Sweetcrude February 2014 by Vanguard Media Limited

FG solar plant expansion to gulp $96 million

Ship owner, others advocate FOB for crude, product carriage

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P\24 President Goodluck Jonathan

A Vanguard Monthly Review Of The Energy Industry VOL 04

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FEBRUARY, 2014

Energy Financing: Nigerian banks come of age …Stake over N5trn in energy sector in three years ...CBN's involvement in reforms major driver for banks' activities

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Beware of charlatans masquerading as shippers, Bello tells SALS

arely a day after describing freight forwarding practice in Nigeria as bizarre, the Executive Secretary/CEO of Nigeria Shippers Council (NSC), Barrister Hassan Bello has advised the Shippers Association of Lagos State (SALS) to guide against admitting “charlatans masquerading as shippers” into the association. He also advised shippers associations in other states to emulate SALS by coming together as a formidable group to work with the Nigeria Shippers’ Council in advocating for quality service delivery from service providers.

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TCN expands transmission capacity to 7,000MW

Contents 4 08

COVER

FEEDBACK

FOCUS

FINANCE

POWER

20 21 24 25 28

INSURANCE

COMMUNITY

Energy Financing: Nigerian Banks come of age

OIL Marginal Fields: Bayelsa, Eurafric, 10 others, yet to commence production

Rethinking Corporate Social Responsibility In Nigeria: The Role Of The Public Sector

Why MOMAN is no longer importing kerosene -Olawore

FG solar plant expansion to gulp $96 million

TCN expands transmission capacity to 7,000 MW

Insurers drive to combat money laundering and terorism

LABOUR

Proposed sale of refineries was to rip off Nigerians -PENGASSAN

SOLID MINERALS Artisanal Mining: Averting dangers ahead

MARITIME Ship owner, others advocate FOB for crude, product carriage

TECHNOLOGY

ERA tasks FG on digital metering of oil production

Shell's Nembe City road

Sweetcrude is a publication of Vanguard Media Limited

THE TEAM Ag. EDITOR Clara Nwachukwu CORRESPONDENTS Victor AHIUMA-YOUNG Godwin ORITSE Jimitota ONOYUME Samuel OYANDOGHA Emma Arubi Michael Eboh Rosemary ONUOHA Sebastine OBASI Kunle KALEJAYE MANAGER, MARKETING Ubong NELSON PAGE LAYOUT/DESIGN

Francis AYO & Johnbull OMOREGBEE

Enquiries Call: 08098051103

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Last year's privatis ation of power assets proved that Nigerian banks have come of age, as most of the funds used in purc hasing the assets c a m e f r o m t h e m . This is why this ed ition is devoted to N i ge r ia n ba nk s to sa l u te t he i r c o u r a g e But it is not yet Uhur u, the banks still have a lot of challe nges ahead. More so, this year when t here will be a lot of demand on them to provide more funds to run operat ions in the power companies as we ll as buy up the NIPPS and m arginal fields. There is more ch eery news as the National Assembly has promised to pass the PIB, no m atter the pressure from the IOCs to frustrate the process. As repres entatives of the people, Nigerians expect no less f r o m t h e m . From the Cover to the Community pages, we bring you the latest developments in Oil, Gas, Focus, Feedback, Financ e, Power, Solid Minerals, Insuranc e, Labour, and M a r i t i m e . We use this opportu nity to welcome delegates and pa rticipants to the NOG 2014, and w ish them fruitful deliberations.

Diamond bank

Cover Story

Energy Financing: Nigerian banks come of age …Stake over N5trn in energy sector in three years ...CBN's involvement in reforms major driver for banks' activities BY MICHAEL EBOH

i g e r i a n banks, after having their fingers burnt in the past, seem to have finally awaken to the needs and opportunities in the energy sector, and have over the last three years committed about N5 trillion to finance major deals in the sector. The level of the banks’ commitment in energy – oil and gas and power specifically, is higher than the yearly budget of the country for the last two consecutive years, and also higher than the N4.6 trillion budget proposed for 2014. Prior to this, accessing funds to finance high capitalintensive projects proved to be

a challenging task for energy firms in Nigeria, a situation which helped stifle the growth of indigenous companies, the sector and the economy in general. According to experts, but for increased activities by Nigerian banks in the energy sector, the Local Content initiative would not have been successful, while foreign firms with huge financial backing from international financial institutions would have taken over the entirety of the Nigerian energy industry, especially in the recently concluded power sector privatisation. According to them, Nigeria would have been denied the benefits in the sector, such as the profits and the interests payable on loans which would have been repatriated out of the country.

Central Bank

CBN takes credit speaking with Sweetcrude, D i r e c t o r, C o r p o r a t e Communications, Central Bank of Nigeria, CBN, Mr. Ugochukwu Okoroafor, said the increased activity of Nigerian banks in the energy sector was engendered by the apex bank, which participated actively in putting forward the power sector reforms that actually paved the way for the inflow of finance to the sector. He said the CBN also laid the groundwork for Nigerian banks to be involved in the process through the provision of funding. According to him, hitherto the power sector was largely a rigid and relatively inactive sector, where there was only one major player, the Power Holding Company of Nigeria, PHCN. He added that this led to the

According to them, Nigeria would have been denied the benefits in the sector, such as the profits and the interests payable on loans which would have been repatriated out of the country

decision to deregulate the i n d u s t r y, r e v a m p t h e regulatory framework, and also usher in private operators to play in that sphere. “At CBN we are very active in the reforms that led to the emergence of the new National Electricity Regulatory Commission, NERC, and also the reforms that led to the

concessions, the sale of the generating companies (GENCOS), and then the concessions and of course the M a n i t o b a Tr a n s m i s s i o n s Company of Nigeria, TCN arrangement. So, CBN has been very active there,” he added. Okoroafor disclosed that CONTINUES ON PAGE 6

Oando ad

Cover Story

Central bank

Energy Financing: Nigerian banks come of age CONTINUED FROM PAGE 4

financing in the power sector was kick-started by the introduction of the Power and Aviation Intervention Fund, PAIF, which made funds available at a very low interest rate for onward lending to stakeholders in the sector. Okoroafor, also disclosed that between N60 billion and N70 billion were yet to be disbursed under the scheme. He said, “We have made the sector attractive for intermediaries, those who have finance and want to intermediate. We want to make funds available for players, and of course this played out during the time of the sale of the GENCOS and the distribution companies, DISCOS, and people who bought these assets got money from the financial system, specifically the banks to help finance those transactions.” On the issue of increased

Also, the CBN said the N163.1 billion disbursed under the Intervention Fund, provided an opportunity for banks and a window to finance power sector projects funding demands from the energy sector, he said, “We know that there are challenges moving forward; those challenges will come of course from continuous sources of funding. There is a need for us to think through those challenges because they are going to be quite massive if we are to realise the objectives of our new power reforms. “But definitely it is on the way, and we are working with

all the interested groups to make sure that Nigeria gets the kind of power sector it truly deserves.” Funding over the years Figures obtained from the latest Financial Stability Report released this year by the CBN, and from other documents from the apex bank, revealed that between January 2011 and June 2013, Nigerian banks had disbursed

about N163.1 billion to fund 35 power projects. The Nigeria Deposit Insurance Corporation, NDIC, on the other hand, in its current annual report, disclosed that banks gave out credit facilities totaling N3.443 trillion to oil and gas firms in two years, 2011 and 2012. Furthermore, the NDIC Report stated that as at the end of 2012, the exposure of oil and gas firms to banks in the country stood at N1.913 trillion, and about N1.53 trillion in 2011. Also, the CBN said the N163.1 billion disbursed under t h e I n t e r v e n t i o n Fu n d , provided an opportunity for banks and a window to finance power sector projects. He added that PAIF also helped to restructure and refinance outstanding facilities in the aviation sector on a long term basis of 10 to 15 years at a concessionary interest rate of 7.0 per cent.

According to the CBN, the Fund helped in relieving banks of the burden of NonPerforming Loans, NPL, on their balance sheets, and improved the credit rating of the beneficiary institutions, thereby providing them access to additional funds for their operations. The increased funding activities came in the aftermath of the crisis that engulfed the Nigerian banking sector between 2009 and 2010, where a number of banks were hurt from huge nonperforming loans recorded by a number of companies, chief among which were energy companies. The Federal Government had to set up the Asset Management Company of Nigeria, AMCON, to acquire the non-performing loans from the banks, to help them to stabilise and clean up their CONTINUES ON PAGE 7

Cover Story

Energy Financing: Nigerian banks come of age

CONTINUED FROM PAGE 6

books. Following the cleaning of their books through the CBN’s involvement, the banks were able to participate actively in the sale of the assets of the defunct PHCN; providing about 70 per cent of funds used by investors in acquiring the assets. Assets sale The Chairman, Technical Committee of the National Council on Privatisation, NCP, Mr. Atedo Peterside, stated that about $3.3 billion (N528 billion) was realised from the sale of the generation and distribution companies, noting that a bulk of the funds came from Nigerian banks. He said, “$3.3bn should accrue to FGN coffers from these PHCN Gencos and Discos transactions. If the participants and financiers respected the financial rules put in place for these transactions, then a maximum of 70 per cent of this total would have been financed through debt/loan instruments. “We know that the lion’s share of the financing came via Nigerian banks, and so our banking industry is now a major stakeholder and a long term player in the Nigerian power sector.”

Banks’ chief executives react Speaking on his return from the just concluded, World Economic Forum in Davos, Switzerland, the Managing Director, United Bank for Africa, UBA Plc, Mr. Philip Oduoza, said the bank staked about N112 billion ($700 million) in the power privatisation. Oduoza, in a statement made available to Sweetcrude, said the fund was used to support investors seeking acquisition of assets in the newly privatised power sector of the economy. He further stated that the Nigerian power sector is a growth sector where the bank plays very big. On his own part, the Managing Director, First Bank of Nigeria Plc, Mr. Bisi Onasanya, told Sweetcrude that the bank has set aside about N60 billion to finance the activities of indigenous contractors and companies in the energy sector, in line with the local content initiative of the Federal Government. According to him, the fund will empower and position the contractors and companies in the sector to benefit from the chains of activities in the industry, to promote growth and foster social development. He said, “As part of our contributions to the growth of SMEs in the oil and gas

industry, First Bank, through Shell Contractors Support Fund, SCSF, and the Shell Kobo Fund, SKF, provided about US$1 billion (N160 billion) and N1 billion respectively, to finance all contracts awarded by Shell Pe t r o l e u m D e v e l o p m e n t Company, SPDC, to support their SME contractors and other contractors from their host community as a way of giving back to society. “Through our various finance schemes, we have helped our customers grow their businesses and improve efficiency. “For instance, we were able to grow the business of one of our customers after executing a product quality and management system, PQMS contract of N50 million and invoice discounting facilities, IDF contracts of N16.5 million, and $103,000 that it had been awarded in October 2011 by a leading international oil company, IOC. “Upon the successful completion of the contract, the same IOC awarded another contract valued at N500 million to the company for their manpower supplies, MAPO contract. “As at year end December 2012, the company ’s workforce has efficiently grown from 16 to 27, excluding five expatriates.”

