FG earns $269b in nine years from oil sector
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Shale gas demand may stall LNG projects in Nigeria-Experts P\21 President Goodluck Jonathan
A Vanguard Monthly Review Of The Energy Industry VOL 03
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Subsidy, unending economic crisis A silent socio-economic revolution going on in CRS
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NIMASA introduces Sea Protection Levy
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igeria’s apex maritime regulatory organ, Nigerian Maritime Administration and Safety Agency (NIMASA), has introduced new Marine Environment (Sea Protection) Levy for various types of vessels. A copy of the directive signed by the NIMASA DirectorGeneral, Mr. Ziakede Patrick Akpobolokemi, and dated 8th of June, 2012, imposed the following levies: $ 1.25 per gross tonnage on vessels of 100 to 1000 gross tonnage, $ 1.00 per gross tonnage for ships of 1,001 to 10,000 gross tonnage, $ 0.75 per gross tonnage for
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ELECTRICITY DISTRIBUTION: Assessing investors’ competence 28
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Contents 4 8 12 18 20 28 30 34 36 38 40 44
COVER Subsidy unending economic crisis
FOCUS Subsidy scam: Guilty parties should pay
OIL
Scarcity DPR to seal depots fleecing marketers
FEEDBACK
Investors perspective on the PIB
GAS
Shale gas demand may stall LNG projects
POWER
Electricity distribution: Assessing investors competences
SOLID MINERALS National Metallurgical centre to go commercial
TECHNOLOGY
Alduco Energy: Active Nigerian services company in Gulf of Guinea
INSURANCE
Nigeria at 52: Insurers capital utilisation still low
LABOUR
Why Nigerians oppose downstream deregulation —TUC
FREIGHT
We have achieved zero oil theft in some areas
COMMUNITY
Crude theft: JTF set up new outpost to battle crime
Sweetcrude is a publication of Vanguard Media Limited
THE TEAM Ag. EDITOR Clara Nwachukwu CORRESPONDENTS Victor AHIUMA-YOUNG Godwin ORITSE Jimitota ONOYUME Samuel OYANDOGHA Oscarline Onwuemenyi Emma Arubi Rosemary ONUOHA MANAGER, MARKETING Ubong NELSON PAGE LAYOUT/DESIGN
Francis AYO & Johnbull OMOREGBEE
Printed and Published by Vanguard Media Limited. Vanguard Avenue, Kirikiri Canal, P.M.B. 1007, Apapa.
Enquiries Call: 08098051103 WEB:
www.vanguardngr.com All correspondence: P.M.B 1007, Apapa, Lagos.
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his must be the wors t Independence celebrations Ni gerians have ex p e ri en c e d i n rec en t y e a rs . I n practically every sect or of the economy the re are tales of woe, the e nergy industry - oil an d gas, and po wer include d, The marginal impr ovement in electrici ty supply occasioned by increase in generatio n has dropped. Some ma y like to attribute it to the exit of the former minister of Power, Pro f. Bart Nnaji, while other s argue that it is part of the instability and lac k of sustenance that characterise the Nigerian system . In the oil and gas se ctor, the new Petroleu m Industry Bill, PIB, is be coming as controversi al as it's predecessor, as the oil majors declare it a n t i - i n v e s t m e n t . Last month we had pr edicted that the bill m ay be dead on arrival, in vie w of all the unresolved k n o t t y i s s u e s . The reality of the loss of Bakassi is j ust beginning to set in, an d the Governor of Cros s River State, Sen. Liye l Imoke, opens up on the challenges of copi ng with developme nt projects in the absen ce of 13% Derivatio n F u n d . Ad de d t o t h is, t h e h e at on su bs id y ma n a ge me n t i s ye t t o c o o l o f f. Ca pt, Em m an ue l I he an a ch o sp e ak s on t h e frustrations of the pro bes on downstream o p e r a t i o n s . Sweetcrudehas remai ned faithful by bringi ng you all the developme nts as they unfold in t he different sectors of th e economy - Oil, Gas , Power, Solid Mineral s, Labour, Insurance , Fr e i g h t , a n d C o m m u n i t y. Happy Independence @ 52 !
Kaztec Ad
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Subsidy, unending economic crisis Queue at a filling station
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ight from the days of former military president, Ibrahim Babaginda, Nigerians have been made to pay higher costs for refined petroleum products with unending promises of unfulfilled economic promises. However, Sebastine Obasi, writes that as in the days of military, nothing has changed under the democratic dispensation, as the higher subsidy the government promises, the worse the quality of life of the people
Eight months after the contentious fuel subsidy protest that shook the administration of President Goodluck Jonathan, Nigerians are yet to feel the impact of the promised palliatives, following the increase of petrol pump price from N65 to N97. The administration had promised to establish refineries through a public – private
partnership arrangement. The plan was distinct from the other refineries that would be set up by other private sector concerns. Apart from the refineries, the government promised to execute mass public works to provide employment for the youths, facilitate a comprehensive mass transportation system for workers and students by
Apart from the refineries, the government promised to execute mass public works to provide employment for the youths, facilitate a comprehensive mass transportation system for workers and students by providing 1,500 buses, build and re-habilitate select key roads around the country
providing 1,500 buses, build and re-habilitate select key roads around the country. The government also promised to build and extend the nation’s railway network and implement social programmes targeted at women, children and the elderly.
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he proceeds from the subsidy removal were to be invested in realising the new agricultural strategy which is focused on job creation and boosting the contribution of the sector to the entire economy. Most importantly, the government promised to ensure that all aspects of the withdrawal of subsidy were managed in a transparent and accountable manner. But the promises of the Jonathan government as regards the palliatives are in tandem with those of past administrations, whose promises yielded no meaningful results. For example, the Olusegun Obasanjo administration increased fuel price about 10 times, but the increase effected in 2004 aroused widespread condemnation and protest. In an attempt to CONTINUES ON PAGE 5
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Subsidy, unending economic crisis CONTINUED FROM PAGE 5
douse the prevailing tension, the government set up the Ibrahim Mantu –led committee to fashion out a framework that would cushion the effects of the policy on the people. O n e o f t h e recommendations of the committee, was the provision of a minimum of N100 million as grant-in-aid by the federal government to each state with a 200 percent matching contribution by each state government for on-lending to bona fide transport owners/operators. The interest was not expected to be higher than three percent, with input by the state governments in the routes plied and fees charged. It was agreed that the contributions of the state gover nments should be charged to their share of excess crude oil proceeds. Other palliatives included the reduction of duties on buses from 22 to 10 percent and a reduction of duties on pharmaceutical drugs from 20 to five percent. The committee also recommended building of more refineries as a way of resolving the intractable problems in the downstream sector. That is not all. Recommendation was made for the “establishment of a mod ular me chani s m t o
stabilise domestic prices of petroleum products and mitigate the impact of upward movement in crude oil prices in the domestic products markets.” These recommendations did not see the light of the day due to poor co-ordination and faulty implementation.
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igerians experienced another plethora of fuel price increases during the eight-year rule of military President ,Ibrahim B a b a n g i d a . Wi t h i n t h e period, increases were effected not less than six times, with the attendant promises of palliatives that would mitigate the sufferings of Nigerians. The usual promises of infrastructural provision were broken sooner than they were made. As a matter of fact, every Nigerian government since 1973 increased fuel prices except Muhammadu BuharI and Umaru Yar’Adua. At the centre of government’s argument for subsidy withdrawal is, the inability of the four existing refineries to meet the growing demand of petroleum products. Nigeria, the sixth largest producer of oil, with a population of more than 140 million, has only four refineries with a combined capacity of 445,000 barrels per day, whereas Venezuela, with a
The problem of Nigerians in perennial fuel scarcity is Nigeria itself, midwived by the NNPC as the industry umpire. It is therefore laughable when NNPC that is riddled with the huge burden of corruption, struggling to save itself, masquerading as Nightingale population of 29.33 million, has three refineries with a combined capacity of 1.26 million BPD. Similarly, Saudi Arabia, with a population of 27.13 million has seven refineries with a combined capacity of 2.1 million BPD. Libya has five
refineries with combined capacity of 378,000 BPD, which serves its population of 6.03 million. Cote d’Ivoire’s one refinery with a capacity of 62,200 BPD serves its population of 18.01 million. With the current price of N97 per litre, Nigeria’s petrol
President Jonathan
still remains the most expensive among OPEC countries. In Algeria, Kuwait and Qatar, petrol is sold at an equivalent of N49.30, N34.80 and N31.90 respectively, just as it is sold in Libya, Iran, Iraq and Venezuela at N20.30, N4.50, N4.50 and N3.20 respectively. Folorunso Oginni, Chairman, Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Lagos zone, said that the problem of perennial fuel scarcity in Nigeria is self-inflicted. “The problem of Nigerians in perennial fuel scarcity is Nigeria itself, midwived by the NNPC as the industry umpire. It is therefore laughable when NNPC that is riddled with the huge CONTINUES ON PAGE 6
Petrobras charged in refinery spill
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prosecutor from Brazil’s Public Ministry has charged state-run oil company Petrobras with environmental crimes for a spill at its Duque de Caxias refinery that allegedly contaminated the mangroves and estuary of Guanabara Bay off Rio de Janeiro. Public Prosecutor Renato Machado also charged two employees of Petrobras, Reuters
reported, citing a statement released on Monday. The spill occurred in June 2011. “The Reduc (refinery) acted with complete negligence. They knew since 2007 at least that the treatment stations were obsolete and not functioning adequately and they did nothing,” Machado said, according to the news wire.
The prosecutor did not mention a fine or compensation value sought. Local courts are considering charges against US oil company Chevron and driller Transocean that could carry fines of up to $20 billion and possible jail time for foreign executives in relation to a spill last November off the coast of Brazil.
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Subsidy, unending economic crisis CONTINUED FROM PAGE 5
burden of corruption, struggling to save itself, masquerading as Nightingale, whereas it is in sheep skin which International Oil Cartels (IOCs) and their local collaborators used to subjugate the people, the economy and the nation, is the body being proposed for full commercialization with 100 percent government equity,” he said. According to Oginni, to address the challenges of fuel subsidy regime, government must not allow any further rise in the pump price of fuel. Also, government should rehabilitate the existing refineries, drive competition through the organised private sector for the building of at least six new refineries within 30 months, with a combined capacity of one million barrels of crude oil per day.
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e also pointed out that government should allocate crude oil to the refineries at special rates, as distinct from the export dependent prices. Oginni further enjoined the
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he Analyst — A v i s i t i n g E u r o p e a n resource expert, Professor Paul Collier, says Liberians can make use of the immense opportunities derived from natural resources in a very meaningful way that would benefit not only this generation, but future generations. Dr. Collier, who is also an Oxford University professor said oil discovered in Liberia can probably end or increase poverty depending on which example Liberians prefer to follow. “If you find yourself at the crossroads, it’s your determination that can lead you to the case of Botswana or Ghana and not other worse oil scenarios in the world, the renowned economist observed. Professor Collier, who concluded a two engagement last week in Monrovia, met with President Ellen Johnson Sirleaf, and held round-table discussions with members of the national legislature, the
That explains why Singapore, a non oil producing country has about 62 refineries. He further stated that Petrobas, Brazil’s national oil company, which was established the same year as NNPC, has more than 700,000 workforce, whereas at NNPC, records kept are at variance with those kept at DPR, its subsidiary
government to monitor the local refineries to ensure that output equals the quantity of crude allocated to forestall diversion, while the NNPC must be unbundled to become publicly quoted companies with government having not more than 10 percent shares in any of the companies. Oginni also said that
importation and exportation of finished products such as PMS, AGO and DPK should be banned upon completion of the refineries for five years in the first instance to stabilize the local petroleum market and protect the new and existing investors. According to Oginni, an automated refinery can be built within 24 months. That explains why
Singapore, a non oil producing country has about 62 refineries. He further stated that Petrobas, Brazil’s national oil company, which was established the same year as NNPC, has more than 700,000 workforce, whereas at NNPC, records kept are at variance with those kept at DPR, its subsidiary. But Faruk Mohammed, principal partner, Nextier Advisory, a petroleum, power and agricultural consulting firm, stated that Nigeria could adopt the Ghana model of subsidy removal in order to make a meaningful headway in the sector. According to him, in January 2004, Ghana government realised that world oil prices would remain high and it could no longer afford the fuel subsidies. C o n s e q u e n t l y, G h a n a launched a poverty and social impact assessment (PSIA), which was completed with guidance from a committee of key stakeholders. In February 2005, the government increased fuel prices by 50 percent, using the PSIA report as justification. It showed empirical proof that subsidies
benefitted the well-off and not the poor. As a follow up, the Minister of Finance announced programmes to be funded with the subsidy savings. The government developed measures for tracking progress on the intervention programmes. The measures were transparent and easy to track by the public. One of the measures included immediate elimination of school fees at government – run primary and secondary schools, as well as massive investments in public transport network. Also there was continuous communication from the government on how the savings are being spent. Mohammed enjoined the government to encourage private investments in refineries to meet local demand, reduce pressure on foreign exchange and enhance production capacity of the economy. He also said that to reduce unsustainable subsidy burden, the government should start to issue bonds for subsidy payments.
the rules, institutions and the critical citizenry that will eventually lead to speedy and vibrant developmental growth. Speaking of the discovery of oil in Liberia, the Oxford Professor said the amount of oil discovered doesn’t really matter. “What matters most is
the effective management of the resources that you as citizens must look at with keen interest, because it is the resources that will give hope to the people.” Professor Collier: “Nigeria has trillions of dollars of oil, but much of the population is living in poverty.
Liberia: Resource expert welcomes
Liberia’s oil
sector reforms j u d i c i a r y, t h e L i b e r i a n Business Association, the Liberian Chamber of Commerce, Civil Society Organizations and other stakeholders on Liberia’s emerging oil and gas sector. The Director of the International Growth Center observed that Liberia is
following the foot steps of Botswana by opening up oil deals and intensifying public engagement that will erase suspicion in the minds of many Liberians. He spoke of the need for Liberians to partner with government and institutions like NOCAL in formulating
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Liyel Imoke,
Derivation: Cross River commits to human development
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n continuation of our series on Derivation Fund, Clara Nwaachukwu assesses how far the Cross River State Governor, Senator Liyel Imoke, can go with N1.1billion internally generated revenues in the face of over N2.2billion overhead costs amid loss of derivation funds, even as the governor is optimistic that a political solution will bring some succor as he strives on with investments in human capital
meant losing them to Cameroon. The Supreme Court in its ruling, said, “The plaintiff (Cross River) has no maritime territory since the cessation of Bakassi Peninsula and the Cross River estuary which used to be part of the state prior to August 2008.”
