U P D A T E SMONTHLY BASKET PRICE

Sept-11 107.61

Jul-11 111.62

May-11 109.94

Mar-11 109.84

Dec-10 88.56

Oct-10 79.86

Nov-10 82.83

Jan-11 92.83

Feb-11 100.29

Apr-11 111.09

Jun-11 109.04

Aug-11 106.32

Oct-11 106.09

110

120

100

90

70Nov-10 Dec-10 Jan-10 Feb-11 Mar-10 Aprr-11May-11 Jun-11 Jul-11 Sep-11 Oct-11Oct-10 Augl-11

Daily | Weekly | Monthly | Yearly 103.11US

80

A Vanguard Monthly Review Of The Energy IndustryNOVEMBER, 2011VOL 02 N0. 30

19

FOSTER, RevenueWatch build capacity on revenue analysis

7

PHCN Eko zone reviews operations … Distributes 85,000 prepaid meters

Usan floater in place off Nigeria

evelopment o f the deepwater Usan field D

offshore Nigeria remains on track for first oil during the first half of 2012, according to partner Nexen Petroleum.

The FPSO has arrived at the field location and has been successfully moored.

COVER

OIL

FOCUS

FEEDBACK

Contents

EDITORHector IGBIKIOWUBO

CORRESPONDENTS

Printed and Published byVanguard Media Limited.Vanguard Avenue, Kirikiri

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Internet:www.vanguardngr.com

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477

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GROUP BUSINESS EDITOROmoh GABRIEL

PAGE LAYOUT/DESIGN Francis AYO & Johnbull OMOREGBEE

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LABOUR

4747

NNSL: The beginning, the end

Jonathan raises Nigeria’s mining profile

Canadian companies to bid for hydro station

We’ve been selling below cost with subsidy

Community engagement buoys successful operations

Fuel subsidy to gulp about $50bn in 5 years

Union lists conditions for downstream deregulation

4242

3838

Foster RevenueWatch build capacity on revenue analysis

FREIGHT

4545 TECHNOLOGY

SOLID MINERALS

Sweetcrude is a publication of Vanguard Media Limited

The Realities of facing deregulation headlong

Nigeria Gas reserves stagnate in 6 years

DEPUTY EDITORClara Nwachukwu

THE TEAM

Oil majors shun local insurance on credit ratings

S nc he word s o on h fulli e t got out, discus i ns t e reg i f h t et u

de ulat on o t e downs ream p role m sector, an h val u l ub i y n p i ular, hav d t e remo of f e s s d i art c eu d ou nal d s ou D s s t h

occ pie r natio i c rse. i cu san s ave u d s d he i ere t d targ e ba e on t ir nt s s an how he v l p l c e u n e d rde e o ment wou d affe t th ir b si ess s an /o i i u i .ndiv d al l ves

o d l , t d t rom t c u o Acc r ing y his e i ion f he over p tmm joi s i t d ou we i g on t

co unity n n he isc rse, d ll n he p n s of v us t e ol s g ver e tpre ared e s ario s ak h der – o nm n , mark t an a h t reg i i

e ers d os of others for de ulat on nt m o e ra mm o er s f F de l Government’s co itment t theol , he vai i i y f uc ure t u p a

p icy t a lab l t o infrastr t o s p orte arket wns re m s c or, a s at tfre m do t a e t nd the t e of he g an f e an t i t e n i alNi eri re ineri s d he ab lity o m et at on d d l peman for petro eum roducts.

h G o E e ut D c or, ni gT e r up x c ive ire t Refi n and he s N g i N i al r l

Petroc mical , i er an at on Pet o eum rp n, M l Chu wu r F uCo oratio NNPC, r. Phi k , in ou oc s i r w t t he r neri s n he n nte vie , admi s hat t efi e i t ir curre ta n n p i i n c t e c i d

st te are i o os t o to ompe e ffe t vely un er er gu a i n n wen o g td e l t o , a d t n to highli h the e a ita o a r a hr h bil tion pr gr mmes the co por tion as e b o ck t e i h em arked n to kno h m nto s ap .

d t o o t s a s r t o l In ad i i n t hi , we l o b ing o y u al thep s i ot e s o s of he p ro e m n us r

hap ening n h r ect r t et l u i d t y d c om a whole o b y l Ga an e on y as , n ta l , Oi , s, Power, n a c , b u , l d M n a Fr h I sur n e La o r So i i er ls, eig t,T ol g an m t , s h eg o echn o y d Com uni y o t at each s ment fhe s i t an o i o d i wi h

t oc e y c have s meth ng t i ent fy t .W r i d g s op ors an r u ye emind o l an a erat d othe ind str nd c mi lay i m e

a e ono c p ers to ava l the selves th op u t f d S t r er on port ni y o fere by wee c ude int nati ald t o s ll e s lve and hei p o

e i ion, t e th m e s t r roducts t the h c p f le and rt s sworld t rough ompany ro i s adve i ement hc orl e ro eum g , WPat the fort oming W d P t l Con ress C, c n u i Qa we D e 4 an omi g p n Doha, tar, bet en ecemb r d8 01, 2 1.

ls o i e art hi tA o, we c nt nu our p ners p with CWC for he 12 i ri a G I t nat f e

20 N ge a Oil nd as n er ional Con erenc and xh n 2, h d t l e E ibitio , NOG201 sc e uled o take p acn y we eb u y d 012 hi i

ext ear bet en F r ar 20 an 23, 2 . T s sai an p ort ni for er t ver s heiag n o p u ty op a ors to ad ti e t r om ni an p t i S etcr ewe ud . c pa es d roduc s n

Petroleum refining: Modular versus Conventional Refineries

Fuel Subsidy: Ekiyor warns Jonathan against bad advisers

Kaztec

4Cover Story

CONTINUES ON PAGE 5

CLARA NWACHUKWU

It is no longer news that

t h e F e d e r a l

G o v e r n m e n t h a s

developed cold feet

over going ahead with

the planned removal of

petroleum subsidy, which will

herald the full commencement

o f d e r e g u l a t i o n o f t h e

downstream petroleum sector.

Government’s indecision

follows mounting criticisms

against the plan, which many

believe would increase the

hardship of the common man.

This is because if allowed to

run, the price of petrol would

be as high as N140/ per litre,

while kerosene, the fuel for the

common man will be as high as

N155/L, according to the latest

market data on the Petroleum

Products Pricing Regulatory

Agency, PPPRA’s website.

Both petrol and kerosene are

currently enjoying subsidy,

which put their retail prices at

N65/L and N50/L respectively.

B y r e m o v i n g s u b s i d y,

government said it would be

saving about N1.3 trillion per

annum, which it plans to use to

shore up other sectors of the

e c o n o m y , s u c h a s

infrastructure provisions

particularly for effective

downstream operations.

As shown in the table above,

between 2006 and 2011, the

Federa l Gover nment o f

Nigeria has spent in excess of

N3.56 trillion, a huge burden

that has weighed heavily on its

finances in view of numerous

needs.

Apart from being a huge

resource drain, the subsidy

regime is open to corruption,

with the Minister of Petroleum

Resources, Mrs Diezani

Alison-Madueke, admitting

that checking marketers’

sharp practices had become

intractable.

According to her, rather than

the masses benefiting from the

system as originally intended,

“the majority of the subsidies

were actually going to the

middle line operators.”

Against this backdrop she

added, “I t has become

pertinent that we find other

ways to utilize vast resources

that are being channelled into

subsidy, which are not

reaching the masses.”

Going forward, she said

government would set up an

advisory body or a think tank,

“ who would monitor and

advise,” as government would

n o t h a n d l e t h e

implementation of these

benefits.

H o w p r e p a r e d a r e

s t a k e h o l d e r s f o r

deregulation?

As the arguments go back

and forth on the wisdom of the

subsidy removal, many believe

that the downstream sector is

n o t f u l l y p r e p a r e d ,

i n f r a s t r u c t u r e - w i s e f o r

deregulation.

For instance, what are the

states of the refineries, can the

Nigerian National Petroleum

Corporation, NNPC, the

operators of the four refineries

cope with the fuel needs of

Nigerians?

If not, can the Federal

Gover nment cope w i th

c o n t i n u o u s p r o d u c t s

importation and the attendant

capital flight and attendant

o f f s h o r e j o b s c r e a t i o n

associated with it?

In terms of infrastructures

are petroleum marketers –

majors or independents or

depot operators fully prepared

f o r t h e c h a l l e n g e s o f

deregulation in terms of depot

and storage facilities, jetties

and a host of others?

A r e t h e r e g u l a t o r y

authorities – the Department of

Petroleum Resources, DPR and

the PPPRA fully equipped to

enforce market discipline, and

check sharp practices, so that

consumers do not suffer

u n d u l y o n a c c o u n t o f

operators’ recklessness?

A Gas station at night

Courtsy: PPPRA

5Cover Story

CONTINUED FROM PAGE 4

CONTINUES ON PAGE 6

Oil workers at work

These unanswered questions

make market analysts believe

that government is putting the

cart before the horse, as these

issues should have been

d i s p e n s e d w i t h b e f o r e

announcing the intent to

deregulate.

Current demand/supply

reality

Local Refining - the existing

four refineries have combined

capacity of 445,000 barrels per

day, bpd. Over the past five

years the refineries only

contributed between 4% and

20% to the national PMS/petrol

consumption, according to

PPPR calculations.

Products Importation - the

tempo of importation activities

have increased due to lack of

local refining capacity and the

guaranteed cost recovery for

importers through the Subsidy

Scheme, PSF.

National Consumption -

there has been a noticeable

increase in the national

consumption of petroleum

products. PMS national daily

consumption for example

currently stands at 35 million

l i tres from the init ial ly

observed 30 million litres, and

Kerosene 8million litres up

from 6 million litres in previous

years respectively.

NNPC embarks on refineries

rehabilitation

The NNPC enjoys monopoly

on refining in Nigeria, as it is

the operator of the nation’s

existing refineries. However, in

view of current realities, the

corporation is not deriving

maximum benefits from its

monopoly status, as it should

because of the very poor state

of the refineries.

NNPC’s Group Executive

D i r e c t o r, Re f i n i n g a n d

Petrochemicals, Mr. Phil

Chukwu, in a no-holds-barred

interview with Sweetcrude, is

the first to admit that NNPC

cannot cope and compete

effectively under the current

state of the refineries.

He said, “The question has

been asked that can we survive

deregulation. And the answer

is that the way we are today,

no! For us to survive we must

look at how can we make the

refineries efficient.”

Chukwu disclosed that the

search for efficiency plunged

the NNPC into a rehabilitation

programme that will revamp,

maintain and prepare the

refineries for possible future

capacity expansion.

T h e r e h a b i l i t a t i o n

programme is expected to last

for a couple of years, because

according him, it goes beyond

mere turn round maintenance,

TAM, a routine structure that

the refineries have not enjoyed

for decades.

He explained, “Although we

have invested, we’ve done

s o m e t u r n a r o u n d

maintenance, but you find that

these are usually very far in

between.

Instead of doing them in

three year cycles, we wait till

sometimes 10 years and more.

S o , m a n y t h i n g s h a v e

happened and what we are

trying to do today is to look at

the problems from different

angles. We look at the plant

itself, the different ones I have

mentioned, we also look at the

supply chain because crude

comes from the fields and tank

farms into the refineries. They

go through pipelines and all

that and when the petroleum

products are produced, they

also go through pipelines into

depots, tank farms or hauled

by road to where they are

needed. These are all areas we

must look at.

“Then the third bit of the

problem is the people. How

have we been operating these

refineries, do we have the

necessary skills to achieve the

objectives of these refineries.

So we look at the plants, we

look at the supply chain and

then we look at the people. So,

in our rehabilitation efforts, we

are going to address these

three key elements.

“For us to survive, we must

move away from our current

production levels of 60% and

the fact that some of the units

d o w n s t r e a m a r e n o t

functioning very effectively, so

we must fix them. In fixing

them, it is not a one-day thing,

it is something that must be

planned properly – gathering

data, doing feasibility studies,

scoping, doing the design and

all and at the end of the day

you are guaranteed the time

when you finish and you are

also guaranteed your costs.

But if you don’t do it very well,

you are bound to mid-way start

to go here and there, trying to

solve problems that should

have been solved before you

started.”

Regulators perspectives

Downstream regulators in

the DPR were weary to

comment on the planned

deregulation when contacted

severally by Sweetcrude, but

its PPPRA counterpart had a

whole lot of arguments in

favour of deregulation.

According to the PPPRA,

“Deregulation and price

l i b e r a l i s a t i o n o f t h e

d o w n s t r e a m o i l s e c t o r

constitutes the basis for

medium to long term reforms

wi th in the downst ream

petroleum sector.”

This, it noted, will to

i n t r o d u c e c o m p e t i t i o n ,

enhance efficiency, and

Chukwu disclosed that the search for efficiency plunged the NNPC into a rehabilitation programme that will revamp, maintain and

prepare the refineries for possible future capacity expansion

6Cover Story

CONTINUED FROM PAGE 5

improve products supply, just

as appropriate and liberalised

pricing framework will help

reduce ineff iciencies in

sourcing, refining, marketing,

supply and distribution of

petroleum products.

It further argued that “the

elimination or reduction of

unsustainable subsidy burden

on government and allow

deployment of resources to

fund critical infrastructure and

vital social sector spending is

critical to revamping the

sector.”

It also said that a deregulated

sector will facilitate the

operation and management of

pipelines and storage facilities

under the Open Access,

Common Carrier regime.

N o t w i t h s t a n d i n g i t s

numerous advantages, the

PPPRA was quick to note that

“Deregulation/liberalisation

must be accompanied by

infrastructural development,

institutional and regulatory

re fo r ms ,” to encourage

prospective investors.

Some of the areas begging

for infrastructure upgrade in

the downstream the PPPRA

enumerated include, adequate

import reception facility,

which it said will reduce the

d e m u r r a g e e x p o s u r e

experienced in products

handling.

• Investment in storage

facil i ty and network of

pipelines as we move through

the creation of a National

Strategic Fuel Reserves, NSFR

• The existing pipelines

need to be refurbished and

adequately maintained.

• There is no pipeline

network in the North West

r e g i o n . C o u l d b e a n

opportunity for investment

• A l s o , d e v e l o p i n g

surveillance system of the

pipeline network in view of the

incessant pipeline vandalism.

Marketers also keep mum

None of the representatives of

the various marketing groups

were willing to speak on their

level of preparedness for

deregulation and challenges

ahead. The Major Marketers

Assoc ia t ion o f Niger ia ,

M O M A N ; I n d e p e n d e n t

P e t r o l e u m M a r k e t e r s

Assoc ia t ion o f Niger ia ,

IPMAN; Depot and Petroleum

P r o d u c t s M a r k e t e r s

Association, DPPMA; and the

Jetty and Petroleum Tanker

Farm Operators of Nigeria,

JEPTFON, all had nothing to

say.

But under the condition of

a n o n y m i t y, a DA P P M A

m e m b e r i n s i s t e d t h a t

deregulation is the only way

forward, adding that the only

issue at stake is, “the sincerity

of government to pull it

through because we have been

on the process for over 10 years

now.”

He noted that the only

reason why deregulation has

suddenly become a big issue is

because “government is cash-

strapped, and because of

increasing pressure from state

governments for increase in

allocation in the light of the

n e w m i n i m u m w a g e ,

government is trying to save

from every possible way.”

He argued that his members

have invested heavily in

storage facilities and were

waiting to get on with the

process and begin to reap the

d i v i d e n d s f r o m t h e i r

investments.

But most marketers of the

petroleum products marketers

had borrowed from the banks

at very high interest rates to

finance their projects and may

not start making profits

anytime soon. With the clamp

down on administrative

recklessness by the Central

Bank of Nigeria, CBN, banks

are under pressure to recover

their loans.

M o r e o v e r , w i t h t h e

acquisition and takeover of

some of the distressed banks

by new management and some

with international affiliations,

the fear of these downstream

facilities being placed under

receivership has heightened.

I n t h e f a c e o f t h e s e

challenges, government may

well continue the burden of

subsidy longer than expected,

except it takes the drastic step

of full blown deregulation after

certain structures have been

put in place.

Government is cash-strapped, and because of increasing

pressure from state governments for increase in allocation in the

light of the new minimum wage, government is trying to save from

every possible way

Long queue for fuel

Dispenser

Oil 7

igerian CONTENT INITIATIVECONTENT INITIATIVECONTENT INITIATIVECONTENT INITIATIVE

Dr. Ibilola Amao

… Groups map out action plans

Facility for Oil S e c t o r Tr a n s p a r e n c y, F O S T E R , recently ended a

two-day capacity building workshop on effectively analyzing and utilizing reports from the Nigerian E x t r a c t i v e I n d u s t r i e s Transparency Initiative, NEITI.

The workshop, which took place in Abuja was facilitated by the Revenue Watch Institute, is part of the institute’s global programme to boost the use of EITI reports, “so that they become effective tools of reform.”

T h e o r g a n i s e r s a r e concerned that the reports a re not be ing used s expected, especially as, “NEITI spends significant time and resources on the production of the NEITI reports, and these reports constitute the single greatest, publicly-available source of information on Nigeria’s oil sector.”

It, however, noted that the trend is not peculiar to Nigeria alone as the great potential of the reports in ensuring accountability and transparency in the extractive industries are lost in many

CLARA NWACHUKWU countries.As a result, the workshop

aims to give participants new skills and ideas on how to use NEITI reports to understand and analyse Nigeria’s oil economy, and also conduct oversight and advocacy activities.

Specifically, the organisers noted that users of the report focus more on the process of compiling the report rather than using the information and data contained therein as a working tool.

