Sweetcrude august 2013 by Vanguard Media Limited

NEITI audit: FG earns $143.5bn in 3yrs

Expert cautions against uncontrolled ship repair yards P\20

P\10 President Goodluck Jonathan

A Vanguard Monthly Review Of The Energy Industry VOL 03

N0. 51

AUGUST, 2013

UPDATES MONTHLY BASKET PRICE

AUG-13 JUL -13 JUN-13 MAY-13 APR-13 MAR-13 FEB-13 JAN-13 DEC-12

106.10 104.45 101.03 100.65 101.05 106.44 112.75 109.28 106.55

NOV-12 OCT-12 SEP-12 AUG-12

106.86 108.36 110.67 109.52

Daily | Weekly | Monthly | Yearly

106.10 US

114 112 110 108 106 104 102 100 98 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-12 Feb-12 Mar-13 Arp-13 May-12 Jun-13 Jul-13 Aug-13

Shell to acquire Chevron’s assets in Nigeria

oyal Dutch Shell PLC (RDSB.LN) has notified the Nigerian government that it is interested in buying some of U.S. firm Chevron Corp.’s (CVX) Nigeria oil licenses, said a senior Nigerian government official Thursday. The move would be a rare acquisition by an international energy company in Nigeria, where oil companies have in recent yea r s g e n e r a l l y ex i t e d acreage amid mounting security risks. It could also herald Shell’s exit from long-dormant oil assets in the Ogoniland

CONTINUES ON PAGE 5

Obstacles mar marginal fields programme P\13

DPR to clampdown on unlicensed LPG marketers

Contents 3

COVER

OIL

FOCUS

GAS

POWER

FINANCE

SOLID MINERALS

LABOUR

22 24

INSURANCE MARITIME

COMMUNITY

Obstacle mar marginal fields programme

Pan Ocean loses $4.96 bn to oil theft

Finance, Technology big issues for marginal field operators

Shell write down is bad news for US shale

FG has no money to pay off electricity works-NUEE

Petron secures N16bm for drilling rigs

Mining sector requires presidential intervention

PIB: IOCs cannot blackmail Nigeria

Inadequate human capacity imped oil, gas risk

Port security: Nigeria struggles to beat US deadline

Oil communities challeges RMAFC on derivation fund

Sweetcrude is a publication of Vanguard Media Limited

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

Francis AYO & Johnbull OMOREGBEE

Enquiries Call: 08098051103

Printed and Published by

WEB:

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

All correspondence: P.M.B 1007, Apapa, Lagos.

It's 10 years now since the Federal Governmen t began the Marginal Fields pro gramme in order to release strand ed and or abandoned fields to harness Nigeria's oil and ga s resources. But As laudabl e as the programme is, the o perators of these fields have not been able to meet government's aspirations in this regard. They on ly.account for less than three per cent of the nation's total product ion. Accordingly, this edition of Sweetcrude takes a look at the challenges facing the operators. We a l s o b r i n g to you developments in the various subsects of the energy va lue chain Oil, Gas, Solid Miner als, Power, Insurance, Maritime as well as happenings in the oil communities that host these natural resources, an d so much more, Have a great read!

Cover Story

Obstacles mars marginal fields programme MICHAEL EBOH

en years after the commencement of the marginal fields programme, the objectives of the federal government concerning the programme are yet to be met. This is because marginal fields’ operators are currently struggling to meet up with the ex p e c t a t i o n s i n t e r m s o f production target and contribution to the country’s energy sector. The marginal fields operators are also battling with legal issues brought about by partnership foisted on them by the government during the award of the fields, lack of access to funding, crude theft, pipeline vandalism, among others. According to the operators, funding challenges, nondelivery of technical/financial partnership agreement, frequent shut down of the export line, community interference and shutdown of their operations and contractors’ inability to deliver projects on time and in good quality are factors negatively affecting their growth and sustainability. They also identified the local content policy as a major challenge to their operations, especially in view of the inherent challenges and harsh operating

environment confronting their contractors. According to them, “the cost of doing business in Nigeria is very high, infrastructure is nothing to write home about, lack of technology, which result in the importation of technology and services required for oil and gas development.” The Director, Department of Petroleum Resources, DPR, Mr. George Osahon, said the contribution of marginal field operators to Nigeria’s crude production remains insignificant. According to him, marginal fields only account for 2.1 per cent of the country’s total crude production, with a daily production of about 60,000 barrels of oil per day and 100 million standard cubic feet of gas per day. He said that despite developing the fields, out of the 24 marginal fields awarded in 2003, and the five fields awarded on a discretionary basis, only nine are producing. He listed the active and productive marginal fields operators as: P l a t f o r m Pe t r o l e u m Asuokpu/Umutu field Walter Smith and Morris Petroleum - Ibigwe field Frontier Oil - Uquo field Britania-U - Ajapa field Midwestern Oil and Gas and

Suntrust - Umusadege field, and, Pillar Oil - Obodogwa/Obodeti field. Osahon also explained that out of the five marginal fields that were awarded on a discretionary basis, only Oriental Energy owner of two of the fields Okwok and Ebok fields, and N i g e r D e l t a Pe t r o l e u m Development Company, owner of Ogbelle field are involved in

Energy Limited and Allgrace EnergyLimited respectively based on their commitments to fund three pilot projects, using the Public Private Partnership mechanism. Background The Marginal Field policy was put up by the Federal Government due to the minimal contribution of indigenous field owners to crude production among other factors.

According to him, marginal fields only account for 2.1 per cent of the country’s total crude production, with a daily production of about 60,000 barrels of oil per day and 100 million standard cubic feet of gas per day active production. He said Okwok and Ebok fields were awarded to Oriental Energy to compensate the company for losing part of its OML 115 to Equatorial Guinea due to boundary adjustment He added that Ogbelle field was awarded to the Niger Delta Development, while in 2010, Otakikpo and Ubima fields were recently awarded to Green

Marginal field/well is any oil field/well that is nearing the end of its commercial life. The production rates of these fields will be low compared to other wells or deepwater wells. Enabling law The Marginal Fields programme was set up by the Petroleum (Amendment) Act No. 23 of 1996, which states that: The Federal Government hereby

decrees as follows: (1) The Petroleum Act is hereby amended, in the First Schedule thereto, by inserting immediately after paragraph 16 thereof the following new paragraph 16A, that is Farm-out. “16A. (1) The holder of an oil mining lease may, with the consent of and on such terms and conditions as may be approved by the President, farm -out any marginal field which lies within the leased area. “(2) The President may cause the farm-out of a marginal field if the marginal field has been left unattended for a period of not less than 10 years from the date of the first discovery of the marginal field. “(3) The President shall not give his consent to a farm out or cause the farm-out of a marginal field unless he is satisfied - (a) that it is in the public interest so to do, and, in addition, in the case of a non producing marginal field, that the marginal field has been left unattended for an unreasonable time, not being less than 10 years; and (b) that the parties to the farm-out are in all respect acceptable to the Federal Government. “(4) For the purposes of this paragraph – ‘Farm-out’ means an agreement between the holder of an oil mining lease and a third party which permits the

CONTINUES ON PAGE 4

Cover Story

Petroleum exploration activity

CONTINUED FROM PAGE 3 third party to explore, prospect, win, work and carry away any petroleum encountered in a specified area during the validity of the leases; “Marginal field” means such field as the President may, from time to time, identify as a marginal field. “This Act may be cited as the Petroleum (Amendment) Decree 1996.” Thrusts of the law The thrusts of the Decree, according to the DPR, include “Promoting indigenous participation and building indigenous capacity in the u p s t r e a m s e c t o r. Pr o v i d e alternative source of funding for exploitation of hydrocarbon resources. “Increase production capacity through acceleration of development of discovered reserves. Increase the oil and gas reserve base through aggressive exploration. Encourage capital inflow. “Gainfully engaging the pool of the high-level competent Nigerian in the petroleum industry and create employment opportunity for Nigerians.” Need for marginal fields The DPR said the marginal fields programme was developed to discourage continuous holding of undeveloped fields by International Oil Companies (IOCs). It added that the programme

also aims at reducing the rates of abandonment of depleting fields and assure the Government’s take in acreages that would otherwise have become unproductive. Giving a background of the Nigerian petroleum situation, M r. O s t e n O l o r u n s h o l a , immediate past Director of the DPR, disclosed that notwithstanding the fact that

Obstacles mar marginal fields programme

Giving a background of the Nigerian petroleum situation, Mr. Osten Olorunshola, immediate past Director of the DPR, disclosed that notwithstanding the fact that Nigerians owned the larger share of the nation’s oil assets, their contribution to total production is abysmally poor.

Nigerians owned the larger share of the nation’s oil assets, their contribution to total production is abysmally poor. He noted that out of the total of 388 oil blocks in the country, only 173 of them have been awarded to individuals and corporations, while 215 blocks were yet to be awarded. Broken further, he said of the 173 so far awarded, Nigerians owned 90 blocks while

foreigners owned 83 blocks. He lamented that all the 90 blocks awarded to indigenous players account for only six per cent of the country’s total crude oil production, while the 83 awarded to foreign oil companies account for 94 per cent of the total output. He said indigenous operators are producing about 150,000 barrels of crude oil per day, representing six per cent of

Nigeria’s total crude production; while foreign oil companies account for the bulk of 2.35 million bpd or 94 per cent of total output. He blame d t hi s on t he lackadaisical attitude of the Nigerian players towards the development of their blocks, adding that majority of them have not commenced any serious production activities on the oil blocks since they were

awarded to them. According to Olorunshola, it appears that people just want to own oil blocks and put it on their complimentary cards. He said, “Government decided to dig deeper as it was not so happy with the performance of the indigenous oil companies. That is the reason why government put in place the

CONTINUES ON PAGE 5

Cover Story

Obstacles mar marginal fields programme CONTINUED FROM PAGE 4

Marginal Fields policy.” Also speaking on the issue, Osahon said the marginal fields programme became necessary, in light of the minimal contribution of indigenous field owners to crude production. Challenges facing marginal fields operators Osahon blamed the inability of a number of marginal field owners to develop their fields on the fact that they are faced with litigations, funding constraints, non-bankable proposals, and a host of others issues. In his own view, Olorunshola said, “The major issue that negatively affected the production capacity of majority of the marginal field owners is the fact that the owners could not access funds. As at 2003, when the fields were awarded, Nigerian banks where in difficult situation, making it impossible for majority of them to give out loans. “Also, another challenge that served as a drawback to the marginal fields programme is the unending litigations by most of the parties the fields were awarded to. The bid rounds brought a lot of litigations, due to the fact that the parties were technically asked to merge before the fields will be awarded to them. Till today, majority of them are still in court and are yet to kick start the process of production on their fields.” Mr. Isa Abdulrazak, Chief Executive Officer, Walter Smith Petroman Oil Limited, listed the challenges confronting marginal field operators to include The Federal Government’s imposition of partners on the operators during the award of the marginal field license. He said the forced partnership brought about a number of litigations and difficulties in their operations, saying that it has helped in making things complicated in their operations. He also identified funding impediment, non-delivery of technical/financial partnership agreement, frequent shut down of its export line, community shutdown of its operations and contractors’ inability to deliver projects on time and in good

quality as challenges hindering its growth. He further stated that the Local Content policy is a major challenge as “Some of the local companies are as well challenged by funding, making it difficult for them to do a good job.” He further stated that the company experienced about 120 days shutdown last year due to disruption in pipelines conveying its products. Also speaking,Mr. Felix A m i e y e f o r i Va l e n t i n e , Managing Director of Energia O i l , m a i n t a ined that the increasing incidence of pipeline vandalism, especially on the Agip’s pipeline, is making it difficult for the company to fund its operations, leaving it with the option of seeking funding from external sources.

e said pipeline vandalism is bringing about a reduction in the earnings and cash flow of operators, adding that Energia is seeking a line of credit that will augment its cash flow. According to him, the company is looking for about $40 million to pay some of its contractors, especially as it is almost the sole financier of its full assets with plans to reconcile with its other partners at the appropriate time. He called on the Federal Government to declare an emergency and war on bunkering and vandalism, saying it is only such that will help ensure a lasting solution to the menace. In his own view, Mr. Dada Thomas, Managing Director, Frontier Oil Limited, said Nigeria’s posture in the international financial landscape, especially in terms of its good governance rating is affecting businesses negatively in the country. He further stated that government’s decision to fix gas prices is affecting the growth of the sector, stating that it is discouraging investment in the sector. In summary, he said, “There is high cost of doing business in the country, infrastructure is

Oil rig nothing to write home about, lack of technology, which results to the importation of technology and services required for oil and gas development. “Fiscal regime in the proposed Petroleum Industry Bill should encourage and not discourage investment in gas. Insecurity in the country is leading to huge cost of operation.” Successes and future plans Speaking on the major milestones attained by marginal field operators, Osahon said that the Marginal Fields’ grew Nigeria’s reserves by 302.6 million barrels as at April 2013 from 141 million barrels in 2004. He also said that the Marginal Fields Programme is gradually living up to expectation with production now up to 60 million bpd and about 100 mmscf/d gas. Speaking on its successes over the years, Valentine disclosed that Energia has grown its production capacity to 5, 700 bpd and is expected to grow further to about 9,000 bpd before year end. He projected an increase in its production capacity to about 15,000 bpd before 2015, due to new reserves it has discovered, adding that it is already drilling Wells 7, 8 and 9 and is optimistic that the drilling of Well 10 will soon commence. Also speaking, Mr. Dada Thomas, said Frontier’s success is being driven by its ability to invest in the building of sustainable programmes in the community. He said, “We were able to set up a trust fund through which we have been able to impact positively on the community where we operate. It can never be perfect because some people within the community may want to keep everything to themselves, but it is necessary

that marginal field operators put the community into consideration when planning. The government gives you the license to operate, but the community gives you the freedom to work. “We recognise the importance of a peaceful and harmonious relationship with its host communities and have therefore made extensive efforts and invested substantial amount of time and resources to engage with them. Our philosophy for working with our host communities is premised on keeping our promises and engaging in regular and transparent engagement to keep them informed of, and involved

our community. “Midwestern Oil and Gas considers social projects and involvement in the development of local community as an important part of its activity, readily participating in the activities of local community and developing good relationships with it. “Midwestern Oil and Gas implements social projects and financially supports various social groups. Midwestern is proud that these programs help to increase living standards for people as well provides opportunities for personal development.” On his part, Abdulrazak disclosed that Waltersmith

He further stated that government’s decision to fix gas prices is affecting the growth of the sector, stating that it is discouraging investment in the sector with the development of the field.”

he Chief Executive Officer of Midwestern Oil and Gas, Mr. Adams Okoene, attributed the company’s success to its relationship with the community. He said, “We recognised community as important partners. We acknowledged the fact that the willing active support of our community partners is indispensable to our communities. We lay emphasis on enhancing relationship with

Petroman, is boosting its storage capacity to about 50,000 barrels of oil, and also improving the capacity of its flowstation to about 15,000 bpd, and is set to construct a refinery with a capacity of 5,000 bpd.