Through our various finance schemes, we have helped our customers grow their businesses and improve efficiency

Exposure threats However, Chief Executive Officer, Lambeth Trust & Investment Company Limited, Mr. David Adonri, argued that it is disturbing to hear that banks are still exposing themselves to the energy sector in such a manner that could threaten their existence. He said, “Those affected have failed to learn from the past. Any bank over-exposing itself to the petroleum industry does so at its own peril because government’s control of that sector is a recipe for commercial failure. “The petroleum sector can only become viable when it is completely deregulated and privatised. If the balance sheet of any bank is damaged as a result of excessive risk taking, the CBN and NDIC should liquidate it and the management made to pay for their recklessness.” Continuing, he said,

“C o n s i d e r i n g t h e s h o r t maturity profile of banks’ deposit liabilities in Nigeria, it is inconceivable that they will venture into financing electric power projects which by nature are long term. “The mismatch in financing will definitely result in bad debts. Electric power infrastructure rehabilitation and development requires medium to long term funds, which are obtainable from the capital market and Development Finance institutions.” Reacting to this, CBN’s Okoroafor said, “We are aware of the concentration risk. There is also the capacity risk; for instance if you put money in a sector and you do not have people who would turn that money around. “We are helping in raising or continuing that conversation by bringing all entity together to make sure that everybody is CONTINUES ON PAGE 8

Cover Story

CONTINUED FROM PAGE 7

industries would also be major beneficiaries as they would have the opportunity to service different aspects of the oil Industry ’s extensive value chain.”

fully in the picture. “Though we are not a fiscal authority; some of the things we do are to ensure that there is stability in the system. We want to make sure we provide s t a b i l i t y. F i n a n c i n g i s something that those that are in that kind of business should be in the position to handle. “Our mandate is stability, sometimes when we do these things; we do from the point of view of bringing stability.” How the banks fared The current financial statements of the banks reflect their increased confidence in the energy sector, and have displayed improved capacity on their part to handle larger transactions in energy, even as they tightened their exposures to the sector. Statistics revealed that while some banks increased their lending to oil and gas, others preferred to do so for power. Specifically, First Bank increased total exposure to oil and gas to about N559.343 billion in 2012, up from N356.6 billion in 2011. But UBA’s exposures to the sector reduced to N131.5 billion in 2012, from N150.033 billion in 2011, while its exposure to power and energy also reduced to N15.357 billion, compared to N18.677 billion in 2011. Zenith Bank Plc also increased lending to oil and gas in 2012 to N170.9 billion, up from N160.85 billion in 2011. But the bank significantly reduced lending to power to about N4.111 billion in 2012, down from N22.01 billion in 2011. This may not be unconnected with the over N2.262 billion it recorded as Non-Performing Loans from the energy sector, with oil and gas accounting for N2.076 billion in 2012, down from N9.258 billion in 2011, and about N186 million to the power sector in 2012. Similarly, Access Bank Plc’s total lending to the oil and gas sector rose to N189.196 billion in 2012, up from N153.763 billion in 2011, while its exposure to power nose-dived to N1.093 billion in 2012, from N2.255 billion in 2011. Access said it facilitated the importation of more than 30 per cent of petroleum products into the country in 2012, while it also committed the sum of US$1 billion (N160 billion) to support Shell contractors. The bank also said it is currently facilitating similar Local Content Schemes for other IOCs operating in

Energy Financing: Nigerian banks come of age Nigeria, adding that these schemes are aimed at giving local contractors a greater role in servicing Nigeria’s oil and gas industry. Fidelity Bank Plc, on the other hand, extended N47.1 billion loan to oil and gas firms in 2012, as against N23.96 billion in 2011, while power firms got N6.05 billion from the bank, compared to N6.57 billion in 2011. Fidelity explained, “In a show of commitment and faith in the development of the Nigerian local content

initiative, we signed a M e m o r a n d u m o f Understanding, MoU, with Shell Nigeria Exploration and P r o d u c t i o n C o m p a n y, SNEPCo, to support local contractors towards the actualisation of Nigeria’s Local Content aspiration. “The initiative is aimed at placing local contractors at the front line for service delivery to the oil and gas industry i m m e d i a t e l y t h e implementation of the Petroleum Industry Bill, PIB, kicks in. Our global commitment under the scheme

is US$1.0 billion for the first five years of operation. “The implementation of this initiative will result in demand for Working Capital and M e d i u m t o L o n g Te r m financing for the local contractors, fabricators and industrialists that employ thousands of Nigerians along the value chain of SNEPCo, as well as help the government achieve its objective of increasing domestic crude oil production to 4.0 million barrels per day by 2020. “Our customers in ancillary

Future opportunities Despite all these, there are still enough funding opportunities for the banks, as Peterside said that about N1.135 trillion is expected to be sourced by investors in the power sector within the next five years, to ensure stability in the supply of power in the country. He said, “Financing the necessary capital expenditure to fund the incremental 4,284.4 megawatts that is required to achieve full capacity (crudely estimated at $1 million per MW approximately) will cost an additional $4.28 billion (N684.5 billion). ”At an estimated weighted average cost (purchase and installation) of N25, 000 per meter, this amounts to over N150 billion. The bulk of this should be recoverable from the consumer, but then the distribution infrastructure also needs to be modernised and expanded to achieve greater coverage. The 11 distribution companies (Discos) are projecting annual capital expenditures in the region of N60 billion per annum for each of the next five years.” A l r e a d y, O a n d o i s considering raising N250 billion from the financial market, through a combination of rights issue, special/private placement of public offerings. The fund, according to the Group will be used in financing its acquisition of divested assets of ConocoPhilips. Apart from these, it is expected that the ongoing divestments by some IOCs from some of their assets in Nigeria, and the planned sale of marginal fields by the Federal Government, will throw up a huge opportunity for banks to strengthen their capacity. A number of indigenous investors have expressed interests in acquiring the divested assets, as well as the marginal fields, which will require huge amount of financial backing to carry through with their plan. This same scenario will also play out when the Government begins the sale of the Nigerian Independent Power Projects, NIPPs, across the country. Analysts await whether these funding demands will further enhance banks’ lending capacities or sink them if they were not prudent enough.

Oil

Marginal Fields: Bayelsa, Eurafric, 10 others, yet to commence production

An abandoned oil rig in Bayelsa

BY MICHAEL EBOH

ut of the 29 marginal fields awarded by the F e d e r a l Government since 2003, Bayelsa Oil, Eurafric Limited, Network Exploration and Production Limited and nine others are yet to commence crude oil and production. According to data obtained from Africa Oil and Gas Report for November and December 2013, their inability to commence production is due to a number of different factors, ranging from fraud allegations, funding challenges to distraction. Giving a breakdown of development in the sector, the report stated that Bayelsa Oil’s inability to commence production is connected to the fact that its new Managing Director, James Agbeyi, is conducting an audit of previous spend and services rendered with regards to this field. Ac c o r i n g t o t h e r e p o r t , Agbeyi’s suspicion is that previous management of Bayelsa Oil was a front to loot the

B a y e l s a s t a t e t r e a s u r y, a development which has inhibited Century E&P, which farmed in with 35 per cent equity interest and 80 per cent working interest, from going forward with re-entry plans. Movido and Goland Petroleum, operators of the Ekeh and Oriri fields respectively, are battling with funding challenges, as the report disclosed that Movido’s challenges is due to the fact that the company is considering an $80 million (N12.8 billion) injection of funds by an American company and is in talks with First City Monument Bank Plc, FCMB, for guarantee. The report noted that the funds is expected to be able to pay for construction of a sevenkilometer pipeline to Chevron’s Middleton facility and drilling and completion of two more wells. It noted that current equity holders in the company include Movido, with 60 per cent, DWC Supplies and an Irish firm, adding that Century Energy has had a look in, but the deal fell through. On the other hand, the report stated that Goland Petroleum

and its technical partner, Nestoil ran out of money after spending over $40Millon on a new well, while the dysfunctional rig broke down several times in the course of three months. “The well did get to 12,000 feet, but the pipe got stuck at 6,000feet as it was running out of hole,” the report noted. In the case of Eurafric, operator of the Dawes Island field, the report said the company has not been able to pay attention to the field development.

ccording to the report, of recent, the company has been distracted by another project; the need to raise funds for the purchase of the government stake in the Sapele Power Generation Plant. The report further stated that Network E&P and Oando Energy Resources, its technical and financing partner have accessed a loan facility of $100 million (N16 billion) from Diamond Bank, for the final leg of development of the Qua Iboe field. Oando got 70 per cent of the

loan while Network got 30 per cent. The report further noted that the partners have drilled two wells and will construct an early production facility, and export the crude through ExxonMobil’s Qua Iboe Terminal. Continuing, the report said, “Universal is embarking on the construction of Early Production Facility. The partners expect 2,000 barrels of oil per day from five of the nine wells on the field. Crude will be exported through ExxonMobil’s Qua Iboe Terminal (QIT) Production Facility. “This project has dragged largely as a result of change in design of the entire production system. “Seven Energy, the 62 per cent owner of Universal Energy (holder of the field), had anticipated production by 4th Quarter of 2011. Sipec is the technical partner. “G r e e n E n e r g y, a n e w Nigerian E&P company awarded the Otakikpo field in 2011, is evaluating bids from companies wishing to farm in to 40 per cent of the asset, and become the Technical and financing partner in the field development. First E&P and Vertex are some of the bidders. “In the case of Frontier Oil, gas has started flowing from the Uquo field into the I b o m Po w e r P l a n t . T h e delivery is made possible by the completion of repairs on the 120MW Frame 9, the largest turbine in the station.

Our challenges in marginal field operation, by stakeholders SEBASTINE OBASI

takeholders in the oil and gas industry have continued to lament their constraints and challenges, ten years after the first marginal field bid round was held. Their concern emanated from the fact that out of the 24 oil fields awarded in 2003, only 7 fields are producing (averaging an aggregate gross production of 27,200 barrels of oil per day and 35 million standard cubic feet per day of gas). This accounts for about two percent of national production. Speaking at the marginal field workshop organized in Lagos, Mr. Debo Fagbami, Chief

Operating Officer, COO, Xenergi Limited, said that lack of access to fund is the greatest challenge facing the marginal field owners. According to him, most of the field owners have not been able to raise about $30 million to invest in their oil fields. Apart from that, they lack technical know-how. As a result, they have not been able to put up credible and bankable business plan. He explained that some of the oil field owners also have partnership complications as they were strange bed fellows from the outset, thereby stalling whatever fruitful decisions that might signal their take off.

Oil

Tank farm

Concerns heighten over Nigeria’s oil industry in 2014

s Nigerians entered the year 2014, the growing concerns over the state of the oil and gas industry have continued to engage the attention of experts and stakeholders. This is because oil accounts for about 90 percent of the nation’s revenue and has been made to be the mainstay of the economy by successive governments. Will the oil industry fare better in 2014? Mr. Barry Esimone, Chief E x e c u t i v e O f f i c e r, C E O, Crusteam Group, an energy and infrastructure company believes that the oil and gas industry in 2013 continued in the trend of decline on effective activities both in upstream and downstream segments. “Exploration activities certainly fell below expected industry standard as no new find was made and very few drilling activities took place. “On the refining sector, the NNPC refineries did not fare any better as internal refining capacity was still very low, product import continued unabated as the major source of r e f i n e d p r o d u c t s . “A f e w

incidences in the refineries continue to show the level of poor maintenance of the facilities. The only exciting news is the planned Dangote refinery project. However, I think a different model of developing internal refining capacity with potential for massive employment generation should be encouraged,” he said. Esimone also said that more exploration programmes should be encouraged especially with the planned marginal field bid round coming up this year, while exploration plans of the majors should be looked into with a view to removing any bottlenecks as this has been the major source of Nigeria’s reserve inventory build up. While we encourage the locals to participate, we should not kill the geese that laid the golden eggs. On the refusal of the International Oil Companies, IOCs, to invest in the last few years, Esimone said that though it is a worrisome trend, the government needs to find out how to break the jinx and make the conditions more flexible until indigenous companies get

a good foothold and build financial and technical capacity. Whether we woo the Asians or not, the bottom line is that, the We s t s t i l l c o n t r o l s t h e technology and may even have hands in the ownership of most of the Asian companies. As regards the state of the refineries, he said they should be sold outright. “I am an advocate of complete sell off of the refineries. If any business fails to provide the reason for its establishment, after several attempts at reinvigoration, It then means that the problem must be structural. “In this case the structure is hinged on meddlesomeness, lack of commitment, sabotage etc. We can save the funds being pumped into them without result if we transfer ownership even at a give-away. “However, I believe that the maximum the government should do is to conduct technical status audit of all the refineries before selling. The issue with local refinery development is still policy based. The necessary legal framework has to be worked out properly especially with regards to feedstock agreement,” he said.