T h e y a r g u e d t h a t “accountability only works if people read, understand and use the reports, while knowledge of the extractive sectors only increases if numbers are accurate and complete.”

P a r t i c i p a n t s w e r e encouraged to assess the quality of the reports based on the 2011 edition of the EITI Rules, which among others stipulates that:

. Reports must be produced annually

. Data contained in them should not be more than two years old

. A clear definition of materiality

. Audited accounts required f r o m g o v e r n m e n t a n d companies

. Discrepancies between

government and company figures must be identified and reconci led, where possible

. Sub-national transfers, barter deals and social payments should be included

. Reports must be clear and accessible.

At the end of the workshop, participants, which included civil society organizations (CSOs), professional bodies, the media and NEITI representatives, charted actions plans on how to improve the quality of NEITI.

While the CSOs spoke about advocacy activities to the National Assembly; Federal Inland Revenue S e r v i c e s , F I R S ; t h e Department of Petroleum Resources, DPR; and calling for reconciliation meeting by a l l s t a k e h o l d e r s , t h e professional bodies called for the strengthening of the technical capacity of NEITI, and auditors given clear and defined terms of reference.

Also stressing the need for i n c r e a s e d t e c h n i c a l c o m p e t e n c e , N E I T I p r o m i s e d o f q u a l i t y assurance and control of its reports, while the media on its part demanded greater access to information and data to enhance public awareness.

Nigerian Oil Firm

Nigeria needs to establish a Refinery and

Petrochemical Plant Development Commission

(RPPDC) to increase its GDP, deregulate the

downstream sector of its oil and gas industry and remove fuel

subsidy to avoid bankruptcy and anarchy. It is no longer news

that Nigeria can not afford to sustain its export of crude oil and

importation of petroleum products at a subsidised cost which is

estimated to be between N1.2 and N1.5 trillion per annum. Fuel

subsidy would be better spent on improved infrastructure,

health, education and job creation through the promotion of

SME’s to jump start a vibrant economy.

Deregulation is a necessary step that must precede

investment in refineries. However, Nigeria needs to have in

place the necessary framework, resources, fiscal terms,

conducive environment and instrument of Government that

would act as an enabler for investors who just may be interested

in locating a refinery within its shores. Without increased local

refining capacity, the removal of subsidies would be tantamount

to robbing Peter to pay Paul as the same fat cats who are

involved in the export and import business would jeopardise the

good intent of deregulation and begin to extort money from the

masses through a hiked price of products which has been the

case whenever there is fuel scarcity.

There is a need to have a government commission that is

specifically assigned with the task of accelerating the

establishment of refineries (modular and standard). An investor

friendly process which removes repetitive and non-value

adding requirements for data, certificates, reports, proposal and

financials and has the required synergy to prevent duplicity of

effort would go a long way to encouraging investment in the

design and construction of new refineries. Struggling through

DPR, NNPC, FIRS, Ministry of Environment and Financial

Institutions is too cumbersome for investors who are used to

non-complex processesA commission would act as a one stop

shop and remove encumbrances that pose a deterrent to

investment in the downstream sector of the Nigerian economy

thus reducing project costs..

Every committed government that intends to achieve a goal,

such as increased in-country refining of crude oil and

production of a surplus of finished products for export, in an

accelerated, transparent and fair manner would be wise to use a

commission with key performance indicators (KPI’s) to drive

such a target. If the penalty for non-performance should be

clearly stated in the appointment letter issued to the Director

General, a clear and ethical road map for investors would be

adhered to and implemented.

Specific objectives for a refining and petrochemical

development commission would include:

1. Examining the existing policy, legal, regulatory and

institutional framework on refinery development in Nigeria vis-

à-vis approvals being sought and concluded within 3 months.

2. Providing the framework for registration with CAC,

Ministry of Environment etc and issuance of DPR License to

operate a refinery whilst ensuring that all bottle necks that had

hitherto resulted in non-performance are removed from the

implementation process.

3. Examining the issues which need to be addressed at

national and regional levels for the purpose of promoting

optimal refinery development in the most viable locations for

Oil 8

Products Current Capacity: Domestic Demand:

Petrol - PMS: 18 million Litres per day 35 million Litres per day

Diesel - AGO: 8 million Litres per day 12 million Litres per day

Kerosene - HHK: 6 million litres per day 8 million litres per day

Th e Pe t r o l e u m Products Pricing R e g u l a t o r y Agency, PPPRA, has proposed a

multi-phased programme on deregulation as the best option out of the current predicament.

The Agency said Federal Government could adopt the p o l i c y o f a o n c e o f f deregulation, in which it would have to make provisions for the “building of adequate fuel reserve, securing and making the pipeline network function optimally, providing various cushioning measures as may be necessary and agreed to by

CLARA NWACHUKWU all stakeholders,” or a phased.In a presentat ion on:

Deregulation of Petroleum Products in Nigeria: Real Sector Perspective, the PPPRA argued that under the latter programme, “Stakeholders in conjunction with the PPPRA will progressively determine in line with the trends in market fundamentals the quantum of subsidy the government will contr ibute for the pre-determined periods.”

In yet another proposal, the a g e n c y s u g g e s t e d t h a t deregulation could be done by appropriation. “In this case, the projected amount of annual subsidy required is determined by the PPPRA. The empirically determined amount is then appropriated by the National

A s s e m b l y . T h e implementation during the year is reviewed and advised by the PPPRA.”

It enumerated the benefits of this multi-phased approach to include;

? A d e q u a t e a n d e f f i c i e n t s u p p l y a n d distribution of products nationwide.

? E l i m i n a t i o n o f i n e f f i c i e n c i e s i n t h e m a n a g e m e n t o f t h e Downstream oil sector.

? Adjustment in the template (if necessary).

? Additional refining capacity would made possible

? Healthy competition within the sector.

? Self-financing and

sel f-sustaining of local refining.

? Efficient allocation of resources and steady revenue generation, and,

Given the above supply gaps, the PPPRA argued that this could be eliminated th rough inves tment in additional refining capacity, which, in turn, will create opportunities for export particularly abound for AGO and HHK.

Furthermore, it said this will attract additional investment in import reception facilities such as Jetties, Ports, Vessels and a host of others, which are currently inadequate.

But before these investments can come, the PPPRA stressed the need to “decongest the L a g o s a r e a , a s v i a b l e alternatives are presented by the two active free trade zones in Lekki & Olokola for the citing of jetties and depots.”

It added that the draughts advantage of these locations would improve on the economy of scale on bulk discharge of products.

In the recent time, the d e r e g u l a t i o n o f t h e downstream petroleum sector, particularly with regard to the removal petroleum subsidy on petrol and kerosene has occupied the national discuss.

S t a k e h o l d e r s h a v e expressed varied opinions and interests depending on what side of the divide they are on.

While on one hand, some argue that subsidy removal will increase the hardship of the common man, others believe that subjecting the downstream sector to market forces of demand and supply is the only way to free up the sector in order to attract the much need foreign direct investment.

The PPPRA, the organisation cur rent ly in charge o f administering the contentious subsidy, criticized the policy saying that it has “constrained government spending on the development of adequate infrastructural facilities and depletion of national revenue profile.

Besides, i t added, “It e n c o u r a g e s i n e f f i c i e n t utilization of resources and product smuggling across the

borders. The consumers of HHK do not buy the product at a regulated/subsidized price set by the government due to distr ibution bott lenecks, m u l t i p l e h a n d l i n g a n d malpractices by Marketers.

“It does not encourage healthy competitions among operators as the regulatory environment is controlled by the government.

“Similarly, subsidy regime is inimical to building an investor friendly environment for improving the national Foreign Direct Investment (FDI) profile.”

Even as the arguments rage, there are concerns about the place of determines the pricing policy of petroleum products through monitoring of relevant pricing indices.

Accordingly, the agency has tried to put its role into perspective, noting that even with full deregulation and the passage of the Petroleum Industry Bill, PIB, its current roles will be strengthened and expanded. These will include:

Regulation of the Market and Marketer’s Activities

D e t e r m i n a t i o n o f Appropriate Operat ional Tariff/Margins

Administration of Open-Access, Common-Carrier Regime

I m p l e m e n t a t i o n & Management of Strategic Fuel Reserve

Monitoring and Enforcement of Industry Standards

D e v e l o p m e n t o f G a s Utilization Initiatives

S e t t i n g r u l e s f o r t h e administration of the open access regime, regulate and administer the open access to t ransportat ion and bulk storage facilities

Determine the tariffs for the open access

Establish methodology for bulk transportat ion and storage tariffs

Administer and monitor the National Operating and Strategic stocks

Arbitration, mediation and conflict resolution

Supervision of the transport logistics company which will take over the products pipelines and depots

Division, segmentation and licensing of pipelines and depots to facility management companies.

Nigeria Oil rig

Oil 9

Artistic impression of an automated machine

One of the ways the Nigerian E x t r a c t i v e I n d u s t r y Transparency

Initiative, NEITI plans to some of the challenges facing it in terms of oil and gas audit p r o c e s s e s a n d d a t a gathering, to boost public confidence is in automation of processes.

Criticisms against recent oil and gas audits conducted by the agency, particularly in terms of uses and relevance to the public made NEITI to have a rethink to re-jig its processes.

The Executive Secretary, NEITI, Mrs Zainab Ahmed, speaking on: The Journey So Far, in the agency’s new publication, NEITI Open Audit, said the agency was faced with a lot of challenges, a d d i n g t h a t h e r administration was doing all it can to overcome them.

She said that part of the immediate plans include the development of strategic plan to guide NEITI’s future plans.

L i s t i n g o t h e r m a j o r priorities areas under the current operating year, Ahmed, who came on board NEITI in November 2010, said she intends to “ensure the commencement of 2007-2010 Solid Minerals Audit,” haven dispensed with the 2006-2008 oil and gas audit.

To reach a wider audience, she also said that her administration will intensify p u b l i c e n l i g h t e n m e n t prograammes and civil s o c i e t y e n g a g e m e n t s particularly at the grassroots.

She noted that NEITI has r e c o r d e d m o d e s t achievements within the past one year despite the plethora of challenges it faced, e s p e c i a l l y i n a d e q u a t e funding to execute its projects.

The NEITI scribe recalled some of the successes, especially the fact that

CLARA NWACHUKWU

between November 2010 and May 2011, the Secretariat was “able to meet all the six EITI conditions, which made it possible for Nigeria to attain Compliant Status.”

She further revealed that “the procurement processes for NEITI to embark on new industry audits have reached advanced stages” for the 2009/2010 Oil and Gas Audit, and the 2007-2010 Solid Minerals Audit. For the latter audit, she said a consultant for the Mining Scoping Study has already been appointed.”

Furthermore, she revealed that the implementation of the Multi Donor Trust Fund, MDTF, under the World Bank has commenced, “following the setting up of a steering committee and appointment of a Project Coordinator, Procurement processes of all activities under the fund.”

However, she noted that NEITI is still bugged down by ineffective government-NEITI relations/sectoral linkages; comatose Inter Ministerial Task Team and static remediation plans, dwindling donor confidence, a n d p o o r N E I T I / C S O relations and a host of others.

V i c e - Pr e s i d e n t , Namadi Sambo at t h e w e e k e n d

urged the European Investment Bank (EIB) to partner with the Federal G o v e r n m e n t i n t h e deve lopment o f the country’s gas sector to boost energy supply for speedy industrial growth.Sambo made the call when he received the Management team of EIB, led by its Vice President, Mr Walsh Patrick, at the Presidential Villa, Abuja.He said the call had become necessary in view of the fact that all the 10 on-going power projects across the country would be completed by 2012 and would become functional only when there was adequate gas supply.“One major area, which even yesterday we had an extensive meeting with the Ministries of Power, Petroleum and the major

frica's and fast-growing Apopulation will help ensure the continent prospers even if the developed world suffers another economic meltdown, Nigeria's president said.

told a business forum in the Australian city of Perth he was confident that strong economic growth seen since 2000 in would be maintained thanks to increasingly strong financial and political fundamentals.

"Africa has come a long way from the 1990s, which was characterised as a lost decade for development," Jonathan told the gathering of mining chiefs and other powerful businessmen from mostly Commonwealth nations.

"All across Africa there is optimism that this positive trend will continue."

Jonathan cited the continent's ability to feed the China-driven global commodities boom as one of the major reasons for believing in Africa's new-found economic resilience.

He pointed out that Africa had 10 percent of the world's reserves of oil and gas, 40 percent of its gold and about 80 percent of its bauxite, as well as significant quantities of chromium, uranium and iron ore.

FG Urges Investment In Gas Sector

oil companies, the IOCs, is the issue to address the local gas supply.‘’I will like to inform that at the present moment, we are constructing 10 new thermal power plants and these plants are at about 80 to 90 per cent completion.“Three of the plants are ready and are injecting power to the system, but gas is the big challenge.”Sambo observed that the

provision of gas for local use was a priority to government, as it was a major requirement for adequate power supply and production of fertilisers.He said that the country had a robust Gas Master Plan meant to speedily develop the sector.According to him, there are programmes in the Gas Master Plan to develop major gas processing centres, develop fields for additional gas and arrest gas flaring.

Africa to prosper despite globalturmoil: Jonathan

Oil 10

Natural Gas pipeline

Recently, about 60

participants from

n i n e A f r i c a n

countries took

part in a two-

week Regional Extractive

Industries Knowledge Hub

(REIK Hub) Summer School,

which held at the Ghana

Institute of Management,

Policy and Administration,

Accra.

Participants were drawn from

o i l a n d g a s o p e r a t o r s ,

m i n i s t r i e s , m e m b e r s o f

p a r l i a m e n t , l a b o u r ,

international organisations,

civil society groups, religious

institutions, traditional rulers,

the academia and the media,

who were put through intensive

coaching on avenues for

leakages and revenue loss in

the extractive industries and

how to checkmate capital flight

from their respective countries.

Participants were drawn from

CLARA NWACHUKWU Tanzania, Nigeria, Sierra

Leone, Uganda, Liberia,

Z a m b i a , M o z a m b i q u e ,

Zimbabwe and Ghana

The Nigerian contingent

comprised 10 representatives

that included two media

representatives, one of whom

was Sweetcrude’s Deputy

Editor, who were sponsored by

the Facility for Oil Sector

Transparency, FOSTER, a

British change programme

funded by the Department of

F o r e i g n I n t e r n a t i o n a l

Development, DFID.

According to the sponsors

a n d o r g a n i z e r s o f t h e

programme, GIMPA, Revenue

Watch Institute and Deutsche

Gesellschaft fur Internationale

Zusammenarbeit (GiZ), the

summer Hub also “seeks to

deepen knowledge and equip

participants with skills for

t h e m t o u n d e r t a k e

independent analysis of fiscal

and revenue management

policies, EITI reports analysis,

contracts analysis and finally

understand key legislation in

their countries.”

The two-week residential

course covered fundamental

and intermediate governance

issues in the Extractive

industry, EI value chain.

The Summer Hub, which

theme was, “Governance of

O i l , G a s a n d M i n i n g

Revenues,” was to acquaint

participants on critical issues

that will help their respective

countries maximize benefits

derived from the exploitation

of their natural resources.

Each course is made up of

modules that cover the EI

value chain and structured

along general concepts

( theor y and p rac t i ce ) ;

comparative analysis of

current situations of current

situations from the region and

beyond; case studies; policy

labs to analyse regional cases

s t u d i e s ; a n d p l e n a r y

discussions.

The participatory and

output oriented course also

drew from participants

experience, their professional

s k i l l s a n d i n d i v i d u a l

initiatives. In addition to the

lectures and case studies, was

a field trip to AngloGold

Ashanti Iduapriem Mine,

Takwa, to give participants

firsthand experience at the

mines.

They added that the variety

of approaches adopted for the

programme is meant to

encourage participants to

share the i r ideas and

experiences through small

group discuss ions and

workshops.

These approaches are

geared toward a deeper

understanding of the issues

and challenges in the EI

within Africa, which is an

emerging hub for providing

global energy security.

Participants are equally

expected to use the insights to

improve on the existing

frameworks in the sub-region,

whi le a l so deve lop ing

regional capacity to provide

e f f ec t i ve t ra in ing and

mentoring to grow the

number of knowledgeable,

skilled human resources who

are duly equipped to affect

s t r o n g o v e r s i g h t a n d

gover nance o f na tura l

resources.

“The purpose o f the

S u m m e r S c h o o l i s t o

s t rengthen, equip and

empower participants to

exercise their oversight roles

effectively in the prudent

management of extractive

industry revenues by their

host governments,” said the

organisers.

Over 30 courses were

delivered cutting across

policy, contractual processes,

fiscal regime, exploration,

exploitation and production,

refining, marketing and

t r a n s p o r t a t i o n , a n d

environmental issues and

rounding off with group

projects on specific subject

matter along the EI value

chain.

With regard to sponsoring

the Nigerian contingent to

the Summer School Hub,

FOSTER, said that this is

geared toward strengthening

t r a n s p a r e n c y a n d

accountability in Nigeria’s oil

and gas industry, especially

as the sector is the livewire of

the economy, from which it

derives the bulk of its

revenues.

FocusF 11

Mr. Phil Chukwu, the group executive director in charge of refining and petrochemicals at the Nigerian National Petroleum Corporation, NNPC, is a focused and driven man. Before his

current posting at the corporation, he had occupied other portfolios including that of group general manager, NAPIMS, group executive director, exploration and production, among others. In this interview with Hector Igbikiowubo and Clara Nwachukwu of Sweetcrude, he speaks passionately about how the refineries fell into disrepair, plans to rehabilitate them and restore production to 90 per cent installed capacity. He talks about the need to position the refineries to operate in a deregulated environment, among other issues.Excerpts:

Can you give us an update on

the state of the four refineries –

the two in Port Harcourt, and

the ones in Warri and Kaduna?