Last week, the National Assembly urged the Federal Government to appeal the International Court of Justice, ICJ’s ruling, which ceded the B a k a s s i Pe n i n s u l a t o Cameroon. The development followed revelations that Nigeria may not have presented a proper defence and evidence to make it retain the oil rich region. H o w s u b s e q u e n t developments will turn out hereafter, will depend on how seriously the Federal Government pursues the case, because in about three weeks from now, the region may be lost forever. Viewed against the backdrop of the displaced people of Bakassi, who, by a sudden ruling are now neither Nigerians nor Cameroonians, the issue portends grave consequences. The reality is that Nigeria lost
Before becoming landlocked Until April this year, Governor Imoke revealed that Cross River state was getting up to N4.2billion per annum or about N350million monthly from the 13 Derivation Fund, which he ploughed into development projects. Most of these projects were geared towards human capital development in order to add value to the lives of the people, as according to the governor, “greatest infrastructure any state can have is its people.” For him, human capital is more important than all the skyscrapers, all the highways and all the technology any economy can build, saying, “Until we invest in these people, we have not developed ,no matter the big buildings, expressways and flyovers that we have; until we invest in the people there is no real development.”
its continental oil shelf and the attendant oil and gas resources that go with it. Cross River State caught in the middle of the whole saga, looks up to the Federal Government for respite in view of its huge financial burden, which was aggravated by the loss of Bakassi. As a result, the state lost its littoral status, which resulted in the loss of the 13 percent revenues from the Derivation Fund. The loss of the 76 oil wells in April to sister state, Akwa Ibom, was nailing the coffin for Cross River, which thought that notwithstanding the loss of Bakassi, it is still entitled to the oil wells. Imoke had criticised that “the judgment lacked justice and equity.” But, as was noted at that time, awarding the oil blocks to Cross River would have
The governor maintained that all of his administration’s development efforts are geared towards uplifting the standard and quality of life. “Through this, their incomes improved, and poverty reduced with a view to meeting the Millennium Development
government with similar healthcare services to expand to 19 other local government areas targeted at 300 families per facility. ? Education – renovated 60 secondary schools and recorded more than 5,000 enrolments. Now No. 7 in Nigeria with 56 percent pass rate in English and Maths. Set a Cross River Standard, which includes science laboratories, computer laboratory for each school in addition to teachers training programmes and a host of others ? Condition Cash Transfer, CCT and skills acquisition programme, valued between N5,000 and N15,000 for 30 vulnerable families per ward depending on the level of skills to be acquired. ? Road construction – done kilometers rural roads in Phase 1, selected by the communities based on access to the big agriculture producing communities. with African Development Bank, ADB, for 492-kilometer roads in Phase 2. ? Rural electrification - have connected 150 communities to the grid ? Water programme – declared best Rural Water Supply programme by the United Nations, UN. IGR and other resource efforts Imoke argues that it is no longer fashionable to depend on the Federal Government for handout, äs such, the state has beefed up its internally generated revenue, IGR, drive, which has paid off handsomely by raking in about N1.5billion in December 2011, on account of tourism boost with the Annual Calabar Festival. Furthermore, he says that in view of the loss of its oil and gas wealth ,as well as the loss of its share of the environment impact fund, the state is
Cross River State caught in the middle of the whole saga, looks up to the Federal Government for respite in view of its huge financial burden, which was aggravated by the loss of Bakassi Goals, MDGs target in 2015.” Some development achievements ? Healthcare – zero infant mortality in one local
falling back on its solid minerals resources, as it has discovered some precious stones, which he hoped would attract new 13 percent derivation fund.
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Focus
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SUBSIDY SCAM:
Guilty parties should pay
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ntegrated Oil and Gas Limited is one of the companies that has had it rough with the subsidy investigations; in this exclusive interview with Clara Nwachukwu and Kunle Kalejaiye, its Executive Chairman, Capt. Emmanuel Iheanacho, a former Minister of Interior tells Sweetcrude that the guilty parties should pay. Excerpts:
What has been the effect of the subsidy probe that began five months ago on oil marketers? The subsidy issue has really caused us a lot of problems. This is something that started about five months ago when allegations were badly circulated about monies that were paid on the PSF programme. We saw our name included in the report of the House of Representatives, which was really out of the blue that the sum of N13.2 billion has been drawn and we were very surprised because, there was no such thing, because every penny that we draw from the subsidy is very well accounted for in the records and it is derived simply from an arrangement that we have with the PPPRA, whereby we import petroleum products and we sell the petroleum products at control prices indicated by government and we then go back to the same PPPRA to give us an authorized issue, authorization to import the products in the first place to recover the difference between the actual selling price and the cost of importing the product. So when we saw the N13.2 billion allegations, we were very startled and we have since of course gone to court to challenge the people who made those allegations to try to substantiate those allegations because we know for a fact that it was absolutely untrue. We k n o w a l s o t h a t , subsequent to the first report by the House of
Representatives, Aigbgoje Aig- Imoukhuede ministerial committee was set up actually to look at this matter. The Aig-Imoukhuede committee worked with the records that they had at the time and came up with a different set of observation. Again, they stated that some money was received but it was completely different from what they said was in the House of Representative report. A lot of people complained a lot of marketing companies who felt that the AigImoukhuede report really had not addressed the issue and in reality a lot of thing they said were incorrect. So, again the first committee was disbanded, the second committee under Imoukhuede was set. We have been at it for nearly four to five months. The effects
Capt. Iheanacho
When we went there to collect the money, we did not see that money at all. We were paid the N1.3 billion and we did not understand why that was the case and we have since advised them that we would rather collect full amount in respect of which we have already paid the PEF and other charges
that this has had on our businesses is that, in all of that time, we have not been able to trade any cargos on
our account and our fixed cost that is what characteristic of the business that we are in. We have fix cost in terms of the
cost of maintaining all those who work in our tank farms and within our ships and those cost are there and we continue to pay them. As far as it concerns us, we are owed a huge amount of money under the PSF scheme, by our own account we are owed about N8.4 billion and this money has been outstanding for a long time. But what worries us is that from time to time, we see publications that is made by the ministry of finance saying that we have been paid, they have made it about twice and in all of that we have not actually received anything from them, so we have not been paid we are still owed
about N8.4 billion and if we don’t find that money and pay back to the banks who ad vance s us t hos e money in first place to buy the products, then we will be in serious trouble, so we are still waiting to be paid those monies that are outstanding to us. The first time they made the publication, we have not been paid any money, if you recalled that there was a face-off between the unions in the oil industry and ministry of finance and at the end of the day it was agreed that the minister of finance would go forward and pay oil marketers. S u b s e q u e n t l y, a publication was put out that we have been paid, but we have not been paid. On this occasion they talked about the publications that came out last week that shows that we have been paid but we have not been paid. I have information that approval have been given for us to be paid. I have to explain to you that the payment comes in tranches because we are owed a batch of N2.8 billion, another batch of N2.7 billion and another batch of N800 million. And we have actually sourced money, a further loan from the bank to go and pay the PEF and the admin charges for the N2.8 billion. When we went there to collect the money, we did not see that money at all. We were paid the N1.3 billion and we did not understand why
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Guilty parties should pay
definitely engendered a downward trend in the price of the products that will be consumed.
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that was the case and we have since advised them that we would rather collect full amount in respect of which we have already paid the PEF and other charges. I don’t want to comment on how much they have paid, I’m just trying to get the monies that are due and outstanding to my company. If they say that they pay N289 billion, it well could be the case, all I am saying is that we are owed an outstanding both in terms of subsidy, PSF refunds that are due in terms of deduction that they had made. In terms of interest payments, about N8.4 billion that is what we are owed and the sooner we are paid that money, the sooner we can go back into importing and distributing petrol because, in the past five months, we haven’t done it. Our business is absolutely under extra ordinary stress and we would like to really get back in doing our business, creating jobs in the industry, and in creating profits in the economy. When Pipelines are in good condition, do we still see oil marketers importing petroleum products? That is not the reason why we import fuel into the country, it is not because pipelines are bad, it is because there is deficit when you look at the quantity that we consume on a daily basis and what is produced in our refineries, we do not produce enough to satisfy local demand and also the issue of the problem with the pipelines, then there is a need
Capt. Iheanacho
to import products and distribute it through channels other than the pipelines, that is to say road transport. Can the money used in setting up a tank farm business be used to build more refineries in the country? I agree with you that the solution to our problems is to build refineries. But there are some institutional problems that need to be dealt with in relation to that proposal. For instance, refineries require ver y expensive equipment or facilities and not a lot of people have the money that they can simply go to their pocket and bring the money to build the refineries, they have to go to the banks. So if you go the bank, you have to do a detailed feasibility proposal and to how you are going to recover the outlays in the investments and pay back the loans that you borrowed. Now if you are operating in a regulated environment, where the price you are to sell
I agree with you that the solution to our problems is to build refineries. But there are some institutional problems that need to be dealt with in relation to that proposal the products is determined not by market forces but by government, then a lot of banks and financial institutions are skeptical and they will never lend you the money to take out investment in refinery capacity. So it is very important that when we talk about the requirement for us to build refineries, yes, it is a solution to our problems, but, we have to deal with the institutional and market arrangement so that who so ever will be investing in refinery should be at liberty to determine the volume that will be refined and the price at which it would be sold rather than to be dependent on the regulations of the government agencies
calling the shot in these variables. Does it also translate to reduction in petroleum price? It would certainly translate to reduction in price because, if you refine products where the products is actually produced locally and the transporting of the crude to foreign markets and transporting the refined products back into the Nigeria market is completely eliminated, it is bound to impact significantly on the end price that people pay for the product that is refined. So, certainly to be able to refine and sell products in the Nigeria market would
What has been the response of the banks since oil marketers have not been paid? I would say that some of the banks have been showing understanding because they know that we are in between the rock and a hard place. The problem we have is that the banks automatically charges interest whether or not it is government or whoever is holding your money. So, we are the ones that is suffering because at the end of the day, there is no provision in the contract that we have with the banks that says because this is a forcemar-jure and it is occurring within circumstances beyond our control, therefore we will not charge interest, that is not happening. So the delays, five months starting from when they made the allegation of subsidy been paid to people. It is killing the business, it is absolutely placing marketers under intolerable pains but we are praying to God that this issue will be resolved very soon so that we can go back to doing our business, creating jobs, sustaining them and making profit. The Role of the PPPRA in the subsidy saga I know that the PPPRA shares some of the frustrations that the marketers have. The only thing is that the PPPRA is a government agency and there is a limit to what they can be vocal in pushing the case on behalf of marketers. As far as I know, they are doing the best they can, they are advising based on their experience and they do have a lot of experience in this market to say that some of these issues that have been brought to the fore in regards to how the PSF scheme has been operated and not really as bad as some has been reported. They are trying the best they can, but being a government worker there is limit to which they can indeed articulate some of these issues.
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Human capital, key to real development –Imoke
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ith over N2billion in overhead costs, and the sudden loss of its status as an oil producing state, the Cross River State Governor, Senator Liyel Imoke, in this interview with Clara Nwchukwu and Ubong Nelson, reveals how his administration is coping with economic and development issues. Excerpts:
How do you feel about the loss of Bakassi and its effect on Cross River? The Supreme Court judgment raises some issues in the sense that the Supreme Court judgment ruled that it was as a result of the loss of Bakassi that Cross River lost its littoral status and became a non-oil producing state. What this means is that, it has revived the Bakassi agitation and since the Supreme Court acknowledged the International Court of Justice, ICJ’s decision, the consequence is the loss to the people of Cross River and the people of Bakassi. Bakassi people are now saying that they are not part of the ICJ’s agreement, they were not party to this and they were not asked where they wanted to settle. At the end of the day, the Bakassi people are being punished for what they had no hand in and they are calling out to Nigerians to respond to this. I think that is basically where we have to arrive at some point of mediation, and political solution. The political solution basically should be addressed for the interest of peace. The political solution is one that we have seen applied in the past. So it is not something new, it is something that the parties involved can come together and agree. Why do I say that? In 2002 and in 2004, the Supreme Court ruled that no littoral state can make claims to offshore production and which was then defined as onshore/offshore dichotomy. So the Supreme Court was very categorical and what that meant was that, all off-shore productions belonged to the federal government. Cross River state now agitated strongly and Akwa Ibom who was the greatest loser at that time led that agitation, by Obong Victor Attah. What happened at the end of
the day was that, we arrived at a political solution. Even under an administration of someone like former President Olusegun Obasanjo, who said we needed to have peace in this region. There were several meetings and it was agreed that we must find a way to deal with the law which the Supreme Court had delivered because the judgment was strictly based on the law. But there were social issues that were to be addressed, and in addressing these social issues, President Obasanjo set up a committee to make recommendations and that committee was chaired by Chief Anenih. T h e y m a d e s o m e recommendations to abrogate the offshore/onshore dichotomy and the two or three paragraph legislation was drafted and sent to the National Assembly. What that legislation said was that states, littoral states will now benefit from off-shore production, the 13 per cent derivation will be applied to them. What that meant was that more
Liyel Imoke,
revenue will be accrued to them and the greatest beneficiary was Akwa Ibom State, because they did not have any on-shore production. So Akwa Ibom today is an oil producer as a result of that political solution. So when there is a will, there is way and there is precedent. What I have
We think that the agencies can come together and arrive at a solution but, in the interim, even the environmental impact funds that we were getting as compensations, we don’t even get them anymore, thus putting us in difficult financial conditions
just told you is something we can make reference to in trying to find a solution. At the federal level they are trying to mediate the political solution, how soon can this happen? We hope that it can be in place very soon. We met with the president and he has given us his assurance. He is very familiar with the case because he handled it when we were trying to arrive at a political solution at the initial stages. We think that the agencies can come together and arrive at a solution but, in the interim, even the environmental impact funds that we were getting as compensations, we don’t even get them anymore, thus putting us in difficult financial conditions. Literally, we are the only state in the Niger Delta region as it were that is suffering from the consequences of a judgment without a political solution, and making us the only state that is not producing when nothing has
changed physically geographically.
or
What side are you going to be on if there is no political solution? I believe very strongly that we cannot ignore the consequences of oil production, so I don’t believe that you can make a case for the state not to benefit from the off-shore production because there is a serious environmental consequence from the off-shore productions. But I don’t think the solution is t o g o b a c k t o t h e onshore/offshore dichotomy, I think that from my perspective, we are also a state that is suffering significant consequences from oil production, and so if we can address the impact to Cross River State which is important and is similar to Akwa Ibom. We feel strongly that the onshore/offshore dichotomy abrogation law was a good law. It is a law I think that was meant
CONTINUES ON PAGE 11
Focus
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and those rights are guaranteed by our constitution and the UN Charter. So I think it is very important that the federal government takes a second look at this matter and before the time lapses we will address them, and I hope that we will be able to convince them. Have you ever been to Bakassi? I have been to Bakassi before it was lost and several times after it was lost and of course now that we have the new Bakassi. Someone asked me about security in Bakassi and what I am doing about it. It has not dawned on the people that we have lost Bakassi, and he was asking the governor of Cross River about security in
Liyel Imoke,
in 2015, and can the SouthSouth region meet the MDG targets in 2015? If we don’t, we may not have invested even if we have built expressways. So that really is where I want to respond from. If you narrow it down to Cross River, for us we are happy to say that our infant mortality rate has reduced significantly. We have achieved zero infant mortality in one local government, which is no child death during delivery because of our investment in the people. We started with two local governments in healthcare services, now we have expanded the programme to 14 local governments this year, and more than 18 will be captured next
We have set target of 300 families to a health facility as what we think should be the standard. We are building more and equipping more. Do you know the beauty of what we are doing? Like I said that you need to be creative
Human capital, key to real development –Imoke CONTINUED FROM PAGE 10 to bring about peace in the region and I think we need to sustain the law and the law should benefit all the players. Now that there is an opportunity to re-visit the Bakassi case, as a Governor you are doing nothing We are doing quite a lot; but as a governor, I understand the fact that when it comes to issues of boundaries between nations and i n t e r n a t i o n a l d i p l o m a c y, regrettable, states cannot interfere. But what we can do, is to restate our case at the highest level of government and listen to the Bakassi people and take their own case. We don’t want to create an aggressive situation in the region, and as a responsible government, we don’t think we need to revisit the case. It can be lost, given that the National Assembly and various experts have spoken about this extensively and it is not proper for me to go out to the public or the media to start shouting that
this is an injustice. What we have done, which is appropriate, is taking the case to the Attorney General, we have met with the President and others on this matter. We have also made our presentation and we hope that with the support of Mr. President and others, there will be lasting resolution to this matter. If the territory is lost, then let the people be compensated and there must be a measure of compensation in place. All that the people are asking for is compensation. Even if the government of Cross River State wants to take your land, for the overall public interest, you must be compensated. So why can’t the federal government pay compensation to the people of Bakassi? The evidence we have in SWEETCRUDE is that the Federal Government did not pursue the case at all? The Bakassi people have come to me and I have told them that I cannot object to their making those requests. They have a right
Cameroun. That is the reality. Nigerians have not come to the terms with the fact that we have lost Bakassi, and that is because we do not understand why the Bakassi territory was lost. What has Cross River been doing with the derivation funds before the loss of Bakassi? One thing that we may not have done well generally speaking is to invest in the greatest assets we can invest in. The greatest infrastructure any state can have is its people. Until we invest in these people, we have not developed no matter the big buildings, expressways and flyovers that we have; until we invest in the people there is no real development. So for me, I think what is critical in terms of what we do with those resources is how much do we extend or invest in our people to a point where their quality of life, their standard of living, their incomes have improved, and poverty reduced. How close are we through that investment, to meeting the Millennium Development Goals, MDG target
year. In education for instance, we have renovated about 60 schools. The amazing thing is that, the level of enrollment has increased as a result of the investment. Two things have happened; more than 5,000 enrollments have been made in the schools. Kids that were leaving communities schools for private schools are coming back to government schools. More importantly, we set internal examinations that are unique to Cross River. We have the first school leaving certificate we introduced in Cross River, and we have mock exams before you take WAEC. Now for us, those are the things we will like to mention in terms of the impact. In 2006 or 2007, the pass rate for WAEC in Cross River was less than 18 per cent including English and Maths. In 2004 or 2005, it was than six per cent. We were classified as one of the educational dis-advantaged states. In 2012, the pass rate including English and Maths is
56 per cent; we were No. 7 in the country. To me these are measures of impact on development. And there are other indices that we looked at. We have made the investment in critical sectors, and we have introduced free health programmes. Free health in Cross River State makes sense. We have free healthcare for all children under the age of five, and all pregnant women in the state. And again, free healthcare in all public health facilities in all local governments. We have expanded access to healthcare. We have increased healthcare facilities, and we have doubled all health facilities in all our local governments, so we have community health facilities. We have set target of 300 families to a health facility as what we think should be the standard. We are building more and equipping more. Do you know the beauty of what we are doing? Like I said that you need to be creative. In some cases, we even had some of our communities donating to the health facilities. And our health programmes are participatory, so the communities take ownership at the primary level. So for us, the investments that we make are improving on the livelihood of the rural dwellers and of the average people. And we have done the same thing for the education sector. We have 60 secondary schools that have been renovated under what we call the Cross River Standard. And our Cross River standard is not difficult to achieve. Our Cross River standard basically is defined that we should not have more than 40 students in a class; we should have enough classrooms in all schools to ensure good standard is achieved. The basic things that were in place when we went to school like football fields, labs,(Physics, Chemistry and Biology) and now Computer Labs in each secondary school, so we have that in our schools. There is also teacher’s training which is compulsory to make sure that the quality of education is achieved, so it is not just the renovation of the buildings. We also have re-introduced the ministers (prefects) of assembly halls. Basically, all these standards have been achieved and the quality of the renovation is also part of what we are trying to achieve. And in trying to do that of course, we have experienced some challenges but of course these challenges have been surmounted. We have what we call the CCT programme, the “Condition Cash Transfer students.” When I came in as the Governor, I always felt we don’t have an appropriate social welfare programme, that caters for the most vulnerable in our society, and that as society evolves, it is dependent on extension family; the extended family system, which has kept all of us and the poor in the community growing. We now
Oil
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SCARCITY:
DPR to seal depots fleecing marketers
Queue at a filling station
CLARA NWACHUKWU
T
o forestall further swindling of customers, the Department of P e t r o l e u m Resources, DPR, said it will from next week, seal any depot located anywhere s in the country found selling petroleum products above the prescribed ex-depot prices to marketers. The Operations Controller, DPR Lagos Zonal Office, Mr. Gbenga Koku, who made the declaration yesterday in Lagos, at the annual general meeting of DPR and petroleum products depot owners, said the development was necessary in order to curb the profiteering habits of some depot owners. He noted that at ex-depot price of N87.90k and 43.70k for Premium Motors Spirit, PMS or petrol, and Household Kerosene, HHK or kerosene respectively, there are already reasonable margins built into the cost for the depot owners by the Federal Government.