Esimone’s concern was shared by Taher Najah, an oil industry analyst with the Organisation of Petroleum Exporting Countries (OPEC), who said that Nigeria’s energy usage is expected to rise by 40 per cent between 2010 and 2030. He said that this level of production was required to lift billions of people out of poverty. Najah explained that with population and incomes projected to rise, the real challenge remained how to manage and meet the energy needs. “The question that begs for an answer is what type of energy will the world use and how much, where it will come from and how new technologies, efficiencies and policies impact on the market. “With energy use expected to rise by 40 per cent between 2010 and 2030, this is required to lift billions of people out of poverty, “The expectation will be huge gains that producing nations make in terms of market share,” he said. Najah, however, said that global peak oil production would be expected before 2030 and there existed significant risks that would occur before 2020. He said that extraction was currently expanding too slowly

to mitigate post early peak oil decline in conventional sources, adding that this could be changed by new technologies. Najah said that oil and gas would continue to lead as the largest energy source and the whole world would continue to find itself in a landscape dominated by the intricacies of the oil and gas business. The OPEC official said that for most developed economies, efficiencies and new technologies remained key solution to mitigating risks. “Whether Nigeria looks east or west, several puzzles will first have to be resolved internally, before tapping into the opportunities created globally or mitigating the risk the global dynamics presents. “These sprawling opportunities created by the industry around the world remains an unrivalled stimulus to economies actively engaged in oil and gas,” he said. For Joseph Ezigbo, Managing Director and Chief Executive Officer of Falcon Petroleum, the passage of the Petroleum Industry Bill (PIB), is the only new year gift that could be

CONTINUES ON PAGE 11

Oil

Concerns heighten over Nigeria’s oil industry in 2014

Offshore oil rig

CONTINUED FROM PAGE 10 appreciated in the industry, because it plays a critical role in national economy. ”If they want to give Nigerians any new year gift, they should pass the PIB. Once they give us the PIB, then we will have a level playing field to grow our economy, we need it to stabilize our economy, because the economy depends on oil and gas resources. So, they should pass the PIB and nothing more”, he said. He noted that though there are arguments everywhere against and for the PIB, what should be done first of all is to enact the PIB as it is and then see how it is functioning. According to him, “We can then see what areas need a change, we can now sit down as a group and decide to amend, modify, change or restructure the PIB but as it is at the moment, the amount of money that this country is losing on a daily basis, the pollution going on in the Niger-Delta, the number of people disenfranchised from getting their dues, the volume of corruption in the system, these

are things that if we put the PIB in place, it will reduce to the barest minimum. Without the PIB, there is no way we can get back to the basics. The PIB is central. It is the bedrock, the foundation on which we can build this nation.” Also, corroborating the views of Ezigbo, Emi Membere-Otaji, Managing Director, Elshcon Nigeria Limited, said the expectation in 2014 is for the PIB to be passed into law. “That is the main thing in our view, because we believe there is going to be a lot of positive development from the PIB, especially if the provisions are fair enough to serve as win-win situation for all the stakeholders.” According to him, the bill would enhance investment profile in the industry and also actualise the local content objectives of the government. ”When the PIB is passed, we also expect that it would be aligned with strict enforcement of the Nigerian content policy, such that it would aid participation of Nigerian companies in the industry”, he

stance might have been informed by the report of the United Kingdom-based policy think-tank, Chatham House, which stated that Nigeria’s crude oil is being stolen on an industrial scale, According to the report, “Some of what is stolen is exported. Proceeds are laundered through world financial centres and used to buy assets in and outside Nigeria, polluting markets and financial institutions overseas, and creating reputational, political and legal hazards. It could also compromise parts of the legitimate oil business.” The report also stated that officials outside Nigeria were aware that the problem existed, and occasionally showed some interest at high policy levels, “but Nigeria’s trade and diplomatic partners have taken no real action, and no stakeholder group inside the country has a record of sustained and serious engagement with the issue.” The lack of good intelligence means international bodies cannot fully assess whether Nigerian oil theft harms their interests, it stated. “It is not clear how much of

said.

he concerns and expectations of stakeholders in the industry may have been informed by the report of the London-based Business Monitor International (BMI) forecasts for first quarter of 2014, which stated that although the Nigerian economy will grow by a robust 7.2 percent in 2014, the downside risks have increased over recent months. According to the report, “The volatility of the price of oil poses a significant risk to export revenues and government receipts. A significant deterioration in the economies of Europe, the US, or other major markets could see the price again head below our current projections, with negative implications for Nigeria’s economy. While we believe that security risks will eventually be contained, if the situation significantly deteriorates, this would potentially affect i n v e s t m e n t , ex p o r t s , a n d growth. Ructions within the ruling party

He noted that though there are arguments everywhere against and for the PIB, what should be done first of all is to enact the PIB as it is and then see how it is functioning could lead to economically disruptive instability in the lead up to the 2015 elections.” The concerns of stakeholders no doubt would have been heightened by President Goodluck Jonathan’s statement that oil export might witness a downturn in 2014. The President’s statement which was contained in the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) submitted to the National Assembly was meant to guide the National Assembly in their approval of the needed benchmark for the price of oil. However, the government’s

Nigeria’s oil is stolen and exported. The best available data suggest that an average of 100,000 b/d vanished from onshore, swamp and shallowwater areas in the first quarter of 2013. “This figure does not include what may happen at export terminals. It also assumes the integrity of industry numbers. But whatever the size of the problem, stolen Nigerian oil represents a tiny fraction of global crude supply and consumption, and a diminishing share of rising light sweet crude production globally.

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Oil

Oil pipeline

Government’s transformation agenda: Fixing PPMC Supply/ Distribution Network CHIJIOKE NWAOZUZU

he Government’s Tr a n s f o r m a t i o n Agenda, instituted by the President, DrGoodluckEbele Jonathan to cover the period 2011 – 2015 is anchored on Nigeria’s long-term economic development blueprint as encapsulated in Vision 20: 2020. The transformation agenda isolates a set of key priority policies and programmes which when executed are expected to yield outcomes that are consistent with present and future needs of the Nigerian people. It is already a known fact that Nigeria operates largely a mono-product economy presently, and it is expected that further developments in,and transformation of,the oil & gas sector will lead to a diversification of the Nigerian economy into agriculture, i n f o r m a t i o n a n d telecommunications t e c h n o l o g y, a g g r e s s i v e manufacturing activities, etc. In this light, it is important that foundational issues relating to the oil and gas sector are dealt with. One of these is the supply and distribution network, made up of pipelines, depots and tank farms, jetties, terminals, etc. Ta k e n t o g e t h e r , t h i s infrastructure behaves like a natural monopoly because it links up all cur rent and projected productive entities within the oil industry. This infrastructure is the foundation upon which existing refineries

and petroleum products’ supply and distribution nation-wide hinges on. It is also the foundation on which new refineries, new storage facilities, etc could be brought on stream, so repair and rehabilitation work on supply/distribution infrastructure should be pursued as stridently as the need to construct new refineries. National refineries and indeed nation-wide distribution of petroleum products cannot operate effectively and efficiently where the supply and distribution (S/D) infrastructure is compromised by vandals. Consequently, the current Petroleum Minister, MrsDiezani Alison-Madueke has taken some urgent and laudable steps to address the most critical of these facilities. Interventions to maintain national refineries have been accompanied with S / D infrastr ucture upgrade nation-wide. The Port Harcourt – Aba product line, which hitherto was inoperable due to pipeline vandalism has now been re-established and rehabilitated. The Warri – Benin product line has been recovered, and the Benin depot has been recommissioned. The Aba product depot has now been recommissioned after nearly seven years of dormancy. The Aba – Enugu product pipeline is expected to be re-established by year ending 2013. A major product depot, the Atlas Cove has been revamped, and petrol tanks 11 & 12 have been reconstructed. Project Aquila (i.e. electronic

monitoring of petroleum products distribution) which was recently introduced by the current Petroleum Minister has encouraged increased investments in the downstream sector resulting in the construction of new depots (from 44 depots in 2010 to 71 depots presently), representing a 62% increase in the number of depots nation-wide. This development has lead to new investments of N53 billion resulting from construction of the new depots, 1000 new petrol retail outlets, and procurement of 800 new fuel delivery trucks.The above actions taken by the Minister indicate that the Petroleum Ministry is serious about tackling this fundamental issue.

owever, the Minister would agree that the measures taken so far are only incremental, and so a far more transformational set of actions need to be initiated post-PIB. The reason is that according to PPMC’s figures around $2.8 billion is required for minor repairs of S / D infrastructure, whereas a study carried out by AON Energy Risk Engineering estimated that $8.9 billion would be required to achieve a full rehabilitation of PPMC supply /distribution network. It may be pertinent to note at this juncture that the passage of the Petroleum Industry Bill (PIB) and the Gas Master Plan Bill by the National Assembly are thought to hold the key to further transformation work in

the oil and gas industry. Their passage would enthrone a transparent regulatory framework and competitive fiscal regime necessary to transform the petroleum industry in Nigeria. Consequently, the Ministry of Petroleum Resources has been building consensus around the main features of the PIB in order to encourage the National Assembly to speedily pass this critical piece of legislation. The huge investment required to address the S/D infrastructure rehabilitation issue has led to calls for immediate privatization of these national facilities. However, it is the view of the writer that in the near- term government will be ill-advised to privatize this infrastructure because together the S/D infrastructure behaves like a natural monopoly. Several actions need to be taken before

these can privatized because of national security issues involved.Therefore, in the interim, these facilities should be repaired under a ‘D o w n s t r e a m Pe t r o l e u m Infrastructure Rehabilitation Plan’. In the medium- term, a government agency (through an Act of National Assembly) can be set up under a tr uly independent regulator (with the requisite character and integrity) to rehabilitate and operate this infrastructure on a truly commercial basis (i.e. cost plus). Such an agency will be invested with the responsibility to set tariffs for users of these facilities. Only to the extent that it should be a long- term measure, I concur with a professional colleague’srecommendation (Dr John Erinne) that PPMC’s S/D infrastructure should be privatized into 4 companies

This infrastructure is the foundation upon which existing refineries and petroleum products’ supply and distribution nation-wide hinges on along the following lines: West (Mosimi Area); Central (Warri Area); East (Port Harcourt Area); and North (Kaduna &Gombe areas).

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Rethinking C S R In Nigeria:

The Role Of The Public Sector

Lagos

he concept of corporate social responsibility (CSR) has become an important area of interest and concern for many businesses. Some have gone ahead to develop and implement policies which clearly suggest that they can simultaneously make profits and be good citizens. Others are now embracing the language of CSR and taking measures to reform their management systems in order to make them more responsive to the environmental and social concerns of the different stakeholders in their areas of operation. Interestingly, there has been a gradual but noticeable expansion in the number and range of stakeholders that businesses have to deal with. This has resulted in the redefinition of the roles and responsibilities of business in a society. New multi-stakeholder groups have emerged and

global governance frameworks have evolved. Working together, they have inadvertently created a strong platform to encourage and/or put pressure on businesses to re-invent themselves as ‘forces for good’ in t h e s o c i e t y. F o r m a n y businesses, CSR means going beyond the simple paradigm of ‘doing no harm’ to the environment or society. It also implies that they must reconsider the previous expectations which mainly focused on the financial returns to their shareholders. CSR is a business management model, and several drivers often compel a company to develop, adopt and implement CSR policies and programmes. These include managing risk and reputation, protecting human capital assets, responding to consumer demands and avoiding regulation. Yet, there are there two main impediments to the full realization of the potential benefits of CSR. The first one is

‘fear’, and this is one of the greatest reasons why businesses undertake CSR. The emphasis here is on the business desire to avoid trouble (e.g. with shareholders, stakeholders, government, etc), rather than looking for opportunities to contribute to the social, economic and environmental development of the societies in which they operate. The second impediment relates to that fact that very often CSR is seen as a ‘bolt-on’ to business operations rather than something that should be ‘built in’ to a business s t r a t e g y. D u e t o t h e s e impediments, CSR can easily become either a distraction or hindrance to business purpose and objectives, rather than helping to contribute to sustainable development of the wider society. This often results in a considerable gap observed between corporate rhetoric and actual practice of CSR. Against the above background, there is need for active public sector

