depot at Ifie near the Warri Refining a n d Pe t r o c h e m i c a l Company, WRPC, to curb the incessant fuel scarcity in the Niger Delta region.

Investigations reveal that it took security agents hectic time to control desperate drivers of fuel tankers that thronged Matrix Energy Depot to lift petrol for onward delivery to the consumers.

There had been fuel shortage in some parts of Delta State in the past few weeks with some filling stations that have the commodity selling between N110 and N150.

B u t f o l l o w i n g information that Matrix Energy Limited had taken delivery of petroleum products, oil marketers from across the Niger Delta region have been thronging the company’s plant at Iffie to load the products.

31

The Question johniyene@yahoo.com

ALISON-MADUEKE,

work or resign

W

Crude oil thief

Shell laments rising crude oil theft Jimitota ONOYUME

P

O R T H A R C O U RT: CRUDE oil theft has become a major problem in the Niger Delta region.

According to Shell the daily exportation of about 140,000 barrels of oil is being threatened by this ugly act going on massively on its Nembe creek trunkline in the region.

The oil giant recently led media men in Port Harcourt on an over-fly of the Nembe creek trunkline to see things for themselves. There were over fifty illegal bunkering points around the trunkline.

These oil thieves gather the crude into Cotonou boats and then sail into the high sea.

Their actions do not only constitute threat to oil exports but pose a major risk to the environment.

Lamenting the sad incident, the Managing Director of the multinational o i l g i a n t , M r. M u t i u Sunmonu fielded questions from journalists said illegal bunkering had also made it difficult to do complete clean up of some oil spill impacted areas in the region.

The level of oil theft and illegal refining of crude in the region constitutes a major threat to the environment.

“I am really worried about the danger to the environment

Mr Sunmonu who sounded very worried enjoined government and other stakeholders to take urgent steps to tackle the problem.

He said all hands should be on deck to save the country greater loss from the callous activities of the oil thieves.

He also called for increased security around the Nembe creek trunkline.

“I feel extremely saddened by what is happening, display of criminality and lack of care. I am extremely worried. Frankly something has got to be done otherwise our operation in the region will not be sustainable. This is very, very worrisome.”

He said the level of oil theft and illegal refining of crude in the region constitutes a major threat to the environment. “I am really worried about the d a n g e r t o t h e environment”.

According to him, there are a lot of international agencies that had indicated interest to develop the agric sector in the region but were reluctant to invest because of the level of crime.

While assuring that as a multinational oil firm, Shell would continue to do its best in the fight against oil theft and other related crimes threatening its operations, Mr. Sunmonu said the crusade should not be left to the oil giant alone.

“This is not a war that Shell alone can win, we need a coalition of efforts.”

The Managing Director further recommended creation of jobs and development of the region as steps towards resolving the problems.

He said Shell had been actively involved in creating empowerment opportunities for people in the region through various schemes and skills acquisition programmes.

hen the debate for the total deregulation of the upstream sub-sector of the petroleum industry was raging, I mentioned to the few who cared to listen that what the federal government wished to achieve was not the deregulation of the sub-sector but to divest of the subsidy burden.

We did not have long to wait before the federal government pegged the price of petrol at N140.00 per litre, not bothering to explain to Nigerians how a deregulated price regime came by a fixed pump price for all the grades of a product that was imported or manufactured under different circumstances. The value of this recall to our discourse is that the petroleum ministry and indeed the federal government have by virtue of knocking out a whopping N32.00 per litre from the old subsidy regime, become better positioned in every sense to improve on the semi-efficient system of supplying petrol to the points of demand in the polity.

But that is not what Nigerians are experiencing; it appears that instead of improving the lot of Nigerians in relation to the supply of petrol, the long queues of old have returned, the black market is thriving and darkness has swooped on cities starved of this direct source of powering homes, offices and the thousands of small scale industries that sustain the Nigerian economy. What is responsible for this situation and what can we start to do about it as civilised folk? If the savings we have made from the subsidy reduction have worsened our accessibility to the product it simply means that the folk who are on call to manage the gains for our mutual benefit are either mismanaging them maliciously or ignorantly. Either way, we owe ourselves the duty to review the performance of the sub-sector nearly three months after the subsidy reduction to re-strategise for a more efficient sub-sector.

The Honourable Minister for Petroleum Resources is a beautiful lady who has the potential for winning awards for Nigeria in more fields of human endeavour than I care to enumerate here but I am emboldened by the findings of my study of her non-achievements at the Petroleum Ministry, to infer that she is a failure at that ministry. Alison-Madueke had her work defined for her in the challenges presented by the ailing refineries, greedy importers, production sharing contracts which would only benefit Nigerians when fossil fuels are outdated, a regulator that is so ponderous as to require fragmenting to allow for efficiency, an oil and gas industry that has no defined place for the role of the owner occupier of the explored and exploited land, unsafe and unhealthy production environments that have attracted the intervention of the United Nation’s Environmental Protection organs, etc. These are not the kind of problems you resolve with the plumes and colours that Alison-Madueke has become famous for or that are settled by efficient mid-level technocrats, the whispering hi-five buddies of the minister who pretends to mingle with subordinates she has successfully emasculated to the detriment of the whole country.

The Minister for Petroleum Resources is not a bad person and I have no personal scores to settle with her. I once had tea with her mother at their GRA Port Harcourt home while waiting for the very refined and respectable lady prepare a bouquet of roses from her garden that I had planned to present to a friend. The Honourable Minister is no doubt a lady as decent and as respectable as her dear mother but the office she happens to occupy is responsible for the success or failure of this country’s fiscal strategies and by implication, the viability of our society.

Pregnant women, accident victims, critically ill compatriots have lost their lives because they could not be transported expeditiously to medical facilities. And some medical facilities are 90% dysfunctional because of lack of petroleum products to power their generators. If we discount the businesses that have closed down, the losses incurred by the economy for the stagnation of business activities in the real sector as well as the losses suffered by the economy in recreational activities suspended for lack of energy, we cannot afford the loss of human lives that accrue daily to the country because of the inability of a minister to harness a bountiful resource for the benefit of the country.

Please join me in calling upon the Hon. Minister for Petroleum Resources, Mrs. Diezani Alison-Madueke to come alive to her responsibilities or resign.

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