He said, “It is unacceptable that in pursuit of excessive profits some marketers are arbitrarily distorting this price regime. Clearly, this practice negates the Federal government’s efforts to provide these products to the Nigerian public at affordable prices.” While urging all depot owners to partner with the Federal government in order to reduce the sufferings of Nigerians, Koku promised that the DPR will double efforts to monitor compliance with the pricing regime and ensure that perpetrators of profiteering are brought to book. Koku also informed that the agency will kick off the renewal of depot licences next week as part of the efforts to streamline the process, while also creating a platform to effectively capture data of trucks used in conveying petroleum products from the depots. “In the near future, we intend to release guidelines for registration of such trucks and a timeline for implementation,” he
said, adding that the agency will continue to monitor the quality and quantity of products being loaded from the depots to ensure that it met specifications.
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ccording to him, “We intend to embark on regular sampling of products from depots storage tanks to ensure that unwholesome products are not allowed to get into the distribution chain. We also urge all operators to ensure that only third party laboratories are engaged when recertifying imported products. These tests must also be witnessed by DPR representatives and signed off by competent personnel in the laboratory.” Stressing on health, safety and environment issues, the Director, DPR, Mr. Osten Olorunsola, noted that although there has been no operational fatality in Lagos area, however, “the use of unsafe equipment in depot facilities can result to total loss of investment and lives.” Accordingly, he reiterated that all depot modifications or
It is unacceptable that in pursuit of excessive profits some marketers are arbitrarily distorting this price regime. Clearly, this practice negates the Federal government’s efforts to provide these products to the Nigerian public at affordable prices
changes relating to physical structures or functions must be approved by the industry regulator. “DPR should be informed and involved s the process of modification goes along and at each milestone.” He added that the directive also covered tankage expansion, as it had become the practice
among depot operators to expand tankage capacity irrespective of the attendant HSE issues. Like the zonal controller, the director, spoke on a number of other issues including renewal of licences, operational issues, products transportation, quality assurance and a host of others.
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FG earns $269b in nine years from oil sector Goodluck Jonathan
KUNLE KALEJAYE
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udit report conducted by the Nigeria Extractive I n d u s t r y Transparency Initiative, (NEITI) on Nigeria’s petroleum industry from 1999-2008 indicated that the Federal Government earned a total sum of USD269 billion. NEITI is the national version of the global multistakeholders initiative that promote transparency and accountability in the management of extractive resources with a view to aiding sustainable development with specific target on poverty reduction, elimination of social conflicts and creation of peaceful business environment. The audit, carried out under the oversight of professor Assisi Asobie, also indicated that within this period, USD92 billion was received from oil specific taxes, the sum of USD5 billion from non-oil specific taxes from oil companies
while USD172 billion was received from the sales of government equity crude. However, during the same period, Nigeria lost a total sum of USD2.6 billion due to leakages in the system. Chairman, National S t a k e h o l d e r s Wo r k i n g Group, (NSWG) of NEITI, Mr. Ledum Mitee who spoke during NEITI’s stakeholders’ engagement on the Petroleum Industry Bill, PIB in Lagos, said the agency reports also revealed that a whopping sum of $9,890 billion is an outstanding recoverable fund due to the Federal Account from the companies. According to him “This amount is equivalent to N1, 373 trillion at cur rent exchange rate which is huge enough to wipe out the federal government of Nigeria current fiscal deficit in the 2012 budgets financing.” “This, no doubt is a significant step in the NEITI efforts and process to promote transparency in the petroleum industry.” Speaking on the PIB, the
This, no doubt is a significant step in the NEITI efforts and process to promote transparency in the petroleum industry
Executive Secretary of NEITI, Mrs. Zainab Ahmed said the PIB is an important bill expected to drive the reform in the Nigeria oil and gas sector. She explained that the bill will provide a solid foundation for the regulatory, structural, commercial and fiscal frame works for the operation of the oil and gas sector in order to halt the mismanagement, inefficiency and lack of transparency in the sector. As an agency set up to
develop a frame work for transparency and accountability in the Nigeria’s extractive industries and to ensure conformity with the principles of Extractive Industries Transparency Initiative, (EITI), Mrs.Zainab said NEITI has legitimate stake in the petroleum industry bill adding that the PIB is an important milestone in the implementation of the Extractive Industries Transparency Initiative in
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Total targets Africa for ambitious output growth
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rench oil group Total, is banking on a string of African projects to help fuel a 25 percent rise in output over the next five years, with growth accelerating after 2015 to top 3 million barrels of oil and gas a day for the first time. Europe’s number three oil a n d g a s c o m p a n y, t o l d investors on Monday that 70% of the fields on which it is basing its forecast for the 201517 period, are already either producing or in development. Three of the projects that will help deliver the post-2015 surge are Egina (Nigeria), Kaombo (Angola) and Moho (Republic of Congo) - all west African projects in deep and ultra-deep water - an area w h e r e To t a l i s a s e l f proclaimed specialist. Total and other top oil firms like BP and Shell are ramping up spending on exploration, often in relatively underdeveloped regions like Africa, to take advantage of the historically high price of oil, which averaged $113.6 a barrel in the first half of 2012, up 2 percent on the year. At its annual investor day in London, Total also announced it had joined the race to exploit the potentially huge resources offshore Mozambique in east Africa, where it already has operations in Uganda and Kenya.
Nigeria. “We in NEITI believe that the Bill must emerge as a law that respects fair competition, efficiency, professionalism, openness and prudent resource management while promoting investor interest. NEITI also thinks that financial, physical and governance issues provided in the PIB should be such that citizens of Nigeria will feel the impact of the natural resources.”
Oil
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Gas station
KUNLE KALEJAYE
T
he past years have witnessed an upsurge in the number of marketers who began construction of filling stations without an approval to construct, and then later applied for a waiver from the Department of Petroleum Resources, DPR, a DPR official has said. According to the official, “This is an outright violation of the laws governing the construction of filling stations and an appropriate penalty will soon be in place for this.” Assistant Director, Products Depots and Jetty of DPR, Mr. Lanre Buraimoh, stressed that marketers are reminded that the construction of filling stations and fabrication of underground tanks should be
This is an outright violation of the laws governing the construction of filling stations and an appropriate penalty will soon be in place for this
undertaken only by DPR accredited consultant, adding that all oil and gas equipment suppliers must be also be accredited by DPR. Buraimoh who stated this at the 2012 annual Independent Marketers meeting with DPR in Lagos explained that the need to ensure strict oil industry
standard as practiced worldwide cannot be over emphasized. “To this end, the Department is in advanced stages for the implementation of the Trucking Policy which is envisaged to enhance tanker trucks usage, institute orderliness in trucking activities at the depots,
minimize pipeline vandalism, check diversion, theft and adulteration of petroleum products and enhance road users safety, amongst others,” he said.
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s the end of the year is fast approaching, Buraimoh stated that it is expected that usage of petroleum products will increase. It is in line with this expectation that we wish to encourage marketers to ensure product availability to the public at this critical period. “Marketers are therefore, strongly advised not to engage in acts that may lead to creation of products scarcity, and other associated ills such as hoarding and product diversion for profiteering.” He maintained that DPR
NIMASA introduces Sea Protection Levy CONTINUED FROM front page
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igeria's apex maritime regulatory organ, Nigerian Maritime Administration and Safety Agency (NIMASA), has introduced new Marine Environment (Sea Protection) Levy for various types of vessels. A copy of the directive signed by the NIMASA Director-General, Mr. Ziakede Patrick Akpobolokemi, and dated 8th of June, 2012, imposed the following levies: $ 1.25 per gross tonnage on vessels of 100 to 1000 gross tonnage, $ 1.00 per gross tonnage for ships of 1,001 to 10,000 gross tonnage, $ 0.75 per gross tonnage for ships of 10,001 to 100,000 gross tonnage, and $ 0.50 per tonnage for vessels of 100,001
gross tonnage and above. For Nigerianregistered ships, the rate of the Marine Environment (Sea Protection) Levy is as follows: N500.00 per gross tonnage for ships of 100 to 1000 gross tonnage, N 350. 00 per gross tonnage for vessels of 1,001 to 10,000 gross tonnage, N300.00 per gross tonnage for vessels of 10,001 to 100,000 gross tonnage and N250. 00 per gross tonnage for ships from 100,00 I gross tonnage and above. The regulation further stated: "The rate of levy payable by an offshore installation and oil pipeline shall be (a) in 'the case of an offshore oil installation that is
producing. Processing, storing, or transferring oil, including buoys used for the loading and/or receiving of oil, NI5,000,000.00 (fifteen million naira) per annum: "(b) in the case of an offshore oil installation used or constructed for the purposes of exploring for oil, N 10,000,000.00 (ten million naira) for each oil well drilled by that installation; "(c) In the case of an oil pipeline, N I, 500.00 per cubic metre of pipeline volume from the high water mark to the termination point offshore." The Marine Environment (Sea
will not hesitate to impose the necessary sanctions on erring marketers found violating the laws, adding that the department will begin the normal process of renewal of licenses effectively from October 2012 for 2012/2014 operating year. “All petroleum products marketers are advised to submit their applications promptly so as to facilitate early issuance of license. Marketers who fail to renew their license by March, 2013 shall have their operations suspended indefinitely,” Buraimoh asserted. Application for renewal, according to Buraimoh must be accompanied with copies of expired license, valid p r e s s u r e T e s t Certificate/Report of Underground tanks, Current Tax Clearance Certificate, appropriate application fees in a certified bank draft, and photographs of the station with evidence of installed standard price boards and adequate safety equipment endorse by DPR staff. He also explained that a reinspection and assessment of all retail outlets will be conducted before renewal of license in order to ascertain current status and compliance with statutory requirements. He warned that dilapidated stations operating with sub-standard facilities will not be renewed for operations.
Oil
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Conoil initiates door -to-door distribution of gas, lubricants
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Bristow Helipad
Local Content:
Bristow Helicopters as pioneers UBOG NELSON
T
he Nigerian Content Act is for the promotion of value addition to the Nigerian e c o n o m y, t h r o u g h t h e utilization of local raw materials, products, and services in order to stimulate growth of indigenous capacity. But, before this became a reality when Nigeria’s President, Dr. Goodluck Jonathan, signed the bill into law in 2010, Bristow Helicopters (Nigeria) Limited had commenced its Nigeria Content Plan in the early eighties. This was long before the idea of developing Nigerians to actively participate in the Oil and Gas Industry became a policy of the Federal Government of Nigeria. The focus has from the outset largely been on the development of Human Resources, Capacity / Capability Development; Technology Transfer and Localisation. The effort at Human Resource Development is focused on two key core areas namely:
1.Pilot Training 2.Aircraft Maintenance Engineers Training.
Pilot Training: In 1984, Bristow commenced training of Nigerians who already had the Commercial Pilots Licence (Aeroplanes) as helicopter pilots at its Flying Training School, Redhill, United Kingdom. In addition Bristow Helicopters Nigeria Limited sponsored a number of candidates through the then Nigerian Civil Aviation Training School (NCAT), in Zaria, Kaduna State through Fixed-Wing Courses. These candidates were later sent to the Flying Training School in the United Kingdom to convert them into helicopter pilots. The NCAT sponsorship programme was identified as inadequate to meet the need to replace expatriate pilots, as it took approximately three to four years to complete the Commercial Pilots programme. A decision was made to accelerate the programme by starting a sponsored programme, whereby Nigerians selected
through a rigorous selection process would be sent to the Flying Training School in the United Kingdom. This would reduce the 3-year programme in Zaria to 15 months. This sponsored Cadet Pilot Programme started in 1986. T h i s C a d e t Pr o g r a m m e continues today and has proudly produced over 200 Nigerian pilots.
Aircraft Maintenance Engineers Training: Bristow Helicopters (Nigeria) Limited (BHNL) in addition to students sponsored through the Engineering Training School at NCAT, Zaria, recruited selfsponsored Nigerian nationals. In addition to sponsorship at NCAT Zaria, a n ‘A p p r e n t i c e s h i p Programme’ was started in 1988 whereby selected candidates were trained in the United Kingdom for 2 years. Following the downturn in training activities in Zaria in the nineties, this programme continued in the United Kingdom. In recent time, Bristow has collaborated with NCAT to reduce money spent abroad
This would reduce the 3year programme in Zaria to 15 months. This sponsored Cadet Pilot Programme started in 1986. This Cadet Programme continues today and has proudly produced over 200 Nigerian pilots
and domicile some training cost by working with NCAT to facilitate some part of the training program in Zaria, before students are sent to the Bristow Academy for further intensive training. Today, Bristow Helicopters Nigeria activities and contributions have proven that, the enactment of the Nigerian Content Act, was a step in the right direction.
eading petroleum m a r k e t e r a n d manufacturer of industrial and automobile lubricants and liquefied petroleum gas (LPG), Conoil Plc, has introduced a new dimension to the distribution and marketing of lubricants and domestic gas to mechanic workshops and homes. The concept is aimed, among several benefits, at improving the delivery of lubricants and cooking gas to the door steps of customers on real-time basis and at affordable prices. The new initiative, simply known as COSA (Conoil Services Associates), guarantees product availability through branded motorcycles and tricycles. Through COSA, the first of its kind in petroleum products distribution and marketing in the continent, the volume of the company’s lubricant sales is projected to increase by over one million litres in one year. Another value addition of COSA to retailers, and invariably end consumers, is reasonable reduction in price. COSA is also designed as the company ’s corporate social responsibility, as it is expected to create hundreds of employment opportunities a n d p r o m o t e entrepreneurship among fresh graduates. According to a statement released by the company, “COSA will create direct and indirect employment opportunities and reduce unemployment rate in Nigeria”. It would be recalled that Conoil recently announced, plans to invest N1.5 billion to re-invigorate the totally deregulated and high margin-yielding lubricant business over a four-year period with projected revenue of N33 billion over same period. Towards achieving this projection, the company upgraded its filling lines at its Apapa Plant and constructed new ones in Port Harcourt and Kano to generate additional volumes.