Marginal Fields operators The DPR listed the Marginal fields operators in Nigeria to include: Platform operator of the Asuokpu/Umutu field Prime Energy and Sufolk Petroleum, operator of the

SPE

Oil

Pan Ocean loses $4.96bn to oil theft Oil bunker at work SEBASTINE OBASI

an Ocean Oil Corporation, an indigenous independent oil company said it lost more than $4.96 billion to crude oil theft and pipeline vandalism in its area of operation in four years. Mr. Toni Ezeukwu, General Manager of the company said at the just concluded S o c i e t y o f Pe t r o l e u m Engineers, SPE – organized Nigeria Annual International Conference and Exhibition, NAICE, that from April 2006 to 2010, the company lost about 40,000 barrels of oil daily. “Pan Ocean lost a lot of crude through theft and vandalism in four years. The company lost over 40,000 barrels of daily in the last four days. That is from April 2006 to 2010,” he said. He however said that to tackle the challenge, the company engaged the over 22 host communities from Ovade-Oghaefe down to Escravos in dialogue to provide surveillance on the pipelines. He also said that Pan Ocean has deployed new technology to bury the pipelines deeper, so as to make them inaccessible to

vandals, to forestall future theft of crude oil. According to him, “In the area of technology application, we are currently installing a 20-inch 67 kilometre and 160,000 barrels per day AmukpeEscravos crude oil export pipeline with the HDD. This new technology protects the pipelines from theft and enhances their durability.” He also explained that the company is carpeting the entire OML-98 with hybrid, 3D/4D seismic data acquisition, with a view to prospecting the deeper offshore. Ezeukwu pointed out that Pa n O c e a n ’ s O v a d e Ogharefe gas plant demonstrates the company’s commitment to domestic gas obligation with a target of 200 million standard cubic feet, scf, per day at full capacity. He advised the federal government to adequately secure the pipelines in other to ensure that the refineries produce maximally. “The crude oil supply lines to the refineries are being devastated and vandalized. Unless that supply guarantee is secured, the refineries cannot per for m at full capacity,” he said.

NEITI urges NASS to address community issues NOEL ONOJA

he Nigeria Extractive Industries Transparency Initiative (NEITI) has called on the National Assembly to use the opportunity presented by the Petroleum Industry Bill (PIB), to ensure uniformity in addressing community problems in mineral producing areas. Addressing a section of the Senate on the PIB and on the proposed Host Community Fund, the Chairman of NEITI, Mr. Ledum Mitee, urged the lawmakers to take a cue from the existing Minerals and Mining Act, to ensure that host communities were fully involved in the execution of the fund. He said: “NEITI believes that the preferred option is for the communities to be directly impacted by the funds through a process which pertains in the minerals sector in Nigeria, whereby the communities enter into an agreement with licensee or lease-holder, as the case may be, and agree as to terms and conditions regarding the fund.” Beyond this, the NEITI Chairman called for clarity in the mode of administration of the fund to ensure direct impact to the benefiting community. He drew the attention of the Senate to a provision in Section 2 of the PIB, saying: “The

entire property and control of all petroleum in, under or upon any lands within Nigeria, its territorial waters or which forms part of its Continental shelf and Exclusive Economic Zone, is vested in the Government of the Federation.” He noted that although that Section of the PIB conformed with the provisions of Nigerian’s constitution, there is the need to recognise other tiers of government such as states and local governments as well as Nigerian citizens as co-stakeholders. He added that it will also be a reminder to government that it was accountable to the people for the utilisation of the revenues derivable from the petroleum resources. Mitee therefore called for the re-drafting of the Section to read: “The entire property and sovereign ownership of petroleum within Nigeria, its territorial waters, the continental shelf, the Exclusive Economic Zone and the extended continental shelf shall vest in the sovereign state of Nigeria in trust for and on behalf of the people of Nigeria.” He also enjoined other stakeholders to call for the creation of strong independent regulatory institutions, adding that deliberate effort should be made to limit the powers of the minister on policy formulation

CONTINUES ON PAGE 8

Oil

NEITI urges NASS to address Oil & Community community issues FELIX AYANROUH

PIB: Raising False Alarms (2)

CONTINUED FROM PAGE 7

monitoring, and oversight. Contract transparency NEITI further urged the National Assembly to ensure that contract transparency is clearly embedded as key provisions in the PIB. Defending its position in a Memo to the legislators during the recent Public Hearing on the PIB, the Executive Secretary of NEITI, Mrs Zainab Ahmed, noted that contract transparency is already a law in the United States through the recent Dodd –Frank Act, while the European Union had also recently endorsed similar legislations for adoption by all EU member countries. “In conformity with the global trends and EITI principles, which Nigeria is a signatory; NEITI is proposing the creation of a register that will contain comprehensive information and data about holders of oil, gas and mining licenses. Such a register should also contain information on corporate entities of all those that bid for, or invest in the upstream sector of the oil and gas industry, the identities of the beneficial owners of oil blocks and licences including all exploration and production contracts.” NEITI disclosed that the global Extractive Industries Transparency Initiative (EITI), recently aligned with the trend by formulating executive principles to promote openness in the award of oil, gas and mining licenses. The EITI principles also cover transparency in developing contractual obligations that guide businesses in the oil and gas industry. Confidentiality clause On the contentious issue of confidentiality clause, which determines the nature of information that companies can share with the public on their operations, the NEITI Executive Secretary observed that Section 174 of the PIB contained contradictory provisions on the issue of confidentiality clauses. “These created mixed signals on what information shall or shall not be made public by the companies. NEITI is therefore of the position that the process of maintaining confidentiality of industrial information by the

companies should be clarified in the legislation.” Crude production On the growing public concern that Nigerians don’t know exactly the quantity of crude oil it produces, Ahmed drew the attention of the legislators to NEITI’s recommendations that the PIB should provide for the installation of dependable metering infrastructure. It argued that this will guarantee accurate measurement of crude produced at the oil flow stations, and the crude export terminals, adding that this was the trend in developed countries such as the United States, United Kingdom, Norway and a host of others. Against this backdrop, Ahmed expressed concerns that the PIB as presently constituted has no clear provision for the installation of metering infrastr ucture for accurate measurement of crude produced in Nigeria, and requested for a redress of the situation. The Executive Secretary also conveyed NEITI’s position that oil and gas companies in Nigeria should be compelled by the proposed legislation to embrace the installation of metering measurement at identified critical points in the production chain. Lease licensing On the allocation of oil blocks and mining licenses, the NEITI scribe disclosed that the transparency watchdog supports the position being widely canvassed that the PIB should provide for transparent, open and competitive bidding process in the award and allocation of oil blocks and licenses. She however added that NEITI should be empowered by the PIB to effectively monitor the exercise as well as scrutinize all contractual obligations and carry out other functions by widening and strengthening the scope of its responsibilities as already provided in section 190(6) of the draft legislation of the Bill. She observed that the enthronement of competitive bidding process will attract wider business opportunities, capacity development, professionalism, efficiency and huge diverse foreign direct investments to Nigerian economy in general and the extractive industry in particular.

Shell to acquire Chevron’s assets in Nigeria CONTINUED FROM PAGE 1

region, where strident local opposition to its presence has prevented the company from producing oil since the 1990s. “Shell has signalled it wants to sell some blocks,” the government official said. “Shell is also interested in Chevron blocks in the swamps.” Shell said Thursday that it is car r ying out a “strategic portfolio review” that could lead it to sell leases in the eastern Niger Delta that currently give the company between 80,000 and 100,000 barrels a day of oil

equivalent. Shell Chief Executive Peter Voser said that while Shell would reduce its presence in some parts of the Delta, particularly the east where “sabotage is clearly a great concern to us,” it would still invest in others. “We will not leave the onshore completely,” said Mr. Voser. “In the more pure oil play, in the eastern part, we will be less represented over time, but it doesn’t mean we go out of onshore.” The Anglo-Dutch oil company has put four of its own Niger

Delta oil blocks up for sale, including two oil blocks in Ogoniland, two people close to the sale process said. “Shell has informed potentially interested local players that the blocks OML 13, 16, 71 and 72 are for sale,” said one of the people, adding that the sales could fetch between $1 billion and $1.5 billion in total. Buying Chevron’s blocks would effectively allow Shell to reduce its presence in the more challenging areas while retaining enough assets to feed Shell’s existing pipelines.

he PIB couldn’t have been clearer about the issue of transfer pricing. Section 353(4) of the PIB proposes an amendment to section 22 of the Company Income Tax Act (CITA), which addresses transfer pricing while providing for payment of additional tax based on selling prices of crude oil and condensate exported by a company based, on fair market value. Given that a sizeable proportion of investment in the minerals and petroleum sectors is transnational, all players in these sectors (government or commercial) must be aware of the key issues of transfer pricing in international taxation. Transfer pricing is one of the most crucial issues facing International Oil Companies (IOCs) today due to its direct effects on both their profits and host and home countries’ tax revenues. Transfer pricing pertains to defining the size of the tax base in each country, and how corporations can ‘move’ their tax base around the world through internal pricing mechanisms in order to minimize their tax liability. IOC’s, especially those which are vertically integrated, make transfers of assets, equipment and services between different component parts of the corporation in different countries. It is generally accepted practice that transactions between related parties occur at prices consistent with those between unrelated parties. This is based on the arm’s length principles which are based on both the Article 9 of The Organization for Economic Co-operation and Development (OECD) and Section 1.482 of the United States treasury regulations. Both the US treasury regulations and the OECD guidelines set out methods for establishing arm’s length transfer prices for tangible goods, services, technical assistance, trademarks or other assets that are transferred or licensed between related or controlled parties. The PIB alarmist do not seem to realize that aside from acknowledging a fair and reasonable relationship to the established official selling price of Nigerian oil and gas of comparable quality and gravity, the PIB and other related laws and regulations would allow government to take advantage of small variations in prices as they arise. The Income Tax (Transfer pricing) Regulations, 2012 made pursuant to Section 61 of the Federal Inland Revenue Service (Establishment) Act. No.13 of 2007 has as its seminal objective the eradication of tax evasion, which is usually promoted through over or under–pricing of transactions between associated enterprises or corporations not adhering to the arm’s length tax principle. Section 17 of the Personal Income Tax Act (as amended), Section 22 of the Companies’ Income Tax Act (as amended) and Section 15 of the Petroleum Profit Tax Act authorizes the Federal Income Revenue Services FIRS to disregard and substitute a proper tax assessment for a prior tax assessment where any transaction is intended to artificially or fictitiously reduce the amount of the tax that will otherwise be assessed and paid by a tax payer in Nigeria. The Arm’s Length Principle requires that the conditions of a transaction, between connected taxable persons, should not differ from the conditions that would have applied if the connected persons were independent contracting parties engaged in comparable similar transactions carried on under comparable similar circumstances. Some of the Transfer Pricing Methods that can be applied in determining whether a transaction is transacted within the parameters of the Arm’s Length Principle include (i) the Comparable Uncontrolled Price (“CUP”) method, or (ii) the Resale Price Method, or (iii) the Cost Plus Method, or (iv) the Transactional Net Margin Method, or (v) the Transactional Profit Split Method, or (vi) any other method as may be prescribed by FIRS, from time to time. To be continued… Felix.ayanruohlaw@gmail.com

Oil

Kerosene scarcity is a national embarrassment -Peterside People queue up for kerosene

he Chair man, H o u s e Committee on Pe t r o l e u m Downstream, Hon. Dakuku Peterside, has described the lingering kerosene scarcity across the country as a national embarrassment. Dakuku made the statement in Calabar, Cross River State, during his committee’s oversight visit to Pipelines and Products Marketing Company, PPMC, and other private oil facilities in the city. Peterside, who spoke with officials of PPMC, marketers, retailers and consumers of kerosene, said the prevailing scarcity of the product is not only an embarrassment, but also a denial of basic rights of the ordinary Nigerians who bear the brunt of national challenges such as this. He said: “This scarcity is a national embarrassment and with every reported case in any part of the country, we feel diminished as a people. Therefore, we must address it because it is unacceptable. Our people should not suffer; there is no reason to suffer in the midst of plenty. “For me, the big question is: where has kerosene been disappearing to despite huge importation by the government?” Peterside maintained that the availability of Kerosene should be taken for granted by Nigerians, especially those in the low income

group who have suffered this unusually long scarcity of the product. H o w e v e r, P e t e r s i d e c o m m e n d e d t h e management and staff of North-West Petroleum and Gas Company, for making kerosene available by going the extra mile. He urged the company to sustain this service which has greatly reduced the burden of sourcing the product in Calabar metropolis and beyond. He also visited the company’s mega station in Calabar, where he interacted with consumers of the product who had formed long queues at the filling station prior to his arrival. At the Calabar office of PPMC, independent

approved prices to end users. Peterside later addressed some retailers who came to protest to members of his committee about the lingering scarcity of kerosene in Calabar and its environs. He gave the assurance that the lawmakers cannot afford to look the other way while Nigerians suffer. “We are going to urgently set up a sub-committee to address this issue, I can assure you.” The Committee also visited the Calabar Free Trade Zone, where he stressed the need for Nigerians to take interest in manufacturing since this is the only way of accelerating the nation’s economic growth. The chairman and

This scarcity is a national embarrassment and with every reported case in any part of the country, we feel diminished as a people. Therefore, we must address it because it is unacceptable. marketers, who spoke through their chairman, Mr. Michael Udofia, said: “kerosene is only available in private depots and it is sold to us at very exorbitant prices.” He pointed out that this was why it is difficult to sell the product at gover nment

members of his committee had earlier paid a courtesy call on the Governor of Cross River State, Senator Liyel Imoke. The Governor had commended the committee for its efforts in addressing challenges in the downstream sector of the petroleum industry.