Let me first of all say that we

see the refineries as three

refineries because Port Harcourt

has two refineries in one – so we

talk about the 210,000 barrel

refineries in Port Harcourt.

In Kaduna, we have a refinery

and a petrochemical plant

attached to it. Actually, in

Kaduna there are two plants –

the fuels plant which uses

Escravos Crude, and there is the

Lubes plant , which uses

imported heavier crude. Also,

there is the LAB, which uses

some of the products from these

refineries to produce linear

alkaline benzene, which is a raw

material for detergents. From

this also, we produce base oil

from the Lubes plant for lubes,

wax for candles etc. So in

Kaduna, you may be talking

about three separate plants – the

fuels, the lubes and the LAB.

Then the tin and drum is for

packaging.

In Warri, you have the refinery,

and then the petrochemicals –

the PP or clean plant as it is

called and the carbon black plant

as well, so you also have about

three of them.

You can now see how complex

these refineries are and for us to

have the full benefits of these

investments, we must have all of

these units work. Unfortunately,

over time, the refineries have not

been operating optimally, they

are not doing well, and we are

doing very poorly.

I believe, if I may say that even

though we can do about 60

percent, that is the inlets or

DCUs- Crude Dispensing Units,

if they can take about 60 percent

of the name plate capacity, even

though we can do that, the other

units also have issues because

t h e y a r e n o t p r o d u c i n g

optimally. Therefore, you find

that the yield slate we have is not

being achieved in the refineries.

This is because of many years of

not investing in these refineries.

Although we have invested,

we’ve done some turn around

maintenance, but you find that

these are usually very far in

between. Instead of doing

them in three year cycles, we

wait till sometimes 10 years and

more. So, many things have

happened and what we are

trying to do today is to look at the

problems from different angles.

We look at the plant itself, the

different ones I have mentioned,

we also look at the supply chain

because crude comes from the

fields and tank farms into the

refineries. They go through

pipelines and all that and when

the petroleum products are

produced, they also go through

pipelines into depots, tank farms

or hauled by road to where they

are needed. These are all areas

we must look at.

Then the third bit of the

problem is the people. How have

we been operating these

refineries, do we have the

necessary skills to achieve the

objectives of these refineries. So

we look at the plants, we look at

the supply chain and then we

look at the people. So, in our

rehabilitation efforts, we are

going to address these three key

elements.

And how far have you gone

with tackling any of these

problems?

The programmes have started,

w e c a l l i t r e f i n e r i e s

rehabilitation programme. For

instance, the Port Harcourt

initially started with a turn-

around programme, and they’ve

gone as far as placing orders for

long lead items, and we have

also visited some of the

contractors because what we are

doing is that those who built the

refineries will be the ones to do

the jobs for us. We have

understanding with Technimont

that was proposed by JGC.

JGC is unable to come for

several reasons – there is a

J a p a n e s e G o v e r n m e n t ’ s

a d v i s o r y t h a t J a p a n e s e

companies should not come to

the Niger Delta. So that is an

issue, and we’ve visited them in

Japan trying to make them

understand, and the Ministry of

External affairs is assisting us in

this respect. So we are trying to

convince them so that the

Japanese Government can

change their advisory from a

high alert level, to maybe a

moderate one so that these

people can come. But the

situation today is that they are

unable to come. But they said

they will work with Technimont,

who has been partnering with

them all around the world. So

Technimont will be there to

w o r k , w i t h J G C i n t h e

background.

For Kaduna, Kaduna was built

by Chyoda, and Chyoda is going

to come and they have agreed to

come, even though they are

Japanese as well, but they are

not going to the Niger Delta,

which is where they have an

advisory. Chyoda have agreed to

come, we were in Japan and we

met with them and we are

working at how we can come to

an agreement for them to come.

Phil Chukwu

CONTINUES ON PAGE 12

Focus 12

For Warri, we have Saipem,

which is the successor of

Snamprogetti, who built the

refinery. Snamprogetti has been

acquired by Saipem, so it’s a unit

of Saipem; they are ready

because they are on ground in

Nigeria so we don’t have a

problem with them.

So all three contractors have

been identified, we are also

engaging NETCO, working with

Technip, an internationally

renowned company with a lot of

experience in refinery work and

they will act as consultants to

NNPC. NETCO and Technip

have formed a consortium, but

NETCO is leading and they will

now act as consultants to us. We

have started going round the

refineries to gather data, do the

inspection and auditing, gather

all the data, scope the work,

schedule it and do the cost

estimates, prepare all the

documentations for negotiations

with the afore mentioned

contractors.

So we’ve gone along this route

and we are currently engaging

with NETCO and their partners

to ensure that we wrap up

agreements with them. But

before then, they have already

started work and their proposal is

with us and we are in the process

of negotiating with them.

Going back to Port Harcourt

and JGC, in the event the

advisory is not vacated, what

happens, or do you have an

alternative arrangement in

place?

Let me assure you that

Technimont is a very competent

company, they’ve worked for us

in that refinery and they partner

with JGC all across the world, so

they don’t have an issue.

Actually, it was JGC that

suggested we work with them

and we believe that they have all

the competences required. They

even worked on the Eleme

Petrochemical Company.

We also know that the Port

Harcourt Refinery over the

years has been bedeviled by

electricity supply issues, is

there any plan to tackle that

problem head on?

Yes, we have two initiatives –

one is to refurbish the existing

electricity supply system, which

is the steam turbine. The

problem we have there is

because of the water quality

producing steam to drive the

turbines. So we are fixing that.

But the main plant, which

removes all the minerals from the

water, we have a contract in the

process and once that is

concluded, they will award

contract for the placement of a

mini plant, which produces the

water, which goes to the boiler

and from the boiler, you have

steam that drives the turbine. So,

CONTINUED FROM PAGE 11

this system is being worked on.

The second system is where

you have a reliable power

generation system just like you

have in Warri, to have a gas fired

generator. In that case what we

are doing is, we are talking to two

companies and as soon as we

conclude, in fact, the papers are

going to be considered in GEC, if

the GEC meeting holds today, we

will look at what has been

proposed, select the best one and

begin to work with them to install

a turbo generator inside the

compound in Port Harcourt. That

will be an alternative to the

existing system.

This doesn’t sound too

s a l u t a r y a n a l t e r n a t i v e

considering the issues we have

with gas, so how will it play out?

We don’t have that many issues

with gas because there is already

a gas pipeline that comes into the

Port Harcourt refinery. The

volume of gas required is

something like for 30 Megawatts

power generation, so it won’t

require that large volume of gas.

Already there is a pipeline taking

gas across that area and all we

need is to key into the refinery.

T h e i n t e r v e n t i o n s o r

p r o g r a m m e s y o u h a v e

mentioned so far appear to be

moving at snail speed, which is

usually the case with executing

policies in Nigeria?

The snail speed you’re talking

about, let me tell you that in

engineering projects you don’t

just jump into it, you must plan

properly else, you’ll have

problems in implementation

and that is what you must avoid.

If you want it to happen today,

it’s not going to happen. When

our consultants finish their

work, then you’ll know the

proper time schedule.

We are looking at three

elements in the implementation.

The first one is to revamp the

refineries the way they are today

in the immediate short term. We

look at the refineries, there are

things that need to be replaced,

some cleaning up and all that

and we’ll do that. The next stage

is the upgrade; you’ll agree with

me that in the time we are

talking about 25-30 years that

these refineries have been there,

technology has changed, and if

technology has moved on, you

need to also adapt to new

technologies. So we the upgrade

segment, after the initial

revamping, you have the

upgrade and if subsequently you

want to expand these refineries,

you can go ahead and refine

them. These are some of the

things that we hope to do.

The first bit is to revamp the

refineries, clean them up,

change the parts that are rusty to

make it more efficient, but it

remains the way it is. Then you

go to the upgrade side, this will

increase the efficiency because

we are introducing the latest

technology in refining, then the

final stage is if we want to

expand the refineries. But we are

not talking about that now.

These are the things we plan to

do and our schedule will address

the first part – revamping, and

then address the second one,

and we take them in stages like

that.

In order to address this

concern, can we look at the time

line, how soon do you expect a

f e e d b a c k f r o m y o u r

consultants?

L e t ’ s n o t l o o k a t m y

consultants because what we

have or the directive we have

from thee management – the

minister and government is that

we will do the Port Harcourt 1 for

one year, the other one we will do

Phil Chukwu

CONTINUES ON PAGE 13

Focus

CONTINUES ON PAGE 13

13

for two years. The Port Harcourt

1 like I told you, we’ve already

ordered for the long lead items. I

personally went to Japan to

speak to some of those who

manufacture these components,

so went to their offices one by

one. We spoke with them and got

agreement with them on when

they can bring them in. the

actual bit of during the time

when they will actually do the

work on ground will be say

during a two month or three

month period. What you have is

from now to probably August-

September will be for the

manufacture of spares and

equipment that we need and

once they arrive, the actual work

of installation and integration

will commence immediately.

We have been given one year

and we are trying to work within

one year, but the revamping bit,

if we now need to move ahead,

then that is another segment of

the work. Our objective at the

end of the day is to achieve about

90 percent of the name plate

capacity for Port Harcourt and all

other ones. Today, Warri is the

best that we have.

But you see, one of the

problems we have in Port

Harcourt is that it is the new Port

Harcourt that we will address

during this phase. The old Port

Harcourt is really in totally bad

shape and that one will be

included in a longer term work

and this will come in with the

upgrade because you have to

really go into it and do detail

work in order to upgrade it to a

standard where it can produce

on the basis of the name plate

capacity.

For the purposes of clarity, the

90% you’re looking at is for Port

Harcourt 2, the 150,000 barrels?

Yes, the 150,000 of the new Port

Harcourt. The old one has not

been functioning for a very long

time, therefore a lot more work

needs to be done there. Port

Harcourt is doing 66% as at

yesterday. But you have to

understand also that the FCC –

Fluid Catalytic Cracking unit

has not been working because of

power issue. So once the power

issue is solved, in fact, they are

trying to bring back the FCC

today.

A little more clarity, if you say

the refinery is doing about 66%,

yet the FCC is not working, how

is that?

The explanation is that the

CDU that is the unit that brings

in crude and when refineries

report their performance that is

what they report. The other units

will take input from the CDUs

and other units to function; the

FCC gets it raw materials from

the VDU and then processes it.

So what the FCC does is to

increase the volume of PMS that

you are producing. But in

reporting the 90% I am talking

about, is from the CDU, what the

refinery can take in at any

particular time. So now it is now

our responsibility to ensure that

these other units function

optimally so that whatever is

passed into them is also

processed.

In real terms, the refineries

supposedly get 450 000, barrels

per day, what volume of this are

you able to process?

I’ve given you an average for

all the refineries, if you talk

about an average of 60%, it will

be 60% of 450,000. But this

fluctuates because it is not that at

any particular point in time you

have just that same volume, it

could be higher, it depends on

h o w t h e r e f i n e r i e s a r e

functioning. But the issue with

CONTINUED FROM PAGE 12

the refineries in terms of the

restrictions of the crude you pass

into it, is not because the

refineries are not functioning all

the time. There are other issues.

There are the issues of bringing

in the crude, sometimes, you are

processing and the crude line is

broken. You process what you

have and if you finish processing

that, you have to wait.

In sum, when you are looking

at the average, you are doing

lower than what you expected to

do, and that is what the issue is. A

lot of problems associated with

the refineries come with the

availability of crude.

Let us look at another level of

the problem, the limited

authority in terms of approval

limits the managements of the

refineries enjoy are rather

small, has this been addressed?

That has been addressed. The

f ede ra l Gove r nment has

changed the level of financial

authority for most of the

ministries, departments and

agencies and we have adopted

that. Today, the approval limit at

the refinery is substantially more

than what it used to be in the

past. So I don’t see that as a

problem.

Given your explanations, it

appears the turn-around

maintenance will take longer

than anticipated?

What we a re do ing i s

rehabilitation not turn around.

Rehabilitation is more of TAM +

because you have to do a lot

more. TAM is a routine thing, but

this time around, we are not

talking about the routine

because when we should have

done Port Harcourt, we are

talking about several years back.

Now we are trying to do it and in

addition to that, we are talking

about all the others like power

system, the de-bottlenecking of

the FCC.

When the Port Harcourt

refinery was built, it was

originally designed at 100,000

p/d, then I think there was a plan

to build another refinery in

Calabar, but that one failed, so

government decided they

should increase the Port

Harcourt to 150,000 barrels. But

in increasing it to 150, 000, the

FCC unit was not increased.

Recall also that the old Port

Harcourt refinery was just a

topping refinery but it didn’t

have FCC, it had to also use the

existing one. So you have to de-

bottleneck it this time around.

You have to increase its capacity

or you add another unit that will

handle it to increase the volume

that it has to take. So the work on

ground is beyond turn around

maintenance.

Given these scenarios, from a

layman’s point of view is it not

just better to build new modular

refineries?

No, I don’t agree. Having a

modular refinery will be very

small and I don’t see a company

like NNPC going to have

smaller refineries. But if we

refurbish this one, we will do

that at a cost that what you will

spend here cannot even build

one refinery. Do you know how

much it will cost you today to

build a refinery of this capacity?

You’re talking about a combined

445,000 bpd refinery; it’s going

to be a huge cost if you decide to

build new ones. Why don’t you

spend a fraction of the money

you would have used to build

this one up, do the technology

upgrade. We have experts who

have looked at them and can do

it.

We are also looking at the

market, the market in Nigeria

today is different from the

market in Nigeria when some of

these refineries were built.

Therefore, the question is, when

experts look at it, am not saying

that is what will be done, but we

can reconfigure the refineries to

produce more of the products

desired in this market than

products that probably we can’t

handle.

Let’s take Kaduna for example,

when it was designed, it was

designed to produce asphalt, but

how do we evacuate it, have we

been able to successfully

evacuate it. Yes, asphalt is

needed in the country but since

we have not been producing,

have we not been using asphalt

in the country?

These are some of the things

we have to look at, we have to

look at the market, what does the

market want? And we must be

able to address the issue. These

are some of the issues we are

carrying out studies on and we

hope at the right time we should

be able to say we can do this to

Phil Chukwu

Focus 14

CONTINUED FROM PAGE 13

the refineries or leave them the

way they are. But some of the will

need twitching here and there,

and I gave the example of the

Port Harcourt Refinery.

I also want note the situation in

Warri, where there is a PC-

Petrochemical plant, it has not

worked for over 12 years and we

hope that during this exercise we

will be able to bring it back to life

because it is also going to be a

money earner for us.

This brings us to a grave

concern out there, which is part

of what has brought the

refineries to where they are

today with regard to the

frequent policy shifts in

government and management.

Won’t you say the NNPC will be

better off partnering with the

private sector for greater

efficiency and less interference

from government?

Let me first of all say that the

policies regarding refineries in

Niger ia have been ver y

consistent in the sense that there

is hardly any government in

Nigeria that does not desire

optimum utilization of the

capacity of the refineries, it has

always been the same. They

want the refineries to run well,

they want them produce at

optimum levels.

Once this is done you may say

that in implementation, there is

scarcity of funds because there

are competing needs in this

country so if the funds are not

there and the money is not

invested at that time, we have

this kind of problems occurring.

So talking about policies, the

pol ic ies have been ver y

consistent.

Secondly, am here today, am

p u r s u i n g a p o l i c y o f

rehabilitating the refineries to

make sure that the refineries are

working at least 90% of their

capacities, it is not just me but

something being driven by the

management of the NNPC and

the government – the minister

up to the president. They desire

it and want this to happen. Why?

From a selfish point of view, if we

don’t do it, then we will b out of

business tomorrow. If there is

deregulation tomorrow and we

are not able to do it we will be out

of business, if we continue to

produce at a higher cost, as an

efficient organization, we should

be able to sell below my costs; if I

do that there will be no market

for me. In the long run, I won’t

even be able to refurbish my

refineries, so these are some of

the things that happened

because the business structure

was really such that we’ve been

sel l ing below costs with

subsidies and all that, it distorts

the market and we are unable to

run a refinery in a business

manner. And that is what

deregulation will probably

introduce and if we don’t do well,

we’ll just phase out. So it is very

important that we fix these

refineries, from the NNPC’s

point of view and bring it to the

level where we are very

competitive.

Then when you are talking

about joint ventures, I believe it

is beyond me, it is government’s

decision on what they want to do

because they own the assets. If

they decide tomorrow that they

want to do it then they will.

Would you then say the NNPC

and the refineries are prepared

for deregulation?

That is what this programme is

all about, it is geared towards

making the refineries efficient

and if the refineries are efficient

they will be able to compete

effectively in a deregulated

environment. For us to be

competitive and bring our

refining costs to a level

comparable to refineries across

the world, then we should be

able fix tem, once this is done,

the products prices will be

competitive as well.

You raised a critical point

about costs of your output; it’s

contentious out there, because

there are arguments that since

the crude oil is here, the

refineries here, the cost of

producing a litre of petrol is

relatively cheaper?

Let me explain that the way it is

today, PPMC buys the crude

f rom gover nment a t the

international market price. It is

PPMC that sends this crude to

the refineries, the refineries

process it for the PPMC, which

takes its products and sends it to

the market. For the refineries,

what they earn is the processing

fees from PPMC. That is the

structure on ground today.

But we are looking at a

structure where the refineries

can buy their own crude, process

and sell. This is happening in

other places. I went to France to

see how they are organized.

They have what they call

refining and marketing. They

process their crude and sell the

products. We are not running

that today and we are looking at

it. This is what was proposed in

the PIB, where the refineries will

buy their own crude, process it

and sell to off-takers and that is

an option we are looking at.