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u t i u Sunmonu is Country C h a i r, S h e l l Companies in Nigeria and Managing Director of the Shell Pe t r o l e u m D e v e l o p m e n t Company of Nigeria Limited (SPDC). He graduated from the University of Lagos in 1978 with a first-class degree in Mathematics and Computer Sciences. He joined the IT department of Shell where he held various roles. Following three years in Aberdeen at Shell UK, he returned to Nigeria in 1993 to become Head of IT Infrastructure Services and in 1995 he became IT Manager for t h e S h e l l Pe t r o l e u m a n d Development Company. In 1997 he moved to the core production side of the business as an area production manager. In 2001 he worked as Regional Business Adviser at Shell Headquarters at The Hague, in the Netherlands where he helped develop the initial investment proposal for t h e C h i n a We s t t o E a s t integrated pipeline and gas suRpeptluyrp nrio njgectto. Nigeria in 2003, Mutiu was appointed General Manager Production for the SPDC Eastern operations. Two years later, he joined the Board of SPDC following his appointment asAEffxfeacirustivaenD direthce tonr CEoxrp ecou ratitvee Director Production in 2006 with overall accountability for the company ’s oil and gas production activities and delivery. Mutiu was appointed Managing Director of SPDC on 1 January 2008. And on January 1 2010, he also became Chairman of Shell Companies in Nigeria. He is married to Funke, and they haM veuftoiu ur cShuilndm reonn. u: Investors peN rsig percitaivh eaosnhth uege PIoBil and gas resources. And with such resources, the country should be on any investors’ primary target list. In this speech, Mutiu argues that there are many factors that would make Nigeria an investment destination given the presence of these resources. But two related factors stand out – a conducive operating environment and fiscal terms leading to competitive and attractive rates of return. A balanced PIB is required – one that will provide optimal revenue to the government whilst providing sufficient incentives for new investment to fuel growth. Ladies and gentlemen, good morning. Nigeria is at the beginning of a transformational shift in the management of its huge oil & gas resources which currently
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Investors perspective on the PIB NEITI –
PIB Stakeholders Forum stand at some – 35 billion barrels of proven oil reserves, 187 trillion cubic feet (TCF) of proven gas reserves and an estimated 600TCF of undiscovered gas potential as well as potential crude oil production capacity of 3.3 Mb/d. With this level of resource, Nigeria should be on any investors’ primary target list as well as Africa’s undisputed energy giant and a major world player. So, what would make Nigeria an investment destination given the presence of attractive resources? There are many of course, but two related factors stand out – a conducive operating environment and fiscal terms leading to competitive and attractive rates of return. The fact is that Nigeria is a challenging business environment, costs are at the high end of the global scale, contracting and licencing can be long and tortuous processes and, onshore, there are a multitude of security related issues that have to be dealt with on a daily basis – not least oil theft and sabotage – leading to lost production and even more cost and resource pressures.
revenues, but those of us who have been here for several decades look on these issues as cyclical and can live with them – though not for ever - provided the underlying fiscal regime is positive. Solutions to these underlying problems will take time, and the PIB must take this operating environment and its direct impact on costs into account. I will come back to this later. The debate on PIB has been going on for some time now and I want to reiterate that, as investors, we welcome a bill that will bring to end fiscal and legal uncertainties and pull together under one roof the many pieces of legislation pertaining to our industry. The country needs it and the industry needs it.
The Federal Government has done and is still doing a lot about these challenges, but we are not there yet by any means. In the recent past, militancy has simply been replaced by industrial scale oil theft and sabotage. We, and others, have had to shut-in significant production, spend huge amounts on replacing and repairing hardware and deploying massive resources to clean up oil spills.
The changing landscape...An avTohid eabclu erfruetn utre PIB draft has highlighted the differences of views between industry and government. And I will be frank, there are still significant gaps to clo Tshee.se differences need to be resolved to support the underlying objectives of the reforms. Like all responsible stakeholders, industry needs to work with government to find a win-win solution. Dialogue is ongoing and with the right level of co-operation, industry and government will obtain better insight that will lead to a resolution of the differences.
All of this has had a huge impact on both cost and
The consequences of the current fiscal and legal
Mutiu Sunmonu
With this level of resource, Nigeria should be on any investors’ primary target list as well as Africa’s undisputed energy giant and a major world player
uncertainty in Nigeria are very visible – lower exploration activity and very few final investment decisions - meaning fewer reserves and reduced investments. This in turn means that production is not being replenished and there is serious threat of a significant reduction in production in the medium term with all of the consequences for revenue generation for the country. So, we need the PIB as quickly as possible as it will define the environment for growth. In the last few weeks the industry-government dynamics have been encouraging. There has been an increased willingness to share data and assumptions and this has opened up greater opportunities
for mutual understanding and progress. We need to continue this dialogue – indeed build on it – but time is of the essence. The outside world is watching and waiting. Analysts are commenting – Woodmac has just published its assessment of the current state of play, and it’s not flattering. The media is portraying this as industry versus government – which, frankly, doesn’t help – and the clock is ticking. Implicit in this is that there is one chance to ensure that the PIB can encourage sustained investment, assure growth of revenue beyond the short term, continue the gains of Nigerian content, foster progress on
CONTINUES ON PAGE 12
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CONTINUES ON PAGE 18 government aspirations for power and industrial development and, of course, encourage economic growth from multiplier effects. Expanding African Supply SoAunrdceswe cannot ignore the developments around us. There have recently been large discoveries in East Africa (more than 100 TCF in one block in Mozambique for example) and additional ones in West Africa – notably in Ghana. There are also good prospects offshore South Africa and Gabon and potential in Equatorial Guinea. And there is huge shale gas potential in South Africa. This is only a snapshot of Africa – all these and many other global opportunities impact competitiveness and the window of opportunity to monetise Nigeria’s resources. Frankly, Nigeria cannot afford to miss the boat. There is a finite amount of money to be invested by oil and gas majors in the short to medium term, and Nigeria needs a slice of that cake. “AAbablaalnacnecded PIBPIB is what is required – one that will provide optimal revenue to the government whilst providing sufficient incentives for new inA vesbtm aleantcteodfuP elIB groiw s thw.h“at is required – one that will provide optimal revenue to the government whilst providing sufficient incentives for new investment to fuel growth. And it is important to take local business challenges in Nigeria into consideration as well as the impact on existing investments made in good faith at current legal and fiscal terms. The PIB should create a level playing field – one that is fair to all investors – big, small, new or old. What we have seen of the draft PIB to date does not indicate a bill that fits these criteria. And this is the opinion not only of the major players in Nigeria’s oil and gas industry, but, as I mentioned earlier, industry analysts as well. What we have seen and what we know of the current draft PIB requires significant improvement to secure Nigeria’s competitiveness, and attract the required level of investment to enable exploration to increase Nigeria’s reserves and then foster development of the projects to monetise them. An unbalanced bill will hinder this investment for growth rather than unlock it, adding new challenges to existing ones in the areas of investment (obviously) but also, for example, license renewals, the industry-wide PSC disputes and lack of gas terms for PSCs. An O batlhaenoce thdePr IhBa2nd, a balanced PIB will be an enabler for
Investors perspective on the PIB
government’s transformatio n agenda of growth and employment creation. With potentially many tens of billions of dollars of investment awaiting the bill, it is not just jobs in the oil and gas industry, but the many thousands in supporting industries and their satellites that will be created. A balanced PIB would help build Nigerian Content Development faster, promoting local manufacturing and entrepreneurial development and in-country capacity and capability.
NEITI –
Imagine, for example, the development of industry around the building of the infrastructure for major offshore deepwater projects in Nigeria. Imagine too developments that might spin off this industry. If it is possible to develop an industry building FPSOs and topsides here, what else might be possible, and what other industry might develop around it?
This has led Not only to a fall in energy imports to the US, but the probability that the US will shortly become a net exporter of gas. It has also led to a significant reduction in the Henry Hub marker price, which has Fallen by some 30% in the last year alone
PIB Stakeholders Forum
As it stands right now the PIB will render all deepwater projects and all dry gas projects – whether for domestic or export markets – non-viable. The opportunities I have just outlined will be lost. And the opportunity to monetise some of the world’s best gas reserves will be lost. The opportunity to kick start the power sector – the key to economic growth – using easily accessible gas will also be lost. Besides these areas related directly to fiscal terms, the PIB needs to address long term industry issues, for example funding issues for JV’s, where funding requirements have constrained production growth. Nigeria needs a strong national oil company, but any national oil company has to partner positively and, again, has to compete with those elsewhere that are also seeking external investment. NNPC has got to be able to fund its share of JV costs if it is going to attract such exter nal investment and partnership. While the economy in general is on the path of diversification it should not be denied that the oil and gas sector remains the
driver of this process providing not only the funds to enable the diversification but also the gas that could and should be being used to regenerate the power sector to provide reliable electricity which is the backbone of industrial growth. If the PIB does not encourage the development of the domestic gas
market none of this will happen and the consequences are almost unthinkable.
“As it stands right now the PIB will render all deepwater projects and all dry gas projects – whether for domestic or export markets – non-viable. The opportunities I have just outlined will be lost. And the opportunity to monetise some of the world’s best gas reserves will be lost.” The more general Nigerian developmental agenda is also huge. The countr y needs massive investment in basic infrastructure and in education, healthcare, and so on. This all needs to be funded in the short to medium term, and in that time period the realistic primary source of revenue remains the oil and gas industry. A bad PIB will deter investment and strangle that revenue flow creating more and broader social issues rather than solving them. The Global Competitive Landscape The window of opportunity is narrow. As Woodmac’s report clearly illustrates, the world is watching. Potential investors will look for better opportunities if a competitive PIB isn’t finalised soon. Nigeria needs to use its resources to achieve what it wants and it needs a good PIB to get there. Investments need to continue and the oil and gas sector needs to continue to grow. Australia is an example of what can be done. Nigeria has 187tcf of proven gas reserves of which less than 50% is dedicated to target markets and projects, AND we have some 600tcf of unproven reserves. In comparison, Australia, a country with only 110tcf of proven reserves is moving for ward with ten projects to deliver 81mtpa of LNG export capability. And global developments suggest an even more competitive landscape in the near future. Qatar recently added 77mtpa to the global LNG supply. Au s t r a l i a , a s p r e v i o u s l y mentioned, plans to deliver 81mtpa by 2017, Russia is
aggressively building more pipelines to Europe to deliver more natural gas and there have been shale gas discoveries in Poland, China, and, more significantly, in the US (where there is thought to be more than 100 years supply of natural gas). This has led not only to a fall in energy imports to the US, but the probability that the US will shortly become a net exporter of gas. It has also led to a significant reduction in the Henry Hub marker price, which has fallen by some 30% in the last year alone. Although the global hydrocarbon demand horizon looks strong, the competitive threat remains, and Nigeria is not isolated from it. As a nation our only weapon is to ensure investment continues so as to grow capacity across the board to make the most of Nigeria’s abundant resources. It is against this background that Nigeria needs to compete – and the PIB will either enable or strangle that competitiveness. Inovr esoto F urs Rpeasrpt,onosiilbilaitnyd gas companies have to be clear on what they need for continued investment in Nigeria. Just saying that the current PIB will not work is not helpful; investors need to get into the solution space. And I think we are getting closer through continued dialogue. We also need to accept that change is inevitable. I said before that we welcome the PIB for a number of reasons – the pill that might be hardest to swallow is that we will have to accept tougher terms in some areas. Nigeria has matured, the competitive landscape has changed and we all have to accept that ‘balance’ means pros and cons. Finally, all of us in the industry need to become more enduring partners of the nation. Nigeria’s fortunes are inextricably linked with the oil and gas industry. Though government has the sovereign right to make laws and industry is accountable to their shareholders, a win-win solution is possible and, indeed, necessary. Nigeria cannot survive and grow without a healthy oil and gas industry and a healthy oil and gas industry needs conducive legal and fiscal environment that will allow it to grow too. Change is inevitable, but I am confident that we can solve this problem and look forward to at least another 50 years of partnership and, if we really get this right, the transformation of Nigeria into the economic powerhouse she has potential to be. Thank you.
Gas
Shale gas demand may stall LNG projects in Nigeria-Experts KUNLE KALEJAYE
E
xperts in the oil a n d g a s industry are of the view that Nigeria may lose her place in the international scene if drastic measures are not put in place to utilise the country’s gas resources, in view of the growing demand of shale gas in the international markets. The development of shale gas in different parts of the world has become a game changer in the global energy mix. The situation is likely to stall new Liquefied Natural Gas, LNG projects with implication for Nigeria’s gas resources.
With the above worrisome situation, the Nigerian Association of Petroleum Explorationists, NAPE deemed it fit to tag its 2012 Pre-Conference Workshop, “The Economic Imperative for the Local Utilisation of Nigeria’s Gas Resources.” Speaking with newsmen in Lagos, President of NAPE, Mr. Mayowa Afe said the pre-Conference Workshop will deliberate on the specific challenges in the gas value chain, “If the commodity is to play any significant role in the nation’s drive for development”. The Workshop ushers in N A P E ’ s A n n u a l International Conference and Exhibition which is undoubtedly, one of the
Currently, natural gas is the fastest growing energy resource in most regions of the world, owing to its abundance and relatively low carbon content that makes it more environmentally acceptable compared to coal or crude oil
largest gatherings of oil and gas professionals in subSaharan Africa. “The conference comes up between the 11th and 15th of November, 2012 at the Eko Hotel and Suites in Victoria Island, Lagos,” he said. Afe, who was represented by
the President -elect, Mr. George Osahon, noted that the Pre-Conference Wo r k s h o p w i l l f e a t u r e discussion on the international development in the shale gas arena; domestic gas utilization: the journey thus far; and Gas to
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Petrochemicals. Special guest of honour at the workshop include Engr. Andy Yakubu, the Group Managing Director of Nigeria National Petroleum Corporation, NNPC. According to NAPE President, three lead papers will be presented which include: International Development in the Gas Arena: Implication for the commercialization of Nigeria’s Gas Resources, which will be delivered by Engr. Chima Ibeneche, President, Nigeria Gas Association; Utilization of Nigeria’s Gas Resources: Perspective of the journey so far ”, will be delivered by Mr. Ubaka Emelumadu, Vice President; S h e l l Pe t r o l e u m Development Company of Nigeria, while the last lead paper, Defining an Effective Gas Commercialisation Policy for Nigeria” ,will be presented by Mr. Osten Olorunshola, the Director of the Department of Petroleum Resources, DPR. In providing insightful comment and presentation into the subject matter, NAPE president said there will also be a three member panel of discussants. Members of the panel are; M r. B o l a j i O s u n s a n y a , Managing Director, Oando Gas and Power, Mr. Babatope Olaleye, General Manager, Geosciences, Nigerian Agip Oil Company and Prof. C.M Ekweozor, CEO of Getamme Group of Companies would specifically handle the issue of shale gas. Currently, natural gas is the fastest growing energy resource in most regions of the world, owing to its abundance and relatively low carbon content that m a k e s i t m o r e environmentally acceptable compared to coal or crude oil. H o w e v e r , g a s transportation from production locations to areas of consumption is capital intensive which probably accounts for large the volume of stranded gas in the country which encourages flaring while constraining its widespread utilization in various industries including the power sector. According to the NAPE president, the PreConference Workshop will address the situation.
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Electricity Transformers
Power
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ELECTRICITY DISTRIBUTION:
Assessing investors’ competence E
ight days the National Council on Privatisation, NCP, will again superintend the opening of the financial bids for distribution companies unbundled from the Power Holding Company of Nigeria, PHCN, like it did week ago with the generation companies. Clara Nwachukwu wonders if the capacities of the investors can be vouched for.