Minister endorses UniPort’s conference T

he Minister of Petroleum Resources, Mrs. Diezani AlisonMadueke, has endorsed the forthcoming 2nd international conference on petroleum refining and petrochemicals, being organised by the University of Port Harcourt (UNIPORT), in collaboration with Indorama Eleme Petrochemicals. The conference is scheduled to hold at the Hotel Presidential, Port Harcourt, Rivers State from August 28-29, 2013. . The Minister ’s endorsement was communicated to the organisers after she had been briefed about the elaborate plans to hold the world-class conference for which many international scholars and project experts have also offered to deliver papers. A statement issued by Prof. Godwin Igwe, the Director of the Centre for Gas, Refining & Petrochemicals (CGRP) of the University said that the theme of the conference is “Creating wealth through diversification, transformation and development of our refineries and petrochemical industries”. According to him, the Nigerian National Petroleum Corporation (NNPC), Indorama Eleme Petrochemicals Limited (IEPL), Petroleum Technology Development Fund (PTDF), and the Petroleum Products Pricing Regulatory Authority (PPPRA), among others have shown tremendous interest in the conference. Executive Secretary of PPPRA, Mr. Reginald C. Stanley; Group Coordinator of Corporate Planning & Strategy (CP&S) and Director of NNPC Transformation, Dr. Tim Okon; Director General/CEO, NOTAP, Federal Ministry of Science & Technology, Dr. Umar Buba Bindir; and Mr Manish Mundra, Managing Director of Indorama Eleme Petrochemicals have accepted to speak at the conference. Prof. Igwe stated that the conference has four sub-themes namely: Need to develop non-fuel downstream sector; opportunities and challenges for entrepreneurs on sustainable refinery and petrochemical products; funding indigenous research & development in developing countries; and economic growth on the back of the petrochemicals sector. He stated that the Vice Chancellor of the University, Prof. Joseph Ajienka, and Chairman of the Governing Board of CGRP, Engr. Tony Ogbuigwe who is also the Group Executive Director of Refineries and Petrochemicals at NNPC, have promised that the international conference would meet global standard.

Oil

Abuja the administrative headquarters of the Federal Government

NEITI audit: FG earns $143.5bn in 3yrs

Payments not confirmed by CBN SEBASTINE OBASI

he sum of $143.5 billion was the total financial flow to the federation and other government entities from 2009 to 2011, the Nigeria Extractive Industries Transparency Initiative, NEITI, report assessing and reconciling financial flows within Nigeria’s oil and gas industry stated. The report released last week indicated that the amount showed a decrease of four percent as against the 2006-2008 audit record of $148.8 billion. NEITI said the decrease was largely due to a 50 percent reduction (from $60 billion to $30 billion) in 2009, arising from a drop in the applicable average oil price (from $100 per barrel in 2008 to $63 in 2009) despite fairly consistent production volumes. The increase in average oil prices in 2010 and 2011 (from $80 to $112 –per barrel) led to increased financial flows observed in the subsequent years with a total

flow of $68 billion in 2011. According to NEITI, flows to the Federation Account are $131.7billion or 91.8 percent of total flows compared to $143.8 billion 96.6 percent of 2006-2008 audit, while flows to states are $1. billion (1.1 percent of total flows) as compared to $552 million (0.4 percent) of the previous audit. The flows to other Federal Government entities including Niger Delta Development Commission, NDDC and the Te r t i a r y E d u c a t i o n Ta x (TETFUND) are $3.2 billion as against $2.5billion in 2006-2008. The NEITI report also stated that flows to NDDC are directly made to the agency and outside the purview of the National Assembly through the Appropriation Act whilst that of the TETFUND is paid to a designated account in the Office of the Accountant General of the Federation (OAGF) as stipulated by the enabling act. Furthermore, financial flows from the sale of crude oil and gas amounted to $81.9 billion which

constitutes 57 percent of the total flows against $97.6 billion or 66 percent of the total flows in the previous audit. The proportion of export crude oil and gas sales to total sales of crude oil and gas reduced to 53 percent ($52.8 billion) in the period 2009-2011, when compared to 62 percent ($65.7billion) from 2006-2008. On the other hand, the

percent ($41.5billion).

Oil, gas export According to the report, the export crude oil and gas sales flows to the Federation Account are affected by the Alternative Funding (AF) arrangements, such as Modified Carry Agreements (MCA), adopted to support production activities in the event of inadequate normal

NEITI pointed out that this has been a recurring issue as an amount of $3.996 billion was also reported as received but not remitted by NNPC in the previous audit.

proportion of the domestic crude oil and gas sales increased from 35 percent ($37.2billion) to 42

joint venture cash call funding. In these cases, direct entitlements (in kind payments)

are made from production to cover production costs as well as for funding repayments. However, there are slight increases in the financial flows from gas and feedstock as a result of increased gas processing, reduction of gas flares and the utilization of feedstock by Nigeria Liquefied Natural Gas, NLNG. Confirmed financial flows, which are flows that are directly attributable to activities within the industry (such as petroleum profit tax, PPT, royalty, signature bonus and concessional rentals and statutory contributions), maintained relative proportion to total financial flows by staying in the region of 30 to 32 percent. Also, individual striking increases were noted in royalty on gas as well as in gas flaring penalties indicating increased attention on gas utilization. It noted that no bid rounds were conducted during the period under review, hence the flows reported for signature bonuses arose from the payment of arrears of signature bonuses. Other flows to the Federation Account (such as company income tax and value added tax) showed a consistent relationship in the financial flows increasing from 2 percent to 4 percent. The drop in company income tax, CIT, receipts between 2010 and 2011 is said to be due to the timing difference in the payment of CIT on gas of $128.7 million by Mobil Producing Nigeria Unlimted for 2011 in July 2012. The report also noted that the financial flows from NLNG include dividends and repayment of loans of which an amount of $4.84 billion was received by NNPC. However, it was confirmed that these amounts have not been remitted to the CBN/NNPC JP Morgan Account or Federation Account. NEITI pointed out that this has been a recurring issue as an amount of $3.996 billion was also reported as received but not remitted by NNPC in the previous audit. It also observed that there is need to confirm the ownership of the 49 percent investment in NLNG, “Is it for the benefit of the Federation, or the Federal Government, or NNPC itself? This is an area for further enquiry,” it stated. Other flows involving taxes on income (PAYE) and withholding taxes show a consistent trend with the previous audit as well as in relation to the activity volume and their location of collection. PAYE flows to the states, where most of the operating companies are domiciled, however, show a significant increase from $452 million in the previous audit to the current $1.53billion.

Focus

'Finance, technology big issues for marginal field operations’ have to grow it otherwise government will collect it back.” That is when we come in and ask them: What do you have? What are your problems? How can we assist you? What are the things that you are lacking? This is what we have? Then we will tell them, ‘this is how much it is going to cost you. Let us sit down and talk about how it is going to happen.

KUNLE KALEJAYE

n this interview, the Vice President and Managing Director of Baker Hughes, Mr. Ayo Shote, identified funding and technological deployment as the bane of marginal field operations in Nigeria. Excerpts What role do indigenous operators play in the Nigeria petroleum industry?The indigenous operators are becoming more important in Nigeria and because they inherited some of these marginal fields from International Oil Companies, IOCs. In Baker Hughes, we feel that they might not have some of the in-house expertise that they need to actually get some of these fields back to production and profitability. So, as an oil and gas service company, we want to pass on what we know to these marginal field operators. We have different products, which we have been doing in the past, but we also offer an integrated solution to these operators. We want a situation where we will sit down with them and they tell us what they want to achieve in a particular field and two years down the line, they will say: “this is what I want to see.” At this point, we want to work with them from the planning stage to the production stage and actualise what they want. How important is Brownfield Rejuvenation to Marginal Field Operators? Brownfield Rejuvenation is very important to Nigeria, it is important to them, (Marginal Field Operators) and we have at different levels the required expertise to help them actualise what they are looking for, and we want to present it to them on a single platform and that is our stated goal in this event. Do you see yourself achieving these objectives? It is obviously going to be

difficult but, it is not impossible. There will be several obstacles. Our contracting environment in Nigeria is one, where you do not have a bundle service solution. The world is rapidly changing, innovation is part of the world, and change is part of the world. Things would change in the future and in Baker Hughes, we believe in customer market where we will be able to show our customers that we have the technical-know-how and the ability to do these jobs. As we engage them in discussion on a day to day basis, we will begin to build a model that they want to see. We want to

Ayo Shote

And there are lots of economic scales that we can achieve with when we talk to them about different products at the same time. So that is what we are looking at right now

have different models for different customers. The question is: Are we talking to them at that level? That is to say a situation whereby we will have different models for different customers. Our focus now is shifting from a single product line approach to talking to our customers about Baker Hughes’ integrated solutions and the various benefits of bundled services. We are still talking to them on a single product line level not at the different model for different

customers level. And there are lots of economic scales that we can achieve with when we talk to them about different products at the same time. So that is what we are looking at right now. What challenges do you see facing Marginal field operators? At different levels, there are different challenges, finance is one. Technology is not exactly an issue because, when you look at the oil and gas service

companies in Nigeria, we have different technologies. So if you want to talk about technologies, I will say maybe the challenge facing the marginal field operators is the inability to recognise the exact technology that they need at a specific time. A key aspect of our integrated solutions approach involves identifying and tailoring the most suitable technology to be deployed to meet a specific need. Production is an issue. The fact that we call these fields ‘Marginal’ it means that to the IOCs the production level of these fields is marginal to them. To the IOCs, those fields are marginal when you look at their budget then, you will discover that it is not economical to them. But, by the time you go to small operators, they want to get the oil out of the field fast so that they can start having cash flow. But how will they achieve that? Coupled with the fact that government has a law that says “ when you have a field for a particular number of years, you

In your own expectation, how do you think government could come into this? Right now, I do not see 100 per cent how government could come, they have done enough already. I know that marginal field operators have close relationship with government and I think, at this time, government has done enough. They have made the fields available to the operators. But government should assist them to have access to funds. They can make funds available to them by allowing more financial institutions to come into Nigeria and I think it is now left to us as service provider and Independent producing companies to sit down and discuss. Let’s discuss how we can increase production thereby increasing more revenue for government. What is your advice for marginal field operators despite the difficulty they face? They should keep at it. It is a difficult environment for them. I have been interacting with them and I know what their issues are and do you know what? I think there is light at the end of the tunnel. Let’s not forget that internationally, Nigeria is the focus. Different organisations in different industries are looking at the Nigeria experiment, if it is going to succeed and if it does, then I’m sure it is going to be applied in other areas.

Gas

Shell write down is bad news for US shale

ver the past few years, the oil majors have been punch drunk on US shale. Now comes the hangover. Royal Dutch Shell surprised the market on Thursday with a $2.1bn impairment, mostly on its liquids-rich shale properties in North America. The writedown showed that the results from Shell’s exploration drilling for oil in its US shale acreage have been much worse than it anticipated. “Shale oil bulls take note,” wrote Oswald Clint of Bernstein Research. The news was sobering for a sector used to upbeat headlines. Production of tight oil in places such as North Dakota’s Bakken shale has increased so fast that it has reversed the decades-long decline in US oil output, reducing America’s reliance on oil imports and even fuelling talk

of US energy independence. Shell’s news shows that some of the breathless rhetoric about shale’s potential may be unwarranted – a view Peter Voser, its chief executive, appears to endorse. The idea of a shale revolution spreading from the US across the world is “a little bit overhyped,” he told reporters Shale impairments are nothing new. A clutch of companies, including BHP Billiton and BG Group, wrote down their US shale gas assets last year, as the low price of American natural gas reduced the value of their reserves. But it is far less common for the oil majors to take charges on their tight oil properties. The impairment highlights a broader problem for Shell – the weak performance of its Upstream Americas business. It incurred a loss in the second

quarter, and Shell says it will probably stay in loss for the rest of the year, and possibly longer. Analysts at Credit Suisse say Shell’s performance in its upstream – or exploration and production – division is a “real worry”. Ever since the oil industry figured out how to use hydraulic fracturing or “fracking” and horizontal drilling to extract gas from shale formations, the US “unconventional” gas story has had an irresistible allure for the supermajors. Shell has been more gung-ho than most. In 2008, it paid $5.7bn to buy Duvernay Oil, which held promising tight gas acreage in western Canada. Two years later, it paid $4.7bn for East Resources. which held big positions in the Marcellus Shale. Shell says that its North American onshore gas portfolio

shale gas supply surge pushed gas prices to 10-year lows. Shell said at the time that it would switch its focus from gas to more profitable “liquids-rich shales” and Simon Henry, chief financial officer, said the company would produce 250,000 barrels of oil a day from its tight oil properties in five years’ time. But that could end up being way too optimistic. Mr Henry admitted on Thursday that the results of Shell’s exploration efforts in US tight oil had been disappointing, and “the production curve is less positive than we originally expected”. As of today, the company is only producing 50,000 b/d from these properties, he said. Shell’s experience has been echoed by others. Oil companies who rushed to buy acreage in Ohio’s Utica shale a few years ago have discovered the rock is not as porous as in other formations such as Texas’ Eagle Ford or the Bakken, and there is less natural pressure underground to help force the oil out. Many companies are now trying to sell their holdings there. Shell, it seems, is taking a similar tack: it has launched a strategic review of its North American shale portfolio, with the aim of halving the number of areas it operates in there. Mr Voser says the company wants to divest some small-scale properties which “are still prospective and can produce, but do not have the size we are looking for”. And perhaps driven by the bad news from US shale, Shell says it

Shell’s news shows that some of the breathless rhetoric about shale’s potential may be unwarranted – a view Peter Voser, its chief executive, appears to endorse. The idea of a shale revolution spreading from the US across the world is “a little bit overhyped,” he told reporters now includes about 3.5m acres of mineral rights, with the potential to yield 40tn cubic feet of gas – the energy equivalent of nearly 7bn barrels of oil. But some analysts have said it paid too high a price to gain entry into the sector. And such a large position proved a doubleedged sword last year when the

is dropping its medium-term production target – once considered a touchstone for investors. Analysts were unfazed. “No one [externally at least] believed it anyway,” said Neill Morton of Investec. – Financial Times

Gas

DPR to clampdown on unlicensed LPG marketers …Projects 200,000mt LPG consumption in 2013

A gas truck

MICHAEL EBOH

he Department of Pe t r o l e u m Resources, DPR, has threatened to s a n c t i o n Liquefied Petroleum Gas, LPG marketers without valid licenses or who failed to comply with its provisions on operational safety. Speaking at the 2013 Annual LPG Stakeholders’ Forum organised by the DPR, in Lagos, Head, Gas, DPR, Mr. Oliver Okparaojiako, said in the next couple of months, the industry regulator will commence facility audit of licensed plants nationwide, to ensure compliance with statutory provisions on operational safety. According to Okparaojiako, who was represented by Mr. Christian Amaechi, an official in the DPR, many marketers store and sell LPG without valid licenses, thereby contravening the law.