So you find that PPMC also has

a lot of issues, lines are

vandalized, they lose a lot of the

crude before it gets to the

refineries and same thing when

the products are produced

before it gets to the end users.

They carry the burden of these

losses. If they eliminate these

vandalism and all, the costs will

be lower.

I don’t know if this is still part

of the PIB, it was proposed that

the refineries will have a

structure where they will

become refining and marketing

companies and take over most of

the functions of the PPMC and a

n e w c o m p a n y w i l l b e

established to manage the

pipelines such that when you

use the pipeline, you pay a fee

for it and it will be open for all

users.

So why were all these not

done before full deregulation?

The question has been asked

t h a t c a n w e s u r v i v e

deregulation. And the answer is

that the way we are today, no. For

us to survive we must look at

how can we make the refineries

ef f icient . I f you look at

manufacturing in Nigeria, it is

done at a very high cost, no

matter which sector you are

looking at –m with having to

provide their own power and

other facilities and the refineries

are not an exception.

Earlier on we were talking

about how to give power the Port

Harcourt refinery, you can’t rely

on PHCN for power you have to

build your own power plant and

when you do this and buy gas

and other inputs your costs will

be higher than the ordinary

power supplied by PHCN.

So for us to survive, we must

move away from our current

production levels of 60% and the

fact that some of the units

downstream are not functioning

very effectively, so we must fix

them. In fixing them, it is not a

one-day thing, it is something

that must be planned properly –

gathering data, doing feasibility

studies, scoping, doing the

design and all and at the end of

the day you are guaranteed the

time when you finish and you

are also guaranteed your costs.

But if you don’t do it very well,

you are bound to mid-way start

to go here and there, trying to

solve problems that should have

been solved before you started.

This is what we are doing today,

engaging those who must work

with us and ensure that this

thing works, those who have

done it before. By the initial

studies carried out, by March

next year, we must begin to see

changes for Port Harcourt. For

the other refineries for the ones

the items that we need to order,

we have placed the orders so that

by the time the ground work

begins we have prepared

everybody. We need also to

address the skills of the workers,

such that in upgrading the

plants we are also upgrading the

skills of the people.

To this end we are planning to

establish a refining school where

people both old and new will be

trained and gradually over the

years they will be going back for

retraining. It’s going to be hands

on, to sharpen their skills, and

improve health safety and

environment knowledge so that

they won’t burn down the

refineries accidentally. Those

already there today, we need to

give them top up training,

because when people have been

in a place for too long there are

certain behaviors they acquire

which are not right. You need to

correct that and you can only do

that through training and

retraining. These are what we

are doing.

Phil Chukwu

15Gas

Gas Reserves

BY KUNLE KALEJAYE

Th e N i g e r i a n

A s s o c i a t i o n o f

P e t r o l e u m

Explorat ionists ,

NAPE, has said

that Nigeria’s gas reserves have

remained stagnant in the last six

years.

S p e a k i n g a t t h e p r e -

conference workshop of the

association in Lagos recently, the

Managing Director, Niger Delta

Petroleum Resources, Mr. Layi

Fatona, said Nigeria is not

discovering new gas due to lack

of exploration activities.

He said, “Nigeria is not

discovering new gas and the

only way to discover new gas is to

do exploration work, and to do

more exploration work is to have

more investments and what that

tells you is that nobody is

investing in oil exploration and

gas operation. All the gas we

h a v e f o u n d i s t h r o u g h

exploration for oil and if we have

not found new gas it means we

have not been exploring for oil.”

He attributed the development

to the worsening weather

condition and the non-passage

of the Petroleum Industrial Bill

(PIB). “When we have favorable

weather condition and the quick

passage of the PIB, Nigeria’s gas

reserves will improve,” he

argued.

In his welcome address NAPE

President Mr. Jide Ojo, said one

of the potential drivers for the

growth of the Nigeria oil and gas

industry is renewed search for

alternative energy.

“This search is driven mostly

by increasing but fluctuating oil

prices as well as an alternative

source of energy due to its

natural occurrence as fossil fuel

and its abundance which is

recognized globally as a cleaner

source of energy with mostly

carbon dioxide (CO2) and water

vapor as by product.”

Ojo believes that Nigeria will

come out from dormancy and an

apparent state of flux regarding

gas development and moving

the gas commercialization train

forward to the next level with

significant potential for gas

revolution through the unveiling

of the President Gas Revolution

Agenda on 25th of March 2011.

In his presentation, the

Managing Director/Chairman,

Chevron Nigeria Limited, CNL,

Mr. Andrew Fawthrop, noted

that there was the need for a

transition from just oil to oil and

gas based economy. This, he

pointed out was the enabler for

e x p l o r a t i o n a n d

commercialisation.

F a w t h r o p , w h o w a s

represented by the Director, Gas,

CNL, Mr. Steve Freeman, said

there was the need to determine

the price of the commodity. He

also stressed the need for

effective guarantee for payments

for the supply of the commodity.

A c c o r d i n g t o h i m , t o

encourage operators to invest in

the business and undertake

effective exploration of gas,

issues like policy, infrastructure,

market, partnerships and

security must be addressed in

the industry.

He maintained that when

there are clear and consistent

policies, players would be

e n c o u r a g e d t o m a k e

investments that would in the

m e d i u m a n d l o n g - r u n ,

transform the petroleum sector.

Fawthrop said the industry

would further emerge as a key

p l a y e r, a n d t h a t w o u l d

e n c o u r a g e d o w n s t r e a m

investments. He said that

companies would, therefore, be

e n c o u r a g e d t o c o n s i d e r

exploration portfolio.

The Group Executive Director,

Exploration and Production,,

Nigerian National Petroleum

Corporation, Dr. Andy Yakubu,

said steady growth in the

demand for gas remained a

good reason for stakeholders to

invest in its exploration. He said

that this was good for the

country’s growth, especially in

terms of national output.

Yakubu, who was represented

by the Group General Manager,

N a t i o n a l P e t r o l e u m

Investments Management

S e r v i c e s , N A P I M S , M r.

Morrison Fiddi, placed the

country’s gas reserves at 184

trillion cubic feet.

Also placing the demand of

the commodity at 225 trillion

cubic feet, he stressed that the

country needed to increase

exploration activities (not only

for oil, but for gas) to address the

deficit of 41 trillion cubic feet,

which is a huge shortfall.

He stressed the need for

effective management of future

demand and supply of gas in the

country, noting that funding had

remained a major issue for

companies that undertook gas

exploration.

A c c o r d i n g t o h i m ,

notwithstanding the challenges,

there were huge prospects in the

gas sector, which strategic

companies could tap into by

boosting their exploration

activities.

Stakeholders in the sector are,

however, argued that for the

domestic gas market to thrive,

issues like securitisation,

stability, development and

coordination, simplicity, and

c o m m i t m e n t ( f r o m a l l

s t a k e h o l d e r s ) , m u s t b e

holistically addressed.

Nigeria’s 2010 natural gas

production at 3.3 billion cubic

feet per day 2010 clinched the

third largest producer in Africa,

contributing 16 percent of

Africa’s production and the 25th

in the world accounting for only

one percent of the production.

Imo to host gas expo

h e I m o S t a t e G o v e r n m e n t h a s T

concluded plans to host an I n t e r n a t i o n a l G a s Roundtable & Expo, tagged IGR 2011, scheduled to hold between November 29 and 30 in Owerri, the state capital.

The Gas Expo, which theme is: Gas-to-Wealth is being organized by the state Ministry of Petroleum and Environment, and meant to serve as the “Energy corridor, linking the huge gas market potentials to gas Producers and Suppliers in Nigeria.”

The organisers also noted that Nigeria is increasingly turning into a significant gas market in her own right with over 187 trillion standard cubic feet, scf of proven natural gas reserve.

I n a s t a t e m e n t t o Sweetcrude, the organisers said, “IGR shall showcase v a r i o u s i n v e s t m e n t opportunities in the gas sector of Nigerian economy, p lay hos t to teaming delegates, oil industry players, resource dignitaries, exhibitors, gas consultants, L N G c o m p a n i e s , international and local gas t r a d e r s a n d b u y e r s , engineers and the gas industry regulators.”

Participants are promised the opportunity to enhance their brand reach, as the expo wil l provide the platform to meet the huge g a s p o t e n t i a l a n d opportunities in Nigeria.

16FeedbackFeedback

In d i g e n o u s j o i n t venture partners, Energia Limited and the Oando Group, have said that the only

way to r un a smooth operation in the communities is through partnership with the host communities.

H i g h l i g h t i n g t h e i r development efforts in their host communities, which made thei r operat ions successful, the JV partners said their host communities are carried along in all of their projects execution.

The host communities include, Emu Ebendo (major host), Obodougwa-Ogume, Umusam–Ogbe, Ogbeani, Isumpe–Ogbe, Umusadege-Ogbe.

Taking journalists on a tour of community pro jects executed in their areas of o p e r a t i o n s , a f t e r a n engagement programme with the communities last w e e k , t h e M a n a g i n g Director, Energia Limited, Mr. Felix A.V., said, whatever

the company gets as gross revenue, at least three percent of it goes back into the communities as a means to help in the development of the communities.

He also said that the company ’ s communi ty engagement approach has resulted into the signing of several Memoranda of Understanding, MoUs with host and other impacted communities.

He said, “1.25 percent of our gross production is ceded to Emu-Ebendo community as host community, and 0.75 percent to each of the impacted communities. We also incorporated a Trust Deed and established a separate Trust boards to manag e t he r e ve nue s a c c r u i n g t o t h e h o s t community, and a separate Trust board to manage the impacted communities for sustainable community development programs. We a l s o p u r s u e d t h e incorporation of a youth’s company, IFOGAT Limited, for the empowerment of the

youths through employment creation and contract award,

“Also, we initiated an i n t e r f a c e f o r m o n t h l y meetings with Ebendo at Kwale Base office, where we made series of cash/material donations to Emu-Ebendo Community during festivals, and other cultural occasions, Energia has remitted large sums of money to the trust fund accounts, held Trust Boards Meetings various ECDA meetings. Energia JV is also involved in other community development efforts outside of the trust fund, awarded series of contracts to IFOGAT, and

other Community registered contractors.”

Some of the community p r o j e c t s i n c l u d e t h e Construction of 12m x 18km earth road from Obodugwa to Ogume; the construction of a mini housing estate with standard borehole and e l e c t r i c i t y ; a n d t h e rehabilitation of Obodugwa water borehole system. Others are the institution of a n E l d e r s W e l f a r e Programme, Educational Re m e d i a l Pr o g r a m m e , c o n s t r u c t i o n a n d commissioning of ultra-modern market at Ebendo

During this period, the

Energia boss disclosed that the company also executed some projects with the site locations, such as the clearing and disposal of grasses and debris at the flow station; construction of 2 x 50HP export pumps skids a n d r o o f ; a n d t h e construction of 10 doghouses for our fire extinguishers storage

“We a l so engage in monthly evacuation of non toxic waste at the flow station, supply of electrical r e p a i r i t e m s f o r t h e construction of pump panel at the station, drilling of water borehole for the d r i l l i n g l o c a t i o n , procurement of two Hilux trucks for transportation purposes, production tanks i n t e r c o n n e c t i o n a n d commissioning, security caravan upgrading and furnishing, condensate return line construction and commissioning,” he added.

Currently, he said the company and its joint v e n t u r e p a r t n e r s a r e developing an Ebendo

Th e C h i e f

Executive Officer of Techno Oil Limited, Mrs. Nkechi Obi, has

been conferred with the Member of the Order of the N i g e r, M O N , f o r h e r meritorious and selfless services to the nation. Other no tab le indus t r i a l i s t s , politicians, educationists, administrators and eminent people were also honored in s e v e r a l c a t e g o r i e s a s announced yesterday by the Federal Government.

In response to the award, Nkechi Obi stated, “I thank Mr. President and the people of Nigeria for considering me worthy of a national honour. To me, it is a clarion call to

m a k e e v e n g r e a t e r contributions to the growth and development of my fatherland.”

“I am delighted indeed, that my country has made me proud and ful f i l led. I continue to advise our teeming youths to have abiding faith in Nigeria because God truly has good plans for everyone,”

With this award, Obi joins t h e r a n k s o f o t h e r distinguished women and men all over the world, who have been recognized for their selfless service in various walks of life.

Obi driven by a relentless passion was raised by a

modest working class family. She resolved at an early age to commit a significant percentage of her resources to help the poor. Over the years, she has remained committed to this cause.

F r o m i t s h u m b l e beginnings, Obi built an impressive track record having nurtured Techno Oil to be a leading indigenous oil and gas company in less than a decade. Her immense contribution to the oil and gas sector in Nigeria has earned Techno Oil a dominant role in the distribution of petroleum products across the country.

S h e i s n o t o n l y a n accomplished philanthropist

of repute; she is also a positive role model and mentor. Obi has shaped the l ives o f many people including the less-privileged and rural women.

Among her impressive charity initiatives that have impacted positively on the society is the scholarship scheme to undergraduates in Nigerian universities who may have never had the opportunity to be educated. Techno Oil’s ethos of social responsibility is founded on Obi’s passion to ‘give a heart.’ She has single handedly undertaken the r e h a b i l i t a t i o n o f f i v e secondary schools, as well as constructed two ICT centres in Lagos and Anambra state

in a bid to bring succor and hope to the less-privileged.

D i s t u r b e d b y t h e predicament and challenges f a c e d b y p h y s i c a l l y challenged people in Lagos, she staged a musical concert attracting top personalities in the society including Gov. Babatunde Fashola to give their hearts to the less-privileged. Proceeds from the event were donated to charity.

Nkechi holds a BSc in Economics and is a core professional in strategy and business development. She is an alumnus of the Lagos B u s i n e s s S c h o o l a n d Harvard Business School in the United States.

BOLAJI AJALA

17Power

OSCARLINE ONWUEMENYI

Ca n a d a h a s

revealed that

some of its major

e n e r g y

companies have

expressed an interest to invest

in Nigeria’s power sector.

T h e C a n a d i a n H i g h

Commissioner to Nigeria, Mr.

Chris Cooter, and his Deputy,

Mr. Jean Gauthier, dropped the

hint recently when they paid a

scheduled visit to the Minister

of Power, Professor Bart Nnaji,

in his office in Abuja.

According to the High

Commissioner, “There is a

g l o b a l a w a r e n e s s t h a t

s o m e t h i n g m a s s i v e i s

unfolding in the power

industry in Nigeria,” even as

he sought from the Minister

specific areas of challenge the

C a n a d i a n f i r m s c o u l d

participate in.

“The air indicates that

something is enveloping

Nigeria’s capacity to lead the

wor ld . We are here to

complement these efforts to

resolve your e lect r ic i ty

challenges and galvanize your

industr ial leadership of

Africa,” he added.

The envoys predicted an

explosion of employment in the

sector as soon as the reforms

are through and allayed fears

being entertained by workers

on lay-offs.

Cooter disclosed that major

Canadian energy companies

will be visiting Nigeria soon to

join other multinational

corporat ions to b id for

participation in certain areas,

especially hydro electricity

where he believed Canada has

the highest comparative

advantage in the world.

He noted that institutional

structures like bulk trading

and privatisation are already

exciting global investors,

boosted by the country ’s

bidding process and urged that

the “foot remains on throttle” to

s tamp out ins t i tu t iona l

corruption. “Canada will go

the whole hog with you,” the

envoy pledged.

In response, Nnaji expressed

Nigeria’s readiness to partner

with Canadian construction

giants in the Mambilla and

Gurara hydro electric power

projects expected to jointly

produce 3,300 Megawatts,

MW.

He told his guests that

reforms in the power sector

h a v e i n s t i t u t i o n a l a n d

legislative backing, and as a

result, their implementations

have been procedural ly

systematic to avoid loopholes

that ruined past efforts in the

sector.

On the need to involve the

state governments in the

sector, Nnaji noted that the

lawmakers put electricity in

t h e Fe d e r a l E x c l u s i v e

Legislative l ist , thereby

imposing the authority to

construct, produce, regulate

and supervise the sector on the

central government.

He quickly promised that the

Federal Government will

continue to encourage the

states, adding that in view of

the sensitive nature of the

Shiroro Hydro-Power Plant

sector, government would

discourage the mutation of

state run power stations that

could possibly be mismanaged

in future and take Nigeria back

to the abyss again.

Nnaj i sa id Niger ia i s

carefully monitoring the

distribution efficiency of the

existing stations as well as the

tariff to incentivise the value

chain. ”We are guarding

against the mistakes of the past

whi le address ing o ther

institutional lapses through

the strengthening of the

National Power Training

Inst i tute , NAPTIN, and

ensuring that World Bank

commitment to the issue of

bulk trading is not lost.”

With regard to labour

agitations against reforms, the

minister said that labour

leaders justifiably fight for

their members and that “they

are elected to do that.”But he

noted that some of their

agitations were motivated by

the self-centeredness of their

leaders and gave the assurance

that all of their grievances

would be addressed.

The minister further argued

that corruption in the power

sector has been a serious

impediment to its efficiency

and effectiveness, adding that

government was not taking the

matter lightly.

Shell fined for Brazil non-compliance

hell has joined Petrobras with the dubious honour S

of facing fines for failing to comply fully with Brazilian local content requirements.

According to Energia Hoje, an electronic news bulletin Brazil’s national petroleum agency (ANP) held that the company had not met its commitments during the exploration phase of a block awarded eight years ago and subsequently relinquished.

The non-compliance attracted a penalty of 1 million Brazilian reais, equivalent to less than $600,000

Andre Araujo, Shell’s president for its Brazilian unit, said the company was considering whether to appeal against the ruling. The company is one of several targeted for alleged non-compliance of local content requirements.