N
otwithstanding the rigorous process for prequalificatio n, the Bureau of Public Entreprises, BPE, needs to ensure that not only do the prospective bidders have the financial muscles to take over the fir ms, they must also be equipped with the relevant experience, and sustainable business model that will make for successful and efficient transition. To avoid the mistakes of past privatisation, where the performance agreements were flagrantly abused, the investors’ competence must be established. In view of the importance of power in nation building, competence driven by knowledge more than political sentiments should drive reinvigoration of Nigeria’s comatose electricity sector. The NCP approved the technical bid evaluation of 31 firms prospecting for the 11 distribution companies, DISCOs, put up on offer by the BPE for private ownership, but the challenge before it is in finding those that understand the complexities of the sub-sect to do the job. Technical cpmpetence Industry experts argue that there is a vital need to
appropriately choose companies with the technical capacities to add value to the sector in line with current reforms aimed at delivering quality services to consumers. Such companies with hands- on experience can the focus appropriately on integrating the various aspects of the electricity distribution in an efficient manner through network expansion, proper metering, revenue management and asset optimisation. Although the investment outlay to achieve these is huge, but Federal Government has agreed to open the commercial space for quality private sectorled intervention. This, it plans to do by giving up 60 percent controlling shares to private investors, while keeping the remaining 40 percent shares. With the new investments, it is anticipated that protracted problems such as high technical voltage losses, line breaks, obsolete substations and other aging key assets will be replaced to reduce maintenance costs and improve supply reliability. It is equally imperative that the local authorities are fully involved especially with regard to distribution companies located in controversial areas such as the Niger Delta region, Lagos, Kaduna and Kano, Port Harcourt and Benin. The
Electricity Pylon
With the new investments, it is anticipated that protracted problems such as high technical voltage losses, line breaks, obsolete substations and other aging key assets will be replaced to reduce maintenance costs and improve supply reliability
support of state is vital for seamless synergistic if expansion projects are to be executed successfully, and especially with regard to the right of way issues. While there should also be legislations against electricity theft and equipment/facilities vandalism to protect private
investments.
F
urthermore, it is important for the authorities to examine the implementation plans by the technical partners in terms of the size of companies they have operated in the past as against their five year loss
reduction ratios. This is to ascertain that optimisation of losses, as technical losses in electricity transmission and distribution is an engineering issue which requires huge capital outlay, and logistics in terms of proper tooling of power systems planning and modeling. Analysts maintain that it is pertinent for the industry regulators to monitor the ratio of technical losses against the loss proposals by prospective bid winners nor do they know the current state of the losses, and open up the issue for negotiations and frequent adjustments. There are global examples of bad choices that have truncated programmes for the electricity sector. India is currently battling to stave off crisis in the sector despite investment made over
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Power
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Assessing investors’ competence CONTINUED FROM PAGE 28 the last two decades. Recent power outages underscore the fact that the country may be heading to crisis situation if this issue is not properly addressed. Similarly, Nigeria’s rural electricity distribution network ranks as the most neglected infrastructure in Sub-Saharan Africa, as well as one with the highest inefficiencies, where the World Bank estimated that the PHCN can only capture about 25 percent of revenues owed. Given the lack of equipment maintenance, the new owners are acquiring high risk assets. As such there is the need to expand the countr y ’s distribution infrastructure as well as install new distribution infrastructure to meet the population and demand growth, which also require continued investments. Specifically, there has to be c on t i n u e d i n v e s t m e n t s i n voltage distribution networks, particularly in theft-prone areas as well as in the replacement of old meters with accurate electronic meters.
T
he same also goes for substations and lines configuration to improve reliability and narrow the
increasing customer expectations as well as narrow the gap between urban and rural expectations. There has to be investment also in newer and better technology to facilitate efficiency and demand management. Also, the new owners will need to invest in personnel and change management, while also setting up direct and open contact with communities and their leaders, and the authorities involved. This will create awareness about the commercial nature of electricity as a ‘good’ with a price as well as well as educate consumers on the culture of regular payment of electricity bills and preservation of electricity infrastructure. As the companies investment in new infrastructure, they will focus on new technologies, advanced metering infrastructure, AMI; automatic meter reading, AMR; communications networks and database systems that will modernise the grids. Analysts estimated that the new companies will need to spend in excess of N200billion to re-build and strengthen distribution systems over the next five years, in order to m a i n t a i n r e l i a b l e s u p p l y.
Against this backdrop, only financially and technically viable companies with relevant experience can address this huge investment expectation to meet at least 50 percent electrification target within the same period. As it were, the Ministry of Power is saddled with dealing with over $32billion debt owed by some of the DISCOs who can’t pay generation companies for electricity supplied to them for their consumers. The development is rubbing- off negatively on the GENCOs with negative consequence also on the financial sector. The Central Bank of Nigeria, CBN’s directive last week on credit freeze to some debtor companies underscores the need for careful scrutiny of the
financial sustainability of the companies shortlisted for the upcoming financial bid opening. In all, the CBN barred banks in the country from extending loans to 113 companies and 419 directors and shareholders of the companies listed. I r o n i c a l l y, f i v e p o w e r companies were included in the list as shown below, while some directors and shareholders also listed have substantial interests in some of the shortlisted distribution companies as well. H o w e v e r, t h e A s s e t Management Corporation of Nigeria, AMCON, has clarified that some like Sir Johnson Arumemi-Ikhide and Prof. Bart Nnaji, were not supposed to be on the list.
As it were, the Ministry of Power is saddled with dealing with over $32billion debt owed by some of the DISCOs who can’t pay generation companies for electricity supplied to them for their consumers
Vigeo Power strategises to acquire assets
B
ureau of Public Entreprises, B P E ’ s postponement of the opening of the bids for electricity distribution companies unbundled from the Power Holding Company of Nigeria, PHCN, offer more opportunities for prospective investors like Vigeo Power, which was shortlisted for the next round, to re-strategise to acquire some of the unbundled assets. Vigeo, which submitted bids to acquire the 11 electricity distribution companies (discos), also participated in the PHCN bid for metering and billing management. The company emerged tops among the bidders in the evaluation of the combined technical and financial proposals. It would be recalled that the company was the
management operator for the N a t i o n a l P r e - Pa y m e n t Metering Programme, N P P M P, i n t h e B e n i n Ele c t ri c i t y D i s t ri but i on Company, BEDC, covering Edo, Delta, Ondo and Ekiti States. The company explained that “The programme was primarily targeted at reducing non-technical losses and improving customer satisfaction via improved customer service delivery. This entails the procurement, installation and management of prepaid meters in BEDC. The contract provides for the installation of 161,000 PrePaid Meters (PPMs) within 2 years and management of the vending operations until the operator ’s investment in metering and vending infrastructure is fully repaid.” “Again GUMCO emerged
Again GUMCO emerged top with no less impact, installing over 150,000 Prepaid Meters within two years, when the total Prepaid metering installation in the whole 11 Distribution companies under the NPPMP was less than 500,000, that is 485,000 at the stoppage of investment deployment under the NPPMP. This is a feat unequalled in the annals of PHCN,” the statement added.
top with no less impact, installing over 150,000 Prepaid Meters within two years, when the total Pre-paid metering installation in the whole 11 Distribution companies under the NPPMP
was less than 500,000, that is 485,000 at the stoppage of investment deployment under the NPPMP. This is a feat unequalled in the annals of PHCN,” the statement added. In addition, the company said it has continued to render technical support services to BEDC, Ikeja Electricity Distribution Company (IEDC) and other DISCOs especially in areas of Metering, Billing and Collection infrastructure development and management. Established in 1999, Vigeo Po w e r h a s e x t e n s i v e experience in the Nigerian electric distribution and downstream sector. It is managed by a team of indigenous and expatriate professionals with over 60 years cumulative experience in power and utilities project management.
Solid Mineral Joseph ERUNKE
I
ndication that most parastatals of the Federal Ministry of Mines and Steel Development would gain autonomy has emerged with the matching order on N a t i o n a l M e t a l l u rg i c a l Development Centre to go commercial. How prepared is the agency for this task? Established in 1973 primarily as a testing laboratory of the defunct Nigeria Steel Development A u t h o r i t y, N S D A , t o specifically handle the analysis of raw materials for the proposed steel plant, the National Metallurgical Development Centre latter changed into Metallurgical Research and Test Division of the National Steel Council, after the abrogation of the Decree establishing the NSDA. The abrogation was meant to give it a broader scope to carry out research and development activities in all metallurgical processes for the benefit of solid minerals and metallurgical industries. The name, National Metallurgical Development Centre was adopted in 1987, after the centre was given legal backing by the Act No 50 of 1992. The agency, as a parastatal in the Ministry of Mines and Steel Development, the National Metallurgical Development Centre, NMDC, is charged with the responsibility for carrying out research and development work for solid minerals and metallurgical development. But the broad objectives of the NMDC is to provide the research and development input for the economic growth of Nigeria’s solid minerals and metallurgical industries through innovation and adaptation of minerals processing and metallurgical technologies so that an ever increasing proportion of the country’s requirements in these areas can be met through the development of local raw materials, particularly in the steel, non-ferrous metals, foundr y and refractor y industrial minerals sub-
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National metallurgical development center to go commercial
Metal melting
The need to prepare the National Metallurgical Development Centre, as an agency not only to meet up with its full mandate but, surpass the set record, necessitated a stakeholders’ forum recently where strategies towards effecting the set goals were put in Place sectors. The centre going by records, have not derailed from its original mandate since inception. In response to government’s policy of diversifying the economy through solid minerals and metals sector development,
the sector strategically acquired various equipment and facilities through budgetary provisions and collaborations to enhance its capacity to offer effective and efficient research and development of the metallurgical, solid minerals and allied sectors of the economy. The need to prepare the National Metallurgical Development Centre, as an agency not only to meet up with its full mandate but, surpass the set record, necessitated a stakeholders’ forum recently where strategies towards effecting the set goals were put in place. The for um which had experts drawn not only from research institutes, but the academia, harped on the way forward in the strengthening of NMDC. The most challenging task thrown at those in authority at the National Metallurgical Development Centre, was the
call by Minister of Mines and Steel Development, Alhaji Musa Mohammed Sada, that the agency should strive to be on its foot without government’s sponsorship. The minister said NMDC must commercialize its services in order to generate revenue for self sustenance in view of prevailing government financial situation in the country. The forum, with the theme, “Transformation of the solid minerals, metallurgical and allied sectors of the economy” was to accentuate the policy thrust of government while establishing its linkages to other sectors of the economy as well as its enormous capacity to support and stimulate growth in virtually all sectors of the economy. He said the NMDC had enor mous potentials to sustain itself like its counterparts in Malaysia, India and other parts of the
world noting that it had made “significant contributions to the economy of Nigeria.” “Nigeria’s solid minerals sector has become vibrant. Now, local and foreign investors as well as operators need the services of the NMDC in areas like beneficiation and milling of mineral ores; extractive and physical metallurgy; chemical analysis; foundry technology; feasibility studies for mineral projects; failure analysis; development of flow-sheets among others,” the minister said. NMDC, he insisted, had “established the process of producing tin metal of international standard locally by fabricating and constructing a pilot scale refractor y fur nace and refining facility at the centre”, saying “the nation prides in the fact that the only tin smelting facility functional in the country is the one at NMSD, Jos.”
Solid Mineral
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Oil worker fixing the pipe
Joseph ERUNKE
T
he inability of Nigeria not only to fulfil its dream of launching a full scale production of its iron ore potential, but successfully privatize the iron ore industry, is no doubt raising concern just as there are rumours of government’s plan to initiate an out-ofcourt agreement in the arbitration. ABUJA—Iron and steel industry is of strategic importance to any developing economy. Its place is of great significance in any meaningful national e f f o r t t o w a r d s industrialisation. The pivot role of iron and steel products in a nation’s economy is attributed to their widespread utilization in all facets of the manufacturing industry. Nigeria had expected significant iron ore production from the Itakpe iron ore deposits to reduce its dependence on oil and gas revenues. Since the country discovered oil, all its attention has been on the oil, neglecting other areas. But of recent, the Federal Government found out that mining would be one of the key areas that the country can pick on to diversify from
Non-oil business, still threatened the oil and gas sector. Nigeria, which gets nearly 80 per cent of its revenues from oil and gas production, was to start receiving revenue from iron ore production as Itakpe iron ore deposit is said to contain three billion tonnes of iron ore reserves. Initial production from the mine was expected to be 2 million tonnes a year, ramping up to 20 million tonnes annually in five years, a development that will help Nigeria establish a track record in the mining industry and allow it to attract more investors. The mining of minerals in Nigeria at present, accounts for only 11 per cent of the country’s GDP, due to the influence of its vast oil
resources. The domestic mining industry is underdeveloped, leading to Nigeria having to import minerals that it could produce domestically, such as salt or iron ore. This became so only when Federal Government made it possible through mining leases, that rights to ownership of mineral resources in the country is held by it. The law made it that, it is only the Federal Government that grants titles to organisations to explore, mine, and sell mineral resources. The National Iron Ore Mining Project, NIOMP, at Itakpe is earmarked to supply the total 2.155 million tons per year iron ore requirement of the Ajaokuta Steel Project. In addition, it is contemplated
that the project would also supply about 40 per cent of the requirement of the Delta Steel. But all the efforts at realising these dreams have remained futile. The hope of making the nation’s iron ore company, located at Itakpe, Kogi State to come to full work became bleak when it was concessioned alongside the Ajaokuta Steel Industries to an Indian firm, Global Infrastructure Holding Limited, GIHL. The agreements entered before the two companies were given out to the firm were ter minated when startling revelations later emerged that there were certain irregularities as well as non-adherence to due process, a development the
Indian firm is challenging currently at the arbitration. But with the seeming unending case at the arbitration, the Federal Government is said to be frustrated and hence planning to go back to the controversial concession agreement with a view to reinstating the Global Infrastructure Holdings Limited, GIHL, to commence production in the firms. This development, which seems to show Federal Government’s confused state on how to resolve the lingering crisis on the revocation of the concession agreement with the Indian firm, experts in steel industry said, would be against the country’s interest, considering the revelation of shoddy deals that were said to be carried out by gover nment before the official concession and the company which had removed most essential components of the firms after the concession. S o u r c e s s a i d correspondences to the effect has gone round to concerned parties informing that the Federal Government would revisit agreements with GIHL and fine tune the contract to favour both sides. The rumoured return of GIHL, as learnt, was part of the outcome of the out-ofcourt settlement adopted by the two parties owing to the huge judgement cost which was still high after arbitration. The Federal Government had in 2008 revoked the concession agreements with GIHL, citing asset stripping and failure of the group to comply with the major provisions of the agreement. This became a subject of litigation at the instance of the group; with a judgement debt hanging over the Federal Government which sources informed is still outstanding. “The return of GIHL seems to be government’s way out of the logjam because government cannot pay the judgement cost which runs into millions of dollars. Government cannot also sell both Ajaokuta Steel and the Iron Ore and Mining Company in Itakpe without settling the issue of GIHL. So this is the problem”, said a source. The government further faces a dilemma on what to do with the Ajaokuta staffers that have not been paid since the concession agreement.