An enabling environment implies a policy environment that encourages business activity that minimizes environmental and/or social costs and impacts, while at the same time maintaining or maximizing economic and social gains participation in the promotion of CSR practice to ensure the full realisation of its potential contributions to sustainable development. In Nigeria, the CSR initiatives and programmes that many companies have developed and implemented depends to a very large extent on how they define CSR and the relative importance they attach to it. There are therefore multiple CSR interpretations, as each organization faces different stakeholders with different expectations and priorities. For

many business organisations, the challenge is simply the political will to look at their impact through the prism of sustainability which requires social, economic and environmental considerations in the decision making process. G e n e r a l l y, t h e m a j o r multinational corporations tend to pursue similar CSR policies. However, the unique challenges of the Nigerian political, social, Dr Uwem E. Ite E-mail: uwem.ite@gmail.com

TO BE CONTINUED

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Thisday Dome, Central Business District, Abuja

Rethinking Corporate Social Responsibility In Nigeria:

The Role Of The Public Sector CONTINUED FROM PAGE 13 cultural and economic environment can make their CSR practices in Nigeria to be significantly different in some respects, from similar practices in other countries. The public sector in Nigeria (i.e. the government) has a significant responsibility to provide the enabling environment for the private sector to contribute to sustainable development through the framework of CSR. An enabling environment implies a policy environment that encourages business activity that minimizes environmental and/or social costs and impacts, while at the same time maintaining or maximizing economic and social gains. The role of the public sector in promoting CSR can be summarised as follows: ? Making efforts to create and raise awareness on a shared understanding of corporate

responsibility among companies and the broader public, including what business can do to implement CSR policies, ? F o r m i n g a n d supporting partnerships that are designed to create win-win situations, with various stakeholders working collectively towards shared values and societal goal, ? Providing soft law approaches that promote and incentivise voluntary action by business as a complement to state regulation, ? Developing mandating instruments that allow governments and relevant agencies to monitor and enforce corporate accountability. In Nigeria, an attempt was made within the last five years to legislate CSR through an Act of the National Assembly. If the bill was successfully passed into law, it would have created a very bad impression as well as provide public evidence of the failure of the Nigerian government to use

the vast amount of resources available in the country for the purposes of social, economic and environmental development. This is because governments have the constitutional and ultimate responsibility for the development of any nation or country. These include the maintenance of law and order and the provision of basic socioeconomic infrastructure. As such, the current CSR initiatives and social investments by private sector organizations in Nigeria are meant to support and complement the development efforts of the Nigerian government. In other words, C SR projects and programmes should not (and cannot) be expected to replace the legitimate role of government in the development process, as evident in the Niger Delta dilemma. The legislation of CSR in Nigeria would have also increased the financial burden on private sector organizations

currently and actively undertaking CSR initiatives and activities in Nigeria. Yet, good corporate governance, functional leadership and creativity are more likely to deliver a more positive impact for the society than legislation of CSR. Instead of full-scale legislation on CSR, several countries (e.g. Belgium, United Kingdom, Canada, Finland, Germany, Netherlands, Poland and Sweden) have developed policies and guidance documents outlining their approach to CSR and expectations from private sector organizations. To conclude, it is important to remember that C SR is a voluntary initiative undertaken by organizations as their contribution to sustainable development. The best and innovative CSR activities and initiatives would not be derived through legislation by the government. Instead of imposing CSR on organizations

through legislation, the Nigerian government should actively explore ways of encouraging the promotion of CSR by providing the enabling environment as outlined earlier above. CSR is a two-edged sword. It can be used to address the needs of disadvantaged communities, or to damage the same communities, whether by mistake or design.

Even though business and government may share in the responsibility for economic and social development, the primary assignment and role for business is still wealth creation. The governmentâ&#x20AC;&#x2122;s main charge is to represent society and to ensure equitable wealth distribution among the various stakeholders.

Focus

Why major marketers no longer import kerosene — Olawore

xecutive Secretary of Major Oil Marketers Association of Nigeria, MOMAN, Mr. Obafemi Olawore, in this interview said lack of policy clarity on the importation of kerosene for domestic use has hindered its members from importing the product into the country. He therefore urged policy makers to promote LPG usage.

KUNLE KALEJAYE Your members have refused to import kerosene for domestic use, why? There is lack of clarity on the whole policy. So for major marketers to come in, there must be clarity. There is no clarity at all. Let’s go back to history, about three, four or five years ago. There was a policy that kerosene has been deregulated, in other words, there is no subsidy. That is to say you will import it, sell it and make a reasonable magin, not cut throat. That is what we understand it to be. That was a policy issued by president Yar’ Adua. However, some officials in government tried to change that policy. So the confusion now came up, kerosene price was now pegged at N50 as the selling price. So there is a contradiction. If it is deregulated, why do you fix a price? Whereas there was a paper for deregulation but there is no paper to say that it has been reversed. Instead there is a paper that said the price is N50 and don’t go beyond N50. With this confusion, no major marketer ever imported and will ever import kerosene to sell, we won’t. Because if we import and government tells you that the subsisting circular said you should sell at N50, the whole process will be criminalised if you sell at more than N50 and whereas when you import, even the landing cost alone is more than N50, so there is no way you can come down and sell at N50 if subsidy is not paid. I can confirm to you that Petroleum Products Pricing Regulatory Agency, PPPRA, when president Yar’ Adua was still around never processed NNPC claims, they did not. In other words, PPPRA as at that time never paid kerosene

subsidy. H o w e v e r, t h e r e w a s a n interregnum between the other time and the present PPPRA. That period, PPPRA then processed some claims by NNPC for payment. Whether it was eventually paid or not by Ministry of Finance, I don’t know because I am not in the finance ministry and none of my members made claims for it because we never imported. So the situation now is, major marketers will not import kerosene and sell at a loss, major marketers will import kerosene when the policy about the product is made clear. I repeat; you cannot on one hand say there is deregulation and you don’t give a letter to that effect and later go and fix the price for N50, there is a contradiction. Until that contradiction is resolved, we are not going to come in and import. Major marketers will only import the aviation kerosene and sell as aviation fuel. NNPC is the one that imports kerosene and NNPC is the one that should answer whether they are paid the subsidy or not. As far as we are concerned, we have not made any claims because we did not import. It was mentioned that FG spent N685trillion on kerosene subsidy in three years, who was the money paid to? Dakuku Peterside’s figure may be right if he has proof. I’m not saying that he is wrong. He could be right, but I’m saying that the right place to go and confirm that is three places. First, go and ask NNPC whether they made any claims for kerosene they imported, go and ask PPPRA if they processed any claims for NNPC on kerosene and ask finance ministr y whether they paid subsidy for kerosene for this period, not me

because my members never imported, I won’t lie. Which means the House of Representative is going ahead to confirm whatever figure Dakuku may have rolled out to the public. So as far as am concerned, for now everything is in the realm of conjecture, but what I can tell you as a matter of fact is that, no major marketer has imported and no major marketer has made claims. The other earlier part was based on the fact that I was a member of the PPPRA Board, so I have some insider information,

Obafemi Olawore

Major marketers will only import the aviation kerosene and sell as aviation fuel. NNPC is the one that imports kerosene and NNPC is the one that should answer whether they are paid the subsidy or not but the truth of the matter is there is confusion in the policy and that confusion must be cleared. The way forward If you ask me the way forward and I think you should be interested in that. Government should deregulate kerosene as a matter of permanent policy and the objective of this statement is to clear any doubt in the mind of anybody that kerosene is deregulated, so that other players will be able to import. When you are talking about kerosene deregulation, nobody is buying it at N50, because there is only one importer, that is why there is so much pressure on the price of kerosene. If NNPC import, MOMAN members

import, Independent Marketers import, the price will come down. As at today, only NNPC import and they give it to those they feel like giving it to and quote me “No supply of kerosene has been made to any major marketer at Apapa facility in the last two and the half years. We must demystify kerosene and I’m choosing my words clearly; “We must demystify kerosene”, kerosene is not a product that should carry all this mysteries about itself. How do you demystify kerosene? We must encourage the use of LPG. The world over, LPG is used for domestic cooking not kerosene. It is only in Nigeria and not up to 10

countries in the whole world that make use of kerosene for domestic cooking. So we should encourage the use of LPG. If there is any subsidy that is coming, we should subsidise the production of the cylinders not t h e p r o d u c t . We s h o u l d encourage the manufacturers of the cylinders locally. It is a shame that the large plants built at Ibadan and Abeokuta are dead, we should encourage them. If we encourage them and they begin production of LPG cylinders, the cash given to them should not be free. They can give them at little or no interest, we finance them so that they can commence production of cylinders in order for the common man, if there is any can be able to buy cylinders at affordable price, otherwise government should distribute cylinders through LPG Association, through major marketers, government can get cylinders to the households in Nigeria and at cheaper rates.

Finance

Solar panel

FG solar plant expansion to gulp $96 million CHRIS OCHAYI

BUJA: The F e d e r a l Government first solar panel manufacturing plant would require a total sum of $96 million to enable it re-double capacity from its estimated 7.5megawatts annual output. T h e E x e c u t i v e Vi c e Chairman of the National Agency for Science and Engineering Infrastructure, N A S E N I , S o l a r Pa n e l Manufacturing Plant, Engr. Mohammed SaniHaruna disclosed this during a visit to the plant in Karshi area of the Federal Capital Territory. Haruna who was accompanied by the Managing Director, Mr John Ocheje and other staff members, said there was the need to encourage local content in the power sector through the deliberate utilization of locally

produced solar technologies and other power equipment. He noted that, “from the period of incorporation, the plant has produced more than 2800 pieces of solar panels of different power ratings including 175 watts to 200 watts capacity.” The plant which has produced over 2800 solar panels of different power ratings since September 2011, was established by the federal government through NASENI and has since been registered as a limited liability company to boost its commercial viability. While it is chaired by President Goodluck Jonathan, it has an Executive Vice Chairman, EVC, and a Managing Director. Haruna maintained that solar technology is imperative to power rural communities and urban centres to open them up for development . While reports say 60 percent of Nigerians do not

have access to national grid especially the rural communities, Engr. Haruna noted that solar could tackle the challenge as Nigeria receives 5.535kilowattshour (kwh) of solar energy with an average of six to nine hours sunshine daily. On its major constraints he said, “The cost of the solar systems is discouraging i n d i v i d u a l s a n d organizations; but government in 2013, signed an MOU with China to utilize local silicone to produce solar cells in Nigeria. It will end our current importation of the cells and we will transit from just an assembly plant to a full blown production plant.” Engr. Haruna said the influx of low quality solar panels at a reduced cost affects the plant as its highquality panels are adjudged to be expensive. He lamented poor patronage from public institutes involved in solar energy projects. The EVC said letters were

Haruna maintained that solar technology is imperative to power rural communities and urban centres to open them up for development sent to the Ministry of Power on collaboration in its ongoing Operation Light-up Rural Nigeria (OLRN) noting that, the Minister of Power, Prof. Chinedu Nebo would soon have a first-hand assessment of the solar panel plant. In his remarks, the Managing Director Mr John Ocheje, commended the energy correspondents who had taken time to visit the manufacturing plant to assess the first indigenously produced solar panel project in the country.