18Power

An Electric meter

OSCARLINE ONWUEMENYI

Just a few months after t h e N i g e r i a n Electricity Regulatory Commission, NERC, announced a new

Multi-Year Tariff Order, MYTO, the Commission is now seeking the removal of the Meter Maintenance Fund, MMF, which could reduce the m o n t h l y t a r i f f p a i d b y consumers across the country.

The introduction of the new MYTO led to a “slight” increase in electricity tariff charged by the Power Holding Company of Nigeria, PHCN,

According to officials of the Commission, the Distribution

Companies (DISCOs) no longer have justification for charging the maintenance fee since such a charge is adequately covered by the MYTO review. The removal is meant to be reflected in the October 2011 bill, which i s usua l ly p resented to customers in November.

The MYTO review in July was met with protests in some quarters due to the poor state of electricity supply in the country. Many claimed that the resultant hike would further worsen the economic gloom of Nigerians. NERC officials, however, argued that the review was long overdue since it had been proposed by the previous administration.

Before the review, DISCOs were permitted to charge

certain fees including the Meter Maintenance Fund, which were aimed to help them shore up their limited funding. However, the latest MYTO review appears to have taken care of such

funding, making any additional charge a burden on the consumers.

I n a n i n t e r v i e w w i t h Sweetcrude, the Chairman of NERC, Dr. Sam Amadi , sympathised with electricity consumers while noting that there has been little or no difference in the state of power supply in the country since the power reform was initiated by the Chief Olusegun Obasanjo government in 2005.

Amadi explained that the Commission was in the process of consulting with stakeholders over the need or otherwise to increase electricity tariff in the country. He urged stakeholders to be objective over the review process, noting that, “Public power supply in the country is still a standby in most homes and offices, as it was in 2005 when the reform in the sector began.”

He added that, “The state of electricity generation in this country is so terrible that one patriotic duty of every Nigerian is to speak strongly and critically about what needs to be done to review the situation. To us at the Commission, there cannot be a better time than now to put issues plaguing the sector back on the front burner. It comes as the Federal government is on the verge of divesting sole ownership and control of successor PHCN companies to allow private equity and management in line with the spirit of the Electric Power Sector reform Act, 2005.”

According to Amadi, the general belief in the electricity sector is that current MYTO p r i c e s c a n n o t s u p p o r t investments therein as they are much lower than in most developing countries. He added that market imperfections as low generation capacity, low private sector participation, high and unprecedented operating costs and overheads still abound in the industry.

But he further noted that, “As

daunting as these challenges seem, we cannot give in to these frustrations if we must succeed. We must confront the pricing challenge while taking into consideration the prevailing economic situation of our country folk.

“For the avoidance of doubt, there is no guarantee whether the tariff will go up or down. It is the outcome of this consultation that will determine where the electricity tariff goes.”

Amadi insisted that all over the world, prices have played a d u a l r o l e i n a c h i e v i n g efficiencies in the distribution of goods and services to consumers and in driving private investment into the economy. “Therefore, if we must achieve the goal of giving every citizen access to stable, reliable and fairly-priced electric power, a reliable and sustainable framework must be put in place to ensure the robust interaction of market forces with social policy to attain equilibrium.

“ T h i s w e c a n d o b y establishing a pricing regime that will sustain massive private s e c t o r i n v e s t m e n t a n d guarantee a positive return on investment, while also being f a i r t o u n d e r p r i v i l e g e d consumers.”

The NERC boss observed that prior to the introduction of MYTO, the industry was characterised by lack of a t r a n s p a r e n t p r i c e determination process and abysmally low tariffs, adding t h a t t h e P H C N - f i x e d government-determined tariffs mostly based on the political whims and considerations as opposed to the economic principle of full cost recovery.

“This promoted inefficient pricing of electricity and constrained the ability of government itself to recoup costs of investment. This ultimately undermined the growth potentials of the sector because it totally distorted the economics of the electricity and d e f e r r e d p r i v a t e s e c t o r participation until now,” he stated.

He explained that “MYTO provides for periodic review of the cost parameters through the minor (annual) and major (five-yearly) review windows. The annual review of the framework takes into cognizance changes in gas price, inflation and exchange rates while the major review considers holistic changes in major parameters.”

However, he pointed out that despite the attributes of MYTO, “the market is yet to become robust. The market has failed to achieve optimum efficiency and milestones as envisaged by the Commission. The much needed private sector investment especially in the distribution sector has not materialized.”

19Power

… Distributes 85,000 prepaid meters

A pre-paid meter

YEMIE ADEOYE & KUNLE KALEJAYE

IN a move aimed at implementing the F e d e r a l G o v e r n m e n t ’ s p r o p o s e d

transformation agenda in the p o w e r s e c t o r t h e m a n a g e m e n t o f E k o Distribution Company, one of the eleven distribution companies under the Power H o l d i n g C o m p a n y o f Nigeria, PHCN has begun the review of its operations.

This is meant to improve efficiency and turnaround time, in order to serve its customers better and shore up its revenue base.

The newly appointed Chief Executive Officer of the c o m p a n y M r. O l a d e l e Amoda, an engineer, dropped the hint during a media interactive session which held at the company’s head-office in Marina, Lagos recently.

According to him the era of a public service mentality for workers of the company is over, as it has become

imperative for them to treat customers’ complaints with paramount importance.

To d e m o n s t r a t e i t s w i l l i n g n e s s t o s e r v e c u s t o m e r s b e t t e r a n d eradicate the issue of crazy billings, which is rampant in the country, Amoda said that the company is set to roll out the distribution of 85,000 prepaid meters to customers on its network, to be followed by the deployment 350 distribution transformers even as 120 has been set aside as relief transformers for customers in overloaded areas.

The CEO explained that aside from the transformers, the Zone’s intention to roll out 85,000 prepaid meters in phases is actually to replace the existing old meters which have become obsolete.

According to him, the zone h a s c o m m e n c e d t h e replacement of the old meters to eradicate the problems associated with inappropriate billing of customers.

He gave the assurance that customers would be given

the new meters within one week of payment, adding that the zone was also replacing all obsolete equipments that had limited its capacity to evacuate power.

He also added that there was an on-going construction of new 33kv and 11 kv lines, as part of the plans to rehabilitate dilapidated lines.

“We have embarked on the construction of new 33kv and 11kv lines. In Eko, the NIPP is also executing 27 projects, including the construction of 33kv and 11kv lines. All the projects under construction,

including those of the NIPP run into billions of naira,” he said.

As part of the measures to ensure that the activities of workers remained in line with the new customer f r i e n d l y s t a n c e o f management, the CEO said that a new re-orientation of the workers had begun.

The new CEO said apart from organising customers’ forum, he would also revive cus tomer consul ta t ive meetings, and also introduce town hall meetings all over the company’s network and areas of operation.

il and gas authorities in the Ivory Coast have O

appealed for petroleum companies to stop drilling i n t o i t s w a t e r s f r o m neighbouring Ghana in a war of words over offshore territory between the two states.

“The state of Ivory Coast, which has continually denounced these operations, again appeals for this [drilling] to end, because the resources being exploited are our exclusive property”, the country’s directorate-general of hydrocarbons said in a statement.

T h e A b i d j a n - b a s e d authority has released a new map delineating three offshore blocks to the far east of its sedimentary basin, dec lar ing tha t “ever y company who wishes to o p e r a t e a n y k i n d o f petroleum-related activity in this zone must apply for permission”.

It says the indicated blocks CI540 to CI544 (see map, above), totalling 5526 square kilometres, are within its territory.

C o m p a n i e s a l r e a d y operating in the indicated area without authorisation should halt operations immediately, the directorate

Ivory Coast urges end to 'illegal' drilling

said, “because their actions consist of assault amounting to theft and looting of raw materials”.

The dispute has already been raised with the UN C o n t i n e n t a l S h e l f Commission without a conclusive result, and it is t h o u g h t a n e g o t i a t e d resolution is the only way to end the dispute without costly arbitration.

The Ivorian government has recently instituted plans to expand oil and gas exploration after President Alassane Ouattara replaced Laurent Gbagbo earlier this year following a bloody standoff in the wake of October 2010 elections.

20Financing

NNPC building, Abuja

YEMIE ADEOYE

NO T l e s s t h a n $50billion would have been spent in the next five years i f t h e f e d e r a l

government yields to the ongoing pressure to allow the continuation of fuel subsidy according to Sweetcrude investigation.

Oil subsidy in a single year gulps anything between $8billion and $9billion, and in the next five years with increase in fuel demand and domestic consumption, the country would have spent about $50billion subsidising fuel.

Oil industry operators, who s p o k e w i t h S w e e t c r u d e exclusively, opined that if the entire budget for Year 2011 is N4.972trillion, which is about $31billion, then it would be destructive to continue with the subsidy scheme, especially as it has been established that most parts of the country don’t enjoy subsidy.

Those opposed to the subsidy removal argued that the federal government would impose untold hardship on the people if the oil

subsidy is removed outright, hence, government should consider a phased removal of subsidy to ameliorate the hardship on the people.

They said, “The Labour Union and other stakeholders at this point need to engage the government from a position of knowledge. They should make government commit itself to laudable and economic-driven infrastructural projects, as there is currently lack of trust for the government due to past experiences over the years.”

Meanwhile, the former Deputy National Chairman of the ruling People’s Democratic Party Chief Olabode George, has also joined other professionals to throw his weight behind the federa l government’s proposed subsidy removal by 2012.

George spoke on the sidelines of the Practical Nigerian Content forum, which held last week in Port Harcourt, South-south Nigeria.

According to him the subsidy is only beneficial to the fat cows who unfortunately are also saying they are against it, now we should note that subsidy gulps a lot of money, where is the direct benefit to the people? He queried.

“In all, our neighboring countries petrol sell far higher than we sell here. What the government should do in this instance is to have the Central bank Governor, the ministers of petroleum, finance and information, to come out and sensitise the people on this issue.

“They can go to as many state capitals as possible to speak to the people in the language they understand through a kind of public hearing. They can also bring the opposition people to the debate, so they can discuss the matter and clear all grey areas.

“It is my view that when the people see the loophole in the treasury as a result of deregulation, they’ll be alarmed. Hence, to change that policy government needs to effectively engage and educate Nigerians.”

Meanwhile, a highly placed industry professional who pleaded for anonymity, argued that the only way the subsidy removal as laudable as it is, would make sense to the average Nigerian, is if the removal is structured in phases.

According to him, the effect on the people would be too severe and government would be unpopular for it. He, however, urged

government to make public what it would be doing with the over $8billion of annual saves if it must remove subsidy.

He further noted, “Part of the problem with government is improper analyses. They need to work with verifiable statistics on this issue of subsidy removal. They need to know how many Nigerians go by diesel powered public transport to work every day and how many go on petrol powered vehicles. In Paris, for example, about 3 million people go about in public buses daily, and with such a figure government can plan.

“They need to be able to tell us for instance, that in the first phase of the subsidy removal refineries would work at optimal level; in the s e c o n d p h a s e , t h e p o w e r generation would rise to a particular level; and in the third phase major road contracts in the country would be awarded and completed in a particular period of time. This is the only way government can show that it is responsive to people oriented issues and would not end up doing the right thing in the wrong way,” he said.

But George differed and opted for an outright removal of subsidy, as according to him, it is benefitting but only a few. “I believe outright subsidy removal is necessary. It takes a lot of courage, but it should be properly explained to the people. The ministers should leave their seats and go out there to enlighten the people that is why they are there.

“The fat cows benefiting from subsidy have a lot of money at their disposal to fight through the press so as to misinform the people so that it can continue. It is a large chunk of our treasury and if it goes on and the people meant to be impacted are not impacted, then what are we doing? It simply means government has failed.

“There cannot be sanity in this system when even beneficiaries of the fuel subsidy are also calling for its removal, probably to shield themselves from the fact that the system has benefited them.

Government should also ensure that the refineries are optimal and create a level playing ground for investors who may be interested in the business of refining. People should be able to go to the bank get money if need be and invest in the business of refining as this is the only solution.

Government cannot run refineries and cannot be in business. All they need to do is create the enabling environment to allow for more investor to flood the system. All over the world if government goes into business it loses money. About 18 companies have been given licenses to build refineries and they have not proceeded, it simply means there is a problem and any responsible government would want to know what went wrong with such a process” he enthused.

21Insurance

ROSEMARY ONUOHA

In t e r n a t i o n a l o i l c o m p a n i e s i n Nigeria, IOCs, have been accused of r e f u s i n g l o c a l

insurance companies the opportunity to cover their risks under the guise that the local underwriters don’t have international credit ratings.

C o n s e q u e n t l y, t h e s e companies still take their oil and gas risks abroad even when the Local Content Act stipulates otherwise.

Mrs. Justina Omekere, an insurance practitioner who made the allegation in Lagos, lamented that with such actions the oil majors have continued to disregard the laws of Nigeria, thereby depriving local insurers’ the opportunity to expand their h u m a n a n d f i n a n c i a l capacity.

In order to guard against the spread of this ugly trend, O m e k e r e c h a r g e d underwriters to subject themselves to international credit ratings to stop the oil majors from using such cheap blackmail to deprive them of what is rightfully theirs as well as saving the country from the incidence of capital flight.

In her words, “The oil majors always demand for credit rating from us before they can insure their risks. In e s sence , under wr i t e r s should avail themselves to be rated by credible rating agencies so that they will not continue to lose business.”

Meanwhile, the former Director General of the Nigeria Insurers Association, NIA, Mr. Ezekiel Chiejina, added that in line with being rated, underwriters should also do a lot of reinsurance in special risk business if they wish to play big in the oil and gas sector.

A c c o r d i n g t o h i m , underwriters should enter into reinsurance treaties with ‘A’ ra ted internat ional c o m p a n i e s t o f u r t h e r increase their ability to underwrite special risks.

Chiejina noted that special risk business is highly capital intensive, as such, insurers should ensure that adequate reinsurance is in place b e c a u s e a d e q u a t e reinsurance is imperative for underwriting companies to pay claims promptly when and where the need arises.

The fo r mer NIA DG advised insurance operators t o e f f e c t i v e l y u s e coinsurance to pull capital and develop relevant skills such that pricing of risks could be done in Nigeria. He added that they should avoid unhealthy competition that e r o d e s t h e p o t e n t i a l

profitability of the companies to participate in the sector.Chiejina stressed that every oil and gas risk underwriting

business must be insured to a Nigerian company for them to take what they can cover, then cede the rest to a captive company, adding that insurers are over exposing their account if they take too much of these special risks and exposing clients unnecessarily.

An Oil Rig

Shell Plans to Boost Nigeria Gas Production Next Year

Royal Dutch Shell Plc, operator of Nigeria’s largest oil fields, plans to boost its natural-gas production in the country as it starts a new facility and cuts flaring, or the burning of the fuel at fields.Shell’s vice president for gas in sub-Saharan Africa, Osten Olorunsola said in Abuja that the Hague-based company plans to increase daily output to one billion cubic feet within a year from about 700 million.Nigeria, holder of Africa’s largest gas reserves of more than 187 trillion cubic feet, flares most of the fuel it produces along with oil because it lacks the infrastructure to process it. Shell plans to collect gas at its Utorogu and Ughelli fields and start the Agbada non-associated gas facilities from the first quarter of 2012, Olorunsola said.“We mop up the gas which otherwise would have been flared and we also make the gas available for power,” he said. “We’re basically using one stone to kill two birds.”About 70 percent of Nigeria’s domestic gas demand is provided by Shell, most of which is used to generate electricity in Africa’s most populous nation. Chevron Corp., Exxon Mobil Corp., Total SA and Eni SpA are the other major suppliers of domestic gas.Shell cut gas flaring 50 percent in the African country to about 300 million feet a day in the eight years to 2010 after installing gathering infrastructure, according to the company’s website. The gas gathering project will cost about $6 billion when completed, it said.Shell has about 14 ongoing gas projects including the integration of the Forcados oil and gas development that will come on stream between the first quarter of next year and 2015, Olorunsola said.

Gas facility

22Insurance

ROSEMARY ONUOHA

Th e N a t i o n a l

I n s u r a n c e

C o m m i s s i o n ,

N A I C O M , h a s

charged insurance

brokers in the country to avail

themselves of the opportunities

in the Local Content Act and

carve a niche for themselves.

Commissioner for Insurance,

Mr. Fola Daniel, who gave the

charge, stated that the Local

Content Act has given brokers a

huge leverage as well as a rare

opportunity to participate in the

oil and gas sector.

Daniel, who made the appeal

at the 2011 National Insurance

Conference, organised by the

Nigerian Council of Registered

Insurance Brokers, NCRIB,

reiterated that the Nigerian Oil

and Gas Industry Content

Development Act 2010, has

given insurance brokers in

Nigeria a leverage, adding, “It is

significant that by section 49 of

the Act, all oil and gas insurance

businesses in Nigeria must be

transacted through a Nigerian

registered insurance broker.

This is indeed a rare opportunity.

However, brokers require

technical, as well as Information

Technology (IT) capacities to

take effective advantage of the

provision.”

Towards developing the

needed capacities, Daniel

advised that building strategic

alliance with some established

foreign insurance brokers may

be helpful in addition to

deliberate efforts to develop

human and technical capacities.

The Insurance Commissioner,

however, regretted that brokers

have not brought sufficient

energy in to the Marke t

Development and Restructuring

Initiative, MDRI of NAICOM.

Daniel stressed the need for a

more energetic and proactive

collaboration from brokers than

is being seen at the moment,

adding that there is the need for

the brokers, and indeed the

insurance industry to reflect on

how to tap into the vast

insurance opportunities that

currently abound in the country,

as these were yet to be fully

exploited.