Solid Mineral
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NIMG: Bringing back the lost glory of mining in Nigeria
Aerial view of mining site
Oscarline Onwuemenyi
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ver the past 10 years, Nigeria’s mining industry has experienced a boom in both mineral exploration and mining activities. Notable developments include the enhancement of regulatory standards, the proposed development of a Road Map for the reform of the sector, and the commissioning of state- of –the-art mining laboratory in Kaduna, Kaduna State. During this period, several mineral prospects for dimension stones, gold, bitumen and uranium have also been developed to various stages of exploration. This has resulted in an increase of the country’s annual gold production from less than one ton per annum in 1998 to about 50 tons in 2008, making Nigeria one of
largest producers of metals in Africa, and increasing the potential for making the mining industry the second fastest growing sector of the economy after oil and gas. While the country continues to record impressive success in attracting investments, the minerals and mining sector has continued to face challenges. The sector ’s rapid growth, particularly in small-scale and artisanal mining, swiftly overstretched the Government’s i n s t i t u t i o n a l c a p a c i t y. Existing institutions lack adequate tools, expertise, and the organizational setup required to oversee and support a modern, marketdriven mineral sector. Other challenges of the sector include low integration with other sectors of the economy; low contribution to the GDP compared to the sector growth; slow development of small scale mining; low capacity of the Government to administer the sector; low level of value addition of
While the country continues to record impressive success in attracting investments, the minerals and mining sector has continued to face challenges. The sector’s rapid growth, particularly in small-scale and artisanal mining, swiftly overstretched the Government’s institutional capacity minerals; and environmental degradation; lack of diversification of minerals from gold and gemstones into base metals and other minerals
Enter the NIMG The Nigerian Institute of Mining and Geosciences (NIMG) was therefore established by the Federal Government to be the centre of excellence of international standard that would attract students for training and research in Mining and Geosciences from within and outside the country. Speaking in an interview with Sweetcrude, the Provost of the Institute, Prof. Idowu B. Odeyemi explained that “the Institute is designed to provide an opportunity for manpower training and institutional capacity building for the mining sector, from which practically oriented and capable management cadre of manpower will be produced to plan and manage the development activities in the mining sector.” According to him, the curriculum for achieving this level of competence and capability in mining and geosciences, is different, of a
higher standard and at a more advanced level than those currently obtained from the strict academic institutions in the country and includes practical field training in mining and geosciences. Prof. Odeyemi, who noted that the mission of the Institute was to bring back the glory of mining education in Nigeria, was quick to highlight the muchneeded financial shot in the arm the Institute received from the World Bank’s Sustainable Management of Mineral Resources Project (SMMRP), which was designed to help the Government meet the challenges and take advantage of opportunities within the sector. Analytical work and activities under this Project have helped to attract investments for mineral exploration and mine development through a first generation of improvements to the mineral sector framework, including improvements of institutions and agencies administering the sector. The concept of a Training Institute for mining in the country dates back to 1923 when the Mines Department was created with mostly expatriate mining professionals. There immediately arose a need to train local technical staff to assist the expatriates in the mines. For this purpose, the School of Mines was established in Jos in presentday Plateau State in 1952. This was upgraded in 1958 to include mining technology in general with a Diploma Certificate issued to graduating students. With the revised policy on mining and exploration in 1971, the Federal government, among other things, decided to establish the Nigerian Mining Institute as a distinct, independent project ubder the Third National Development Plan (19751980). In 1995, a Committee of eminent persons set up by government to produce a Solid Minerals Policy for the country recommended that the Instute should engage in training higher level manpower by addressing the gap left in the training of mining engineers in the universities and polytechnics, and that it should run courses not usually covered in the routine curricula of the higher institutions.
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Corrosion problems at pipe supports ALDUCO ENERGY: Active Nigeria service company in Gulf of Guinea
A
C
or rosion problems at pipe supports on onshore and offshore Oil and Gas facilities all over the world is one of the leading causes of piping failures. This paper discusses the various corrosion mechanisms that occur at pipe supports leading to these failures and a proven method of prevention to this problem.*
the whole support area is bare steel. •Crevice corrosion starts At this point on, the galvanic crevice corrosion is driven by metal to metal contact. •Pipe fails - Leading in some cases to some catastrophic consequences. If we consider some of the more common types of pipe supports used in the oil & gas industry and we can see why the problems arise:
they find under these clamps. The result is softening and failure of the paint and corrosion is able to proceed uninhibited. Saddle clamps offer other disadvantages: they provide for no inspectability under the clamp; are expensive, and are rarely removed during maintenance painting so that the coating is never repaired.
Causes and innovative solutions for solving them During routine inspections of onshore & offshore oil and gas production facilities all over the world, a recurring problem has been noted, namely corrosion on piping systems which often leads to a piping failure. Why are pipe support points prone to such localized corrosion and what can be done to prevent it?
The Corrosion Mechanism •The problem starts at the pipe supports with the following: •Crevice forming - This is the root of the problem. •Water is trapped - The supports allow water to be held in contact with the pipe surface. •The paint system fails - As the paint surface is in constant contact with water, it softens, exposing the bare steel of the pipe. This makes the pipe and support to be in direct contact with the trapped water. •Corrosion is initiated - The small area of steel now exposed to the water starts to corrode and spreads. Soon
Corrosion at pipe supports Pipe corrosion at saddle clamps
Saddle Clamps Pipe corrosion at saddle clamps Saddle clamps are a potential corrosion hot spot. The saddle clamp often has a rubber liner designed to protect the coating on the pipe during installation. Sometimes this liner is required to provide electrical isolation between the pipe and clamp. In either case, the result is a tight crevice at the pipe surface. The crevice is so aggressive that any water falling onto the pipe in the area of the clamp may be sucked into this crevice by capillary action. Once in there, it is difficult for the water to escape and thus the pipe surface stays wet. Pipe coatings, (paint) used on topside piping are designed to protect the pipe from atmospheric corrosion. They were never intended for immersion ser vice. However, that is the service
Beam Supports Corrosion at pipe supports This is a very common method of supporting pipe runs. The pipes are usually stabilized with a U-bolt and it is not uncommon to see a neoprene pad installed under the pipe. The neoprene pad is designed to stop paint damage during installation and to reduce metal-to-metal contact. In truth, it aggravates the problem. Being soft, the material deforms under the weight of the pipe and forms a very aggressive crevice at the pipe surface. Paint failure then ensues by the same mechanisms as previously described. Again, Inspectability and access to maintain with painting is poor.
Half Saddles and Cradles Pipe corrosion at half saddles and cradles In many cases, these types of CONTINUES ON PAGE 35
lduco Energy a local asset i n t e g r i t y management services company that has been making giant strides in the oil and gas industry in the Gulf of Guinea. It has successfully provided and continues to provide services to the oil & gas industry in Nigeria, Republic of Benin, Congo Brazzaville and Equatorial Guinea. Alduco Energy ’s core activities are the provision of NonD e s t r u c t i v e Te s t i n g (NDT), Risk-Based Inspection (RBI), corrosion control and Cathodic Protection (CP) services. O i l a n d g a s infrastructure — in Nigeria, regionally and globally — has long been plagued with the issue of severe corrosion problems, and Alduco Energy recognises that managing corrosion is one of the key challenges facing operators in their drive to maintain the integrity of their assets. Stringent regulatory and company requirements have encouraged companies to ensure the integrity of their infrastructure by implementing asset integrity management solutions, to ensure that their facilities are in a safe operating condition. Failure to comply could result in facilities whose i n t e g r i t y a r e compromised, which could result in costly unplanned shut downs, accidents, major financial loss, environmental damage and even potential fatalities with serious legal consequences.
The challenge faced by asset owners, especially those that operate offshore, is the complexity and high cost of replacing subsea corrosion control systems, particularly depleted Cathodic Protection systems, i.e., anodes. From its two bases in Nigeria and Equatorial Guinea, Alduco Energy has been providing the world’s most innovative and cost effective CP solutions to assist operators in maintaining and extending the integrity of their assets, including platforms, FPSOs, pipelines and other subsea infrastructure. Alduco Energy has successfully carried out numerous retrofits of depleted CP systems that were no longer protecting the facilities they were intended to protect, due to damage or because they had reached the end of their design life. This has been done in record time, with minimum disruption to the operations of the oil and gas companies, and with cost savings in some cases as much as 80%. Alduco Energy’s valued client list is comprised of major international oil and gas companies, including ExxonMobil, Marathon Oil, Hess, SBM Offshore, EG LNG, Perenco, Noble Energy, Atlantic Methanol Production Company, Globestar, Cakasa, and C o n s o l i d a t e d Contractors Company, among others. In recognition of its work in and contribution to the growth of the oil CONTINUES ON PAGE 35
Technology CONTINUED FROM PAGE 34
support could be substituted for multiple U-bolt type clamps and a lot of the problems would disappear. However, the point of contact at the beam or in the bottom of the cradle will always be a concern. The same problems of moisture retention, poor inspectability and maintainability apply to these support types.
Phone: 08027181717,
since 1987. Performance has matched or exceeded all expectations of the operators specifying them, with no reported failures.
Problem is eliminated with IClip
Beware of inferior products
Pipe corrosion at half saddles and cradles
How do we stop the problem of corrosion at pipe supports? With a design that achieves the following goals: • Eliminate the crevice and thus the ability to hold water in contact withthe pipe • Be simple to install either on new or existing piping systems not requiring hot work • Be inexpensive • Provide inspectability and maintain-ability • Eliminate metal-to-metal contact. The Solutions Deepwater corrosion inc, has developed a range of patented products that eliminate crevice corrosion at pipe supports, these include the Nu-Bolt which is a standard pipe U-Bolt modified with a variety of corrosion resistant treatments and the I-Rod and I-Clip which are half-round configuration rods made from a high-strength ther moplastic material. When introduced between the pipe and the support, it achieves all the ideal solutions. The curved surface against the curved surface of the pipe minimizes contact area and water is shed from the pipe surface. The separation created also provides good access for separation and maintenance while eliminating metal-tometal contact. Easily installed either in continuous lengths across the top of pipe support beams or as an integral part of a Ubolt assembly to replace saddle clamps, the rods provide a cost-effective solution to the problem. NuBolt, I-Rod and I-Clip have now been in service on hundreds of oil & gas facilities all over the world
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e-mail: jimlaw2004@yahoo.com
I-Rod & Nu-Bolt assembly
I-Rod Pipe Supports are specified by major operators because of their reliability and proven corrosion prevention capabilities. In 25 plus years, there has not been one reported failure of the I-Rod. The simple appearance of the Nu-Bolt assembly leads many companies to attempt to copy the trademarked design, but the I-Rod that is made of a half-round high-impact thermoplastic made is impossible to replace. No
other known material possesses its heat-resistance and compressive strength, the key factors to its success. The above images show how inferior products quickly fail, the thermoplastic rods put under the pipe, get crushed under the weight of the pipe, water is trapped and a crevice is formed, which leads to corrosion under the pipe supports. The genuine IClip, I-Rod and Nu-Bolts are only available from Alduco Energy in Nigeria and the
Gulf of Guinea. *The article was written by Alfredo Jones, Managing Director of Alduco Energy, an Asset Integrity Management Services company specializing i n p r o v i d i n g N D T, R B I , Cathodic Protection and Corrosion Control to the oil and gas sector in Nigeria and the Gulf of Guinea. For more information on Alduco Energy’s range of services you can visit www.Alduco.com or contact us at info@Alduco.com .
ALDUCO ENERGY: Active Nigeria service company in Gulf of Guinea Corrosion at pipesupport
Problem eliminated at with Nu-Bolt & I-Rod assembly
I-Clip
Corrosion at saddle support
Problem is eliminated with IClip
Corrosion at cradle support
CONTINUED FROM PAGE 34
and gas industry in the Gulf of Guinea, in June 2012, during the 15th Gulf of Guinea Oil & Gas Conference held in Equatorial Guinea, Alduco Energy was honoured with the prestigious award of National Company of the Year 2012 by the international oil and gas publication, The Oil & Gas Year (TOGY). The award was presented to the Managing Director of Alduco Energy, Alfredo Jones, by His E xc e l l e n c y G a b r i e l Mbaga Obiang Lima, the Minister of Mines, Industry and Energy of Equatorial Guinea, who in his speech during the a w a r d s c e r e m o n y, described Alduco Energy as the kind of local company that he believes represents the future of the oil and gas industry based on its ability to add value to the oil companies and to the region. In his acceptance speech, the Managing Director of Alduco Energy, Alfredo Jones stated that for too long, m u l t i n a t i o n a l
Alduco Energy takes its local content obligations very seriously, and to enable it to be at the forefront of the latest Asset Integrity Management methods and technology, the company formed a joint venture (J/V) with Deepwater Corrosion Inc.
companies have looked down on local companies, and that Alduco Energy’s vision is to change the poor perception of local companies, by showing that local companies can be successful not only in their countries, but also r e g i o n a l l y a n d internationally, and he also stated that he accepted the award on behalf of all the independent local companies like Alduco Energy, that are impacting
in a positive way the oil & gas industry, in their countries and beyond. Alduco Energy takes its local content obligations very seriously, and to enable it to be at the forefront of the latest Asset Integrity Management methods and technology, the company formed a joint venture (J/V) with Deepwater Corrosion Inc, a world leader in the provision of life extension solutions for offshore oil and gas facilities. With Alduco Energy as the sole distributor of Deepwater products in the Gulf of Guinea, the alliance sees Deepwater engineers from Houston working alongside Alduco Energy ’s engineers in Nigeria, enabling technology transfer and building the capacity of its team, which in turn has permitted the company to offer its world class services to its clientele in the Gulf of Guinea, competing with wellestablished international companies, and in some cases outper for ming them.
Insurance
Right: Fola Daniel
NIGERIA AT 52: Insurers’ capital utilisation still low Rosemary ONUOHA
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he Nigerian nation is 52 years old, however, the n a t i o n ’ s insurance industry is very much older than the country having been in existence since 1918 when Royal Exchange commenced operations. Invariable, the Nigerian insurance sector have come of age, regrettably however, experts are of the opinion that the sector in its current structure is still very fragmented.
The sector made significant progress with the successful recapitalisation in 2007, however, the 49 insurance companies put together, write little above N200billion as premium income in a country of 160 million people against a total industry shareholders’ funds of about N347billion. Of the 49 companies, less than 50 percent write premium income equal to or higher than their share capital which is usually a measure of the efficiency of capital utilisation by insurance companies. Looking at the technical solvency of the entire
The Nigerian insurance sector have come of age, regrettably however, experts are of the opinion that the sector in its current structure is still very fragmented insurance industry, experts are worried that gross underutilisation of capital has
continued to exist. The regulatory minimum capital requirement for composite insurers is N5billion, N3billion for general and N2billion for life operators, however, experts are of the view that with such as capital requirements, there is only so little that underwriters can do. Because globalisation has become reality, insurance operators need to invest in infrastructure, technology, people, etc. And because in a number of these things, operators have to make the investment up front before the income flow will come in, N5 billion capital base is
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therefore not sufficient. According to Managing Director of Cornerstone Insurance Plc, Mr. Ganiyu Musa, if insurers are going to play in some segments of the market like in corporate business, oil and gas, as well as in the multi-national sector, there is need to embrace more capital injection. Musa said “If you have a capital of N5 billion and you want to insure a major industrial risk for instance, they are not going to take you serious. At N5billion, you have to make heavy use of Re-insurance which will reduce your retained income and the rest. So, while it is possible to operate as a niche player with minimum capital, if you want to be broad- based and essentially play in the corporate, oil and gas as well as the multinational sectors and also to make the investment necessary to roll out a broad based strategy, I would think you need more than N5 billion.” Another major challenge for the insurance industry is the fact that the penetration ratio is very low, reported to be less than one per cent. According to Managing Director of Risk Guard Africa, Mr. Yemi Soladoye, less than one million adult Nigerians carry one form of insurance or the other. Soladoye said “If you compare that with 25 per cent penetration in the banking industry, you will see that the potential you have in the insurance industry is really outstanding.” According to Musa, one of the consequence of the fragmentation is the fact that very few individual insurance companies have the necessary financial capacity to make the investment needed in human capital, technology and infrastructure to be able to really provide the type of service that will appeal to and attract the 90 million adults out of the 160 million population. He said “Because capital is small, your access to or comfort in making those investments will be limited on one hand. On the other CONTINUES ON PAGE 37
Insurance
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Congo Violence Forces UK Oil Explorer to Halt Operations
R
Insurers’ capital utilisation still low CONTINUED FROM PAGE 36
hand, your capacity to underwrite and retain risk is also dependent on the level of capital that you have. When you are small and fragmented, there is only very little that you can write and retain. A number of the multi-national risks tend to be de-localized or dislocated because those multinationals have very strict credit requirements such that only very few insurance companies will meet their minimum credit threshold. As a result they don’t feel comfortable insuring in the local market.”