He said: “Henceforth, all retail outlets for LPG must be licensed. We want to use this medium to direct all LPG plant operators to ensure that resell points have valid licenses. Our inspectors have been directed to ensure compliance. “Plant operators must be conversant with all safety need of LPG plant operations.” He projected that the annual consumption of LPG will rise above 200,000 metric tonnes in 2013, which he based on recent efforts by government to increase consumption. Also speaking, Mr. Gbenga Koku, Operations Controller (Lagos Zonal Office), DPR, said it has been recording significant increase in the number of applicants for Approval to Construct, ATC, by prospective plant owners, while existing plant owners are applying to install LPG skid or auto gas within their service stations. According to him, this is an indication that there is a

positive development aimed at encouraging LPG utilisation as the preferred energy. He, however, warned LPG plant owners who continued to sell products to unlicensed distributors and bulk end users to desist from the act, saying that henceforth, violators will be severely sanctioned.

e said, “Some operators have not been renewing their operating license. DPR staff will start constant visits to plants to enforce compliance. “In as much as we encourage the proliferation of LPG plants, prospective plant owners must follow due process to obtain all requisite approvals before the commencement of any construction or installation. “Also approval should be granted before the commencement of any upgrade or modification of plant. The Department will embark on operational facility audit of licensed

In as much as we encourage the proliferation of LPG plants, prospective plant owners must follow due process to obtain all requisite approvals before the commencement of any construction or installation

plants starting from next month to ensure strict compliance to statutory guidelines and standards.” He further directed that all products reception point must establish a functional

laboratory, adding that those currently without laboratories should arrange a M e m o r a n d u m o f Understanding with third party laboratories for product re-certification.

Power VICTOR AHIUMA-YOUNG What is the situation with the government in terms of workers’ benefits and other issues ahead of the transfer of the Power Holding Company of Nigeria, PHCN’s assets to the private sector? Well the position clearly is that the Nigeria Government does not have money to finance reforms and if they don’t have money to finance reforms, they are taking certain steps and actions that are capable of derailing the process while at the same time they are trying to shift the blame to the workers. Negotiations were concluded since last year and on daily basis they have been making claims of when they are to pay or whether they have started paying. Up till now nothing concrete has taken place. Rather the meetings we have been involved in the last few weeks are meetings where they are trying to tell us that they don’t have enough money. So, I think if they don’t have enough money we have to sit down and review the whole process and how best to go about it. But my own understanding as at now is that it appears Nigerian Government does not have money, and the proceeds from the sale of PHCN would not be enough to settle the labour liabilities in PHCN. So I think they should be more initiative and find out how best to go about this whole process. But they are still pushing ahead with the terminal date for private sector to take over the assets of PHCN? That is not even the major problem that we have. It is not even the takeover, you know that taking over is dependent on settling the labour issues and in the whole privatisation process, all over the world and as contain even in the Nigeria Privatisation Process, you can’t take over the sector until all labour issues are resolved. So I would not know the extent they are pushing whether they want to take over without resolving the labour issues. Unless they want to do that, I can’t see any serious effort so far

Joe Ajaero

FG has no money to pay off electricity workers -NUEE

INCE November 2012, the Federal Government and electricity workers reached agreement on major labour issues regarding power sector privatization, yet these are not implemented. In this interview, the General Secretary of National Union of Electricity Employees, NUEE, Mr.Joe Ajaero, gives insights into the situation from the labour’s perspective. Excerpts:

from their side. Because, come to think of it, somebody has paid for 25 percent and 75 percent is still pending. So, if you now hand over to a person who paid for only 25 percent, in a situation where you even undervalued the sector to next to nothing, and then the person paid for only 25 percent, you start to wonder which type of process is this.

There are insinuations that labour is dragging the process backward? When an agreement has been signed and we are at the point of payment, is it labour that will pay itself? So those insinuations, if you see anybody making those insinuations, know that the person must be a pure illiterates. Negotiations were conducted, agreements were

signed and even in February every Nigerian heard the Minister of Labour saying they will start payment the following day. From February till now, you will be hearing either May, June from the same government, they have not paid. We were at the point of paying and they have refused to pay, so how is labour dragging it back? Is it the labour that will pay itself? So, you see when people fail

14 to do what they are supposed to do first, it has a tendency to bounce back. I have it in good authority that the government did not assess the implication of privatising PHCN. As at the time they were even asking us for negotiation, they did not know the cost implication, even some of the social implication is yet to be felt. The other day the Nigeria Labour Congress, NLC, came up with a release condemning tariff adjustment by PHCN, before long it will be unattractive for you to tell any investor who probably bought gas for 10 million not to sell it up to 10 million because he must remain in business. As at today even PHCN is like it is receiving gas from gas companies almost free and if private individual now buys gas after selling electricity, such a person should be able to recoup the money for even buying gas. I am telling you that the cost of gas presently is almost higher than the cost of the tariff people are paying. So, we should be brazing up for higher tariff. However, I told you once that the unions would not talk again on the issue and that Nigerian people would talk last. I want to maintain that position. What about the issue of the contributory pension scheme, have your members subscribed to it? Yes, we have subscribed to the contributory pension scheme, but it appears there is a deceit somewhere along the line and that is why we are going to engage them. Any moment from now we are going to engage them in a show down because the power ministry is chronically deficient in terms of acknowledging letters. You know we have written series of letters on certain developments in the sector but they have refused to acknowledge them or address them. Now why did I say this? We ask our members to subscribe to the Pension Fund Administrators, PFAs, and they have subscribed to PFAs, in doing that, our agreements is clear. In the first instance, we have the ones contributed maybe from 2004, the one Government is going to pay up, and the one CONTINUES ON PAGE 15

Power

FG has no money to pay off electricity workers -NUEE CONTINUED FROM PAGE 14

that management is going to pay up with current contribution, that has been calculated. Government has given the workers a kind of pay advise, every worker in PHCN now understands how much he is collecting and by extension how much will go into the pension fund. Now as we discuss, government wants to pay because the negotiation is in two components. The one going to pension and the one the workers are receiving as cash. So, if you are receiving 10 million for instance and 6 million is going into your pension, and 4 million is coming to you cash, the government is planning to pay you 4 million cash and tell the whole world that they have paid. We said no, the pension component should go into workers pension fund which they have opened and by the time government pays in workers will receive alert from the pension. It is not cash that they are receiving, when they receive an alert. When government now gets money it can pay the one that is cash. If government pays the workers cash and asks them to go and it does not pay the pension, it then means that the government has deceived the workers. The government is not finding it funny and they wanted to eat our heads. That was when we realised that there was more to it. In the first instance, you have not funded the arrears and secondly, government is supposed to commence deduction. Now they wrote a letter that deduction should be commenced, from June and we told them that they can’t do that because the agreement we had was that government should pay up and then when we go into the private sector, the private sector pays 7.5 and the workers pay 7.5 percent. We equally agreed that government should fund it because the circular they sent government did not fund the 7.5 that management is supposed to pay. They now

Joe Ajaero

want to deduct the workers 7.5 and the circular equally said it should be paid into dedicated account. So, if i have a worker has his pin and he has opened a pension account why will you pay it into a dedicated account? Those dedicated accounts who are the signatories to them? It then means that there are some plots behind all these. These are some of the problems we are having. The workers have pin numbers and they have subscribed to some of the PFAs, let us say Trustfund pension. Now their 7.5 and 7.5 of the management

So, if i have a worker has his pin and he has opened a pension account why will you pay it into a dedicated account? Those dedicated accounts who are the signatories to them? It then means that there are some plots behind all these. should go into that place. You can’t say deduct it and pay it into a dedicated account why must it be so? Then say a

worker ’s accumulation maybe 20 million or 10 million before, you have not even transferred that into the

worker’s PFA account and you are saying you will pay the worker this one that is cash, maybe gratuity and that he should go. I tell you, the main clash is still ahead. They are not handling this in good fate and it is really unfortunate. How prepared are you to ensure that your members are paid their entitlements before new owners take all over? Well that is where we are now. Already, we have given them an ultimatum to address some issues. One, we realised they were dashing some people promotions, even some they gave double promotions from principal managers to general managers or to assistant general managers, fine and good. The Ministry of power can give promotion from principal manager to assistant general manager, but then the normal promotion in PHCN takes place every June. Between June last year and June this year they refused to carry out that promotion exercise. Meanwhile, they are promoting people, which mean that promotion is not abolished. But the main workforce they refused to promote them. Two, our agreements took effect from June 2012 and now because of their inability to implement these agreements between June 2012 to July 2013, there is 13 months service that is not computed. We are going to have a show down with them and that 13 months service is not National Youth Services to anybody. Now, we have 13 months outstanding, how do you compute this and add to workers entitlements? That is the issue that is on ground now. Nobody will tell you after working for one year, maybe you worked for 10 years before and you worked for additional one year plus and you say that one year plus is free. We have written to the ministry of power and up till now they have not acknowledge the letter, rather the ministry of labour has sent a letter inviting us for a meeting and we are not going to attend that meeting. The ministry of power should be able to address even a letter by replying us, to say we are not going to do what is in the letter. We have written not less than 10 letters that they have refused to acknowledge.

Power

t the opening of Financial Bids for Kaduna Distribution Company (DISCO) and Afam Generation Company (Genco) which held on July 31, 2013 in Abuja, Northwest Power Ltd. It had the highest Aggregate Technical Commercial and Collection Loss reduction (AT&C) of 29.26 % with respect to Kaduna Disco while Taleveras Group emerged the preferred bidder for Afam Genco with an offer price of $260,050,000. The Reserved Bidder for Afam plant is TES Power which had an offer price of $222,900,000. The ATC & C Loss Reduction proposal by the other bidders for Kaduna Disco are LEDA Consortium (26.71%), NAHCO Consortium (22.83%), Incar Consortium (22.73%), Copper belt Consortium (21.07%) and Axis Power Distribution Ltd (17.40%). Chairman of the Technical Committee (TC) of the National Council on Privatisation (NCP), Mr. Atedo N.A. Peterside who presided over the bids opening said the results are subject to NCP’s final approval. The Chairman noted that: “For Kaduna Disco we are seeking to establish which bidder is offering the highest aggregate technical commercial and collection loss reduction figure (ATC &C). He added that the use of ATC&C method is a clear departure from NCP’s usual practice of awarding companies to the bidder who makes the highest financial offer after being technically qualified. Peterside noted that the NCP had done its very best to ensure that the level of transparency that heralded the previous sale of 15 companies was maintained in the sale of Afam Power Plc and Kaduna Electricity Distribution Company Plc. “Accordingly the NCP is confident that this process will produce the most appropriate core investors and fulfil the government objectives of rapid transformation of the electric power sector”, he added. Earlier, the Director General of the BPE, Mr. Benjamin Ezra Dikki said that the event was another testimony of the success of the Reforms of the Power Sector that began with the constitution of the Electric Power Sector Implementation Committee (EPIC) by the NCP to undertake a comprehensive study of the electricity power industry. “The reform initiatives resulted in the preparation of a power policy blueprint that defined government’s new direction for the electric power sector that culminated in the production of the National Electric Power Policy (NEPP) in March 2001 and approved by the Federal Executive Council (FEC) in September 2001. The reforms of the power sector were however stalled until it was reinvigorated by the Transformation Agenda of the Goodluck/Sambo administration”, he said. The BPE boss noted that with the over one hundred submissions received for the NIPP plants less than two weeks ago and the quality of the bidders, “we can beat our chests and say the Power Sector reforms have succeeded. Our dream to introduce a better operating environment that is efficient,

Atedo Peterside

Privatisation: Peterside explains use of ATC & C for bidders effective and well-regulated and enticing to private sector participation has become a reality. The participation of the private sector should bring about higher generation capacities through the provision of more efficient and costeffective power stations and improvements in the distribution sector in the areas of billing and collection, distribution networks”. He recalled the imperatives that fuelled the need for the reforms in the telecoms and power sectors among others and stated that they were more compelling today than before. “The revenue profile of

government when matched with the ever increasing demands on these resources should compel us to vigorously pursue the reforms in the other critical sectors of the economy like the transport and oil and gas sectors, seeing that we have made a huge success of the reforms in telecoms, power and pension. The Bureau should be commended for driving these reforms that have so clearly impacted on the economic fortunes of this country. The Bureau also solicits the support of all as it collaborates with Ministries and Agencies to undertake other reform initiatives in Housing, Transport

opening, the preferred bidders will be given a timeline to pay and takeover the enterprises. It would be recalled that the Kaduna Electricity Distribution Plc (Kaduna Disco) and Afam Power Generation Plc (Afam Genco) were among the 17 PHCN successor companies that were advertised for sale in December 2010. Both companies along with fifteen others went through a full competitive tender process which culminated in the submission of technical and financial proposal in July 2012. H o w e v e r, f o l l o w i n g t h e rigorous technical evaluation of all the bids, none of the bids received for Afam Power Plc and Kaduna Electricity Distribution Plc scored the minimum 75% required to progress to the financial bid stage. This development compelled the National Council on Privatisation (NCP) to order a rerun of the entire transaction as it was not prepared to settle for a sub- optimal outcome However, in order to fast track the process, NCP directed that no fresh adverts would be put out but instead all prequalified bidders who had earlier expressed interest in the power privatization and paid the US$ 20, 000 data room fees would be allowed to participate in the exercise. Following NCP’s directive, letters were sent to all the 163 bidders asking them to indicate their interest by submitting fresh bids for Kaduna Disco and Afam Genco. By January 31st, 2013 which was the deadline for interested bidders to indicate their interest, 29 bidders indicated interest in Afam Genco while 19 bidders indicated interest in Kaduna Disco. Requests for proposals (RFP) were subsequently forwarded to all the bidders and they were given up to April 16, 2013 to conclude their due diligence and submit Technical and Financial proposals.