Power Kunle KALEJAYE

h e Tr a n s m i s s i o n Company of Nigeria, TCN has expressed readiness to transmit 7,000 megawatt of electricity sequel to massive expansion work on the countr y ’s transmission lines.The transmission lines initially had the capacity to transmit 5,000 megawatt of electricity that would be generated from Generation Companies, GENCOs. According to the Presidential Task Force on Po w e r, N i g e r i a ’ s p e a k generation currently stands at 3,600 megawatts, although the country hopes to generate above 5,000 megawatts, TCN said it is ready for transmission. TCN General Manager Public Affairs, Mrs. Seun Olagunju said the company currently has the capacity to transmit 7,000 megawatts of electricity. Commenting on the recent drop in power supply, Olagunju said some of the power plants were shut down for maintenance purposes, re-iterating that maintaining the nation’s power plants is aimed at improving power supply. She said the shutdown of Shiroro plant was necessary so as to allow t h e e n g i n e e r i n g maintenance crew to rectify faults on the station’s carbon dioxide control panel. Recall that Kainji power plant with installed capacity of 760 megawatts, was shut down as a result of multiple faults that affect the eight units. Kainji’s 1G5, 1G7, 1G8,1G9 and 1G10 units were also shutdown as a result of rehabilitation and faults of various type. 600megawatts Shiroro Hydro plant was also out due to ongoing repairs and overhaul, but later came back on stream after repairs was carried out.Also the 507megawatts Sapele NIPP, went out completely due to gas constraints, loading problem and civil work on its basement. The 1,131megawatts Alaoji NIPP was also shut down following a water injection test of GT1 unit while GT2 unit was shut after 72 hours performance test.For the 500megawatts Olorunsogo NIPP plant, it was similarly out due to gas constraints and

TCN expands transmission capacity to 7,000MW

Electricity transformer maintenance routine after a commissioning test. It was also reported that GT1-3 and ST1 units of the plant were out due to gas constraints while the ST3 unit was shut down after a commissioning test and the GT4 unit was down for maintenance purpose.The 150megawatts Omoku IPP was reported for not

generating electricity to the grid due to collapsed towers on the Omoku/Port Harcourt mains 132kv lines. Trans-Amadi IPP had its GT1 and 3 units out as result of faults, while GT2 and 4 units tripped due to reversed power. On the issue of T C N / M a n i t o b a management contract, Mrs.

The 1,131megawatts Alaoji NIPP was also shut down following a water injection test of GT1 unit while GT2 unit was shut after 72 hours performance test

Olagunju explained that there is harmonious working relationship between the duo. She stated that Manitoba signed a contract to manage TCN for three years, adding that it has been a healthy working relationship as against what was reported However, the National Assembly had urged the Federal Gover nment to equally unbundle the Transmission Company of Nigeria (TCN) like the Power Holding Company of Nigeria (PHCN), to make it more efficient and also called for a total review of the contract agreement government entered into with Manitoba. Senate Committee on Power chair, Senator Philip Aduda and his counterpart in t h e H o u s e o f Representatives, Patrick

Ikhariale, had since called for the agreement documents to enable it study the grey areas that negate the principle of Nigerian content which gave the company an advantage to the detriment of Nigerian experts in the sector. Aduda said, “ we need to ensure that apart from M a n i t o b a H y d r o International managing the transmission sector, we must have the technical counterpart, because they are here as management partners. “We have demanded for copies of the agreement so that we can proffer solutions to the lingering problem. We must look at that agreement because the Bureau of Public Enterprises (BPE), was there and must remember most of those aspects in question,” Aduda stated.

Power

Power transmission Kunle KALEJAYE

he recent w o r s e n e d power supply in the country, has been attributed to the inability of successive federal administrations to upgrade generation and transmission infrastructure in the power sector in line with geometric growth in the country’s population. In addition to the country’s increasing population, increased economic activities as a result of civilisation and urbanisation are key variables that have long been neglected by successive administrations. This was the submission of the Managing Director of Meter manufacturing company, Paktim Nigeria Limited, Mr. Ilofulunwa Charles Ejikeme.He however said the cur rent administration has done a lot in the power sector, but admitted that more still needs to be done. “You may need to know that basically, what we are seeing today as a failure in the power sector is as a result of inability of the successive federal a d m i n i s t r a t i o n t o ke e p upgrading the generation and transmission

Generation, transmission inadequacies frustrate power supply infrastructure in line with the geometric growth in Nigeria’s population and increase in economic activities as a result of civilisation and urbanization. So the inability to build the capacity on these two variables remains the major setback. “However the cur rent regime has done a lot even though a lot still need to be done in the area of transmission capacity to evacuate what has been generated especially from Agip power plant in Kwale,Delta State and Afam Power Plant in Oyigbo, Port Harcourt etc to the national grid,” he said. In tackling vandalisation of gas pipeline, Ejikeme

suggested that the latest technology that helps in surveillance and monitoring, dictating the exact spot with precision where the vandalisation was and time needs to be deployed. “The drop in 300mw as they said, has to do with gas pipeline vandalism. In that case, what needs to be done is to deploy the latest technology that helps in surveillance and monitoring, dictating the exact spot with precision where the vandalization was done and time, for quick intervention and remediation with precision and put in place adequate security measure to forestall future occurrence.

“Secondly, when we were in the secondary school, we were told that in siting your industry, the first thing you consider is proximity to rawmaterials. So I expect that before siting a power plant that will depend on gas supply, proximity to gas source must be paramount in consideration rather than political consideration, to reduce the incidence of vandalism as a result of long stretch of gas pipeline that will be laid to connect to the plant. “In addition, various alternative renewable energy sources should be deployed in cluster areas to enhance power supply, especially in the rural areas. E.g. Solar Photovoltaic, solar

thermal system, wind turbines, waste power plants, Biofuels/Blomass heating system and air source heat pumps. Commenting on some factors hindering development in the power sector, Mr. Ejikeme said new investors need to deploy latest technology into the power plants to replace obsolete ones. “I believe the new investors will need up to a year to fully understand practically the quantum of decay in power infrastructure, the exact locations and latest cutting edge technology that is needed must be deployed to replace them and increase their performance by up to 98% installed capacity. Not until they are done, you may only be witnessing marginal increase in performance capacity.

Power

Nigeria to benefit from N 10,000 MW U.S. Initiative Sebastine OBASI

igeria and six other African countries a r e t o benefit from a United States initiative aimed at increasing generation capacity by about 10,000 megawatts. The U.S initiative, termed Power Africa and pioneered by Millennium Challenge Corporation (MCC) and Overseas Private Investment Corporation (OPIC), which plans to double access to electricity in sub-Saharan Africa has drawn new investments to the region. “We are seeing developers investing for the first time in power in emerging markets. We are seeing developers we have never seen before. We are also seeing with the private sector in Africa an opportunity to partner with American companies,” said Mimi Alemayehou of the U . S . O v e r s e a s Pr i v a t e Investment Corporation (OPIC). OPIC mobilizes private capital to help solve critical challenges in developing countries. President Barack Obama announced the Power Africa initiative in June 2013. Vanguard learnt that through a public-private approach, Power Africa wants to increase generation capacity by about 10,000 megawatts in six partner countries with the objective of increasing access to electricity for 20 million people, improving reliability and reducing costs for African businesses. The partner countries – Nigeria, Ethiopia, Ghana, Kenya, Liberia, and Tanzania and others in Africa were said to have identified energy insecurity as a binding constraint to economic growth. Alemayehou said that with a combined population of 800 million people, the countries of sub-Saharan Africa use the same power capacity as does Spain, with a population of 45 million. He also said that OPIC has committed $1.5 billion to Power Africa for its first five years while MCC has committed around $1 billion to the initiative. USAID will provide $285 million in technical assistance, grants and risk mitigation to assist private sector energy transactions and help governments adopt policy and regulatory reforms to attract private investment. “Power Africa is intended to

Electricity transformer

Power Africa is intended to bridge the gap between Africa’s power shortage and its economic potential by working with U.S., international and African businesses and governments to develop newly discovered resources responsibly, increase power generation and transmission capabilities, and expand the reach of mini-grid and off-grid systems

bridge the gap between Africa’s power shortage and its economic potential by working with U.S., international and African businesses and governments to develop newly discovered resources r e s p o n s i b l y, i n c r e a s e p o w e r generation and transmission capabilities, and expand the reach of mini-grid and off-grid systems. “One example is a partnership in which U.S. and Icelandic businesses have joined to build 1,000 megawatts of geothermal generation capacity,” Alemayehou said.

She also said that investments in Africa’s power could add as much as two percentage points to the region’s already strong growth rate and create jobs. Alemayehou said Power Africa is encouraging countries to continue reforming their power sectors. “They want to be part of Power Africa,” she said.

Insurance

Rosemary ONUOHA

errorism and m o n e y laundering are g l o b a l phenomena which has set nations on edge while the battle to nip them in the bud rages on. In the Nigerian financial sector, there are series of efforts geared towards combating terrorism and money laundering. And since the insurance industry is a crucial arm of the financial sector, it has mapped out and continues to review its own programmes in the fight against these vices. Consequently, the insurance sector has long joined the Anti-Money Laundering and Combating Financing of Te r r o r i s m , A M L / C F T, regime. As part of efforts geared towards the above, insurance companies now view individuals and entities whose source of wealth cannot be easily identified as high risk clients. Such high risk clients include, non resident high net-worth individuals; trusts; charities, NGOs as well as organisations receiving donations. Others are companies with close family shareholding or beneficial ownership; Politically Exposed Persons (PEPs), as well as those with dubious reputation as per available public information requiring higher due diligence. Recall that the Financial Action Task Force (FATF), has asked Nigeria to complete the enactment of laws that adequately criminalise money laundering and terrorist financing. A c c o r d i n g t o F A T F, Politically Exposed Persons are individuals who are or have been entrusted with prominent public functions both in Nigeria and abroad and those associated with them. They include heads of state or governments; governors; local government chairmen; senior politicians; senior government officials; as well as judicial or military or Para-military officials from the rank of major or equivalent. Others are senior executives of state owned corporations; important political party officials; family members or close associates of PEPâ&#x20AC;&#x2122;s and members of the royal families.

Pegged dolars

Insurers drive to combat money laundering and terrorism Accordingly, insurance companies now obtain senior management approval before relationship is established with such clients as well as approval of senior management vital for continued relation. Insurers now take steps to establish the source of wealth of PEPs as well as conduct enhanced due diligence or monitoring of the relationship and in the event of abnormal discovery, flag the contract and contact the National Insurance Commission/Nigerian Financial Intelligent Unit, NAICOM/NFIU. All insurance companies now have AML/CFT program which at a minimum include policyholder identification; suspicious and currency transaction reporting; internal policies and

All insurance companies now have AML/CFT program which at a minimum include policyholder identification; suspicious and currency transaction reporting; internal policies and procedures; appointment of compliance officer; training of employees/agents; record preservation; ongoing training as well as internal control/audit procedures; appointment of compliance officer; training of employees/agents; record preservation; ongoing training as well as internal control/audit. According to the Assistant Director (Inspectorate) of

NAICOM, Mr. Sam Onyeka, the Nigerian financial sector should implement adequate procedures to identify and freeze terrorist assets as well as demonstrate that financial sector supervision, including customer identification against money laundering

and terrorist financing is adequate and efficient. Onyeka said that the move is necessary because the country has not made sufficient progress in addressing the deficiencies in Anti-Money Laundering and Combating Financing of Terrorism AML/CFT. For Chairman of Cornerstone Insurance Plc, Mr. Adedotun Sulaiman, the insurance sector should join the fight against money laundering and the negative trend of wanting to get businesses at all cost should stop. Suleiman therefore charged insurance operators to look for creative, acceptable and innovative ways to do business that will take away the negative image.