We need to make insurance attractive and affordable to as many people as possible. We need to be able to do more in terms of consumer awareness and consumer education
The way forward: According to experts, for the insurance industry to move forward, there is need for a paradigm shift. One basic factor that insurance operators must imbibe, according to Musa, is to improve on the quality of personnel in their companies. Musa said “Managements of companies need to work hard to put in place a robust strategy to re-position their companies to play a very key role in the emerging insurance industry landscape in Nigeria.” According to him, for
insurers to really play a key role, there is need to have a minimum size to be relevant because there will be a lot of opportunities if there is adequate capacity. Musa also said that with adequate capacity, there is no reason why the agency workforce in the sector should not be ten times what it is at the moment. “It takes time and resources to train and build an agency workforce to get to the level of experience that you require,” he said. Since individual insurance companies have different
areas of strength, Musa said that there is need for companies to embrace mergers and acquisitions because coming together to form a big entity will be in the interest of stakeholders including staff, shareholders and more importantly the insuring public. Also, underwriters should be committed to operating at a very high level of professional standard and ethics. Musa said that the key to the growth of insurance is in the retail market. “While we have to position to serve the commercial and corporate sectors, the key to the development of insurance in this country is in the retail sector, that is, the personal lines business. Really we need to make insurance attractive and affordable to as many people as possible. We need to be able to do more in terms of consumer awareness and consumer education, we need to put in place the infrastructure to enable you do your insurance.” ”We all run after the same NNPC business; head of service account and such major accounts. So the investment in infrastructure, technology that is needed to build a sustainable business model is not focused on
because we don’t have the money to do that. So, there is the potential for business volume far beyond the level of capital that we have.” Musa said “Having been beaten in the capital market during the 2008/2009 crash and the capital market remains challenged at the moment, there is very limited opportunities for significant investment returns which means as insurers now, we have to go back to the basics in terms of doing proper professional underwriting and charging appropriate prices.” ”Unfortunately, we are all chasing the same companies, accounts and we tend to compete only on price. Competition is stiff at times and almost very brutal in the i n d u s t r y. S o , w e s e e competitive pressure on pricing being a significant challenge in certain segments of the market,” he said. There is a significant level of either misunderstanding or mistrust on the part of the insuring public. “We are still struggling as insurers to remove the garb of poor perception. We need to work on that, do a lot more in terms of consumer education,” Musa said.
enewed fighting b e t w e e n Congolese rebels and government forces has forced U.K.-based wildcatter Soco International PLC to evacuate workers from its oil exploration camp in the country’s restive eastern region to a site across the border, Ugandan police and the company said Tuesday. Soco has started moving equipment and expatriate workers from areas around the Virunga National Park in North Kivu to the Ugandan border district of Kanungu, said Western Uganda police spokesman Elly Maate. A Soco spokesman confirmed that the company has suspended its exploration work in Congo, but said the halt was “temporary ” pending a final assessment of the situation. He said its main helicopter landing site has also been re-located to Uganda, from where Soco will continue to monitor events. “SOCO is assessing the security status on a continual basis. The safety of SOCO’s personnel is of paramount importance and, therefore, they’ll only proceed when it is safe to do so,” said SOCO Executive Vice President Roger Cagle. The company’s decision underscores a worsening security situation in North Kivu, where Congo’s illequipped army is attempting to halt a rebel advance. The most recent fighting which erupted in April, after renegade former army General Bosco Ntaganda defected with hundreds of troops has already chocked mineral exports from North Kivu. Soco operates an 800square kilometer oil block in Eastern Congo, within the Lake Albertine Rift basin. Oil exploration companies have discovered more than 2 billion barrels of crude on the Ugandan side of Lake Albert and companies like Soco are hoping to make similar finds on the Congolese half of the basin.
Labour Victor AHIUMA-YOUNG
T
RADE Union Congress of Nigeria, TUC, has explained that Nigerians oppose the government interpretation of deregulation in the downstream sector of the nation’s Petroleum industry because it became an instr ument for foisting hardship on the citizenry by the government. TUC accused government of mis-representing the facts about de-regulation saying that is why Nigerians perceived it for what it is; a contrivance to hike the prices of petroleum products and make life more difficult for the hapless and hopeless citizens of the country. In a paper on “Efficient management of public perception in implementing government policies-Deregulation and local content”, President-General of TUC, Comrade Peter Esele, “De-regulation is simply the opposite of regulation and in essence, it means the absence of regulation. In the context of the downstream sector, it is actually supposed to mean the freeing of the operations of the sector from the fetters of governmental controls and dictates and leaving it to run within the ambits of market determined choices. This therefore especially in the area of Pricing, seeks to allow the forces of the market to drive the determination of the prices of petroleum products within the market and removing the pervasive influence of governmental agencies like the PPPRA. It was therefore designed to make the market more efficient eliminating costs that are artificial in the process envisaging in the long run to make the sector more robust, fully domesticated as every facet of it becomes activated tapping into the freedom to eventually drive down the prices of products.” “If this is the theoretical understanding of deregulation in the downstream petroleum sector, a rational mind would wonder why it has raised so much dust within the nation’s polity
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Why Nigerians oppose downstream sector deregulation —TUC
Deregulation protesters
over time and why Nigerians would have to march on the streets for almost two weeks in resistance to that supposedly laudable policy of government. The quagmire is in the interpretation of government of what constitutes deregulation. Gover nment agents mischievously decided to couch the hike in prices of petroleum products under the veil of deregulation. Instead of deregulation wearing its full meaning, it became an instr ument for foisting hardship on the citizenry because there was no truth in what the government was trying to sell to the public.” According to Esele, who is the immediate past President of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, “Nigerians are generally not opposed to this policy but are opposed with operational side of this policy which takes away the real meaning of deregulation and that is why Nigerians made the demand
that if de-regulation means price hike then, it is not for us but if it is for efficient downstream operations, then, we are all for it. We can therefore easily accuse government of misrepresenting the facts and that was why Nigerians perceived it for what it is; a contrivance to hike the prices of petroleum products and make life more difficult for the hapless and hopeless citizens of the country.” “On the other hand, Local content as it concerns the downstream sector is about making the oil and gas sector more domestic driven or internalising its activities by making most of the components of the industry more Nigerian. It ensures that an increasing percentage of the operations of the industry are handled by Nigerian owned businesses and individuals and not by foreigners. This is hoped would help in making the positive multipliers in the industry more impactful on the domestic economy than
Nigerians are generally not opposed to this policy but are opposed with operational side of this policy which takes away the real meaning of de-regulation otherwise. It is envisaged that more and more of the technology and components deployed in the various production activities within the sector and the Service sector of the same industry are indigenous.”
“We have established thus far that the public’s interpretation of government’s policy especially in the downstream petroleum sector have always been in contradiction with government’s understanding of why they embarked on such policies in the first place. Why has government’s insistence on altruism in its efforts been met with outright rebuff by the masses or sometimes total indifference? Is it that the citizenry has decided to reject its own government or that there is a gross misunderstanding between the people and the government? Having situated these policies within the context of our analysis, the next logical quest will be to seek an understanding of the factors that have made most of the policies of government within the downstream sector of the petroleum industry very perceptibly disagreeable with the populace.”
Labour
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Expatriates on oil rig
PENGASSAN moves against expatriate quota abuse in Nigeria’s oil industry Victor AHIUMA-YOUNG
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ETROLEUM and Natural Gas Senior S t a f f Association of Nigeria, PENGASSAN, has directed all its branches in Nigeria to engage their managements over the unprecedented engagement of expatriates through all manner of guises into the Nigerian oil and gas sector, in apparent move against alarming influx of expatriates. Sweetcrude gathered that the directive became n e c e s s a r y a f t e r PENGASSAN discovered that oil companies have been undermining the Nigeria Content Act, where the n u m b e r o f ex p a t r i a t e s (foreigners) working in Nigerian oil and gas sector is increasing by the day instead of decreasing. It was gathered that, angered by the influx of the
expatriates, PENGASSAN because of seriousness of the abuse of the Content Act, in the letter to its branches, copied the Ministers of Labour and Productivity, Petroleum and Interior. Decrying the regulated influx of foreigners into the nation’s petroleum industry, National Industrial Relation of Officer of PENGASSAN, Comrade Hyginus Chika Onuegbu, said “a report issued in October 2010 has it that expatriates constitute a third of the workforce in the oil sector. One can only imagine the actual number now? When a foreigner comes to a developing country like Nigeria, he is called an expatriate irrespective of his professional standing, but when a Nigerian goes to Europe and America or a more developed country, he is called an immigrant. Immigrants are poorly paid. But expatriates enjoy unimaginable pay and
dreamland privileges, which is very high even by the standard of their home country.” Delivering a paper on “The Nigerian Content Act: Issues and Workers Concerns”, 2 0 1 2 Po r t H a r c o u r t International Oil and Gas Conference & Exhibition, PHIOG, blamed poor m o n i t o r i n g a n d implementation of the Nigerian Oil and Gas Content Development Act 2010 and among others for the problem. According to him, “It is rather disheartening that two years after the passage of the Nigerian Oil and Gas Industry Content Development Act, 2010, the country is yet to notice any positive impact of the Act. The Nigerian Content Development and Monitoring Board, NCDMB, needs to wake up and aggressively pursue and deliver dividends to our people, communities and country. We will not be
A report issued in October 2010 has it that expatriates constitute a third of the workforce in the oil sector. One can only imagine the actual number now
deceived by stage- managed events, adverts and proclamations. The truth is that we will continue to challenge these fictitious statistics with reality. We want to see our people being trained and assigned
accountabilities in critical disciplines of the Oil and Gas Sector, not as figureheads for purpose of statistics.” Comrade Onuegbu said another issue is the misinterpretation of the Act leading to abuse and unrestrained use of contract staffing and casualization. He said “This is the only visible ‘benefit’ of this act today in Nigeria. This is very pathetic and contrary to the global trends in the employment in the oil and gas industry. For instance the Oil & Gas Global Salary Guide 2012 published by the Hay Group shows that the year 2011 saw a sharp rise in permanent staff as a percentage of the overall workforce.” PENGASSAN’s Industrial Relations Officer, pointed out faulty and unpatriotic regulations by the NCDMB as part of the problem confronting the content act. “It is very surprising and disheartening that the spirit and intent of the Nigerian Content Act is being seriously undermined by unpatriotic and illegal regulations made by the NCDMB. In fact at a recent workshop last week in Lagos, organised by NEITI on PIB, attended by PENGASSAN and other stakeholders in the oil and gas industry, Senator Lee Maeba, who was the sponsor of the Nigerian Content Act 2010, made it clear that the many provisions of the NCDMB Guidelines are void to the extent of their conflict with the NCA provisions” he declared. Capacity gap, Onuegbu said, “is a major challenge to having Nigerians take up the quota allocated to them in the Act. What is the NCDMB doing to enforce the law and close the gap? Remember the Act provides that “Where Nigerians are not employed because of their lack of training, the operator shall ensure, to the satisfaction of the Board that every reasonable effort is made within a reasonable time to supply such training locally or elsewhere. Such effort and the procedure or its execution shall be contained in the operator`s E & T plan (section 30)”. According to him, “PENGASSAN supports the Nigerian Content Act and any genuine effort to grow Nigerian content not just in the oil and gas industry, but in all other sectors of the Nigerian economy.
Freight
Mr. Winfred Itima, Managing Director, Global West Specialist Vessels Limited
T
HE demise of Captain Romeo Itima, the late M a n a g i n g Director of Global West Specialist Vessels Limited after an attack from suspected pirates has no way effected the operations of the firm. In this interview with Sweetcrude’s Godwin Oritse, the new Managing Director Mr. Winfred Itima, the immediate elder brother of the late Romeo said that the project to save Nigeria from the hands of oil thieves is beginning to yield results. Excerpts: Can we meet you? My names are Winfred Itima, the new Managing Director of Global West. What is your background ? I am a marine Captain and I have been working in the marine industry in the last 30 years and I just returned from the United States in November, 2011, to work with Global West following the passage of our late Managing Director which led to my being appointed as the new Managing Director. What is your assessment of
We have achieved zero oil theft in some areas –Captain Itima the Maritime domain with regards to security of the nation’s coastal waters and the activities of the oil and gas exploration? If you live outside this country, you will definitely know that there is a problem in Nigeria, if you are within the country and you have never travelled outside, you will not know that we have a big problem. But there is a big problem that need to be looked into, some of which are, sea pirates, illegal bunkering including oil theft and these are major problems that are impacting the nation’s economy negatively.
What was the security situation before and after Global West took charge of security of the coastal waters? The security situation was terrible, the level of illegal bunkering was high, every day we heard of sea pirates, but since Global came in, the situation is changing and the criminals have slowed down and we pray that with time everything will become normal again. There was a statement credited to the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA) that oil theft has
reduced by as much as 70%, will agree to this? To tell the truth, in some parts of Nigeria, oil theft is zero, in some parts we still have the problem of oil theft going on, and I think NIMASA and Global West and the security agencies are fighting tooth and nail to stop them. What is your assessment of oil theft with regards to the economy? Oil theft does not only affect the economy, oil theft also causes environmental problems. If you go to a place like Escravos, the oil cannot be cleaned from the waters in the next 100 years .
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This is the most important problem I think we have on our hands right now because it leads to both health and economic problems. I think if we can start to address it right now, the future of Nigeria will be better for it. There is this insinuation that the oil thieves are the Niger Deltans, how will you react to this? The boys in the Niger Delta are just the errand boys, they are the small boys in the business, they cannot steal oil without the full support of the big boys who bank roll these illegal businesses. The oil that is stolen from Nigeria is taken to other countries, nobody in the Niger Delta can do that, there are big men behind these boys and it is these big men we are trying to unravel. So we have to start from the top, they keep talking about the small boys .If you are not buying my product will I ke e p g i v i n g t h e s a m e product?That is our major problem. What is Global West and what is its structure? Global West is a contractor to the Nigerian Maritime Administration and Safety Agency (NIMASA), we supply plat forms, surveillance equipment and we give them information we gather from our operations. If and when we board a vessel, and we find any problem on board that vessel, we relate our findings to NIMASA, who takes from there. We do not carry arms, NIMASA has its own maritime guard Command that they use to effect any arrest. Sometimes we hear people say that Global West arrest people, we do not arrest people, we are just platforms providers to NIMASA. What kind of person would you say Captain Itima was? I think he was my best friend and blood brother and I think he also wanted to ensure that Nigeria become one of the most reputable country in world. How do you intend to sustain Captain Romeo Itima’s legacies? With the kind of people currently working with us in Global West, we will progress and I think whatever Romeo set out to do will be achieved.
Freight
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Ghost workers crisis rocks LADOL Godwin ORITSE
T
Pix shows from (L) A chieftain of the Ohaneze Ndigbo Hon Chukwuemeka Ezeife shaking hands with the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA) Mr.. Patrick Akpobilokemi ® while Barr. Obi Nwabueze, Executive Director, Maritime Labour Services and Cabotage looks on
Nigeria needs hydrographic agency Godwin ORITSE
T
HE Nigerian Hydrographic Society (NHS), has raised alarm over the state of the nation’s waterways, even as it expressed concern that the waterways have not been surveyed in the past 60 years. Hydrography is the measurement and description of the features of the sea and coastal areas for the primary purpose of navigation. The Chairman, Nigerian Hydrographic Society (NHS), Eastern zone, Mr Chikezie Elekwa, said in Lagos that lack of survey had rendered the waterways unsafe for navigation. “Can you imagine that we still buy our charts from the
U.K. These charts have been in existence since the colonial era and this is not supposed to be so”, he lamented. Elekwa recalled that in 2008, the International Hydrographic Organisation, labeled Africa as the least surveyed waters, adding that because of this, ship owners charged higher freight for goods coming to Nigeria. According to him, this is the reason ship owners bring only their oldest ships to Nigeria. The hydrographer also said that because there were no maps and charts of the waterways, a ship could be lost. Elekwa called on the Federal Government to upgrade the Nigerian Navy Hydrographic office to a national office to separate hydrographic services from
the administration of the Navy. “O p e r a t i o n a l l y, t h e hydrographic service in other countries like South Africa, India and Australia is under the Navy, but funding of hydrographic services is placed under the government. “Hydrographic services are very strategic to any country. So, in order to have cohesion among the operatives who render the service, there is always a national office. “The national office will also ensure that the hydrographic service rendered to the nation is holistic in nature and meets international standard as laid d o w n b y t h e Wo r l d Hydrographic body,” Elekwa said. He said that the navy could not fund the activities of the hydrographic services from its allocation as it was
ex p e n s i v e i n t e r m s o f training, equipment, platforms (survey boats, survey ships and launches). According to Elekwa, the Nigerian Navy hydrographic service has not done 100 per cent of what it is meant to do. He lamented that hydrographic services were being contracted out to foreign companies when Nigeria has its own hydrographic service. “If we have a National Hydrographic office, it would generate its own fund and we can be a leader in our subregion. “It is not a money wasting venture, it is a money earner and once it takes off, it will fund itself. “Ninety per cent of the world’s trade is carried by w a t e r. T h a t i s w h y hydrography is given a high premium in any nation except
HE Lagos Deep O f f - s h o r e L o g i s t i c s (LADOL) base is currently embroiled in ghost workers crisis that is rocking the entire base following the discovery of an employment fraud. The crisis has also led to sack of two personnel of the base just as investigations to unravel the level of their involvement is also on going. Sources close to the base told SWEETCRUDE, that over N10million was discovered to have been paid out to ghost workers over a period of about 15 months. It was gathered that management is already putting structures in place to forestall a re-occurrence of the incident in the future. LADOL spokesman, Mr. Alex Akao however denied the occurrence of such incident in the base adding that the operations at the base is too technical and structured to entertain the issue of ghost workers. “The issue of ghost workers cannot happen in LADOL, our operation does not and cannot allow such things to happen at the base. We know the number of the workers that come in there every day because the entrance and exit of people are document and besides, our operations are also technologydriven”, Akao stated.
in Nigeria,” the NHS boss said. He said that lack of a national office had made c o o r d i n a t i o n o f hydrographic services unattainable. “ T h e e x i s t i n g hydrographic office has the mandate to co - ordinate hydrographic services, but lack of a holistic policy or law has made sanctioning of offenders difficult,” Elekwa said.