Daniel noted that in the past

two years, the Commission has

been under the burden of

developing and expanding the

insurance market and by

extension, increasing the

insurance sector’s contribution

to the nation’s Gross Domestic

Product, GDP, and part of the

efforts is the introduction of the

MDRI in 2009.

He said, “For emphasis, one of

the key objectives of the MDRI is

continuous availability of

genuine insurance products at

the grassroots. Naturally, fake

insurance products will thrive in

the absence of genuine.

“We therefore need more

brokers and agents at the

grassroots. Towards achieving

this objective, the Commission

has tended to be more liberal

with licensing of brokers and

agents. Notwithstanding, it

appears that brokers have

continued to be concentrated

only in our major commercial

cities. This trend must change if

we are to truly develop the

insurance industry in Nigeria.

Beyond MDRI, brokers now have

the opportunity even to explore

Micro and Takaful insurances.

This is important especially in

the face of the renewed efforts by

world governments towards

financial inclusiveness.”

The insurance commissioner

stated that the government has

d e m o n s t r a t e d r e n e w e d

commitment for developing the

agricultural sector through the

launching of the Nigerian

Incentive Based Risk Sharing for

Agricultural Lending, NIRSAL

project currently coordinated by

the CBN.

“The insurance element in the

project is indeed a big plus for

the insurance industry. A

necessary fal lout of this

development has been the

proposal for deregulating

agricultural insurance in

Nigeria. At the moment it seems

that the Nigerian Agricultural

Insurance Corporation, NAIC

Act, has conferred on NAIC the

exclusive right to insure all

subsidised agricultural risks.

However, opportunities still

abound in the a reas o f

commercial unsubsidised

agricultural risks.”

Daniel noted that going

forward, the Commission shall

give appropriate consideration

to underwriters desiring to

u n d e r w r i t e ’ a g r i c u l t u r a l

insurance under the relevant

provisions of the law, noting that

existing underwriters are well

advised to take advantage of the

capacity already accumulated

by NAIC. As a means of

attaining sufficient capacity for

large risks, the Commission

shall actively support pool

arrangements, co-insurance

For mer Managing Director of Financial Institutions Training

Centre, FITC, Mr. Oladimeji Alo, has advised insurance operators to create a strategy that suits their own business pattern and not involve themselves in every business in the insurance sector.

According to Alo, because of the varying capital base levels of insurance operators, not every insurer can go into oil and gas business.

Alo who gave the advise in L a g o s , s t r e s s e d t h a t u n d e r w r i t e r s s h o u l d consider their strengths and capacities before they decide to do oil and gas business.

Meanwhile, Managing Director of the Law Union & Rock Insurance Plc, Mr. Yinka Bolarinwa, said that underwriters and Nigerians i n g e n e r a l h a v e n o t

pos i t i oned themse lves strategically in reaping from the benefits which the Local Content Law provides.

According to Bolarinwa, one key element that the country needed to play actively in the oil and gas sector is infrastructure, and the government has provided the infrastructure on a platter of gold, which is in the form of the Local Content Act.

In his words, “Now there is a guideline on this Local Content Act which stipulates that 70 per cent of non-life

risks in the oil and gas sector must be domic i led in Nigeria, while 100 per cent of life business must be done in Nigeria. To me, that is the infrastructure that we need and nothing more.”

On what operators need to do to tap into the benefits of the Local Content Act , Bo la r inwa s ta ted tha t u n d e r w r i t e r s s h o u l d c o l l a b o r a t e a n d w o r k together as one team to develop capacity, human capital as well as skills that will be able to match the

demand from local insurers.He stated, “Nobody can

love this country more than you and I. it is you and I that must do it and build this country. So insurers must collaborate, work together and ensure that the Nigerian model work for us. I must tell you the truth; we have not started penetrating the oil and gas market. So we need to collaborate and work h a r d e r. T h e N i g e r i a n Government has said ‘this is what I want in my country,’ so if the oil majors don’t corporate with Government they should be shown the way out.”

He, therefore, tasked insurers to ensure that the Local Content Law worked, adding, “This is our country, the oil majors should not dictate what happens in our country for us. If they don’t

comply with the law of the land they should leave. So you and I must not also be saboteurs, we must ensure that we collaborate with government so that it works. No outsider will come in here and do anything that is not in line with the law except you and I connive with them.”

C o m m e n t i n g o n t h e directive handed down to insurers by NAICOM to transit to International F i n a n c i a l R e p o r t i n g Standard, IFRS, Bolarinwa stated that collaboration a m o n g s t i n d u s t r y p r a c t i t i o n e r s w i l l b e beneficial to all. “Naturally, when we are starting a new thing like this it is better to collaborate if others are available to collaborate with you. But if they say, ‘no’, there is no way you can force them.

For emphasis, one of the key objectives of the MDRI is

continuous availability of genuine insurance products at the

grassroots

23Insurance

Naicom corporate building

Th e N a t i o n a l

I n s u r a n c e

C o m m i s s i o n ,

NAICOM, has

been accused of

not doing enough to engage

o t h e r l a w e n f o r c e m e n t

agencies and security outfits in

its drive to increase insurance

penetration through the

Market Development and

Restructuring Init iat ive,

MDRI.

The Regional Manager, Law

Union & Rock Insurance Plc,

Mr. A. Falade, who made the

assertion, stated that the

regulatory body should do

more to engage such outfits

like the Nigerian fire brigade,

Nigerian police, and the

Federal Road Safety Corps, to

increase insurance penetration

in the country.

Falade stated that for the

MDRI to work, NAICOM

should regularly engage these

law enforcement agents and

security outfits in various

awareness campaigns and stop

relying on its own agents

alone.

He said, “NAICOM wants to

stamp out fake insurers in the

country and have not engaged

the law enforcement agents to

enlighten them on what

const i tute fake or real

insurance certificates. The

policeman on the street does

not know fake or rea l

insurance paper, so how does

he apprehend people with fake

certificates?”

He argued that NAICOM

needs to regularly train these

people to get the best because

if they continued doing the

same thing, they will keep

getting the same old result.

The concept of MDRI is

based on the development of

t h e m a r k e t t h r o u g h

enforcement of compulsory

insurances; restructuring of

the system through a review of

the channels of distribution as

well as the elimination of fake

insurances. The policy is also

meant to build consumers

confidence in the Nigerian

insurance market; promote

public understanding of the

i n s u r a n c e m e c h a n i s m ;

increase the penetration from

six per cent to 30 per cent by the

year 2012, as well as grow the

nations insurance density.

Others include enhancing

the citizens’ access to relevant

and affordable insurance

products; as well as reducing

the potentials for insurance

firms to be used for financial

crimes.

Aside from engaging these

other agencies, some experts

are of the view that the

government has a big role to

play if the insurance sector

must grow.

T h e G r o u p M a n a g i n g

Director of Royal Exchange

Insurance Plc, Mr. Chike

Mokwunye, said that the

government needs to lend its

support towards the growth of

insurance in the country and

assist it in deepening the retail

end of the market because it is

important to the nation.

According to him, “The

government should assist the

insurance industry to develop

the retail market because

developing retail end takes

time but with government’s

support, it will be achieved.”

Mr. Wole Oshin, Managing

Director of Custodian & Allied

Insurance Plc, stated that the

g o v e r n m e n t n e e d s t o

recognise insurance as is

obtainable in other economies

where governments pick on

insurance for progress.

il prices rose by more than a dollar after O

European leaders agreed to boost the region's rescue fund, raising hopes that the euro zone debt crisis will be contained.

The new version of the euro zone's rescue fund will be leveraged four or five times, giving it firepower equivalent to about €1 trillion ($1.4 trillion) accord ing to French President Nicolas Sarkozy

Brent crude was up $1.00 at $109.91 a barrel last week, after touching a high of $110.12 earlier. US crude gained $1.51 to $91.71 a barrel after hitting an intraday day high of $92.04.

"I attribute the edging up of oil futures to some apparent progress in the discussions in Europe regarding the European debt crisis," said Victor Shum of Purvin & Gertz.

"The stock markets, if you look at the Japan Nikkei index, are also reacting p o s i t i v e l y t o t h i s development. The macro event and the financial markets are leading and oil futures are reacting even t h o u g h t h e c r u d e inventories in the US have increased substantially."

Crude stockpiles rose 4.74 million barrels to 337.63 million barrels in the week to 21 Octoctober, EIA said. This was sharply h i g h e r c o m p a r e d t o analysts' projection of a 1.3 million build.

Expectations that the Ch inese gove r nment would begin loosening tight liquidity policy in the fourth quarter as China's economic growth slows also supported oil prices. .

Oil rises on EU rescue plan

Barrels of Oil

NNPC Ad

NNPC Ad

Electricity Transformers

NNPC Ad

Electricity Workers laying power cables

NNPC Ad

NNPC Ad

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OSCARLINE ONWUEMENYI

NNPC Ad

34Labour

Union states conditions for downstream deregulation

VICTOR AHIUMA-YOUNG

Th e N a t i o n a l U n i o n o f Petroleum and N a t u r a l G a s W o r k e r s ,

NUPENG, has warned the Federal Government to be ready for war if it goes ahead with the deregulation of the downstream sector without meeting the agreements reached with organised labour over two years ago.

The union, at its National Executive Council, NEC, meeting in Owerri, Imo State, also decried the non-passage of the Petroleum Industry Bill, PIB that has been before the National Assembly since 2008 and the increasing insecurity in the country.

In a communiqué signed by comrades Igwe Aches, and Elijah Okougbo, NUPENG’s President and General Secretary respect ively, m e m b e r s s a i d t h e y deliberated on issues that were key and germane to socio-economic and political transformation of the country. These issues included the PIB, deregulation of the downstream sector and the insecurity in the Niger Delta region and a host of others.

The communiqué read in part, “The NEC in session expressed dismay over procrastination in the general reform of the oil and gas i n d u s t r y t o e n s u r e t r a n s p a r e n c y a n d accountability increased investment and return through the timely passage of the petroleum industry bill which has been at the national assembly since 2008. It is even more worrisome and disturbing that there are various versions of the bill in circulation giving room to w i l d s p e c u l a t i o n a n d apprehension in the industry and the nation at large.”

“The NEC in session therefore cal ls on the National Assembly to make

Refinery

available the authentic version of the bill to the public to enable concerned s t a ke h o l d e r s t o m a ke meaningful contributions to the content of the bill. The NEC in session further calls on the National Assembly to immediately put in motion all processes for the speedy passage of the bill for the actualisation of the much anticipated reform in the oil and gas industry.”

On deregulation of the downstream sector, the NEC e x p r e s s e d t o t a l disappointment at Federal Government’s attempts to

deregulate the sector under the current import driven petroleum product supply status. Furthermore, they noted that the refineries are not functional, compounded b y o b s o l e t e p r o d u c t s pipel ines network and depots, low local refining and i n a d e q u a t e e n e r g y generation capacity and dilapidated road network in the country.

The union reiterated that it i s n o t o p p o s e d t o deregulation, but that it must be undertaken under the following conditions:? T h e r e m u s t b e

immediate practical and p ragmat i c s teps to rehabilitate the existing four refineries in the country to ensure optimal capacity utilisation.

? Government must c r e a t e a n e n a b l i n g environment to engender private investors’ interest in building refineries in the country for the purpose of improving the local refining capacity to meet the ever increasing local demand of petroleum products and indeed for exportat ion purposes? Engage in massive infrastructural development v i d e , r e p a i r s a n d construction of road network, modern railway system, e x p a n s i o n o f e n e r g y generating capacity, repairs and recons t r uc t i on o f p e t r o l e u m p r o d u c t s pipelines network and depots to improve and ensure

effective distribution of petroleum products. ? E n s u r e t h a t a p p r o p r i a t e p a l l i a t i v e measures are instituted to cushion the immediate impact of the deregulation on the citizenry, and ? Ensure adequate protection of all oil and gas workers in the country as the UNION will not hesitate to take appropriate actions should these attacks and a b d u c t i o n c o n t i n u e unabated.The union equally expressed alarm over the increasing rate of insecurity in the country as reflected by reports of violence across the country and the high rate of criminal activities vide, kidnapping, communal strife, resulting in wanton destruction of lives and properties, bombing, arson ,armed robbery, rape .

These issues included the PIB, deregulation of the downstream sector and the insecurity in the

Niger Delta region and a host of others

35Labour

Informal workers reject planned subsidy removal…Say safety nets will be meaninglessVICTOR AHIUMA-YOUNG

& NOAMI MGBAKOR

WORKERS in the informal sector have rejected the F e d e r a l

Government’s plan to remove subsidy on petrol, saying it would worsen the sufferings of Nigerians and that the so-c a l l e d s a f e t y n e t s b y g o v e r n m e n t w o u l d b e meaningless.

Under the umbrella of the Federation of Informal Workers’ Organisations of Nigeria, FIWON, the workers said that

Informal of sector of the economy

government’s reasons for the removal of subsidy were not tenable because the welfare of the majority of the masses was the reason for government’s existence.

The General Secretary of FIWON, Comrade Gbenga Komolafe, also faulted the plan to hike electricity tariffs and wondered why government did not discuss the so-called safety nets with stakeholders and unions.

He contended that “If some monies embezzled during programmes and those cut from salaries of political appointees can be saved, it will be enough to

fund social protection net.” According to him, “The federal

government has announced its intention to increase the prices of petroleum products and electricity tariffs. They have gone on to link this plan to an intention to implement a programme of ‘social safety nets’ to cushion the effects of the increases. These so-called ‘ sa fe ty ne t s ’ have been arrogantly announced without consultations with relevant s t a k e h o l d e r s e s p e c i a l l y organisations of the working poor and the trade union movement. It is no surprise that the content of the so-called

‘safety nets’ have little bearing to the central concerns of the working poor. More importantly, we deplore a situation whereby the announcement of social protection measures by the federal government is made conditional on policies that will completely obliterate whatever good the so-called safety nets will achieve. Increases in the prices of petroleum products and electricity tariffs will make aggregate costs of production, transportation of food and raw materials even more prohibitive with attendant consequence of more small businesses closing down. Kerosene will become more costly forcing even more people to use firewood with dire c o n s e q u e n c e s o n t h e environment.”

“On the other hand, a reasonable reduction in the colossal cost of governance with government bureaucracy and political appointees gulping close to 70% of national resources will immediately free trillions of naira to fund social protection measures as well as massive social and physical infrastructural projects all over the country. After all, previous increases in petroleum products’ p r i c e s a n d c o n c o m i t a n t promises of investing in the social sectors have never been implemented. We therefore reject unequivocal ly, the planned increase in the prices of petroleum products as well as the hikes in electricity tariffs. We demand that our right to social protection be respected without conditions while calling on the National Assembly to enact a comprehensive social protection law to cover unprotected Nigerians. We also demand that the federal government should mass ive ly inves t in the construction of refineries not only for domestic consumption but also for export as several other developing countries including non-oil producers have done rather than wait forever for so the called private sector to do so.”

On social protection the FIWON scribe said, “Most poor people in Nigeria are in the informal economy where there is no protection against their multiple vulnerabilities making the lofty objectives of the Millennium Development Goals (MDGs), a pipe dream in Nigeria.

We also demand that the federal

government should massively invest in the construction of refineries not only

for domestic consumption but

also for export

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visitors to our website Call: Hector on +234 805 1100 256, Ubong on +234 705 656 5800 or

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Email: heckie4real@yahoo.com, iubong@yahoo.com

36Labour

WORKERS i n t h e P o w e r H o l d i n g Company

of Nigeria, PHCN, have insisted on the October 31 deadline to the Federal G o v e r n m e n t a n d t h e i r management to pay the 50 p e r c e n t a g r e e d s a l a r y increment or risk industrial unrest.

The threats came against speculations that instead of the 50 percent pay rise agreed to and signed between government and the workers, government is preparing to pay them only 37 percent.

It will be recalled that the w o r k e r s a n d P H C N management agreed on 150 percent pay rise, of which only 15 percent had since been paid. The 50 percent was the final agreement after the g o v e r n m e n t - a p p o i n t e d conciliator, pioneer President of Nigeria Labour Congress, NLC, and Secretary General, Organisation of African Trade Unions Uni ty, OATUU, Comrade Hassan Sumonu, prevailed on labour to accept at a conciliatory meeting.

Sweetcrude gathered that both organised labour and Comrade Sumonu have k i c k e d a g a i n s t t h e government’s latest antics and have totally rejected it.

A labour leader in the sector who spoke on condition of anonymity, said government was playing with fire as the workers would not accept anything less than 50 percent, as this was a compromise by the workers.

The two in-house unions in the power sector, the National U n i o n o f E l e c t r i c i t y Employees, NUEE, and its Senior Staff Association of E l e c t r i c i t y a n d A l l i e d C o m p a n i e s , S S A E A C , counterparts had on October 14, issued the October 30 deadline to pay the 50 percent salary increases or face industrial unrest.

General Secretary of NUEE, Comrade Joe Ajaero, told S w e e t C r u d e t h a t t h e ultimatum remained and that the choice was government’s, to either trigger off or avoid industrial unrest in the sector at this critical point in time.

In a separate letters to the PHCN management, NUEE and SSAEAC noted that the new pay package ought to have begun since June, but has been delayed, adding they were no longer in a position to restrain the workers after the expiration of the ultimatum.

Victor AHIUMA-YOUNG

The NUEE letter signed by Ajaero, read in part; “Workers in the industry have flooded our Secretariat with complaints of non-reflection of the 50% salary increase in their September 2011 salary as prev ious ly promised by Government. We are amazed at this unwarranted development because Government made it very clear in our maiden negotiation meeting in Abuja on May 19, 2011 that enough fund had been set aside to take c a r e o f a l l f i n a n c i a l implications emanating from the negotiations.