Labour

Proposed sale of refineries was to rip-off Nigerians —PENGASSAN Folorunsho Sunday Oginni

Victor AHIUMA-YOUNG

AST month, after a meeting between Federal Government officials, labour leaders in the Nigeria’s Petroleum industr y, the planned privatization of the four public refineries was jettisoned and the planned shutdown of the sector by labour was similarly suspended. In an interview with Sweetcrude, one of the labour leaders at the meeting and Chairman of the Lagos zone of the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENG ASSAN), Rev Folorunsho Sunday Oginni, among others, gives insight on how the planned sale would have rip-off the nation. Excerpts. Now that labour leaders have reached agreement with the Federal Government that the refineries would not be privatized, at least for now, what’s next? We are threading with what I can call caution. The issue of the refineries, we shouted and thank God and the media for the role played. People need to ask why we were against the sale of the refineries and why are we against this privatization? I explained to a cross section of Nigerians when I appeared recently on a television programme. As we speak today, I stand to be corrected,

that none of the so-called privatised companies has so far been making profit. We privatized Daily Times of Nigeria, as we speak today, Daily Times has never returned to the news stand. The story that we have been hearing and have been reading and has been confirmed is that the people that bought the Daily Times of Nigeria have sold all the assets of the company. All the guest houses in Lagos, even the one in London, and all other assets have been sold

somebody bought as a privatized company, today about 8,120 staff have been sacked and as we speak, they have not even gotten their entitlements. NICON Insurance has gone down. Air Nigeria, formerly Nigerian Airways was sold, as we speak, there is no single aircraft that is flying in that fleet. When you go to the downstream sector of the Petroleum Industry, you talk of African Petroleum, you talk of former National Oil and so on, their story is

The buyers are people who would promise government and the nation heaven and earth before privatization, but after privatization, these socalled new investors would destroy the companies. So, as at today, we have not seen any of the so-called privatized companies that today is a success

off. The promise they made was that they were going to revamp the Daily Times and restore it to its place of pride. That never happened. If you ask what happened to NICON Insurance that

disheartening. Before these companies were privatized, we were the custodian of the workers because they were our members. The number of PENGASSAN members in these companies were 8,520

and as we speak, they are less than 1000 and 95 percent of them as at today are contract, outsourced and casual workers. The buyers are people who would promise gover nment and the nation heaven and earth before privatization, but after privatization, these so-called new investors would destroy the companies. So, as at today, we have not seen any of the so -called privatized companies that today is a success. Yet some un-informed Nigerians would say, what about the GSM? We have continued to educate them that it was not NITEL that was privatized, people that operate the GSM companies today brought their money and set up their own companies. That is why you see them making profit and expanding. Till today, NITEL is moribund and has not been privatized. Back to the refineries, we started the OGIC (Oil and Gas Implementation Committee) and our members were there r e p r e s e n t i n g PENGASSAN and NUPENG (Nigeria Union of Petroleum and Natural Gas Workers). It was a robust discussion and ever ything that was needed in the oil industry

was discussed. The government however, came and said OGIC would not work and discarded it. They said it was going to be Petroleum Industry Bill (PIB). We said no problem. But as we speak, they did not allow any of our members to represent the yearnings of oil workers or our input in the public hearing. We did not bother because since it is for Nigeria, we participated and are still participating in PIB issues. Today, the PIB has not been allowed to see the light of the day. At the last sitting of the immediate past Senate, the Senate President, David Mark told Nigerians that if they were able to return to the senate, that the first bill they would attend to was going to be the PIB. As God would have it, they came back and after three years, and elections are coming next year, the PIB has not seen the light of the day. What many people do not know is that, the PIB has already taken into consideration all that is needed for our refineries to work and be a success story. Do you know what, we discovered that government wanted to rush the sale of the refineries because all the spare parts for the TurnAround- Maintenance (TAM) are already in the ship coming to Nigeria and will arrive any moment. That was why some people were CONTINUES ON PAGE 22

Labour

CONTINUED FROM PAGE 21

pressuring government to sell the refineries as scraps so that when the spare parts come, they would take the spare parts to do the TAM and tell Nigerians that they have done the magic and that the refineries are now working. We have been talking about TAM for more than 10 years. Late General Sanni Abacha awarded the contract twice for the TAM, but nobody did anything in spite that the contract sum w a s p a i d . T i l l t o d a y, government has not apprehended anybody. We insisted that no, you cannot sell the refineries, you must wait for the spare parts to come, do the TAM and let us see what would happen next. Because they are people that want to reap off the nation from the sale, they were pressuring the government. People have argued that private sector will manage the refineries better as Nigerian government has no history of any successfully managed enterprise. What is your response? Many of our so-called businessmen that we celebrate as successful in Nigeria, are not really businessmen. All they do is to feed fat on public fund. The question is, why is the PIB not signed into law? Who is afraid of the PIB? These people know quite well that if PIB is signed into law, all these problems confronting the nationâ&#x20AC;&#x2122;s oil and gas sector have been addressed by the bill. These refineries we are talking about, they were built pre-1989 and those who built the refineries recently had declared that the technologies used in those refineries had been phased out. What is stopping us from building more refineries? To build a refinery today is about 4billion US Dollars. We produce not less than 2.4 million barrel of crude oil on daily basis and we sell at 108 Dollars, which is the price all over the world. Going by that calculation, we are making about 41.2 billion US Dollars daily. The next question you will ask is, where is this money going? When you look at our roads, it is nothing to write home about. Education, you are living witness to when lecturers went on strike for over five months. Electricity, we do not have and infrastructure g e n e r a l l y, i n e v e r y ramification, you cannot equate us with ordinary Ghana here. The question

Folorunsho Sunday Oginni

Proposed sale of refineries was to rip off Nigerians â&#x20AC;&#x201D;PENGASSAN The fate of the workers in the refineries is not the primary issue, the issue is that we do not have reason as a nation to be importing fuel. The four refineries if they produced at 100 percent installed capacity; will produce 18.2 million litres per day that is begging for an answer is, if you are making over 41 billion dollars daily, why is poverty still ravaging the country? Do not forget that we have the capacity to produce more than 2.4 million barrel per day, but because of ceiling by the Organisation of Oil Producing Countries (OPEC) which we are a member. Singapore is a country that does not have crude oil, they import, yet they have about 62 refineries. They buy the crude, refine and make huge profit. Why is that Nigeria that has the crude, the manpower is wasting because of nothing to do, cannot build refineries. We had a meeting with governmentâ&#x20AC;&#x2122;s officials, they said because Nigeria is not running it well, Nigeria

cannot build refineries. We told them that there is a panacea for that, go ahead and build even if it is one, one in each six geographical zones. Today, businessmen are building industries but are not the ones running them. We can name many hotels that are springing up in Lagos and other parts of the country. If you go to Victoria Island and Ikoyi, most of the hotels you see there, the people that built them are not those running them. They gave them to those that have the managerial or technical know- how. We told them this is a simple thing, build the refineries and if necessary take World Bank loan. The bank would be very happy to give you loan for it and after building it,

you can give it to those who will run it on your behalf and set a target for them. For instance, within four or five years, I want my money back. But they are not ready to build new refineries. Do you know why? If more refineries are built, there will be no more importation and there will be no more subsidies where their cronies and fronts have been reaping off the nation, those that finance their election and stay in government. We have argued that even if the refineries are to be sold you must sit down with us as oil workers to discuss labour and related issues. The fate of the workers in the refineries is not the primary issue, the issue is that we do not have reason as a nation to be importing fuel. The four refineries if they produced at 100 percent installed capacity; will produce 18.2 million litres per day. But because of age and others, they cannot produce at such. In Nigeria today, we are consuming over 38 million litres per day and if you look at the gap between 38 and 18, it is very wide. This gap, nobody is talking about how to close it. But we are

very much interested in importation and subsidy. Niger Republic recently discovered oil and they have built a refinery. When the President was asked, your country is a very small country, when you refined from this automated refinery, where will you sell the refined products? His response was that selling is not a problem. He said they have a ready market in Africa alone. When he was asked to substantiate, he said Nigeria is a big market for their refined petroleum products. What an insult to the socalled giant of Africa. Yo u a n d g o v e r n m e n t agreed to develop workable business models for the refineries. Can you substantiate on this? If you are conversant with the story of Nigeria Liquefied Natural Gas (NLNG), you will know that today NLNG is producing and moving forward. What we have in mind is for government to do the TAM and then follow the NLNG model. Visit Port Harcourt or Warri refinery and see how Nigerians are using their ingenuity to fabricate and make the obsolete equipment in the refineries to function.

Labour Victor AHIUMA-YOUNG

O R M E R D e p u t y PresidentGeneral of the Tr a d e U n i o n Congress of Nigeria, TUC, Dr. Brown Ogbeifun, has said the Petroleum Industry Bill, PIB, remains the best option to move Nigeria’s Petroleum industry forward. Ogbeifun, an ex-President of Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, argued that PIB would definitely add value to the country’s national hydrocarbons if passed and the sole beneficiaries would be Nigerians and Nigeria. Speaking on whether the aborted planned sale of the public refineries was the best available option, in a chat with Sweetcrude, he said: “would have preferred other words in place of the word “sale” because that word means so many things to so many of the Stakeholders. First, the concept of Privatization is not a bad idea, but the modus of implementation in Nigeria runs fowl of all known positive virtues and values. The harrowing experience of Nigeria Telecommunications Limited, NITEL, and Power Holding Company of Nigeria, PHCN, are the usual reference points by the Unions. This has left Oil and Gas Unions with mutual suspicion, cynicism and total loss of confidence in the privatization process. Secondly, privatization is not synonymous with job losses. But, what we find here is that once an enterprise is privatized, the motive of profit drives the primary instead of the secondary objectives. So we see excising of workers and contracting their jobs to labour contractors that the Unions refer to as pay masters. This further fuels the resistance of the Unions against government privatization process. In all sincerity, government should blame itself for this very vicious and unending privatization spirals.” “For whatever reason(s), gover nment refused to implement the business model (Nigeria National Liquefied Natural Gas, NLNG, model) agreed with the unions for privatizing the refineries in 2004. This can be verified. This model runs like any other venture in partnership with technical,

PIB remains the best option for Nigeria’s oil sector —Ogbeifun

Brown Ogbeifun

For whatever reason(s), government refused to implement the business model (Nigeria National Liquefied Natural Gas, NLNG, model) agreed with the unions for privatizing the refineries in 2004. This can be verified financial partners and the government. Though government will have a stake in the venture, it does not have the overall controlling authority, which gives it authority and right to interfere in the internal affairs of the management of the holding company. The

refineries under this model would have had a life of theirs and commercially managed. But government made a uturn perhaps due to the advice of either its political strategic partners for purely selfish reasons or that of the i n t e r e s t e d b u y e r s . Fo r instance, in the twilight of

President Obasanjo’s second term, rather than implement the privatization process using the NLNG model canvassed by the unions to the investors, which would have at least kick- started a win-win option, the government decided to give away Kaduna Refinery and Petrol-Chemical Companies, KRPC, and Port Harcourt Refinery Company, PHRC, on wholesale. So the unions cried blue murder and fought hard to reverse the process. So, trusting government ever since has become impossible. Six years after, we are back to the starting block.” According to him, “one can emphatically say that the unions were ready at a point to accede to a middle of the road option that will help remove the hands of government as the sole owner in running the affairs of the Nigeria National Petroleum Corporation, NNPC, and by extension that of the refineries. When NNPC was compared with other National Oil and Gas companies, it was discovered that unlike other commercialized oil and gas companies, the average turnover of Managing Directors in the International Oil Companies, IOCs were between three to five years. OANDO has had Mr. Wale Tinubu as its CEO for more than a decade. He has moved OANDO from a single window to multiple windows in the upstream, mid-stream and downstream. He was able to do this because of the continuity and the stability of his team.” “But in the case of NNPC, the reshuffling of its top management is at will and almost on every other year by its sole owner (Government). This has had very serious negative impacts with some taking very many years to ameliorate. It has had not less than seven Group Managing Directors within a ten year period. The implications of this in terms of very high turnover of the top management that are the strategic planners at the Corporate level are dangerously enormous. This also cascades to the

Managing Directors and the Executive Directors of the refineries. Internally, it has very serious pension implications as those who would have been paying to the pension baskets are retired prematurely and the commencement of drawing pension well ahead of their retirements etc. Un-planned changes destroy succession planning, prevents talent management, causes policy sommersault, kills consistency in policy f o r m u l a t i o n a n d implementation; reduces investor confidence and breeds anxiety among staff as they do not know what to expect when once there are changes especially after every Presidential election.” “Does it not worry us that the top management of NNPC virtually sleeps in the National Assembly week-in week-out with very grave consequences and implications for executive time management? What about the politics and intrigues as it was with the Central Bank of Nigeria, CBN’s, red flag on the $49bn theft it accused NNPC of? Do we truly appreciate what damage that did to the image of Nigeria, investor confidence and the NNPC? All these continuously happen because NNPC is an agency of government and I do not think this is what the unions crave for. With this type of picture, privatization in whatever form will remove the bottlenecks and challenges, allow for stability in the internal dynamics of the refineries, expands the risk sharing among the financial, technical partners and government, the revitalization of the refineries to produce optimally thereby creating more employment opportunities and investments along the value chain.” “The refineries currently operate under very difficult s o c i o - e c o n o m i c environments with huge challenges, which majority of our people do not appreciate. Vandalism and tortuous long approval processes from above for major turnaround of the refineries are real challenges that cannot be wished away.