The revenue profile of government when matched with the ever increasing demands on these resources should compel us to vigorously pursue the reforms in the other critical sectors of the economy like the transport and oil and gas sectors, seeing that we have made a huge success of the reforms in telecoms, power and pension and Agricultural Sectors among others.’ He added that with the bids

Finance Petron secures N16bn for drilling rigs 17

Michael EBOH

n indigenous oil and natural gas drilling company, Petron Drilling Fields Nigeria Limited, said the US$100 million (N16 billion) financing deal it secured from the United States’ Export Import Bank is being utilized for acquiring a land drilling rig to be used in launching its operations in the Nigerian oil and gas sector. In a statement, Mr. Bonny Chukwuemeke Bonny, President/Chief Executive Officer, Petron Drilling, said the company is set to deploy its first 1,500 horsepower AC VFD Standard land drilling rig and is awaiting the approval of the Department of Petroleum Resources, DPR. According to him, the project is at its completion stage, as its Chinese partners are currently in the country to provide the needed support to make the deployment a reality According to him, a significant step towards the realisation of Petron’s strategic ambition in the oil and gas drilling business began following the signing of a deal earlier this year, with the company’s American partners - Shaw Regional Transit LLC, USA. The deal was to arrange a US$100 million finance package from the Export Import (Exim) Bank of the United States, to enable it acquire and operate its own fleet of drill rigs. He said, “As an energy-oriented company, Petron will engage in contract drilling, drilling support services and drilling waste management service. The company aims to deliver cost-savings services to its customers through ongoing improvements and leadership in drilling efficiency and safety. “Our success will be based on our ability to develop and apply new ideas, technologies and processes that create a differentiated, high-quality service offering.” He commended the Federal Government for taking this bold step of providing the Oil and Gas Local Content Act. “We are not myopic of the opportunities that are inherent in these various provisions, especially when it also states that all operators and promoters in the Nigerian oil and gas industry are required to give to Nigerians, especially those operating in the oil and gas producing communities, the first consideration when acquiring goods and services or employing personnel,” he noted. Bonny further stated that the company has secured the commitment of its Chinese partner not just in the purchase of the rig, but also in providing active key persons to support Petron’s operations until Nigerians fully take control of the operation of the rigs. Also speaking, Mrs. Gloria Ofila, General Manager, Administration/Corporate Services, Petron Drilling, explained that “One important advantage of this strategy of embedding manufacturers in our operation is to reduce downtime of the rig to the barest minimum, thereby improving operational processes and systems that will enable our clients increase productivity, reduce costs and enhance revenue generation

...Seeks approval for rigs deployment

Drilling machine

activities.” Petron is a Nigerian oil and natural gas drilling company with field office in oil-rich community of Umusadege in Kwale, Delta

State, and administrative representations in Fairmont, North Carolina, and Little Ferry, New Jersey, USA. It is

incorporated under the laws of the Federal Republic of Nigeria.

Solid Mineral Emma UJAH

r Sunday Ekosin is t h e President o f Pr o g r e s s i v e M i n e r s Association of Nigeria, which has been in the vanguard of enthroning best mining practices in the country. In this interview, he expresses confidence that with the right polices and personal intervention of President Goodluck Jonathan in the industry, mining would take the centre-stage of the nation’s economy. Excerpts: What impact has the Progressive Miners Association made on the mining industry since its birth in 2009? The Progressive Miners Association which started in 2009, was established with a clear philosophy of ‘empowering miners t h r o u g h m i n i n g renaissance’, essentially, the lack of credible mining Association that is wholly devoted to caring for the miners in Nigeria brought about the Association. PMEA was established in response to the need for a collective lobbying organization that would articulate the interests of the indigenous miners. By a great extent, we have vigorously pursued these sets of objectives. Mining in Nigeria has been largely docile, what is responsible for this? After decades of mining operations in Nigeria, it is indeed unfortunate that we have still not being able to use mining as a diversifying agent in our economic transformation. Huge benefits deliverable from mining are yet untapped and to major stakeholders like me are very pained. However, it is critical that we build a sustainable and well respected industry made up of globally competitive mining and associated businesses. This only comes if we earn this respect and support. To achieve this we need to achieve: Development of small and medium scale indigenous mining sites and plant across the entire country based on a developed mining module such that will ensure health,

Sunday Ekosin

Mining sector requires presidential intervention After decades of mining operations in Nigeria, it is indeed unfortunate that we have still not being able to use mining as a diversifying agent in our economic transformation. Huge benefits deliverable from mining are yet untapped and to major stakeholders like me are very pained

safety and environment practices that ensure our people remain safe and that presence of mining activity is supported by enforceable regulations. Have patriots to develop a well-thought-out community engagement, delivering operations that exist with the support of, and benefit from mining activities in a sustainable manner. Strong stakeholders’ relationships to ensure rapid

sustainable development of the sector. Currently, the frosty relationship that exists amongst us leaves so much to be desired. Could these be the reasons you have consistently called for a standing Presidential Committee on mining? Ye s , a p r e s i d e n t i a l committee with a clearly well thought out deliverables for both immediate and long term benefits. Among these, is the creation of two million

direct jobs, positive engagement of our teaming y o u t h i n m i n i n g development, establishing privately operated small mines and plants across the six-geo-political zones of this country, ensure that our mining licenses are valuable n a t i o n a l l y a n d inter nationally through carefully rejuvenation of license certifications etc. Mining remains major employer in many communities and provides economic benefits It means that rural communities where these mines are located will attract developments accrued by mining activities in good roads, clinics, bursaries and rural development projects, giving communities the power to create their own destiny. This will also contribute towards the alleviation of poverty. The Presidential Committee will equally focus attention on economic development in grassroots- level empowerment and

18 upliftment, hence addressing the stagnation of development initiatives that sometimes emerge because of logistics and bureaucratic challenges in government. Why are local investors not investing in this sector despite the high return on investment? The biggest problem is the inability to bridge the gap between wealth expectations (i.e. Mining seen as sudden wealth able to meet all local needs) and reality of low margin mining in global industry Mining Practices. Many investors coming into mining have the perverted views of a ‘gold mine’ investment, and without doing due diligence and interacting with major stakeholders particularly with experience, they get out as fast as they get in. The mining business does not change – no new perspectives – we may have young people coming up in mining companies but ‘they are talking old” mining is profitable to the extent of proper management of financial investment, technical soundness and prudence management. Why do your members complain about licence revocation and reassignment at the Mining Cadastre Office? Let me start by laying the foundation and setting the records straight, as at this very moment, the only law in Nigeria, regulating the operation of the mining Cadastre Office is the Minerals and Mining Act 2007, to operate therefore outside of this Act is to operate illegally. As a private organization of Nigerian miners we have received several complaints emanating from the MCO in the administration of mining titles. Several of these cases are in court and others are with security agencies across the country for investigation. These developments are unfortunate but that is the current situation. You can only imagine the situation of mining both now and in the near future what will become of mining when this fundamental aspect of mining is enmeshed in the conflict of confidence. As the Bible says “ what can the

CONTINUES ON PAGE 19

Solid Mineral

Mining sector requires presidential intervention CONTINUED FROM PAGE 18

righteous do when the foundation is destroyed”. This is one reason, some patriots like me keep crying out to Nigerian leaders and well-meaning statesmen to plead with Mr. President to inaugurate the proposed Presidential Committee to tackle these multifaceted problems impeding mining development in Nigeria. The provisions of the law on the revocation of licences are very clear, Part II of the minerals and mining Act 2007, sections 11 to 14 states: “11. A mineral title shall become liable to revocation where the holder thereof has failed to pay the prescribed fees. 12. In case of default of payment of the annual service fee due to the Mining Process for Cadastre Office, the Mining Cadastre Office shall give a thirty-day written default Revocation notice to the defaulting party and, if payment is not effected during that period, the Mineral Mining Cadastre Office shall record the default and revoke the mineral title 13. The amount of the fees payable under section 10, administration and Determination modalities for their payment shall be determined in the regulations issued by the Minister. 14. Any notice required to be sent by the Mining Cadastre Office to an applicant Notice to for, or holder of a Mineral title shall be sent by courier service or register Mail to Applicant. The last known address in Nigeria of the mineral title holder or given in person to an Authorized representative of the applicant or holder of the mineral title in Nigeria or published in the Gazette. The notice shall for all purpose be sufficient notice of the subject matter of the applicant for or holder of a mineral title.” The law specifies that a title holder be officially notified in writing and by registered mail or by courier, giving thirty days within which to rectify any query raised in connection with a title. After all these might have been exhausted and the title holders still fails in his obligation, the final stage is to now gazette the defaulter before final revocation.

Safe mining programme kicks off in Zamfara Noel ONOJA

Sunday Ekosin

The reason for this long procedure is to avoid miscarriage of justice in m i n e r a l s t i t l e a d m i n i s t r a t i o n . Unfortunately, the processes and procedures are daily being abused and circumvented. The issuance and revocation are done in violation of the ACT, hence all these protests, litigations and hues and cries. The sad situation is that for any mineral title revoked all that is required in Nigeria is to make newspaper publications, not minding the damages such action might have on the original title holders in terms of time and money spent in

reconnaissance, community development project executed, cost of title acquisition and goodwill. No matter the threat to my life as a person by the uninformed who are uncomfortable with my advocacy for the right thing to be done in the mining sector in Nigeria and all the name calling, maligning and exclusion from my legitimate rights, I have resolved to stand for truth, equity and justice and to tell all agencies of government saddled with the responsibilities of regulating this sector to stand up to their responsibilities. As a leader, I must stand in defense of my

The law specifies that a title holder be officially notified in written and by registered mail or by courier, given thirty days within which to rectify any query raised in connection with a title. After all these might have been exhausted and the title holders still fails in his obligation, the final stage is to now gazette the defaulter before final revocation

people. Too many things are going wrong in the Nigeria mining sector; hence the sector remains undeveloped in spite of the huge potentials that exist in this sector. This is the sector that holds the key to Nigeria economic diversification and the earlier Mr. President steps in to salvage what is remaining of this sector the better for us and the generation coming after us. As things now stand, we have no other alternative to the proposed standing Presidential Committee for mining to revamp this sector. How closely have you worked with the National Assembly to address the issues raised with regard to the implementation of the law? We have worked with the Committee on Mining very closely at the House of Representative and we know that they can use their oversight functions in Nigeria mining development to ensure that all stakeholders play according to the rules of the game. On behalf of Nigeria miners I am appealing to them as major stakeholders in the Nigeria mining sector to demonstrate more commitment and patriotism toward this sector.

overnment’s intervention o v e r t h e Zamfara lead poisoning in 2010, has attained remarkable achievements particularly in the areas of e n v i r o n m e n t a l remediation, sensitization on safer mining practice and treatment of the affected victims. The disclosure was made by the Countr y Representatives, Medecins Sans Frontieres (Doctors without Borders), Michelle Chouinard, and the Director of Field Operations, TerraGraphics International Foundation, Simba Tirima. They were at the Ministry of Mines and Steel Development, to discuss strategies for further alliances to prevent future occurrence of lead poisoning in Zamfara and other states of the country. Tirima also said that the essence of their visit was to inform the ministry that the remediation exercise at Bagega in Anka Local Government Area of Zamfara State had been completed. Te r r a G r a p h i c s International Foundation is a US-based company that partnered with the Federal Ministry of the Environment to handle the remediation programme at Bagega as a result of the lead poisoning incident, while Medecins Sans Frontieres, is involved in the treatment of the victims of the lead poison. Tirima said he and Chouinard were impressed with what the Ministry was doing on the Safer Mining Programme, and reiterated their desire f o r c o n t i n u o u s collaboration with the ministry and other stakeholders involved in the various intervention programmes. The Permanent Secretary in the Ministry, Mr. Linus Awute, who received the guests, commended the team for their various roles in stopping the death incidents occasioned by the lead poison.

