Tuesday 24 March 2015

Oily lessons from Saudi Arabia



Last week, this column touched on the crisis of fuel supply in the country and the notable incongruity of having a so-called ‘oil-producing’ (really, the precise term should be ‘rent-collecting’) nation that cannot refine its crude domestically but has to engage in the neo-colonial and economically ruinous practice of round-tripping its crude abroad from where it shamelessly re-imports same as finished petroleum products!


This week, we may have gone elsewhere but the reality of the fact that just like was the case with NITEl and the telecommunications sector, nothing would really change until we dismantle the NNPC behemoth, compels us to remain on that page in the hope that over time we will achieve the required critical mass to dislodge the beast.


Oil is politics and for a mono-dependent economy as ours, it quickly moves the subject to the realm of political economy. As is evident presently, Nigerians and indeed the rest of the world have been at the receiving end of dislocating oil prices in the past few months. So malevolent has its effects been that the naira has since spiraled from an exchange rate of N151 to the dollar to a current figure in the range of N227!


This has come with collosal effects. As we write, the Jonathan administration and the National Assembly have continued to tinker with the 2015 budget in which revenues are largely predicated on crude oil sales. States can hardly meet salary and pension obligations even as 2015 may sadly yet turn out to be our leanest year yet in much needed capital projects and infrastructure upgrades. At the personal level for citizens, the value of N1 this time last year hovers between 50 and 70 kobo even as Africa’s richest man, Aliko Dangote has tumbled some 40 paces on the world’s richest rankings. Of course, foreign investors, clinical and unemotional portfolio managers that they are, have since scrammed, waiting to someday return when you would have sorted yourselves out! And ‘thanks’ to a leadership hiatus, organized labour has not sent its already indicated wage review invoices to government at the moment, but wait for it, it is coming! And with all its implications too!!


When many analysts explain the problem, they put it on the doorsteps of the now traditional ‘general downturn in the global economy.’ But they need to be more precise: this current crisis has its roots in the Middle East, and precisely in the kingdom of Saudi Arabia, the acknowledged biggest producer of crude oil in the world today.


The land remade in the 1920s by the then fundamentalist House of Saud has over time been largely made famous by the annual convocation of the muslims at Mecca and Medina for the hajj. Within the conclave of Arab politics, it has also been seen lately as a conservative political monarchy as opposed to the theocratic rule of the mullahs in Iran and the jackheads of ‘Islamic State,’ Al-Shabab and Boko Haram. Then there is the issue of the opportunistic relationship between its leaders and the Washington establishment which has helped the West secure a critical political foothold in the Gulf but deeply infuriated regional power contenders and Ottoman empire revivalists like Al Qaeda and Hezbollah.


Oil as politics
In the 1970s and 1980s, the West, whose production and growth machines have for over a half century been closely tied to crude oil as a critical energy source, pushed all of its buttons to ensure that crude oil prices fell. Oil producing nations, including the single largest producer of all, Saudi Arabia, saw their revenues decline massively. It was not funny.

It was particularly most difficult for the Saudis who, on account of their closeness to the leaders of the West, were being vilified in the Arab world as traitors to the oil producing nations, the Arab world and the beneficial interests of muslims. To mitigate some of this, the Saudis used their clout in the Organization of Petroleum Exporting Countries, OPEC, to galvanize a campaign to resist free-falling oil prices through measures like national production quotas


It is leadership, stupid!
One man’s meat it has been said is another man’s poison. For years, the Saudis were content to remain as shock balancers in the global economy as it has to do with oil. Recently however, their patience has literally snapped. There is a limit to how much you can pumell a dog without it responding.

The point of vexation is in the threat of an imminent end to the reign of crude oil as the single most dominant fuel source in the world, thanks to continuing progress in the research and development of shale oil and other energy alternatives. Should this come to full fruition, the Saudis risk not just a return to the tumultuous 70s and 80s but also an even more uncertain future where their crude would no longer be king. So this is a fight between crude and shale and the worst hit nations in the debacle are those like Nigeria who on account of having no strategic vision in the entire process, are mere bystanders. Pity the nation….

It is one thing to be beaten today. It is however something else to see tomorrow’s trouble coming and do nothing to avert it. Nigerians, your vote is your power; this weekend, use it wisely. It shall be well with our nation.




Tuesday 17 March 2015

Jega, the baby, the bath water




Today, Nigeria has what has been described as a Jega problem. It has to do with the fact that a very influential and high-level segment of the political elite has concluded that the biggest national project on the horizon, the 2015 polls, should not be superintended over by the Professor of Political Science and immediate past Vice-Chancellor of the Bayero University, Kano.