Solid Mineral

Illegal miners

Gabriel EWEPU

ver the y e a r s , Nigeria had b e e n a country riddled by illegal mining activities, particularly the solid minerals sector, which had been abandoned for many decades as a result of the 1973 Indigenisation Law that made the Europeans that were in charge of mining sites to abandon these sites for the unskilled Nigerians who were working with them. U n f o r t u n a t e l y, t h e s e Nigerians could not operate the machinery and plants left for them, rather, they chose the path of crude methods of mining, which led to the eventual collapse of the mining sector, and also various administrations could not pay attention to the development of the sector for revenue generation. Instead were carried away by the wind of oil boom in the petroleum sector and its politics. The increasing and frightening poverty also gave rise to the inflow of artisanal miners in the sector as most rural people took to the

Artisanal Mining: Averting dangers ahead dangerous and illicit business for survival, and being hijacked by some merchants who sponsored the trade. It is interesting to know that in Nigeria, artisanal and illegal miners were mainly rural men, women and children, who were without any legal mineral title. The just excavate where they feel has some mineral deposits, and begin mining activities. They are fond of illegally mining of gemstones like tourmaline, beryl, amethyst, aquamarine and garnet and p r e c i o u s m i n e r a l s l i ke diamond and gold. It also includes mining of other minerals like columbite, tantalite and cassiterite. The implements and equipment they use are simple and crude and in most cases include shovels,

It is interesting to know that in Nigeria, artisanal and illegal miners were mainly rural men, women and children, who were without any legal mineral title. The just excavate where they feel has some mineral deposits, and begin mining activities

pickaxes, hammers, headpans, simple crushers, sluice boxes, rolling mills and sieves. All the mining activities at present in Nigeria fall within the smallscale category, since there are no big corporate miners

in the country. The reasons why these illegal miners engaged in extraction of minerals are not far-fetched. They have been forced by the level of poverty and frustration to engage themselves in the tedious job

of minerals excavation. While most of them see it as lucrative, and delved into it to increase their income base and for other business ventures. Others were sponsored by the â&#x20AC;&#x2DC;ogasâ&#x20AC;&#x2122; for shipment to other parts of the world, but do it through exploitation and oppression. According to Dr. Jacob I. D. Adekeye, they often work seasonally, for example, subsistence farmers mine gemstones in the dry season when there is less agricultural work. Some people may also take up mining as a last resort during periods of economic recession e.g. in Nigeria, during the mid 1980s and late 1990s. Illegal mining boomed in Nigeria during this period. Also, many people can suddenly be CONTINUES ON PAGE 25

Solid Mineral

Artisanal Mining: Averting dangers ahead CONTINUED FROM PAGE 24

drawn to these mining activities following the discovery of new mineral resources. Adekeye also stated that they lack degree of mechanization, who do great amount of physically demanding work, involving low level of occupational safety and health care, others were deficient qualification of the personnel on all levels of operation, inefficiency in the exploitation and processing of the mineral production (low recovery of values), exploitation of marginal and/or very small deposits, which are not economically exploitable by mechanized mining, including low level of productivity. Low level of salaries and income, periodical operation by local peasants or according to the market price development, lack of social s e c u r i t y, i n s u f f i c i e n t consideration of environmental issues and hence significant impact on the environment, chronic lack of working and investment capital and mostly working without legal mining titles. They should not be underrated because of some basic required skills and know-how not met. According to Hilson and Potter, Artisanal and illegal miners extract a broad range of minerals. Generally, they produce minerals that have the advantage of being relatively simple to extract, transport, and sell legally or illegally. Coming to the grave issue of negative and adverse effects on the environment, it is gratifying to know that most states were sitting on a keg of gunpowder set by illegal miners that will soon explode and engulf innocent Nigerians if nothing urgent was done. It is imperative to state again, the painful and agonising experience in the Niger Delta and everybody knew how it started and how government failed to nip it in the bud when oil and gas activities tremendously increased, and without proper enforcement of the laws guiding oil exploration and exploitation. Today, the people and the environment are dearly paying for the pollution and

Miners at work

Coming to the grave issue of negative and adverse effects on the environment, it is gratifying to know that most states were sitting on a keg of gunpowder set by illegal miners that will soon explode and engulf innocent Nigerians if nothing urgent was done degradation in the region. The waters contaminated, farmlands devastated and polluted, the air is seriously polluted and unfit for human, animal and plant inhalation. The level of poverty is very frightening and the agitations refuse to abate despite the amnesty package for ex-militants. Oil theft and illegal bunkering are telling on the federal government’s revenue generation, and kidnapping is on the increase. Also human lives have been lost in thousands, including animals and plants in the Niger Delta region, while the health of the people is still in jeopardy as it hangs in the balance. Also development in the region is still in limbo as many communities lack basic infrastructure to raise their standard of living, among others.

These are not palatable experiences suffered by the people of the Niger Delta, but all were traceable to the neglect of firm policies to safeguard the lives of the people in that region, and now government is applying fire brigade approach to quell the tension they created consciously and unconsciously. The solid minerals sector is fast tilting towards the same direction, as the activities of illegal miners has caused the lives of Nigerians in states affected in the northern part of the country. Zamfara State lead poisoning incidence drew the attention of the world as most of the communities where the illegal mining activity was carried out had their sources of water contaminated, the land for agricultural activities polluted and the air became

unfit for human breathing. Eventually, men, women and children lost their lives untimely. If the government fails to swiftly stop these illegal miners the source of drinking water will be contaminated, farmlands will be affected, the bur rowed pits will become death-traps for children and livestock, emergence of possible outbreak of terminal diseases, and devastation of the entire environment. It was disclosed by the Chairman, Solid Minerals Development Fund, Linus Ad i e , t h a t t h e f e d e r a l government had received $2 million grant from the governments of Canada and Australia for rapid development of the sector. Adie stated that, the grant received will be utilized to boost human capacity building in artisanal and small-scale mining and provision of strategic infrastructure in the sector. “Mining remains relevant i n t h e e c o n o m i c transformation of Nigeria. Mining by its structure provide elements of economic contribution, throughout its value chain from exploration, mining, and value addition to marketing. “The grant will be used

specifically to prepare strategic infrastructure corridors in the mining sector, capacity building in artisanal and small scale mining and general governance of the sector,” Adie stated. The Ministry of Mines and Steel Development said it has registered a total of 570 artisanal and small-scale mining co-operatives across the country. The Director of the Department of Artisanal and Small-Scale Mining in the ministry, Obiora Azubike, said this, while speaking with the News Agency of Nigeria. He said that out of 1,600 applications so far received from artisanal and smallscale miners to register as cooperatives; only 570 had been certified nationwide. I n v i e w o f t h i s development, the $2 million grant should be promptly utilised for the purpose it was received, because it will help to safeguard the lives of the miners, people in the communities and the entire environment since the impact on the environment is yet to escalate and get out of control.

Maritime

26 We don’t collaborate with shipping companies, terminal operators over charges — NSC boss Godfrey BIVBERE

Oil tank vessel

Shipowners, others advocate FOB for crude, product carriage Godwin ORITSE

he Nigerian Chambers of S h i p p i n g (NCS), the M a r i t i m e Arbitrator Association of Nigeria (MAAON) and the Nigerian Ship Owners Association (NISA), are currently working round the clock to change Nigeria’s policy on the affreightment of crude oil and refined products. The move which is being spearheaded by the Chambers is geared towards changing the country’s trade policy from the Cost Insurance and Freight (CIF) to Free on Board (FOB) for the inward and outward movement of both the nation’s crude and refined products. Speaking to Sweetcrude in Lagos, weekend, the Director General of the Nigerian

Chamber of Shipping, Mrs Ify Akerele said that it was obvious that some Government officials are working against the interest of the move because of their personal gains. She, however, vowed to sustain the fight until the Government see the need to change the trade policy in favour of the Nigerian people and the economy. Akerele noted that after ten years, no progress has been made to show for the implementation of Cabotage Law; “ we need to be more practical in our approach to this issue” she added. Lamenting on the development, the President of the Nigerian Ship Owners Association (NISA), Chief Issac Jolapamo said that his group has gone beyond that stage, adding that NISA has been part of the Presidential retreat where they recommended that the policy be changed to the advantage

of Nigerians. He disclosed that about N2 trillion is lost as freight to foreign carriers on an annual basis adding that with FOB, this amount will be retained in the nation’s economy. He stated that if the Government changes the policy, it will put local players on better stead; it will also create more than five million jobs for the teeming populations. In his reaction, maritime lawyer and legal luminary, Mr. Olisa Agbakoba, Senior Advocate of Nigeria (SAN), said a prudent business man must take full advantage of the business he does. He said that Nigeria is not taking advantage of its position as an oil and gas producing nation adding that the country needs to change some laws so as to put local shipping operators on a more advantageous position. He maintain that ship owners have instructed them to push their case through, so that

they can use the proceeds to develop the shipping subsector. He explained further that even Nigerian banks and insurance firms are shortchanged in the entire process of moving both crude and refined products as most of the monies used in transacting these deals are done with the foreign banks like J.P. Morgan. He noted that these foreign banks do not remit these monies as at when due and use those to trade before they finally remit them. He said “For example, Shell explore oil, decide on the vessel to carry the crude. Shell has no right to give these businesses to foreigners, Nigerians are the rightful people who should carry the crude to whatever country the government so decide. We need to be more aggressive in controlling our dues “.

he Executive Secretary of the N i g e r i a n Shippers’ Council, NSC, Hassan Bello, has denied allegation that the Council is collaborating with shipping companies and terminal operators over indiscriminate increase in charges for clearance of goods from the nation’s ports. Bello who spoke to SWEETCRUDE in his office, said that the Council has done more for shippers’ in terms of protecting their interest and wondered why anyone will want to think that Shippers’ Council will collaborate with any stakeholder to work against shippers’. He noted that Shippers’ Council has handled 111 cases of the 136 that were brought before it last year by shippers and their agents. He explained that while the Council successfully resolved 36 of the 43 complaints by the shippers between January and June last year, it also saved the complainants N16,940,737.50, $30,000 (Thirty thousand dollars). The Shippers’ Council boss pointed out that 75 of a total of 93 complaints that were received were successfully resolved. Similarly, he said that N8,843,730.00 and 346.76 Euro was recovered for shippers’ who complained between July and December 2013. According to him, “We have handled more cargo complaints now compared to four years ago and we have caused monetary refund to be made to shippers. We have gotten several commendations from shippers also. The Shippers’ Council more than ever before is involved in trying to solve the problems of shippers despite a weak legal framework as I have said earlier; many people are r unning to Shippers’ Council for resolution of their problems.

Maritime

WCO blames FG for cumbersome clearing procedure

Protesters disrupt Warri Port operations Godfrey BIVBERE

Containers at port

Godfrey BIVBERE

h e Wo r l d C u s t o m s Organisation, WCO, has blamed the Federal Government for the cumbersome clearing procedure in the country, stressing that the above is stretching the capacity of the Nigeria Customs Service, NCS. Disclosing this to SWEETCRUDE, National President of the Association of Nigeria Licensed Customs Agents, ANLCA, Prince Olayiwola Shittu, said that he recently asked the Secretary General of the WCO, Kunio Mikuriya, why cargo clearance procedure is more cumbersome than that of its counterpart aboard, he quoted the WCO to have said “the operations of the custom of this country depends on what the government wants.” Shittu pointed out that the focus of the Nigerian government for the Customs is revenue generation and that is why target is set for the

He said the operations of the Custom of this country depends on what the Government want. If it is revenue generating Customs and not a trade facilitating Customs, that is what you will get

Service yearly. He noted that, that has resulted in the Nigeria Customs Service, NCS, paying more attention to revenue generation instead of trade facilitation. The ANLCA boss explained that the focus on revenue generation opens an opportunity for the average Customs officer to cut corners for their own benefit,

a situation that would not have risen if the focus had been trade facilitation. According to him, “there was a question we asked the Secretary General of Customs Organization that how come the challenges faced by Nigeria Customs are more cumbersome than that of Customs in other countries?