Labour Victor AHIUMA-YOUNG

resident of the Institute of Mediators and Conciliators, I C M C , D r. Brown Ogbeifun, in this interview with SweetCrude, speaks on a wide range of issues in the petroleum industry including the Petroleum Industry Bill, PIB, among others. Excerpts As a former President of PENGASSAN, 1st Deputy President General of TUC and now President of ICMC, it appears you no longer comment on topical issues like PIB, insecurity and the crisis in Rivers State that may impact on the oil and gas industry? Though the leadership positions I held before or I am still holding now entrust me with some responsibilities, I am honestly doing my best to contribute my quota to peace building, which may not be seen on the pages of newspaper. I have been working quietly with our social dialogue partners in the oil and gas industry to achieve industrial peace in the sector. Can you give examples of such undertakings? Mediation between parties is absolutely confidential and I am not permitted to reveal the identities of the companies. However, I have been involved in resolving conflicts in some of our oil and gas industries, which ordinarily would have thrown this nation into severe crisis with very devastating strikes and inconveniences to Nigerians. For me, this is an undertaking of inestimable value to this country, a country that is heavily in contestation with insecurity. I am also involved in preaching the dialogue option among my comrades, wherever and whenever we have such opportunities. This I do in seminars and workshops. I am also in the faculty of the ICMC that train Mediators who are the foot soldiers of peace and reformation in Nigeria. All these are efforts geared towards achieving peace in oil and gas sector and Nigeria in general. What is your take on the PIB? The Petroleum Industry Bill

‘PIB: IOCs can’t blackmail Nigeria’

Dr. Brown Ogbeifun

has very good intentions. The laws we currently use to drive oil and gas process in Nigeria are dispersed in about16 pieces. This Bill seems to streamline these into one readable text. Furthermore, the laws and fiscal regimes put in place at the infancy of the oil and gas industry when we were virtually begging investors to invest in Nigeria, are still applied today and time is running out in the oil and gas

I am also in the faculty of the ICMC that train Mediators who are the foot soldiers of peace and reformation in Nigeria. All these are efforts geared towards achieving peace in oil and gas sector and Nigeria in general

industry. It is like saying that the clothes a child wore in its infancy should still be worn at 18 years. Paradoxical, is not it? This definitely cannot develop our oil and gas sector beyond developing other economies. If we must fix the e n e r g y s e c t o r , u n e m p l o y m e n t , infrastructure, then we do not have readymade alternatives to PIB. Secondly, the agencies involved in oil and gas business, have several overlapping and chaotic functions that need to be streamlined. This Bill is supposed to do that. T h i r d l y, t h e F e d e r a l Government has been accused of opacity in running the oil and gas business. The Bill in all intent and purposes is trying to enthrone openness, transparency and accountability in the governance structure of the Oil and Gas post –PIB. If the Bill is passed, it becomes easier to monitor the inflow and outflow from crude business. The issues of deregulation, subsidy and the commercialization of critical agencies in the value chain of the oil and gas sector becomes a done deal from the point of law. We shall now do oil and gas business as a world class industry. T h e re a re f e a r s t h a t International Oil Companies, IOCs, and other investors may leave the sector because of the perceived stringent fiscal regimes in the PIB? Let me correct an impression that the stringent Fiscal regimes will drive the IOCs out of Nigeria. It will not because even without PIB they are already divesting massively from Nigeria to other areas of Africa because CONTINUES ON PAGE 21

Labour

CONTINUED FROM PAGE 20

o f i n s e c u r i t y, i l l e g a l bunkering, corruption, policy inconsistency, tax issues, vandalism of their pipelines and equipment by vandals. All these have been articulated as causes of increasing overhead, which is compounded by the yearly negotiation cycles between them and their Unions; and the increasing hard stance of the Union. Rightly or wrongly, they may have their justifications for the assertions. PIB or no PIB, those that will go shall still go and those that will stay will. In several Oil producing countries, the counterpart subsidiaries of the Nigerian companies operate strictly according to the laws of the countries where they are resident. In more than 80 percent of the countries that have oil and gas driving their economies, expatriates do not remain on the job for more than two years. We do know that some of the expatriates stay on the job for so many years without compliance with the understudy clauses. The resultant effect is that Nigerians are not empowered to take over their duties. Apart from Nigeria, no g ove r nm e nt a llows t h e luxury of breaching the expatriate rules as they do in Nigeria. In addition, the fiscal regimes are more stringent than we have here yet they are not divesting or quitting from those countries. The truth is that going by our cur rent Fiscal regimes, monitoring strategies and expatriate quota policy, Nigeria remains the most generous and our take in financial terms remains one of the lowest in the world. So the truth is companies are allowed to relocate where they so desire. It is for the Nigerian nation to know who our true friends in plenty and adversities are and respond appropriately when we are out of the woods. Lastly, those who will remain will surely do so no matter the turn of events. I sincerely agree with those expressing such fears. Just take a look at the subsidy and pension scams. Aggregate the role of some of the prosecutors and some judicial officials and you will find a huge conspiracy theory at play. But I can tell you that the publishing of government allocations at all levels is having some reflective impact and Nigerians are

Dr. Brown Ogbeifun

‘PIB: IOCs can’t blackmail Nigeria’ The truth is that going by our current Fiscal regimes, monitoring strategies and expatriate quota policy, Nigeria remains the most generous and our take in financial terms remains one of the lowest in the world now asking questions more than ever before. I can take a bet that the docile nature of Nigerians watching their leaders aggrandize and s q u a n d e r t h e i r commonwealth will meet with very stiff resistance very soon. I believe Nigerians will in no time come to shift focus to tackling identified corrupt prosecutors and judicial officials that are giving

lifelines to corrupt politicians/public officials. If Nigerians want better life for this generation and the next, fighting corruption will form the agenda of like minds very soon. So, let them leave Nigerians to worry about that. As a mediator, the threat of leaving Nigeria if the laws are not made to reflect the position of the IOCs’ proposition to me is in bad

faith bargaining. People must come to the negotiation table with an open mind. I don’t know of any European government that will want to change its laws and we will threaten them not to do so. For instance, what we pay for foreign travels in Nigeria is one of the highest for the same distance in the world. The visa fee paid by Nigerians in Nigeria is one of the highest in the world. In the face of harsh economic environment and realities, most advanced nations hardly consider foreigners for any available jobs that their citizens can do. Shall we then lead a pack of protesters to boycott their products and services in the face of this discrimination? Instead of the threat, my appeal to them is to sit down to discussions using the instruments of legal lobbying, which is

permissible in a democracy, moral suasion and winapproach. They need to work with the Nigerian state to ensure that when the PIB is passed, the government is pressured to put in place an environment that is conducive for their businesses. They should logically put their thoughts across and stop threatening the Nigerian nation, because if they leave, others are waiting to take their positions. Still on PIB, the Unions on the other hand have people issues with transfers across the new agencies, career progression, pension, cohesiveness of the union and employment security etc. The fears are germaine but a well-articulated and intentioned PIB will lead to job creation in the long run and there is a window period of 24 months to resolve labour issues before the law fully takes effect. My appeal is that all the stakeholders must come together and see Nigeria as the essential goose that should be protected against dangers and death in order for her to continue to lay golden eggs. What will your comment be on the crisis in Rivers State? In a democracy, people within the same political party may differ in opinions. People are bound to be ambitious to the annoyance of others. But this should not have erupted into the kind of film we watched on the floor of the Rivers State House of Assembly in which human beings were being planked with the Mace. It is unfortunate, unacceptable, condemnable, and offensive to all known socio-political ethos and a very big distraction to governance. We must be careful also not to redefine democracy to mean where minority will have their way against the majority. For the sake of the citizens of Rivers’ State, all the parties must come to table quickly for the sake of the survival of our democracy. Politicians should please remember that the very people they swore to protect and defend will be the losers in this avoidable conflict. We should not forget in a hurry how militancy was imported into the Niger Delta polity. It nearly consumed this nation. Kidnapping, which is an outcome of the painful past has not been effectively dealt with.

Insurance

22 Tanzania insurers want 10% in gas deals

Gas pipeline

Inadequate human capacity impede oil, gas risks Rosemary ONUOHA

nadequate human capacity has been identified as a reoccur ring phenomenon in the insurance industry and is prone in the underwriting arm of the sector. Immediate past President of the Chartered Insurance Institute of Nigeria, CIIN, Mr. Wole Adetimehin, who made the assertion, said that the development has made the sector unable to play big in the underwriting of oil and gas risks. Adetimehin said, “I would say inadequate human capacity has remained a reoccurring challenge facing our industry. It is more prominent with the underwriters. Nobody can fault the underlining reason of the local content policy

initiative and it is meant to cut across all the sectors of the Nigerian economy. But in appraising the benefits so derived from the insurance sector, we are all having the fears as to what conclusion or report card we would give at this time. “This is because from all facts available, we are yet to begin. Yes, there has been some participation here and there, but it is still far from the real intention and I think the industry should be addressing these challenge in a more pragmatic manner and one of such strategies, would be to really come together, sit down and evolve practical solutions.” He therefore advised insurance practitioners to shun independent approach to doing things, and align more effectively to the fundamentals of insurance

practice globally which is pooling and sharing of risks. According to him, the move is necessary for insurers to tackle the challenge of human capacity and maximise opportunities provided by the local content policy. He further said that the concept of pool formation and working together are the only way operators can grow their capacity, adding that available facts show that operators have not begun to scratch the sur face of opportunities provided by the local content policy. “The whole idea or approach of everybody going about it alone can hardly resolve this challenge. At our level as an institute, the challenge to us is to promote training modules and curriculums that would open or widen the mind-set of

practitioners as to what to do. Capital base of companies have grown considerably, in fact, beyond imaginable scope.” Adetimehin noted that beyond capital, there is a lot more that is expected from operators, stressing that operators ought not to underwrite or shoulder risks with their capital. He said capital is meant to provide infrastructures that would propel them to underwrite risks effectively. He said operators need to develop the capacity to absolve risks, adding that the experience has been fairly good in the oil and gas business. He noted that if stakeholders can come together under pool formations, as being canvassed at many levels, capacity would grow.

he local insurance industry in Ta n z a n i a i s pushing the government to put in place a legal framework that obliges oil and gas companies to give 10 per cent of the insurance cover in the industry’s deals to local companies. Sources say a proposal is already with the gover nment with the justification that “local capacity should first be fully utilised” before covers are taken outside. Tanzania’s insurance annual gross premium market is estimated at around 400bn/- but with massive natural gas discoveries that figure could reach 2tri/- within a decade, according to industry sources. It is understood that a committee under Association of Tanzania Insurers is in talks with the Finance Ministry over how to move this forward to conclusion. They are asking that while they don’t have capacity to handle 100 per cent of the multibillion insurance deals of the multinationals in the country, they should be accorded 10 per cent of it. “To be frank, we are worried. We don’t want all these companies in the gas industry to insure outside,” a source in the insurance industry said at the Tanzania Oil and Gas Suppliers Conference which ended in Dar es Salaam. He said there are steps in the industry including exploration (downstream and hydrocarbon production), shipping, p r o d u c t i o n , transportation, storage and marketing and that each of these steps are usually insured. “Not all these insurance covers should be taken outside,” he said. R e c e n t l y, t h e government was advised to ensure the energy policy being formulated contains a clause that demands oil and gas businesses to be insured by firms registered in Tanzania.

Insurance

Insurance issues loom over shale gas development

Shale gas operators

nsurance providers want a clearer picture of the potential hazards of deep well hydraulic fracturing in U.S. shale plays as they weigh the costs of covering the risks - or consider whether to provide insurance at all, industry officials and experts say. Some major global reinsurers, which traditionally pick up substantial parts of insurance exposure, remain unwilling to take on fracking and well drilling risks in shale plays. They will wait until operating, regulatory and legal liability issues become clearer, said Justin Russo, senior vice president of energy insurance provider Energi Inc., based in Peabody, Mass. A more consistent, visible and effective set of best operating practices is needed, said Russo. “We think it (drilling for oil and gas) can be done safely,” said Russo, who described the dilemma at a meeting of the Environmental Council of the States last month. “We have developed ‘best

It is an unresolved issue that will have to play out over the next few years, maybe longer” as a new block of lawsuits moves through state courts, Hagström said

practices.’ But the reinsurance community isn’t convinced,” he said. The unique nature of fracking and horizontal drilling operations presents new legal issues that could bear critically on the effectiveness of insurance coverage, said Earl Hagström, an attorney with the Sedgwick law firm’s hydraulic fracturing group. “The issue that insurance companies and their counsel are wrestling with is: Is this risk covered under existing policies?” he said. “Environmental risk has been around for a long time. Insurance companies know how to deal with it. But there

are a lot of unknowns (in shale gas operations), and a lot of conflicting information. If something goes wrong, how big a problem is it?” Hagström said. “It is an unresolved issue that will have to play out over the next few years, maybe longer” as a new block of lawsuits moves through state courts, Hagström said. “The insurers and the reinsurers are reticent to participate if they can’t understand the risk. If they can’t understand the risk, they can’t price it. That’s what the insurance industry is wrestling with: ‘If we write this policy, is it going to be profitable for us?’ he added.

Several major reinsurers declined to comment on their position on shale gas and oil development for this story. “The whole business of reinsurance is based on that premise that you can understand and quantify risk and spread it around to an insurance pool,” said Andrew Logan, director of insurance program at Ceres, a Bostonbased advocacy group for sustainable resources strategies. “If an insurer can’t measure and quantify that, the choice would be to stay out of the business entirely. Insurance is one side of the issue. Bank f i n a n c i n g i s a n o t h e r. Rabobank, the Dutch financial firm, has declared it won’t finance fracking projects at all. He added, “They don’t understand the risk, and they don’t think it is justified by the returns. We’ve certainly heard other banks are trying to come up with some set of indicators to judge which (drilling) companies to lend to and which not to. Given the tight constraints on gas operations, that’s a pretty big deal.”