“The non-implementation of this salary increase clearly s u g g e s t s t o u s t h a t Management and Government are only paying lip service to the spirit of tripatism and social dialogue. In view of this mistrust deliberately created by Government, we cannot but

carry our destiny in our hands to salvage our situation. We therefore demand that the salary increase including the arrears from 1st June, 2011, be paid to workers in the industry not later than October 31, 2011. We have waited enough. At the expiration of this two weeks’ notice, the Union w o u l d n o t g u a r a n t e e industrial peace in the sector.”

Similarly, the SSAEAC letter by its Secretary General, C o m r a d e A b i o d u n Ogunsegan, to the Minister of Power warned that workers should not be held responsible for any action to be taken by them if the agreement reached on the 50% salary increase is not implemented by the end of this month

The letter, also copied to the Managing Director/ Chief Executive Officer of PHCN, read: “We need to inform you

that in breach of our line of c o m m u n i c a t i o n , t h e H o n o u r a b l e M i n i s t e r dispatched letters to the market Operators, the CEOs, and station heads on the payment of the negotiated 50% salary increase, thereby creating serious distortions in the information flow and consequently affecting the payment of the salary increase agreed.

“The 50% salary increase negotiated in May 2011, was to take effects from June 2011, and be effected in staff salaries from September 2011 as Government had stated and pleaded in the negotiations with the unions in July 2011. However, the report we received from our members is that the new pay is yet to be computed for payment due also to the lackadaisical a t t i t u d e a n d l a c k o f

c o m m i t m e n t o f t h e m a n a g e m e n t a n d t h e Government to pay.

“We wish to draw you attention to the increasing u n e a s i n e s s a m o n g o u r members due to the refusal to pay as agreed and wish to inform you that we will not be held responsible for any action taken by the workers, if by October 31, 2011, payment of the arrears of 50% salary i n c r e a s e f r o m J u n e t o September 2011, and salary of October incorporating the 50% is not effected.”

Theworkers, however “called on the Government to intervene on the implementation of the 50% salary increase, stressing that when the announcement was made in May 2011, it was not clear to Nigerians that by S e p t e m b e r 2 0 1 1 , t h e implementation is yet to take-off.”

Demonstrators on the street

Ferry

38Solid Mineral

Pr e s i d e n t

G o o d l u c k Jonathan has cont inued to demonstrate his

a d m i n i s t r a t i o n ’ s c o m m i t m e n t t o w a r d s developing the mining and minerals sector as a counter-f o r c e t o o i l a n d g a s exploitation.

Speaking last week at an interactive dinner with leading Australian mining and solid minerals investors, the President said his a d m i n i s t r a t i o n w i l l v i g o r o u s l y i m p l e m e n t policies, programmes and projects that will ensure the rap id deve lopment o f Nigeria’s solid minerals sector in the next four years.

He invited the Australian miners to also invest their resources, skills, expertise and technology in the development of Nigeria’s solid minerals sector. “You are well known for solid

Jonathan raises Nigeria’s mining profile

Oscarline Onwuemenyi

minerals and you will find a lot to do in Nigeria,” he told his audience at the dinner.

The president, who spoke at the foreground of the meeting of Commonwealth Heads of Government, CHOGM, in Perth, Western Australia, said this is in furtherance of efforts to c r e a t e m o r e j o b o p p o r t u n i t i e s f o r t h e country’s youth. Western Australia with its huge solid minerals resources is the richest mineral region in Australia.

President Jonathan had earlier in the day met with the Premier of Western

Australia, Mr. Colin Barnett, a n d d e c l a r e d h i s commitment to the full development of Nigeria’s s o l i d m i n e r a l s s e c t o r because of its huge potential for boosting the national economy.

He told Mr. Barnett that his administration was working towards the full development of Nigeria’s solid minerals sector to expand and diversify the country ’s economic base. “We have a lot to learn from you in solid minerals development and w e l o o k f o r w a r d t o establ ishing mutual ly-beneficial partnerships with

Australian investors and industrialists,” he said.

The President also re-assured the gathering that his administration had the p o l i t i c a l w i l l a n d c o m m i t m e n t t o f u l l y implement all the regulatory reforms required to facilitate the ent rance o f more investors to Nigeria’s mining sector. According to him, Australian investors were also welcome to invest in other under-developed sectors of the Nigerian economy such as agriculture, noting that the country was blessed with vast arable land on which almost anything

can be grown.

The Minister of Trade and

Investment, Mr. Olusegun

Aganga, who also spoke at the

occasion, told the Australian

investors that Nigeria had over

33 solid minerals in sufficient

quantities for commercial

exploitation. He also promised

of government’s commitment to

c r e a t i n g t h e e n a b l i n g

e n v i r o n m e n t f o r t h e

development of Nigeria’s solid

minerals sector.

O n e m a j o r i m m e d i a t e

outcome of the session was the

proposal by Mr. Hugh Morgan,

a leading Australian solid

minerals developer who co-

chaired the interactive dinner,

for the establishment of a Joint

Nigeria-Australia Trade and

Investment Commission, to

promote economic cooperation

between countries.

Miners at work

39Solid Mineral

The Minister of M i n e s a n d S t e e l Development, M r . M u s a

Mohammed Sada, has stressed that the Federal Government would not entertain an out of court settlement nor would it enter into further negotiations with Global Infrastructure Holdings Limited, GIHL, over the cancellation of the concession of Ajaokuta Steel Company Limited, ASCON.

Sada, who said this at a policy dialogue and briefing with the media in Abuja, said government would see the case through, adding that it would not withdraw from a case with an investor w h o m h e a l l e g e d cannibalised the assets of the steel company and breached the terms of the concession agreement.

He noted that the present a d m i n i s t r a t i o n w a s determined to wrest the management of the billion-dollar steel complex from the Indian managers, whom he accused of “asset-s t r ipp ing and round-tripping.”

According to him, “There will be no negotiation; we cannot enter into any negotiation with a company t h a t h a s r e p e a t e d l y breached the terms of agreement. What we must do is to demand for our rights and ensure that things are done properly. We have already articulated our position on the issues and hope the matter will be amicably resolved soon.”

He, however, said that government and are in arbitration, adding that both parties met last month and would meet again in January next year, when Nigeria will present its counter claim.”

Meanwhile, he said, government has concluded plans to re-stream some of the completed units of the Steel company such as the Engineering Workshop, the Thermal Power plant, and the Rolling Mill, which workers retained on the job are being paid regularly.

“The arbitration does not say we cannot operate on our asset, and we are ready to go ahead and do what we must do to keep the place afloat even as we try to find a way to resolve what has turned out to be a sham of a concession and a ridicule to our national pride and

Oscarline Onwuemenyi

Carbon Steels

resource,” Sada stated.H e n o t e d t h a t t h e

concession to GHIL, which was based on a principle of capital importation, could have seen the Indian steel manufacturer investing billions into the company. However, “what we have seen over the years is a continuous stripping of the assets of the company by people who are supposed to be investing money into it.”

He added that, “What they met on the ground in terms of raw materials, they did not try to improve upon that, rather they just sat on the r a w m a t e r i a l s a n d consumed and drained the natural resources.”

The minister further hinted that more than N37

billion borrowed by GHIL from local banks was partly to blame for the crises that set in some of the banks.

On government’s plan for the firm and the Nigeria Iron Ore Mining Company, NIOMCO, Sada said that to avoid the repeat of past mistakes, government has raised an economic team to carry out a study on what to do with the two entities.

The team, headed by the Coordinator of the Economy, and Minister of Finance, Dr. Ngozi Okonjo- Iweala, is to study the possible rate of return for the plants.

He said, “Government wants to transform the place. As I am talking to you, there is a study of economic rate of return on the two facilities. I

think it will be concluded very soon. It is being c o o r d i n a t e d b y t h e Coordinator of the Economy because it is not a technical thing; it is strictly business.

“All the factors will be put into consideration, as we don’t want a situation whereby a private investor will come and look at it and say I can operate it. No. We want professional managers to contact professional engineers, get the input from them and get their report so we know this is their direction. So, we will be able to advise the government on the various available options, between concession, outright sale or joint venture. This is where we are now.”

O n t h e c o n t r o l o f explosives, Sada said the ministry and stakeholders have agreed that explosive dealers and directors of user c o m p a n i e s w i l l b e thoroughly screened before licences are issued.

He said stakeholders unanimously agreed at a conference in August for the review of the Explosive Act of 1964 and the Explosive Regulations of 1967, to address emerging needs, trends and challenges associated with explosives handling. The review is also expected to address issues that border on security, manufacture and export.

40Solid Mineral

Th e F e d e r a l G o v e r n m e n t h a s u r g e d operators in the n a t i o n ’ s

extractive industries to operate in a professional manner that will ensure the s u s t a i n a b i l i t y o f t h e environment and help create opportunities for wealth creation for millions of Nigerians.

The Minister of Mines and Steel Development, Mr. Musa Mohammed Sada, s t a t e d t h i s d u r i n g a Stakeholders’ Forum on C o m p l i a n c e a n d Enforcement, organised by the Council of Nigerian Mining Engineers and Geoscientists, COMEG, in Abuja.

He charged professional bodies to uphold standards

Oscarline Onwuemenyi and best practices in their areas of operation, saying, “There is no gainsaying that an established and well-managed extractive industry will accelerate economic, social and political growth of the country through the p r o v i s i o n o f g a i n f u l employment and a rise in national economic earnings. In addition, solid and liquid minerals development will provide local raw materials for industries and bring vital infrastructure and wealth to rural areas.”

Sada stressed that the mining industry is a global industry with many countries competing for exploration funds, adding that the government is generally creating an environment that will enable businesses to flourish.

“There is therefore a need to develop the mineral resources of the country

along policies, actions and strategies that are conducive to investment. The policy thrust would respond to the n e w a n d g l o b a l developments in the sector, and furthermore, develop human capital development in the extractive industry. Most importantly, this will develop the legal and r e g u l a t o r y f r a m e w o r k consistent with international best practices,” he said.

He argued that the global increase in demand for e x t r a c t i v e i n d u s t r y commodities has enhanced the need for quality and adequate manpower for the s e c t o r. “ G o v e r n m e n t recognizes the need to continuously develop skills in order to meet the demand for professionals in the extractive sector.

H e a d d e d t h a t “ t h e registration of a professional is a testimony that the

individual has achieved a standard of proficiency sufficient to guarantee the possession of the knowledge and skills required for the efficient practice of his area of discipline.”

Sada, however, charged members to upgrade their skills as best as possible in the light of advancing knowledge. “A member is therefore expected to, at all times, possess and exercise the skills and judgment of an average member of the profession practicing his or her discipline.”

A l s o s p e a k i n g , t h e Registrar of COMEG, Engr. Jonathan Ikeako, dislosed t h a t t h e c o u n c i l h a s developed a Code of Conduct and Ethics for members, to ensure the proper exercise of skills within the prevailing knowledge and disciplines.

According to him, “The member shall at all time act

in a judicious manner and with full regard to the code of practice of the profession in accordance with the rules laid down in the Code of Conduct and Ethics.”

The forum was meant to sensitize practitioners especially those in the Mining and Quarrying industries, oil and gas as well as water and well-drilling, and construction on the need to regulate their activities through formal registration with COMEG in accordance with the Decree (now Act) No 40 of 1990.

“The main thrust is to regulate and control the training, deployment, discipline and practices of professionals, who work in the extractive i n d u s t r i e s . T h e s e professionals include g e o l o g i s t s , m i n i n g engineers, metallurgists, minera l processors , h y d r o - g e o l o g i s t s , hydrologists and in other related fields,” he stated.

COMEG registers all p e r s o n s w h o a r e authorized to practice specialized professions in Nigeria; approves any course for the training of prospective members of these professions as stipulated in the Decree; approves any institution either in Nigeria or elsewhere, which it considers to be properly organised and equipped fo r conduc t ing the training of relevant p r o f e s s i o n s t o b e registered.

The Council also sets standards for candidates who wish to be registered t o s h o w t h a t s u c h c a n d i d a t e s h a v e sufficient knowledge and skill to practice the relevant professions, besides maintaining d i s c i p l i n e i n t h e professions.

Underground tunnel miners

41Solid Mineral

Th e N i g e r i a n

g o v e r n m e n t

constantly speaks

of the desire to

“d ive rs i f y the

source of revenue generation for

the economy away from oil,” and

regularly projects the mining

industry as the next best thing

outside crude oil.

Accordingly, government has

identified dimension stone

production as the gem of the

solid minerals industry, and a

sure route to the creation of

millions of jobs and wealth for

Nigerians.

This belief appears to be

catching up even internationally

since the country’s participation

in one of the biggest and most

colourful Dimension Stones

Fairs in Italy, last year.

Locally too, there has been a lot

o f m o v e m e n t s i n t o t h e

dimension stone sector, showing

that perhaps local operators may

have finally woken up to the

potential of the sector to create

wealth. Indeed, the growing

interest in Nigeria’s dimension

stones by international market

operators marked the sector as a

valuable tool for the nation’s

u p w a r d b u i l d i n g a n d

construction industry as well as

for architectural designs.

Speaking recently in Abuja,

the Minister of Mines and Steel

Deve lopment , Mr. Musa

Mohammed Sada, noted that the

workshop reflects government’s

determination to grow the

industry rapidly.

He said this is in line with the

policy of utilizing the nation’s

natural resources for the overall

economic growth and well-

being of Nigerians.

Sada, who spoke at a workshop

on: Fundamentals of Dimension

Stone Quarrying Techniques,

o b s e r v e d t h a t N i g e r i a ’ s

basement complex hosts a wide

variety of granites and marbles

with attractive colours and

textures, which have a huge

potential for both domestic use

and for export.

He stressed that Nigeria is

endowed with huge natural

resources for the dimension

stone industry, but which

potential are undermined by the

over-dependence on finished

imported stones from Europe

and Asia.

According to the minister, “The

cost of the finished locally

p r o c e s s e d m a t e r i a l s i s

considered too expensive, hence

the high patronage of products

from other countries.”

H e a r g u e d t h a t t h e

development of dimension

stones is one of federal

g o v e r n m e n t ’ s s t r a t e g i c

interventions towards the rapid

transformation of the minerals

Oscarline Onwuemenyi

Dimension stones

industry as a catalyst for

economic growth.

He said that over the past few

years, the ministry has worked

assiduously to implement a wide

range of reforms to create an

environment conducive for both

government and investors.

He said, “Government has

p r o v i d e d t h e n e c e s s a r y

t r a n s f o r m a t i o n f o r a n

accelerated development of the

sector. The private sector is

hereby challenged to invest in

mining. The dimension stone

industry with its diverse

downstream opportunities,

including a large Nigerian and

international market is no doubt

a good business.”

He hoped that the workshop

would igni te interest o f

architects, builders and other

stakeholders to “the large and

beautiful deposits of Nigerian

stones, the technical criteria for

architectural stones and modern

usage of stones in architecture.”

He said that his ministry

through the World Bank-

A s s i s t e d S u s t a i n a b l e

Management o f Minera l

Resources Project, SMMRP, has

commissioned a baseline study

to prepare a typical business

plan for the development of the

stone industry. This is meant to

promote Nigeria’s dimension

stone industry, including the

s o u r c i n g o f p l a n t s a n d

machinery (mine to market).

Sada explained that the study

was carried out by “reputable

international consultants from

Italy,” adding that tremendous

interest had since been shown in

the development of the industry.

The minister stated that the

country is targeting self

sufficiency in dimension stones production.

He noted, however that one major issue that came up during the fair was the European Union policy on the certification of all stone blocks imported into EU countries, generally referred to as CE Marking.

“This involves the technical evaluation of the quality of the stones for use in architectural and decorative designs. Some l a b o r a t o r i e s h a v e b e e n approved all over the world for the pre-evaluation of stones entering the EU countries.”

Other challenges are the need for the training of Nigerians on the s tone quarrying and processing and the need to establish a World

class DS testing laboratory in the

country.

To this end, the minister

d i sc losed tha t Pres ident

G o o d l u c k J o n a t h a n h a s

approved a programme to

facilitate the development of the

sector to include organizing a

construction industry workshop

on dimension stones in the

country; the engagement of

i n t e r n a t i o n a l a n d l o c a l

consultants to professionally

classify Nigerian stones; and the

t raining of operators on

dimension stone quarrying and

processing techniques.

Furthermore, he said that

Nigeria has now established a

world-class dimension stone

testing laboratory, located at the

National Geosciences Research

Laboratories Centres, NGRL, in

Kaduna, Kaduna State.

42Freight

TH E

establishment of t h e N i g e r i a n N a t i o n a l Shipping lines

L t d w a s b o r n e o u t o f government deliberate policy not only to participate in the invisible earning sector of the economy but also as part of its economic independence from the colonial masters and the creation ofthe country ’s distinct image.

The Company therefore came into being through a Private members Motion in the Federal House of Representative in 1958 and 1959 calling for the establishment of a Government Shipping line that would carry the “country’s flag to all the seas of the world.” After the motion was passed into an Act of Parliament in 1959, the Federal Government then incorporated the NNSL with the following Object Clauses:

1. To project the good image of Nigeria abroad by flying the Nation’s flag on the High seas and world seaports.

2. To promote the acquisition of shipping technology by creating and diversifying employment opportunities in the shipping industry.

3. To improve the country’s balance of payments position by enhancing the earnings and conser vat ion o f fo re ign exchange.