“He said the operations of the Custom of this country depends on what the Government want. If it is revenue generating Customs and not a trade facilitating Customs, that is what you will get. That is why they give bench mark of how much they must realize in a year. If they don’t realize it, the management has failed, they can throw them away. Now, has this solved the problem? No,”in trade facilitation, you do not focus on revenue generation first because in revenue generation you have given an average officer the opportunity to either enrich himself or enrich the Government, are you getting my point? When that particular officer sees such an opportunity, nobody tells him the one to do first. The officer will say “I don’t know what will be tomorrow, they might remove me from here, let me h e l p m y s e l f n o w, ” t h e Nigerian in us will now come in. But when things are done in the open, it will be difficult for anybody to take advantage,” he concluded.

ome protesters who claimed to be f r o m ‘ h o s t communities’ Delta Ports of the Nigerian Ports Authority (NPA) in Warri, early this week disrupted port activities in protest against the posture of a terminal operator. The protest which was led by one Emiko Oghomienor and another Ijaw youth leader, led to stoppage of port operations for about several hours and caused heavy traffic logjam that took the combined efforts of military men and police officers to bring under control. The protesters told the management of the port led, by the Port Manager; M r. O b u m n e m e Onuenyenwu, that they took to the peaceful protest against the operator, as all avenue explored to resolve their grievances with the company fell on deaf ears. They alleged that out of about 18 companies engaged in different activities in the port, only the operator has refused to dialogue and sign any M.o.U with them after so many years of operations. They alleged nonemployment of qualified host community indigenes, non- award of contracts to indigenous a n d c o m p e t e n t contractors, nonpatronage of indigenous haulage trucks owners, while persons from outside the host communities are employed and engaged to lord it over them against the local content policy of the federal Government. They said that they can no longer continue to fold their arms and allow the a l l e g e d g r o s s marginalization practice of the operator to continue. A source who pleaded anonymity said that the protest was stagemanaged by another competitor in Warri port. He alleged that the same company had been sponsoring write-ups and propaganda against the operator, even as he added that “they are yet to understand that Nigerian ports are in a new dispensation of concessioning, where ports are meant for certain category of cargoes”.

Technology

ERA tasks FG on digital metering of oil production Jonah NWOKPOKU

h e Environmental Rights Action, a n o n government organization has charged the Federal Gover nment to employ real time digital metering of oil production in order to ascertain the true rate of oil produced in the country and curtail oil theft. ERA’s Executive Diretor, Dr. Godwin Ojo gave the charge while addressing news men at a media launch recently. Outlining ERA’s tasks for 2014, Ojo noted that the amount of oil produced in Nigeria is virtually unknown. According to him, “What we usually hear is that the country produces between an estimated 2.4 million barrels a day. But if it is true that oil theft accounts for between 400 to 600 barrels of crude stolen, and if it is true that illegal oil bunkering, is higher than the regular theft, then you can now begin to look at the figures. So Nigeria loses on the average, about 2 million barrels of oil per day. So Nigeria may actually be producing about 4 million barrels per day but just declaring what they have sold at the export terminals by the oil companies. “This year, we want to push that there should be metering, real time digital metering of oil production. From the point of production through transport to the oil wells down to the export terminals, we should be able to measure them through real time digital measuring so that the actual production would be well recorded. This would help Nigeria on two fronts, it will help to save us the ridicule in the world that today, we don’t know the amount of oil produced and secondly, it will improve the economy of this country.” Ojo also tasked the federal government on social security, saying that it has become imperative since a lot of people have been deprived

Digital meter

of their rights and livelihood especially in the Niger Delta region where oil production activities have destroyed the environment, especially farm lands. “The people in our rural areas have been deprived of their rights and livelihood and in the year 2014, ERA will focus more on actualizing the rights of these local communities. In order to actualise this; we are looking at the national income basic scheme which will serve as a kind of social security and provide a kind of assured income for all

Nigerians, especially those who are unemployed. “This is simply because, some people at the Niger Delta for instance, have had their livelihood destroyed through oil exploration and pollution. Also, if you look at up north and see what is happening there, you will see that that is also a question of livelihood which has been destroyed. In the South West and South East, deforestation and gully erosions have taken over, so what will the people depend on for their livelihood? “We need the government to address the issue of national income basic scheme. This can be something from N10, 000. 00 or more. Some may argue that the government does not

have that kind of money but it’s a question of priority. If things are rightly prioritised by the government, this will be done. What we need to think about is how do we ensure that national basic income scheme becomes a reality? Already there are some states that have begun to pay some stipends to some elderly people and I think the federal government can key into this and give it a legal backing that it depends that this initiative is promoted and make sure that all the unemployed in Nigeria is catered for,” he said. Speaking further, he said ERA would also look into energy access for the poor. “In doing this, we are also looking at renewable energy. We w a n t t o u s e t h i s

opportunity to commend the federal government for the light up programme that has just been inaugurated, the focus on non-renewable energy in order to produce electricity to rural dwellers. The ERA proudly buys into the operation light up the rural area project. We want to advise the FG not to approve any energy policy without broad consultation with the people, particularly the civil society. We strongly believe that it is time for non grid electricity. A decentralised energy system that ensures that communities own their own resources, produce and supply electricity and are even able to conduct maintenance on their own,” he said.

Militants Gabriel EWEPU

BUJA- AS m o r e Nigerians call on President Goodluck Jonathan to contest in 2015 presidential election, exmilitants in the Niger Delta also have endorsed him for reelection. Secretary, Third Phase Exmilitants, Comrade Tam Odogu, said the endorsement of Jonathan was not farfetched, because of his proven achievements in various sectors of the economy , and thereafter, he was elected President in 2011, in spite of the grave challenges his administration had to contend with. Odogwu, who is also the National Co-ordinator of exmilitants on Jonathan’s reelection in the Niger Delta, on behalf of his fellow exagitators, pledged support for Jonathan’s re-election if he declares his intention for the race. His words, “We in Third Phase Amnesty want to let Nigerians understand that the constitution of the Federal Republic of Nigeria clearly states that an elected public officer has the constitutional

2015: Ex-militants endorse Jonathan Let us forget the politics of blackmail and hatred as being expressed by some sections of the country, and be thoughtful about what Mr. President has been able to achieve in spite of all these challenges posed before him

right to seek re-election if he or she desires. “We join our voices with

other meaningful Nigerians urging Mr. President to contest in the 2015 presidential election, and urge him not to be distracted as we have unanimously endorsed him for the election. “It is obvious for everyone to see what President Goodluck Jonathan has done in every sector of the economy through his administration’s transformation agenda. “Let us forget the politics of blackmail and hatred as being expressed by some sections of the country, and be thoughtful about what Mr. President has been able to achieve in spite of all these challenges posed before him. He has made Nigerians to

feel they have a President who listens and responds appropriately. “We want to state that there was and is no nation in the world that their President or Prime Minister did not have challenges, and could solve it all despite their old democratic practice and experience. “A l l N i g e r D e l t a ex militants and every Niger Deltan, are fully behind Mr President come 2015, and nobody can stop him from completing his second term in office. I plead ex-militants and people in the region to ignore political deceivers who always use and dump them at the end.”

Community

Samuel OYADONGHA

he recent upsurge in violent crimes along the creeks and waterways of Bayelsa State, has again brought to the fore the deteriorating security situation in the riverside enclave of the state where armed men are holding sway. While suspected sea pirates are terrorizing commuters along the creeks and waterways, armed men are also taking advantage of the parlous state of security in the far flung communities, many of which are not accessible by road except by water. Only last week, the peace of Ekeni community in Southern Ijaw local government area of the state, was violated by armed men suspected to be sea pirates. A woman, identified as Madam Rhoda WukaBrisibe, was reportedly shot dead in the orgy of violence unleashed on the community by the gunmen, who allegedly missed their target. But a police source who pleaded anonymity because he was not authorized to speak on the issue said, those who launched the attack on the community in which the woman was killed were gunmen and not sea pirates as being alleged in some quarters. Those injured during the attack were Pakemie, Ilabai Leader and Mary John. They were lucky to have escaped death by the whiskers, as they reportedly sustained serious injuries and were rushed to neighbouringFuropa community on the Atlantic fringe for treatment. Also, three houses were allegedly razed by the invaders. The remains of the dead woman had since been deposited at the morgue of

Sea pirates

Piracy activities heighten in Niger Delta the Federal Medical Centre, Yenagoa, according to a source, close to her family. Though the motive for the attack could not be verified, Sweet Crude, nonetheless learnt that an ex- militant leader had earlier threatened to launch attack on the community over an alleged missing barge. According to a community source, an ex militant from Angalabiri and Ogboinbiri, had prior to the attack made a call to the CDC chairman of Ekeni, that a barge was missing around the creeks of Ekeni and Forupa.” He requested that Ekeni should produce the barge or

risk being attacked. “But we don’t know who assigned the ex- militant leader for the attack,” the source lamented. Just as security operatives were yet to unravel the masterminds of the heinous act on Ekeni community, gunmen this time around, believed to be commercial kidnappers again struck weekend in the Nembe waterways and attacked a tugboat belonging to Nigeria Agip Oil Company, NAOC. The chief engineer and captain of the tugboat, were seized by the armed men who later demanded N5m ransom to set free their victims.

The tugboat which sailed from Port Harcourt in Rivers State, to Brass to load petroleum product at Agip terminal, was attacked by seven heavily armed men recently at Peter ’s Town, Nembe. This sad turn of event in the creeks and waterways is already having its toll on river transportation as most boat drivers are staying away from the troubled routes due to the activities of the rampaging hoodlums. “Traveling by river is now a risky venture given the high number of attacks on passenger boats by armed bandits operating with

impunity in the creeks,” a resident who simply gave his name as Eladebi said. He added, “it is not enough having policemen deployed at strategic places in Yenagoa, the state capital and its environs to protect the citizenry, the government should also do the needful in the riverine areas, where innocent commuters are being terrorized, killed and dispossessed of their cash and valuables by sea bandits and other unscrupulous elements.” Also lamenting the insecurity in the riverine area of the state, especially as witnessed at Ekeni, the group, Niger Delta Youths for Positive Attitude Change and Progress, condemned the killing and looting that took place in the community perpetrated by gunmen allegedly loyal to an ex militant leader. “We are calling on the federal, state governments and the Amnesty Office, to fish out the murderers that have held the people of Southern Ijaw hostage in their evils in the last one year,” the group noted. The group warned that if the government fails to bring the killers to book, it would mobilize its members in the state to take over the Government House with protest and to express their displeasure to the gover nment of Seriake Dickson, for failing to protect lives and property that he swore to protect.

Community

PHRC moves to reduce incidents of youth restiveness Jimitota ONOYUME

O R T H A R C O U R T: Port Harcourt R e f i n i n g C o m p a n y, PHRC, has engaged a total of 60 youths from Eleme and Okrika for its first Youth Empowerment and Skill Acquisition Programme, YESAP. Acting Executive Director Services, of the firm, Sir Ralph Ugwu said the training programme was part of effort on the part of the firm to productively engage youths in the area, adding that it would help reduce security challenges. He said the youths would be trained on welding and fabrication, carpentry and woodwork, plumbing and pipe fitting, plaster of Paris POP, fashion design, GSM repairs, catering, poultry, fisheries etc. Continuing, Sir Ugwu said the company saw the need to build capacity among youths

Youth on rampage in its area of operations, stressing that the move would also promote peace and security for its operations. He further explained that the training would span a period of six months and would be broken into three phases, urging the youths to make good use of the opportunity offered by the

programme, adding that they would get monthly stipend for the duration of the program. Mr Andy Ogbuigwe, who also spoke said thirty six of the participants were drawn from Eleme while the other twenty four were from Okrika. He also expressed the hope that the effort of the youth would help curb youth

restiveness in the area. According to him, the essence of the programme was to increase the employability of the youths through entrepreneurial skill. He said the continuity of the programme would rely on the success of the pilot scheme Speaking further, he said that the selection process for

the training program was r i g o r o u s a s t h e l u c ky participants went through various stages before they were picked. Mr Ken Onodingene on his part congratulated those selected even as he charged them to be committed to the training program.

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