MDAs should pay 2013 insurance premium - NCRIB Rosemary ONUOHA

resident of the Nigerian Council of Registered Insurance Brokers, NCRIB, Mrs. Laide Osijo, has appealed to all federal government Ministries, Departments and Agencies, MDAs to pay up their insurance premium for the 2013 financial year. According to Osijo, some MDAs have paid up in line with the ‘no premium, no cover ’ directive of the National Insurance Commission, however some others are yet to follow suit. She said, “I appeal to other Ministries Departments and Agencies of government to follow suit. So far, many MDAs have paid their premiums and we want others to do so. I must commend the efforts of the Federal Government for assisting the insurance industry in growing the Gross Domestic Product (GDP) and adding more to the economic growth of the nation.” It will be recalled that all MDAs are statutorily required to have a compulsory group life insurance for their employees, which is renewable every year. Osijo however commended the Nigerian N a t i o n a l Pe t r o l e u m Corporation, NNPC, for prompt payment of premium for its risks. S h e s a i d , “A s t h e President of NCRIB, I want to commend the NNPC for prompt payment of premium. Immediately the business was given, they complied with the ‘No premium no cover’ rule, and paid the premium. All the brokers that were approved for the business have taken their commission, which is highly commendable. With the payment, when claims occur, definitely underwriters will pay their claims. Brokers will help the NNPC in ensuring that the claims are paid promptly too.”

Maritime

Surveillance camera at the port

PORT SECURITY:

Nigeria struggles to beat U.S. Deadline Godwin ORITSE

t is barely one week to the expiration of t h e 9 0 - d a y ultimatum issued by the United States Coast Guard to the Federal Government to ensure proper implementation of the International Ship and Port Facility Security (ISPS) Code for port security, or face sanctions. As at the time of filing this report, stakeholders in the maritime industry were still struggling to put measures in place to secure some cargoes and port facilities in the country. A l r e a d y, t h e Fe d e r a l Government has appointed the Nigerian Maritime Administration and Safety Agency (NIMASA), as the Designated Authority (DA), to midwife and implement the ISPS Code, and NIMASA on its part is partnering with other relevant agencies to ensure that the deadline is met. Besides the frantic effort being made by NIMASA, the Nigerian Ports Authority

( N PA ) , h a s r e c e i v e d p r e p a r e d Po r t Fa c i l i t y Security Assessments (PFSA), and Port Facility Security Plans (PFSP) on port terminals across the country. Recall that the American Government issued a threat to stop vessels that have called at Nigerian port thereby stopping shipping services to Nigeria. Speaking at a recent meeting of the Port Facility Security Officers (PFSO) Forum, Chairman of the group, Mr. Subaru Anataku, said that the threat should be taken seriously as time was running out on Nigeria. He charged the officers to be on top of the situation as they will be held responsible for any breach, adding that the new regime has put more responsibilities on them. The group is however of the opinion that sanctions should be meted out to any terminal or facility that did not comply, noting that it is only when this is done that stakeholders will fall into line. Another member of the Forum, who pleaded for

a n o n y m i t y, n o t e d t h a t NIMASA needs to be guided on implementing the ISPS Code, as the agency has exhibited some level of ignorance in processes and procedures. Also speaking, Mr. Lucky Aghomi, urged members of the Forum to do a selfappraisal of their facilities, before the arrival of the officials of the U. S Coast Guard, noting that was the only way to stay abreast of security situations. He said constant regigging of the Port Facility Security Assessments and Plans is one sure way to stay afloat, and urged PFSOs to imbibe the tenets of the Code with a view to knowing their rights and position on issues as they arise. The security expert explained that the Code gives the PFSOs a lot of powers and responsibilities to deal with issues when security is breached. “The Code gives you power to limit the movement of armed personnel within your terminal, but it is only you who knows that such power can be exercised,” he

stated. Anataku maintained that drill and exercises should be a continuous routine in the terminals as that was one of the concerns raised by the Americans. As stakeholders and operators in the maritime industry rush to beat the deadline, security firms are also providing training on ISPS for their personnel so as to remain relevant in the new dispensation. So far, about 12 terminals are said to be deficient in the implementation of the process during the last visit of the U. S coast guards. Some of the terminals include ENL Consortium, a general cargo terminal in Apapa Port and Tin-Can Island Container Terminal. Among those that are compliant include crude oil terminals operated by oil majors in Nigeria, including, ExxonMobil’s qua Iboe Te r m i n a l ; C h e v r o n ’ s Escravos Terminal , Shell’s Forcados; and Nigeria LNG’s Bonny Terminal.

Dockworkers raise alarm over youths’ employment in tank farms

OCKWORKER S operating at the Tin Can Island Port in Lagos, have raised alarm over some illegal activities allegedly being indulged at the jetties of some of the tank farm operators at Ibafon. The workers told Sweetcrude in Lagos last week that some of the tank farm operators engage the services of indigenes of Igbologun, Snake Island and Kirikiri; all n e i g h b o u r i n g communities to carry out labour activities that are meant for dockworkers. According to them, employing other workers to do the jobs meant for dockworkers, is tantamount to illegal engagement because, the indigenes are not legally registered with the Nigerian Maritime Administration and Safety Agency (NIMASA). They said that the NIMASA Act of 2007 clearly stipulates that all dockworkers should register with the maritime regulatory agency.

Maritime

Terminal Operator decries insufficient tug boats, multiple checks F

Freight forwarders set up 7-man committee Godwin ORITSE

Tug boat

Godfrey BIVBERE

P M Te r m i n a l s , one of the p r i v a t e terminal operators at Apapa Port, has decried the incidence of inadequate tug boats for pilotage functions at the ports in Lagos, as well as the presence of multiple Customs check points after consignments have been cleared for exit. Speaking for APM Te r m i n a l s , t h e C h i e f Commercial Officer, Neil Fletcher, while making a presentation to the visiting Minister for National Planning, Dr Shamshudeen Usman, said that inadequate tug boats makes it difficult for vessels to be brought to the berth when there are lots

of ship calls. The Minister, who also doubles as the Chairman of the Monitoring and Implementation committee of the National Council on Privatisation, NCP, had led members of the committee on a tour of Apapa Port to assess the concession exercise. According to Fletcher, “The number of tug boats available for traffic management,” are not enough. “Sometimes when berthing, we have some delays because tug boats are not available. There are no tug boats within the harbour and we can’t get ships in as quickly as we like because of tug boats.” On the issue of multiple check points, the APM Terminal boss said, “On the way out, multiple checkpoints on containers

leaving the terminal” after they have been duly cleared is a problem.” Similarly, Fletcher also complained about the high volume of containers which the Customs send for physical examination, stressing that it poses a great challenge to its operations. In his words, “The percentage of Customs request for examination is very huge in number in Nigeria and that is one reason why we have the challenge with physical examination and the containers we scan. It’s the amount of request we have.” The Minister had earlier said that though there are still some challenges, the nation’s ports have improved greatly in terms of cargo t h r o u g h p u t a n d infrastructures after the concession exercise.

He commended port concessionaires on their positive impact on the cost of doing business in Nigeria. According to him, “The efficiency at the ports is in multiples of what it was prior to the concession. There is no waiting time for ships as they come into Apapa; every one docks immediately and begins the discharge.” The minister compared port operations during the infamous “cement armada” saga of the 1970’s, and the era of $850 congestion surcharge on containers to what obtains now. “I remember when I was working in Lagos, as you are driving on the Marina… You used to have a large flotilla of ships waiting to berth. Now it looks as if there is not enough business in the ports but it is really because of the work that all these companies are doing.

reight forwarders have set up a s e v e n - m a n committee to rescue the cash-strapped and crisesridden, Council for the Regulation of Freight Forwarding in Nigeria (CRFFN). The decision to set up the committee was reached at a meeting held in Lagos last week at the instance of the immediate past chairman of the CRFFN Governing Council; Alhaji H a ke e m O l a n r e w a j u , which was attended by leaders of all the registered freight forwarding associations. Members of the committee are: Chief Ernest Elochukwu, Chief Peter Obih, Alhaji Hakeem Olarenwaju and Alhaji Aminu Kaye.Others are; President of NAGAFF, Chief Eugene Nweke, Alhaji Moshood Tijani and Chief C.A.T Agubamah. In a chat with reporters shortly after the meeting, President of the Association of Registered Freight Forwarders of Nigeria (AREFFN) Dr. Frank Ukor, said that the committee was set up to move the Council and the associations forward, in line with international best practice. Ukor noted that another meeting will hold soon for the committee to report on the achievements made within a time frame, while a town hall meeting will be conveyed for all freight forwarders on how to work as a team. “The council is our own and all freight forwarders must be carried along in whatever decisions that comes out.” On his part, a former president of the Association of Nigerian Licensed Customs Agents ( A N L CA ) , S i r E r n e s t Elochukwu, also said that without the Council, the dream of professionalising freight forwarding will not be achieved.

Maritime

Abandoned ship

Expert cautions against uncontrolled ship repair yards Godfrey BIVBERE

onorary Secretar y o f t h e Institute of Marine Science and Technology (IMarEST), Mr. Alex Peters, has warned of great dangers ahead unless the Federal Government takes action on uncontrolled ship breaking and ship repair yards scattered along the coast line in Lagos, and other riverine areas in the country. Pe t e r s , w h o s p o ke t o SWEETCRUDE on the issue in Lagos, explained that illegal breaking and repair of vessels have environmental, atmospheric and aquatic effects, which in the long run will also affect residents living along the riverine areas. He noted that other countries have designated

yards where breaking and repair work on ships are carried out to protect the environment, adding that a lot of poison (chlorine) is emitted into the water through such uncontrolled activities. He pointed out that apart from the pollutions from these activities; there is the danger of explosion during repairs of tanker vessels because there are substances that can lead to explosion. The IMarEST boss said that the Federal Government decided to stop cooking of crude from which diesel is gotten, because of its effect on the environment and not the quality of the product that is gotten. He stressed that as long as there is demand for ship breaking and repair services, these illegal yards will continue to operate until government move in to

He pointed out that apart from the pollutions from these activities; there is the danger of explosion during repairs of tanker vessels because there are substances that can lead to explosion regularize their functions. On the agencies of government responsible for the regulation of these functions, Peters identified them as the Nigerian Ports Authority (NPA); Nigerian

Maritime Administration and Safety Agency (NIMASA); L agos State Water ways Authority; and the National Inland Waterways Authority (NIWA). Meanwhile, an official of one of such facilities in Lagos who spoke to SWEETCRUDE in confidence disclosed that they are still in business because they regularly settle officials from government agencies who come to them at intervals. He explained that there are times the government officials come down hard on them when complaints get to their offices, but like everything in Nigeria, they are soon let off the hook. When contacted, General Manager in charge of Public A f f a i r s , N PA , C a p t a i n Iheanacho Ebubeogu, said it might not be true that the owners of those facilities are operating illegally, but

however stressed the need for their operations to be regulated. On whose duty it is to regulate their functions, E b u b e o g u t o l d SWEETCRUDE that he could not speak over the phone as there are issues that needed to be explained personally. On his part, the Deputy Director in charge of Public Relations, NIMASA, Mr. Isichei Osamgbi, did not respond to SWEETCRUDEâ&#x20AC;&#x2122;s many enquiries on the issue. He requested that enquiries should be e-mailed to him, or sent by text message. But he did not respond to either However, an official of NIMASA who spoke to SWEETCRUDE, confirmed that there is a department responsible for the regulation of ship breaking and repairs. He said that although a lot have been done in regulating the sector, there is the need for the provision of more platforms to enable them per for m their functions effectively.

27 Ijaw communities give oil major ultimatum on spill Emma ARUBI

Niger Delta community

Oil communities challenge RMAFC on Derivation Fund Noel ONOJA

i l producing communiti es in Abia State, have joined their counterparts in other oil producing states in clamouring for the direct payment of 13 per cent derivation fund to the communities. The oil producing communities are insisting that according to the constitution, the 13 per cent Derivation Fund is a first line charge on the Federation Account, which should be directly beneficial to the communities rather than through a third party arrangement. The group argued that the 13 per cent derivation is constitutionally set aside b e f o r e t h e Fe d e r a t i o n Accounts Allocation Committee (FAAC) meeting is allowed to share the

balance of the total oil revenue of 87 per cent. These observations were contained in a memorandum sent to the Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), and signed by 10 leaders of the communities including Chief Jones Udeogu, and Barrister Chinedu Elechi. The memorandum read in part: “RMAFC has no right to send the 13 percent derivation fund through any state government account who is the third beneficiary of the Federation Account. “It is also clear that 13 per cent Derivation Fund is not part of the consolidated account of any tier of government. The fund is not part of state/local government Joint Account, the fund as provided in the 1999 constitution is on its own and should be treated as such,” they stated. They noted that the fund is

The memorandum read in part: “RMAFC has no right to send the 13 percent derivation fund through any state government account who is the third beneficiary of the Federation Account not manna from heaven but was fought for by the oil communities during the 1994/95 National Constitutional Conference, headed by Chief Edwin Clark. “It was due to the pressure exerted by the oil and gas

producing communities of Nigeria that made the 13 per cent derivation fund as one of the main decisions and resolutions of the 1994/95 conference. During the 1999 Constitution Drafting Committee, the oil and gas producing communities were there to pile pressure to ensure that 13 per cent derivation fund is enshrined in the 1999 Constitution of Nigeria,” the group said. They therefore posited that RMAFC has no right to send the fund through the state governments’ account, which is the third beneficiary from the Federation Account. They alleged that for 13 years, the governors of the states have received the derivation fund meant for the development of oil and gas producing areas to develop their state capitals and non oil producing communities, leaving the actual host communities in abject poverty, hunger and penury.