To be sure, there have been several problems with the Jega tenure. However, this is not an apology for the out-going INEC boss. And on a personal note, this correspondent who has voted in every election since 1999 should be the last person to ‘defend’ the Professor given that on account of some of the failings of the Independent National Electoral Commission that he presently leads, your correspondent, sadly, is not a registered voter in the 2015 polls.


However, beyond the individual hurts that Nigeria has caused us must be a deeper commitment to the broader interests of the nation. And this today has to do with the worrying trend to demonize the office and person of the Chairman of the Independent National Elections Commission.


At this point, history must be our guide. And here we recall that Nigeria has had a long roll of electoral commissioners being vilified. From Esua in 1964 to Ani in 1979, Ovie Whiskey in 1984, Guobadia, Iwu and now Jega, INEC Chairmen have actually not had their ride easy. In the run-up to the 1983 election, Ovie-Whiskey was so harassed that he had to publicly ‘swear’ that he had never seen a million naira in his life!


For Jega today, the accusations have been similarly heated. He has for example been accused of taking actions to favour the North and for good measure, the leading candidate of northern extraction in the polls, General Muhammadu Buhari (retd). For one who supervised the 2011 polls where the same Buhari was defeated by the incumbent, this 360 degrees shift has to be explained. If Jega did not go out of his way to promote the interests of Buhari in 2011, what changed?


The Nigerian political environment being what it yet is today, it is clear that some of these difficult-to-add-up postulations would be heard now and again. What is more worrying however is that within this confluence of ‘all-is-fair-in-the-jostling-for-political-and-personal-advantage,’ we are now seemingly becoming a people who stand for nothing, who dispense with ethics and truth so cheaply and who throw away the baby with the bath water so casually.


The present elections will come and go with one of either Goodluck Jonathan or Muhammadu Buhari becoming President. But for some of us, that is only the beginning. We will next have to roll up our sleeves and get on with the tough work of building a maximally functional nation, complete with institutions that work and systems that thrive.


And it is here that we return to the Jega tenure. For example, Jega’s emergence in 2011 was a moment that was cherished. Here was a competent and accomplished professional coming to fill a void that had been waiting to be filled. And so unanimous was his appeal and the mood of the nation to help him succeed that, when he asked for a seemingly incredulous sum of money to do the first voters roll for the 2011 polls, the nation rose up to a man to say, ‘give it to him, we want the job done.’


Perhaps this was part of the problem. That Nigeria was too generous to Jega; that he got away with his primal request so easily; that he was Nigeria’s spoilt child, that the national Assembly did not perform more of the oversight that was required of it, that….


There were also other ‘problems.’ In an interview this correspondent had with Senator Enyinnaya Abaribe weeks into the Jega appointment, he pointed to the fact that one problem Jega could have in delivering on his mandate would very well be that the average INEC Chairman is usually brought in from above and then introduced to a team that has already been put in place for him to work with! The implication of this, he reasoned, is very clear: he has limited elbow room within which to manouvre.


Abaribe’s point can be given flesh today in what is clearly the Ogun dilemma. As we write, the National average for voter cards collection is well over 80 percent. But Ogun is only now just struggling to close on 50! So what is the problem here? Many reasons have been adduced for this lag but this writer who lives in Ogun and who had tried to register there knows that Ogun INEC is structurally today a most incompetent organization where gratification is requested of communities before electoral officials are sent to register them!


But there have also been global positives in the Jega years. The introduction of youth corps members in the electoral process, the use of professors and vice chancellors as returning officers, the search for and insistence on modernizing the electoral infrastructure as it has to do with say the Permanent Voters Cards and the Card Reader machines; these are positive developments that should be sustained and built further upon even in the post-Jega era.


Has Jega been fantastic? No. Has he been totally terrible? This is arguable. But for Nigeria, the struggle surely continues. And this includes the struggle to not throw away the baby with the bath water. Good night, Mr. Jega. Of course you know by now not to hope for a renewal of your tenure as it lapses in a few weeks’ time.



This piece was first published in www.hallmarknews.com


Friday 13 March 2015

Slaying the fuel scarcity dragon




As I write this piece, Nigerians are about putting the lid on the latest incidence of fuel scarcity, the annoying wait at the gas pumps, burning away precious time in needless queues, looking for fuel with which to power their cars, generating sets and other industrial appliances.


Like many of the periodic acts of fuel scarcity that occasionally ravage this clearly misbegotten oil-producing nation, the media had before this time out caught a whiff of its imminence and written whistle-blowing stories to push the system managers to work at averting it. Characteristically however, the spin-doctors at the Ministry of Petroleum and the Nigerian National Petroleum Corporation, NNPC, preferred to obfuscate the facts and continue to wallow in denial. And then the chickens came home to roost; literally.