Freight
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Godwin ORITSE
T
he President, Dr Goodluck E b e l e Jonathan, has stressed the role of the Private Sector in the realization of Nigeria’s economic growth under the transformation agenda which is focused on repositioning the nation among the leading twenty economies of the world by the year 2020. This is coming just as the promoters of the Lagos Deep Offshore Logistics (LADOL), said the organization would continue to partner with government in championing the course of local content drive in the oil and gas logistics sector. President Jonathan, who was represented by the R i v e r s S t a t e g o v e r n o r, Chibuike Rotimi Amechi, at the opening ceremony of a two-day “2012 Oil and Gas Tr a d e a n d I n v e s t m e n t Forum” in Onne, Rivers State, disclosed that, to underscore the realization of the Vision 20:20 agenda, the issue would form part of the activities lined up for the celebration of Nigeria’s independence anniversary next month. Also speaking with newsmen at the event, representative of LADOL, Mr. Alex Akao, noted that economic growth is synonymous with youths empowerment through jobs creation which could best be achieved by encouraging and promoting local investment, development, indigenous ownership, and management of job creating facilities by Nigerians. He noted that to this end, LADOL has so far invested over $100 million in transforming a swamp land off Apapa port axis in Lagos into a world class one- stop shop deep offshore logistics base and free zone now known as LADOL Free Zone (LFZ). “LADOL is the only facility of its kind in Nigeria, being the first Greenfield specifically designed and built deep offshore logistics base. As a wholly indigenous N i g e r i a n f a c i l i t y, t h e organization is a champion for local content and one of its greatest success stories is the provision of a hassle free on-shore and off-shore logistics supports for oil and gas production and exploration.
Pix shows from (l) Mr. John Jenkins, Managing Director of the Port and Cargo Hamdling Company, Senator John Shagaya and Mallam Mohammed Bulango representing the Managing Director of the Nigerian Ports Authority Alhaji Habeeb Abdulahi at the commissioning of the newly acquired Rubber tyred Gantry crane in Lagos last week.
Jonathan stresses role of private sector in economic development …As LADOL pledges commitment to local content drive “Let me inform you that activities at LADOL this year alone have domesticated USD 60 million that would otherwise have been spent abroad”, he said. The LADOL spokesman called on government to continue to support local investors by providing a level playing field which would guarantee equal opportunities for Nigerian industry players. In the President’s speech, Dr Jonathan noted that it is pertinent to inform investors, particularly in the Oil and Gas industry that government remains
committed to the implementation of the economic reforms which are capable of changing the dynamics of Nigerian economy. “As part of our efforts, government has come up with policies, plans and programs geared towards the reduction or elimination of bottlenecks and other encumbrances to business and investment through harmonization of Nigeria Trade procedures and documentations”. Other efforts by government to provide an investment friendly environment, a c c o r d i n g t o Pr e s i d e n t
Jonathan, include the setting up of Nigeria Extractive I n d u s t r y Tr a n s p a r e n c y Initiative (NEITI), Public Sector Reforms through Pubic Private Sector Pa r t n e r s h i p , a n d t h e empowerment of the Private Sector through Nigeria Investment Promotion Act of 1995. While reaffirming government’s faith in the capability and commitment of free Trade Zones operators in Nigeria, President Jonathan stressed that the strength of his economic reforms agenda lies on a “ robust private sector
supportive investment facilitation mechanism as well as fast growing financial sector and youthful skilled and low cost labor”. The 2012 Nigeria Oil and Gas Trade and Investment Forum with the theme, “Harnessing Investment Opportunities in the Oil and gas sector: The Role of the Oil and Gas Free Zones in the Transformation Agenda” was organized by the Federal Ministr y of Trade and Investment in conjunction with Orlean Investment West Africa.
NIMASA Ad
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CRUDE THEFT: JTF sets up new outpost to battle crime … Activist condemns illegal bunkering, refinery in N’Delta Samuel OYADONGHA
A
s part of the renewed effort to stem crude oil theft and illegal refining in the mangrove swamp of Bayelsa State, the military authorities have established a new base in the creek of Igbomotoru in the Southern Ijaw council area of Bayelsa State. Sweetcrude gathered that the decision to establish military presence in the area was the outcome of a meeting of the security chiefs to effectively secure the Igbomotoru axis, which is believed to be the gateway for trans-loading of stolen crude oil and illegal refined products from Cotonou boats to bigger ocean going vessels. The area is also littered with hundreds of illegal refinery camps tucked away in the deep mangrove swamp from prying eyes. The Presidency it was learnt was troubled that in spite of the large scale clamped down on illegal refineries and crude oil theft in the vast mangrove swamp of the state by the nation’s special security in the Niger Delta, Joint Task Force codenamed Operation Pulo Shield, crude oil theft and illegal refinery business has been on the increase. Sweet Crude investigation revealed that both the young and old are involved in this illicit business which is an offshoot of militancy. Most children of school age it was reliably learnt, have abandoned their education to join the old ones in refining stolen crude unaware of the inherent dangers to their health and future. However, the ease at which these oil thieves tap into the delivery lines in the creek to get raw crude for their illicit business has raised suspicion of internal collaborators within
Crude Oil lifting locally
The ease at which these oil thieves tap into the delivery lines in the creek to get raw crude for their illicit business has raised suspicion of internal collaborators the oil industry. It was therefore resolved that a military base be set up in the Igbomotoru enclave to dislodge the illegal refinery operators and suspected crude oil thieves from their area and ensure they do not
return. Accordingly, heavily armed operatives of the Joint Task Force codenamed Operation Pulo Shield backed by gunboats and other smaller fast moving water crafts were deployed to the area weekend. The new outpost with two massive house boats to serve as the operational base of the troops, now sit atop the water and guarded by menacingly looking gunboats. Immediately the troops led by Major Augustine Obochi established their presence in the area, they launched dawn raid on the illegal refinery camps. Conscious of the narrowness of the passage to these camps, the soldiers resorted to using their smaller watercraft specially acquired for the operations, stormed the illegal refinery sites
destroying about 30 of the camps and 29 Cotonou canoes used in transferring stolen crude oil and illegally refined petroleum products to sea going vessels. The Media Coordinator of the Joint Task Force, Lt. Col. Onyema Nwachukwu, confir med the militar y operation in the creek which led to the destruction of 28 illegal refinery camps and 29 Cotonou boats used in conveying stolen crude oil and illegal refined products. The JTF Spokesman also confirmed the setting up of a military outpost in the area. He said, “Igbomotoru community is noted for its notoriety in illegal bunkering, because most sea going vessels have been discovered to use it as hide out where they do their transshipment of illegally siphoned crude oil.”
According to him, the operation would continue until the area is rid of oil thieves and illegal refinery operators who are further destroying the environment through their crude technology of refining the stolen crude oil. “We will not be stopped by false hue and cry,” he declared. Also, the co-ordinator of Stakeholder Democracy Network (SDN), Inemo Samiama had repeatedly condemned illegal refinery activities in the Niger Delta, describing it as painful given the magnitude of despoliation being unleashed on the environment by the oil barons who are only concerned about the quick returns they make while the vast stretch of the land is withering away.
Community
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Bad Road
Samuel OYADONGHA
T
hough created in 1996, making it one of the youngest states i n t h e federation, Bayelsa State interestingly boast of some of the oldest federal roads yet to be completed in the country. These include the YenagoaOkarki-Kolo road, which passes through Rivers and Bayelsa communities to link the oil rich Ogbia Kingdom and the Ogbia-Nembe road, being bankrolled by the NDDC and SPDC said to have been conceived in the late sixties and is currently going at snail speed. There is also the SagbamaEkeremor road, said to have been on the federal government drawing board since the early seventies, as w e l l a s t h e Ye n a g o a Oporoma road, designed to link the oil rich communities of Southern Ijaw. Interestingly, these roads were designed by the then Federal Military Government to link the oil rich east, central and western parts of the geographical
No roads in Bayelsa despite oil, gas wealth enclave which later became Bayelsa State to Yenagoa and open up the area to commerce with a view to accelerating development in the hinterland. However, almost 39 years after take- off, work on the N10bn Yenagoa- OkarkiKolo road is yet to be completed, while the tarred stretch is already riddled with several failed sections. S a d l y, t h e Ye n a g o a Oporoma road and Sagbama-Ekeremor-Agge road, both of which are federal roads designed in the early seventies to connect the far-flung oil rich communities in the central and western part of the present Bayelsa, never took
off, in spite of their alleged repeated inclusion in the federal budget over the years. Although the federal government through the Niger Delta Development Commission (NDDC), later awarded contract for the construction of the SagbamaEkeremor-Agge road to the admiration of the indigenes of the area, the project nonetheless suffers series of setback due to alleged poor funding on the part of the central government. Also, the Yenagoa-Oporoma road which was taken over by the state government in the wake of the refusal of the federal government to kickstart the project, was abandoned by the
construction firm, Julius Berger which then pulled out of the Niger Delta at the height of youth militancy. The lack of motorable roads to the hinterland and the alarming insecurity on the waterways Sweet Crude investigation revealed, had been a source of serious concern to the people of the area, until the Governor Seriake Dickson administration which is conscious of the strategic importance of the roads to the s o c i o - e c o n o m i c development of the state not only wrote the NDDC to hands off the SagbamaEkeremor-Agge road, but, also re-visited the long a b a n d o n e d Ye n a g o a -
Oporoma road by awarding contract for their construction to Setraco and Julius Berger respectively. The governor, who stressed his administration’s unwavering commitment to access the Atlantic Ocean with the aim of opening up the state for increased business investments by constr ucting the three senatorial roads, disclosed that the construction of the Yenagoa-Oporoma road is estimated to cost government about N45 billion. Governor Dickson commended the companies, particularly Julius Berger for mobilizing to site, describing them as a reliable and dependable ally in the restoration project and urged the company to re-double the pace of work in the various projects they will be contracted to undertake in the state. In the same vein, the Governor expressed confidence and trust in the ability of Setraco Nigeria Limited to deliver on time, completion of the Toru-Ebeni Bridge as well as the Sagbama-Ekeremor-Agge road.
Community Jimitota ONOYUME
P
O R T H A R C O U R T: I L L E G A L bunkering has become a major problem in the oil rich Niger Delta region. At the last count the nation reportedly loses about 150,000 barrels of crude oil per day to this illicit trade. According to experts, illegal bunkering is supplying crude oil illegally. Within the context of the Niger Delta, it also includes the vandalism of oil pipelines and facilities for illegal crude. Besides supplying the crude to vessels for local and international market illegally, those in the illicit trade have also devised illegally, means of refining the product for local consumption. Within the last two years in the region, no fewer than one thousand five hundred illegal refining points have been attacked and destroyed by the Joint Task Force Operation Pulo shield, JTF. Inspite of the huge financial investment of the federal government in the cr usade against illegal bunkering, nothing much seems to have been achieved. Commander Sector II of the JTF Operation Pulo shield and Brigade Commander 2 Brigade, Port Harcourt, Brigadier General Burutai Tukur, voiced the frustration of the security body in the crusade in his office in Port Harcourt recently, when he said that the international oil companies, IOCs were insincere in the anti- illegal bunkering crusade. Although he was limited with information on his allegation, but, the statement speaks volumes of the near hopeless state the JTF finds itself in the crusade. In some quarters, some men of the security body have been accused of compromise. Meantime, with the huge loss being recorded by the government to the illicit trade and the failure of the JTF to achieve meaningful impact, some ex- militants under the aegis of Niger Delta ExAgitators Leaders Forum, have called on the government to legitimise the illicit trade. Former number two man of the Movement for the Emancipation of the Niger Delta, MEND, a disbanded frontline militant group in the region, Mr Prince Amaeibi Hornby aka Busta Rhyme said when the trade is legitimized, those involved could be made to pay tax to the federal government. Adding that legitimising the illicit trade would create empowerment for youths of the region, he said it would
46
Experts seek legal backing for bunkering
Illegal refiners drums
When government legalises illegal bunkering, it will reduce crime in the region and give room for oil communities to own indigenous refineries
also allow emergence of indigenous refineries in oil communities. These refineries should now be made to pay tax to the government. He said there was no way the federal gover nment could stop illegal bunkering in the region because those
involved were part of those fighting it. According to him, it is a big trade involving big time investors. “Security men are part of the illicit trade. We think if government gives legal backing to illegal bunkering it would lead to establishment of indigenous refineries.” He said the indigenous refineries should be made to produce to specification. “NNPC should ensure they refine to specification.” The former MEND leader further argued that illegal refineries were all over the region and were creating huge loss to the government in the crude oil business. Adding that the only option opened to the government to have a grip of what many see as an ugly situation was for it to legislate it into existence and give room for indigenous refineries to be set up all over. He further said that legitimising illegal bunkering would reduce hazards associated with illegal refining of crude. Hornby said
some contractors get their crude supplies to the big oil firms from the illegal bunkering markets. “The local refinery products do pass specification test. Some of the big oil firms, their contractors come to buy products from the illegal market” “When government legalises illegal bunkering, it will reduce crime in the region and give room for oil communities to own indigenous refineries”. Prince further enjoined the National Assembly to come up with a law legalising the illicit trade, adding that it would save the country the money being seemingly wasted in the crusade against the trade. The former militant “general” also appealed to the government to revisit the ceding of Bakassi to Cameroun. He said Ijaws in the area still saw themselves as Nigerians. And the government on its part recruited many of them in its
amnesty programme. He also spoke on the deplorable East West road, urging the government to reaward the part that was given to Julius Berger to the
company, saying it would help to speed up work on the project. Meantime, some persons who also spoke to the Vanguard on legitimising illegal bunkering cautioned the federal government against it. Mr Francis Tarry said it would increase crime in the region. But Chief Tamuno Charles differed with the forgoing. According to him, ogogoro was initially labelled an illicit gin because it was brewed locally. But today it is almost in all homes in the country and traditional events. He said legitimising illegal bunkering would create a buoyant economy for the country and save her the loss it suffers from the illicit trade.
Community
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Jimitota ONOYUME
P
O R T HARCOURT: To a d d r e s s challenges of poverty in the Niger Delta, Total E & P has said it would give more attention to human capital and entrepreneurial development. S p e a k i n g w h i l e commissioning an SME development network centre at Obite, Egi arts/ cultural development centre also at Obite and Egi technical workshop at Erema, Deputy Managing Director, of the oil giant, Mr Denis Berthelot said the firm in the last few years have been emphasizing on the need for a shift from infrastructural, to human capital and entrepreneurship development. He said communities would develop more through conscious involvement of the people in economic development projects and programmes. Adding, Mr Berthelot said the commissioned projects would stimulate enterprise development activities in the area. He enjoined the people to make use of the opportunities created by the
Empowerment forum
Total focuses on human development project effectively. Earlier, President General, Egi Peoples Assembly, Chief Oris Onyiri had assured that
the community would continue to create the needed atmosphere for the oil giant to operate.
He further enjoined the firm to assist to grow Egi language and culture,
adding that they should be taught alongside French language in the area
Sweetcrude is a Publication of VANGUARD MEDIA LIMITED, Vanguard Avenue, Kirikiri Canal, P.M.B.1007, Apapa. Website: www.vanguardngr.com (ISSN 2251-0001) Editor: CLARA NWACHUKWU . Phone: 08098051103, All correspondence to P.M.B. 1007, Apapa Lagos.