ARRI- IJAW communities in both Delta and Bayelsa states, affected by the Qua Iboe/Eket oil spillage in the river Ramos, have issued a 21-day ultimatum to Mobil Producing Unlimited, within which to effect a thorough clean-up and pay a total of N53 billion as compensation, or face the wrath of the people. In a statement by Alhaji Babatunde Asaba, the spill which occurred November 9, 2012, have left the communities without any means of livelihood since then, just as they were neither given any kind of relief assistance to cushion the Economic hardship being suffered nor have their letters of complaints to the company be addressed. He listed some of the affected communities to include Azamabiri, Orobiri, Aghoro11, Jafawei, Agge Palm Bush, Kare-Epre, Belle, Okubou Zion, Okofa-Aka, Seleghngbene, Akpagrofullboat, Youtu 1 and 11, Okia, Panya, Galiwei and Beniboye all in Ekeremor and Burutu council areas of Bayelsa and Delta States. Asaba urged the company to do a clean-up without delay to avoid further provocation of the people and called for relief materials, stating we “have written Mobil Producing with formal claims amounting to N53.5 billion with respect to the degree of damage suffered by the communities. We are worried by the delay from the company to effect payment and initiate clean-up within 21 days failing which we shall embark on protest to disrupt their operations,” the statement added.

Community

Road safety works on duty

ExxonMobil, FRSC partner on road safety in Akwa Ibom

Pan-Nigeria road safety campaign, a partnership b e t w e e n ExxonMobil and the Federal Road Safety Corps (FRSC), has been launched in Akwa Ibom State. The campaign, which is part of a series of road safety programmes to address the challenges of road accidents will witness a week-long events in the state lined up for Eket, Uyo and Ikot Ekpene. The year-long campaign, which was formally launched

in Abuja in June 2013 by the Corps Marshall and Chief Executive of FRSC, Osita Chidoka, focuses on three critical areas - seat belt usage, speed reduction, and use of phone while driving. In his speech at the flag-off of the Akwa Ibom State awareness campaign in Eket, the Manager, Logistics, Mobil Producing Nigeria, Capt. Femi Olaiya, said that ExxonMobil is partnering with FRSC on the campaign to promote attitudinal change among road users in Nigeria in order to reduce road accidents.

The national road safety initiative reflects the level of priority which ExxonMobil accords safety in all its locations of operation in Nigeria

Olaiya said: “The national road safety initiative reflects the level of priority which ExxonMobil accords safety in

all its locations of operation in Nigeria. This campaign demonstrates our commitment to safety and

support for Nigeria’s aspiration for accident-free roads.” Olaiya advised drivers to ensure that they use their seat belts, avoid over speeding and the use of mobile phones while driving in order to protect themselves, their passengers and other road users from avoidable road hazards. Speaking at the event, Deputy Corps Marshall, FRSC, Mr. Yomi Olukoju, said that road crashes have been a source of concern not only to the people of Nigeria but to most developing countries and in the next few years, road crashes may be the third highest killer of mankind. Olukoju while narrating some chilling stories of how road accidents affected his loved ones, said that road crashes do not just happen, but are caused and therefore preventable. He said: “This campaign is a national reawakening to address the challenge of poor attitude to road use in Nigeria, which has resulted in several avoidable accidents.” He commended the partnership between FRSC and corporate bodies particularly ExxonMobil which he said has shown commitment to issues of road safety and security of human life in work places.

Community

Emeka Offor appointed Rotary Ambassador for polio eradication

n appreciation of his generous donations of $1million towards polio eradication in Nigeria, the Executive Vice Chairman of the Chrome Group, Sir Emeka Offor, has been appointed as Rotary International’s First Polio Ambassador in Nigeria. In a letter dated July 12, conveying the appointment to offor, signed by Rotary Foundation trustee, Messrs D.K. Lee, and Wilfrid J. Wilkinson, the Foundation said, this was sequel to the Rotary Convention PolioPlus reception held in Lisbon, Portugal on June 25. The letter read in part: This appointment is made in recognition of your extraordinary commitment to the eradication of polio, and your willingness to play a strong leadership role in Rotary’s polio eradication efforts in Nigeria.” Rotary ended by noting that the eradication of polio is its first priority, adding that O f f o r ’ s “ g e n e r o s i t y, commitment and enthusiasm will help to eliminate this dreaded disease from the surface of the earth.” The foundation also sent a similar letter to President Goodluck Jonathan, informing him of Offor, who is also the Founder, Sir Emeka Offor Foundation, SEOF, of his appointment as a polio ambassador. The letter, also signed by Lee and Wilkinson, said: “As a Polio Ambassador, Sir Emeka Offor will utilise his professional and personal skills and connections to advocate for activities that support immunisation activities throughout Nigeria and West Africa. “The message will be clear: polio must be eradicated, and leaders must all collaborate in order for the effort to be successful.” Also similar notification letters were sent to the Secreatry of the Government of the Federation, SGF,

Sir Emeka Offor

Offor’s “outreach will not only allow him to discuss the requirements for polio eradication on the African continent, but also encourage opportunities for increased collaboration and enhanced cultural exchange” Senator Ayim Pius Ayim; the ministers of Health, and Culture and Tourism, Prof. Christain Chukwu, and Chief Edem Duke, respectively. In Anyim’s letter, Rotary disclosed that as an ambassador, Offor “ will represent Rotarians in his outreach to leaders in

Nigeria and throughout Africa, asking for their urgent engagement in the polio eradication effort.” It added that: “We have made tremendous progress in the fight against polio in Nigeria, but we cannot afford to slow our efforts now.” To Chukwu, the letter indicated that Offor planned

“to meet with Nigerian leaders and to perhaps expand those conversations with leaders in other polio affected countries throughout Africa.” While to Duke, the letter noted that Offor’s “outreach will not only allow him to discuss the requirements for polio eradication on the African continent, but also encourage opportunities for increased collaboration and enhanced cultural exchange.” The letters urged all the respective recipients to support and collaborate with the polio ambassador to ensure a successful eradication of the disease in Nigeria and the rest of Africa. In a separate letter thanking Offor for the $1 million to PolioPlus, the Vice C h a i r, I n t e r n a t i o n a l

PolioPlus Committee, Mr. John F. Germ, said the contribution “helped to launch the new Bill & Melinda Gates Foundation challenge, and as such was leveraged with an additional US$2 million, resulting in a cumulative impact of US$3 million toward the eradication of polio in Nigeria, Afghanistan and Pakistan.” He added that “The announcement of an additional US$100,000 corporate gift plus air time on your radio station network was a welcome surprise. This corporate gift will also be leveraged by the Gates Foundation, and the media coverage on the polio eradication activities will help to set the stage for success.”

Community

NDDC urged to re-award shore protection project Jimitota ONOYUME

Oil rig

NASS urged to tackle policy weaknesses in PIB Jimitota ONOYUME

O R T H A R C O U R T: MEMBERS of the National Assembly have been urged to address weaknesses so far identified in the Petroleum Industry Bill, PIB, before it is passed into law. In a keynote address at the 3rd Port Harcourt Petroleum mini roundtable, Dr Joseph Ella, who made the appeal said there was the need for the bill to be properly formulated for it to achieve targeted goals. Continuing, Ella said the PIB was the first unified legal

framework coming up to regulate operations in the oil and gas sector of the country. He also noted that at the moment the sector was being operated under various joint venture, JV agreements, a situation he said, had not made the nation to reap the full benefits from the oil operations in the country. Ella, who was the keynote speaker at the roundtable organised by Emerald Energy Institute, University of Port Harcourt, said the PIB should be made to guarantee uninterrupted flow of oil and gas, adding that it should also address challenges in the Niger Delta region. Continuing, he urged the lawmakers to also ensure that

the bill promotes accountability in the oil and gas sector as part of its objectives, adding that the bill should give cognisance to the oil bearing communities as owners of the oil resource. Ella further called for the bill to put some restraint on the powers of the Minister of Petroleum, arguing that in its present form, the bill accorded too many powers to the minister, which could be abused. “The bill will not operate well if the Minister has unrestrained powers,” he maintained. While calling on the National Assembly to scrap the Petroleum Equalisation Fund, PEF in the bill, Ella

said the PIB should be made to create direct funds for the Pe t r o l e u m Te c h n o l o g y Development Fund, PTDF, and the Petroleum Host Communities Fund, stressing that the bill should properly define what a host community is. Earlier, the Vice Chancellor of the University of Port Harcourt , Prof. J os e p h Ajienka, in his welcome address called on the nation to get the oil industry right for the overall interest of all sectors of the economy. On his part, the Acting Director, Emerald Energy Institute, Prof. Ogbonna Joel, said the bill should not only be passed, but should also be

O R T HARCOURT: AN urgent appeal has gone to the Niger Delta D e v e l o p m e n t Commission, NDDC, to re-award the Otuabagi shore protection project in Bayelsa State to a competent contractor. A former Bayelsa Commissioner on the Board of the NDDC, Mr Anthony Or ubo, who made the appeal in Port Harcourt, Rivers State, said the contractor handling the project allegedly abandoned it shortly after he got funds to mobilise to site. Orubo, who spoke extensively on the importance of the project to the people of the area, wondered how a contractor could abandon such a project that was very significant to the economic life of several communities in the area. He further appealed to President Goodluck Jonathan to ensure credible persons were appointed into the board of the NDDC at the end of the tenure of the present board. While commending the team spirit in the current board of the Commission, Orubo said credible persons should be made to take over from them at the end of their tenure, adding that partisanship should be shunned in selecting a team to succeed the current board. Continuing, he said there were capable hands for the office of Executive Director of Projects that is speculated would go to the state. “I can’t tell you whether Bayelsa will get Executive Director of Projects, but if that office comes to Bayelsa as many are saying, it will then be good because there are competent Bayelsans to fill such position,” he said. He also appealed for early completion of the Kayama shore protection project and the Sampo/Nembe/Ogbia Road.

Community

Bayelsa seeks Dutch assistance to tackle flood

Communities distance selves from proposed Ijaw Congress Emma ARUBI

Flooded community in the Niger Delta

Samuel OYADONGHA

ENOGOA Troubled by the perennial problem of flooding and its devastating consequences on its citizens, Bayelsa State Government has solicited the assistance of the Kingdom of the Netherlands to help the state overcome the menace. Yenagoa, the Bayelsa State capital alone has 13 water channels which ordinarily should have ser ved as natural drains, but these channels instead serve as passage for influx of water from the Epie Creek and Ikoli River at the height of the flood season. Only recently, a study conducted by the State Post Flood Committee on a proper method of drainage management in the state capital, proposed a flood gate to regulate the inflow of water into the Epie Creeks, to save the capital city from being sub-merged. It was therefore not surprising when the Bayelsa State Governor, Mr. Seriake Dickson, seized the opportunity of the visit of the Ambassador of the Kingdom of the Netherlands to Nigeria, Ambassador Bert

This is the centre of gravity of the Niger Delta, and is the real delta of the Niger Delta. We talked about our common desire to see how we can synergize to address some of the problems of development that our people are confronted with Ronhaar to Yenagoa, to solicit the expertise of the latter country which is also below sea level to address the flood menace, water management and environmental pollution. Dickson, who spoke at a state banquet in honour of the envoy, noted with concern that oil bearing communities including those in Bayelsa State, have continued to bear the brunt of environmental degradation as a result of the activities of multi-national oil companies operating in the region. While lauding the efforts of the Dutch Envoy for d e e p e n i n g a n d strengthening the cordial working relationship between the Netherlands and Nigeria, he appealed for his co-operation in tackling

the problems as well as addressing serious issues of flood and erosion control as well as other related matters. He also called on the envoy to help attract investors into the state by projecting Bayelsa positively to the outside world, noting that his administration’s determination to make the state a tourism and investment destination is fully on course. “Ambassador, as you have come, you have seen the determination of our people to make a difference. You have also seen the peace and security of our state, and because you are here, where it matters most, this is just not the capital of a state, you are here in Bayelsa State, Yenagoa, the Glory of all

Lands and the headquarters of the Ijaw nation. “This is the centre of gravity of the Niger Delta, and is the real delta of the Niger Delta. We talked about our common desire to see how we can synergize to address some of the problems of development that our people are confronted with.” Dickson frowned at the travel advisories of some Western embassies noting, “this is the irony, whereas their business interests work in our creeks far away making monies for this shareholders, Western embassies advise their citizens and tourists not to visit certain areas. “Ambassador, I can tell you without any fear of contradictions, that Yenagoa where you are, that Bayelsa State where you are, is safer, more secure and more peaceful than many places, not only in Nigeria, but so many other countries of the world.” Underscoring the strategic importance of utilizing the economic benefits that abound in the state, which spirals beyond the Nigerian market to the West African Sub-region and the entire Gulf of Guinea, the Governor noted that anybody that takes advantage will also enjoy economic control.

ARRI-THE E t h n i c Nationalities of the Niger Delta, have stated that they cannot be part of the proposed Ijaw region by the Ijaw National Congress, INC. The group also described as barbaric, the attacks and killings of Itsekiri natives by armed Ijaw militants and charged the Federal Government to urgently intervene to stem the possibility of an escalation into a regional crisis. In a communiqué signed by representatives of the group after an enlarged meeting at Uyo, Akwa Ibom state by Dr. Cyril M. Ekiko, Obong Aniedi Ndem, Edward Ekpoko, Amorighoye S.Mene, Chief Augustine W. Okajie, P r i n c e Vi n c e n t E . O. Chukwu and Shadrach Ebiana respectively for the Ibibio, Itsekiri,Ikwerre and Isoko ethnic nationalities, they dissociated themselves from the proposed Ijaw region, saying that it is a “Frankenstein Monster”. “If ethnic nationalities in the South-South are suffocating under the political weight of the Ijaws in the present dispensation, it is obvious t h a t a n I j a w Re g i o n including these ethnic nationalities will be a nightmare”. It would be recalled that in the proposed Ten (10) Fe d e r a t i n g U n i t s f o r Nigeria by Ijaw apex body, the Ijaw National Congress, INC, the Ijaw region would include territories belonging to the Ibibios, Ikwerre, Itsekiri, Isoko, Ilaje, Benin and U r h o b o e t h n i c nationalities. The communiqué condemned in strong terms the “ recent unprovoked and barbaric attacks on some Itsekiri communities in Warri North council area of Delta State, leading to the destruction of lives and property” and called on the government to fish out those behind same for prosecution to stem the current wave of crisis in the Niger Delta region.