Because it is election season, funds were of course found from ‘ways and means’ sources to stem the gap, albeit temporarily, and to get fuel a fairly significant volume of fuel back to the pumps. The NNPC - which is yet to fully pay back the $1.48bn, which even the pro-establishment PWC audit report held, it had withheld from the Federation account - for example, promptly announced an injection of some 688million litres of products into the system in a move that it believed would definitely make the current queues history. It has succeeded in the main; but we are yet to slay the dragon.


And the reasoning here is simple. If it is true that the recurrent supply shortfalls have come upon us because the ‘Major Marketers’ say they can no longer continue to shoulder the burden of borrowing to import products on their behalf, and also on behalf of a government that perennially fails to pay its own negotiated ‘subsidy component,’ then the question is for how long can the NNPC wade in and meet the supply shortfalls? Also worth answering would be where the NNPC found the funds to import the current bridging stock as well as would find even more to undertake further importation thereafter given the cash crunch that has afflicted government revenues? All things considered then, the current queues will almost invariably return in the not-so-distant future, because the dragon still breathes.


At the centre of the problem is the crisis of perennial mis-diagnosis. In statement after statement, NNPC and the Ministry continually pass on the gauntlet. They accuse hapless Nigerian citizens of panic buying and their partner-marketers of hoarding on a good day and being most insensitive on other days. NNPC is the patriotic party in all of the messages and the enemy is the other. But beyond the blatant blame shifting that is apparent from these lines, it is also clear that any contributions by citizens and marketers in the entire debacle can only be flicks on an already developed gargantuan snow-trail. So we have to go back to the critical question of where the massive iceberg came from.


Critically examined, we are faced with that classic situation explored in that anti-imperialist poster that was most popular within the progressive students’ movement a few decades ago. It displays the picture of a Caucasian imperial overlord being carried in a hammock by black African freedom-seeking slaves, and the inscription which we only paraphrase here, read somewhat: ‘I am the source of your oppression, the only way you would be free is when I come down, but I would not!


Put squarely, the trouble with our petro-chemical complex today is the nature, structure and oppressive mould in which our oil affairs are managed. And it would take the complete restructuring of the Ministry of Petroleum Resources and the Nigerian National Petroleum Corporation to begin to appropriately reset the template. Herein is the path to our liberty as a people.
The NNPC and its mother ministry today are like the Caucassian oppressor described in the poster just referred to. They are imperial behemoths, parasites that leach on what should ordinarily have been a most robust national oil sector. We will not make any progress in our oil affairs as a nation if their excesses are not curtailed. And some of the corollary questions to address in this regard are whether we need them in the first place, and if we do, whether they should continue to remain in their present imperial form and shape, too?


As things stand in the sector today, our crude oil is explored and drilled by private prospecting companies. Going down the chain, other private companies negotiate long-term contracts to buy the produced crude and all of these objectively speaking can take place without the NNPC and the Ministry of Petroleum. Indeed, when the first oil contracts were entered into in colonial Nigeria, it was in the form of the Governor-General giving a long lease to Shell D’Arcy, precursor of today’s Shell Petroleum Development Company, SPDC, to prospect for, drill and market oil on behalf of the colonial state. And it worked. From 1938 when this lease was given to 1958 when oil was finally located at Oloibiri, this was the extant state of affairs. All the government involvement that was noticeable at this time was that Shell D’Arcy sent progress reports to the relevant desk in the Colonial Department of Mines. It was that much of a simple operation. And no one batted an eyelid.


At independence, it was still this state of affairs that persisted until the civil war and its aftermath when oil began to play a heavier role in the nation’s revenue profiles. This coupled with the move for more and more centralized federal power, led to the introduction of a Ministry of Petroleum Resources and the formation of the Nigerian National Oil Corporation which was to later become the Nigerian National Petroleum Corporation.


While it has been argued that the expanding profile of oil in the national economy justified the need to introduce these additions, the reality is that their introduction may have indeed done more harm than good to the overall national petrochemical and economic infrastructure. This is because, rather than assisting in the enhancement of the national petrochemical and economic value chain, they have rather retarded same. This is because though petroleum has since come to be the biggest source of our national revenue, its shoddy management by the agencies in the dock has resulted in a most untenable situation where the nation is today saddled with deficit refineries, a despoiled environment, perennially leaking pipelines and haemorrhaging national values. It is a sad day today in oil-endowed Nigeria.


And so without adding any significant real value to our national fortunes today, the Ministry and NNPC have become most notorious as a cesspool of scandals, blockades, easy cash, slush funds and economic sabotage. They routinely withhold funds from the Federation Account, make upfront deductions from revenues accruing to the nation and dispose of national assets at their own whims. This clearly is not the way to go. And these are the underlying reasons why fuel scarcity would not go for a very long time to come. Compelling reasons indeed why we must most determinedly, slay the dragon today.