4. To assist in the economic integration of the West and Central African sub-region.

5. To support the Nigerian Navy in the event of conflict.

From the foregoing object Clauses, it could be said that profit motive, though implied, was not the motivating factor f o r t h e c o m p a n y ’ s establishment.. One has to understand the mood of the major political players at the t ime to appreciate why “showing the nation’s flag to the world’ was a major focus. The sh ips were indeed expected to play the role of” A m b a s s a d o r s ” f o r t h e e m e r g i n g i n d e p e n d e n t country. Arguably, NNSL achieved most of its major objectives as envisaged by the founding fathers before its liquidation which I personally consider ill advised and very unfortunate.

T h e C o m p a n y w a s i n c o r p o r a t e d w i t h a n Authorised and Fully paid-up Share Capital of N4 million (four million pounds sterling) held jointly by the Federal Government and two non-Nigerian shipping lines, namely Elder Dempster lines Ltd and Palm line Ltd both

Gerald CHIDI

Ship in the sea

British which were technical p a r t n e r s . T h e Fe d e r a l G o v e r n m e n t h e l d a Controlling Share of 51% while the two technical partners had 49% between them. In 1961, either in the e u p h o r i a o f p o l i t i c a l independence or selfish interest of the Nigerian Management of the Company, the non-Nigerian equity holdings were bought out rather prematurely and the Company became wholly o w n e d b y t h e Fe d e r a l Government with Nigerian Management in total control. The company, however, had a small office in liverpool in the United Kingdom wholly manned by British personnel for fleet management which included technical ship maintenance and commercial p r o g r a m m i n g . E l d e r Dempster lines were also General agents in the UK which provided the major

ports of call. The Company started operations with four second hand vessels in 1959 and this increased to 15 vessels by 1971 but at that time the ships were already becoming old and unable to meet the c h a l l e n g e s o f m o d e r n s h i p p i n g . T h e Fe d e r a l Government then decided to retonnage the fleet with 19 combo vessels but by the time the first of the new ships was delivered in 1976/77 changes in ship technology and containerisation concept had taken place and unfortunately all the 19 ships were the same t y p e - c o m b o v e s s e l s . Diversification in ship type, s i z e a n d t h e e v o l v i n g technology could not be reflected in the “new” ships d u e t o i n f l ex i b i l i t y i n Government policies as it was the Government that provided the fund. This situation ultimately played a part in the failure of the Company.

When the 19 new vessels were introduced into service, there was no working capital. Even the initial bunkering of the vessels at the builders’ ship yard was done on credit. But the situation was managed because in 1973 NNSL incorporated a subsidiary c o m p a n y k n o w n a s NIGERLINE (UK) Ltd based in Liverpool, England. The subsidiary company acted as General Agents in Europe to N N S L . T h e s u b s i d i a r y c o m p a n y e m p l o y e d e x p e r i e n c e d a n d k n o w l e d g e a b l e B r i t i s h shipping technocrats in the field of marine engineering for fleet technical maintenance as w e l l a s commercial/operations, etc. even though a Nigerian was the Head of the subsidiary company. That subsidiary Company was trusted in Europe by creditors and shippers alike. The Company

was a training ground for

training Nigerian officers and in

particular for the co-ordination

of sea officers training. One

notable advantage of this

arrangement was that apart

f rom per for ming agency

services for the parent company-

NNSL - and earning agency

commission which was hitherto

paid to Elder Dempster Lines,

the outfit was supervising ship

repairs and making sure that the

r i g h t w o r k e t h i c s w e r e

ma in ta ined resu l t ing in

reasonable ship maintenance

costs and seaworthiness of

vessels. However, when civilian

government returned to the

country, in 1979 interest groups

w i t h i n t h e L a g o s - b a s e d

management began to criticize a

situation where decisions on

ship repairs/maintenance was

not totally controlled by Lagos

Head Office even though all

major repairs for strategic and

economic reasons were carried

out in Europe.

43Freight

NA T I O N A L

President of

t h e

Association of

N i g e r i a n

Licensed Customs Agents

( A N L C A ) A l h a j i S h i t t u

Olayiwola has said that the

eviction of the Standard

Organisation of Nigeria and

other security agencies from the

nation’s seaports will reduce the

cost of clearance of cargo by as

much as 40 percent.

In an exclusive chat with

Vanguard Shittu stated the

affected agencies before their

eviction had constituted check

points in the ports.

He accused SON and other

agenc ies o f be ing more

interested in the so called levies,

fees and penalties which they

tagged administrative charges

because these monies are

auditable.

He said “SON claims to know

the importers of fake and sub-

standard products let them go

after these unscrupulous

importers.

“We are talking about trade

faci l i tat ion must Nigeria

continue to remain like this that

is my worry,, we want the

wrought to stop so as to help this

country

Godwin ORITSE

“You have what is called single

window project being practiced

by the Customs NICIS. By the

time you go to the Trader Data

Input (TDI), the information you

get from your importer v ia the

internet if the importer is

compliant, automatically your

cargo can go to green.

“Now the number of times

your importer brings in cargoes

and has been dec lar ing

genuinely determines the level

of confidence the system has in

the importer but majority of

Nigerian importers are not

complaint and I can tell you that

the importers I work for are

compliant some of them have

been with us for 15 years and

once their cargoes come, they go

through green.

“Green means that you b do

not have to do any examination

but you are given immediate

release .

“But Customs will not sign

your exit until you have gone to

all these agencies to sign that

they are satisfied with your

examination

“Meanwhile, there is this one

stop shop that was brought by

Customs that any container that

is meant for examination must

have all the agencies in

attendance.

“And when they come, they

send the lowly junior staff to go

and give them report in their

offices.

The importer will now in turn

go to their office to negotiate the

release of their cargoes before

they sign his exit

“Now the representatives of

the affected agencies ensure

that as long as your cargo

remains in inside the port, you

are under pressure to negotiate

the release of your cargo.

And as long as your cargo

remain in the port, you will e

intimidated to part with money

so that you can go.

“Otherwise, while you are

waiting demur rage is running

on the trailer, demurrage is

running on the container

demurrage is running on the

terminal rent so they know you

cannot afford to waste time so

you must ‘settle’

“Let SON and others do their

work outside the port, the port is

suppose to be a transit area,it is

not suppose to be storage area, it

is not suppose to be a check

point but what we are seeing are

check points in the ports

Nigerian Port main gate

HE management of Transport and TP o r t

Management System (TPMSL promoters of the Cargo Tracking Note in Nigeria, has said that the scheme is a veritable tool to facilitate international

T P M S L ‘ s spokesperson Mrs Tola Aiyewumi explained that these notes provide additional security by collating and storing all data or information on all cargo either coming or leaving the country.

Some of the provided by the scheme on every cargo inc ludes the identity of the importer, country of origin, the f o r w a r d e r , t h e consignee; notified party, car r ie r, vesse l and voyage number, port of loading and discharge, d e s c r i p t i o n o f t h e quantity/quality of the content and value of goods, etc.

A i y e w u m i f u r t h e r s ta ted that , among others, the notes help in the generation of data for economic planning and development; provide a single windowv system of operation in the clearing process, I e. a database; and improve the integrity of the information in the bill of . lading and manifest, thereby el iminating false/ under-declaration! concealment of cargo.

“Since the operation is web - based, we operate round - the - clock, t h e r e b y h a v i n g information before the a r r i v a l o f o t h e r documents.

“This is an important aid towards Nigeria’s projected 48 ­hour cargo clearance time frame”, she said.

44Freight

TH E L a g o s Deep Offshore L o g i s t i c s (LADOL) base, an indigenous

o r g a n i z a t i o n h a s commenced talks with foreign investors for the take off of its proposed $ 3 0 0 m i l l i o n d o l l a r s mul t ipurpose fac i l i t y o ther wise ca l led the Float ing, Product ion, Storage and Offloading (FPSO) platform.

T h e p l a t f o r m w h e n completed is expected to advance the count r y towards the realization of her potentials and desire as a major Oil &Gas hub station for the West African sub-region.

Managing Director of LADOL, Dr. Amy Jadesimi, who dropped this hint Tuesday in Lagos at a Business DayConference, t a g g e d ‘ A n n u a l Infrastructure Roundtable’, described the FPSO as a massive investment that would create 5000 direct jobs for and an additional 50,000 indirect jobs for Nigerians.

According to her, the facility which will be completed in the next 36 months as the LADOL phase II is in fulfillment of government’s desire to attract the volume of Oil & Gas projects that were only hitherto carried out outside Africa, to now take place in Nigeria.

She pointed out that Nigeria currently expend over $100 billion USD on deep offshore oil and gas venture in Afr ica as indicated in a World Oil Report without having much to show for it since most of the jobs go to foreign companies.

Dr. Jadesimi noted that the development at LADOL will further encourage fabrication in the country taking advantage of the e n s u i n g t e c h n o l o g y t r a n s f e r a n d s k i l l acquisition since most of the massive fabrications that would be needed at the

Godwin ORITSE

Foreign Partners

FPSO platform would be carried out within the Niger Delta region of Warri, Port-Hacourt and Yenagoa, where they will be shipped to the base in Lagos.

The LADOL boss, who attributed the investors’ courage in embarking on the project to government’s

institution of the Local Content Act, maintained that the industry and the nation’s economy would be the better for it.

“We are now talking to a lot of foreign partners and because the Local Content Act mandates that the foreign company has to work here in the country, we anticipate that more than one of them may actually end up working here with us on the development.

“The beauty of having this development in Lagos by an

i n d i g e n o u s N i g e r i a n facility built on NPA land is that it will now be available f o r m a n y f o r e i g n companies to use in the future. So, we are not tying ourselves to a situation where we can be held to ransom by one foreign company…hence we are opening the doors for a n u m b e r o f f o r e i g n companies fo r wider technological transfer and wider investments” she added.

S h e d e s c r i b e d t h e

investment as a necessary development adding that, the only reason why it was delayed was as a result of lack of infrastructure to support the initiative.

She lauded the efforts of Government, which she noted, has already provided the enabling environment by setting up the Local Content Development and M o n i t o r i n g B o a r d (LCDMB) which she said has added to the boosting of opportunities in the oil and gas industry.

Oil refining i s t h e process that t a k e s u s from crude

oil to refined or finished products through an oil refinery such as high-o c t a n e m o t o r f u e l (gasoline/petrol), diesel oil, liquefied petroleum gases (LPG), jet aircraft fuel, kerosene, heating fuel oils, lubricating oils, asphalt and petroleum coke.

A petroleum refinery is therefore a factory where crude oil is transformed into

45Technology

PETROLEUM REFINING:

Jim-Rex Lawson MOSES petrol and hundreds of other useful products or a factory where crude oil is broken down into its various components, which then are selectively changed into new products like the ones mentioned above.

A n o i l r e f i n e r y i s considered an essential part of the downstream side of the petroleum industry.

Re f i n e r i e s c o m e i n various sizes. The range from small topping and reforming refineries to sophisticated complex refineries, but perform three basic steps which are Separation ( fractional distillation), Conversion

(cracking and rearranging t h e m o l e c u l e s ) , a n d Treatment.

A t y p i c a l l a r g e [conventional] refinery costs billions of pounds to build and millions more to run and upgrade. It runs around the clock 365 days a year, employs hundreds of people and occupies as much land as several hundred football pitches.

A modular refinery as the name implies, is a refinery whose parts or equipment are constructed in modules designed to be transported q u i c k l y a n d e a s i l y anywhere in the world and comes in a variety of sizes with capacities that range from 500 to 20,000 barrels per day.

Picture of a typical large scale petroleum refinery at night

PREFERENCE FOR MINI REFINERIESMini Refineries are ideally suited for:

Remote locations Rapid production of

p r i m a r y f u e l s ( f o r consumpt ion)and raw materials or feed (for the petrochemical industries)

G r e a t e r p r o c e s s flexibility (Refining units may operate independently o r l i k e w i s e b e i n t e r c o n n e c t e d i n combinationas determined by the processing needs).

Limited refinery project land space

L o w o r m i n i m a l nstallation cost (using skid-m o u n t e d d u r i n g construction)

Quicker investment recovery

Two operators can restart the plant from a cold start and have the plant in full operation in a matter of hours.

Completely automated and once an operator sets all the controlling points, all product temperatures and flows can be controlled automatically.

Only a flat support area or concrete slab without anchor bolts is required to support the plant.

Fuel supply can be natural gas, naphtha, diesel , fuel o i l or a combination of these fuels.

C O N V E N T I O N A L versus MODULAR REFINERIES

CONVENTIONALConstructed in place

(on site)Configuration could be

any of topping, coking, cracking, hydroskimming etc

Caters for all range of products

Could Process all crude t y p e s d e p e n d i n g o n processing severity

MODULARS k i d - m o u n t e d o n

modulesMostly installed as

topping or hydroskimming plant

P r o d u c t m o s t l y restricted to production of middle distillates, naphtha, and lights.

Utilization of heavy c r udes ’ y ie ld h igher proportion of low value residual fuel oils

A typical modular petroleum refinery

46Technology

In the oil and gas Industry, invested capital declines in v a l u e u n l e s s machiner ies are

properly maintained. Experts say that corrosion

and wear of machinery parts are a major problem in the offshore drilling business. Offshore oil and gas platforms are subjected to hostile corrosive marine e n v i ro n m e n t s , w h i c h r e q u i r e c o n t i n u o u s preventive and corrective maintenance to ensure p r o l o n g e d a n d s a f e operations. Millions of premium pipes

and couplings are used in oil fields every year. Many of these connectors suffer galling due to a combination of extreme tensional and compressional forces. The galling of the threads of the connectors is at best a nuisance resulting in a leak, but at worst a disaster as the pipe and connector weld together causing expensive time wasting and the loss of p i p e l e n g t h s a n d connectors.

Jim-Rex Lawson MOSES In realization of the foregoing, Tricontinental Technologies Limited, a d i v i s i o n o f t h e Tricontinental Group has d e v e l o p e d a n e w technology called the DALIC Selective Process - f o r r e b u i l d i n g w o r n components and for filling i n d a m a g e s u c h a s corrosion or erosion of expensive or badly needed p a r t s – t h r o u g h electroplating, on site, on oil and gas platforms.

W H A T I S D A L I C TECHNOLOGY?DALIC Technology is a

mobile system for adding metal to metal. The process is, in fact, a special type of metalizing but with far bet ter adhesion, less porosity and more precise thickness control than spray, flame, or plasma types of metalizing or welding techniques, no h e a t i s g e n e r a t e d . Therefore, no internal stresses are imparted to the part. The end result is the user is concerned with neither thermal distortion nor cracking.

DALIC Technology works like an arc welder. A DC power pack has two flexible leads, one going to the work and the other connecting to one of a number of working tools “styli”. Anodes of different sizes and shapes (round, flat, concave, and convex) are connected to the end of the styli. The anodes are wrapped with an absorbent material. The covered anodes are dipped into the DALIC solutions or the solutions are flow-fed to the area when mechanized operations are used. A positive (+) connection from the DC power pack is connected to the work tool and the negative (-) is connected to the work piece. An electrical circuit is completed either when the wrapped tool is moved over the metal work piece or by moving the work piece under the wrapped tool. With the completion of this electrical circuit, metal deposits from the liquid

solutions onto the base metal. The deposition rate is very rapid, often times at the rate of 0.05mm per minute.

WHERE IS THE DALIC TECHNOLOGY USED?Anywhere industry needs metal build-up for repair, resizing, metal restoration, or replacement coatings for mechanical, electrical, or c o r r o s i o n r e s i s t a n t p r o p e r t i e s . D A L I C installations are now used in service world-wide in Aircraft overhaul; Marine maintenance; Offshore oil drilling; Plastic, Rubber, or G l a s s m o u l d i n g ; calendaring; Offset & Gravure printing; Power generation and Turbine r e p a i r ; R a i l w a y maintenance.

HOW MANY COATINGS MAY BE APPLIED?Over 100 primary metals or binary or territory alloys can be deposited with the DALIC Technology. Examples are: Babbitt, Cadmium LHE, Copper, Cobalt, Gold, Lead, Lead-Tin, Nickel, Nickel-

Tungsten, Rhodium, Silver, Tin, Tin-Indium, and Zinc. The end-user’s application governs which coating is selected.

WHAT IS THE COST JUSTIFICATION FOR THE DALIC TECHNOLOGY?Most DALIC customers save the cost of their DALIC installation within the first six months of application. A D A L I C Te c h n o l o g y installation is possibly the most cost effective capital equipment any company will ever purchase.

W H A T A R E T H E CHARACTERISTICS OF DALIC’S DEPOSITS?First and foremost, an excellent bond. In contrast to spray type metalizing where a mechanical bond is ach ieved , the DALIC Technology results in a molecular bond. This bond is achieved on any base metal such as aluminum, cast iron, cast steel, stainless steel, t o o l s t e e l s , c h r o m e , beryllium copper, brass, or bronze.

Pictures showing the DALIC technology in process

47

FORMER national president of the I j a w Y o u t h Council, IYC, Dr. Chris Ekiyor, has

called on President Goodluck J ona t han t o f o l l ow h i s conscience in taking decisions that affect the country, and not a l l o w “ s t u p i d p o l i c y formulators” to make his government unpopular.

Speaking to Sweetcrude in Rotterdam, The Netherlands, on the plan by the Federal G o v e r n m e n t t o r e m o v e petroleum subsidy, Ekiyor wondered why President Jonathan, who won the support of the masses in the way he managed the fuel crisis in his early days in power, would now want to do exactly the opposite by removing fuel subsidy at such a critical point in time.

“Instead of removing fuel

Emma AMAIZE

(Just back from The Netherlands)

subsidy, the President should concentrate on the many challenges facing the country, including issues on state creation, which should benefit all Nigerians; the fight against corruption , which should ordinarily tackle the cabals’ benefitting from the subsidy scam. Others include infrastructure development especially in the Niger Delta, to address the very cause of t h e a g i t a t i o n ; s l o w per forming Mil lennium Development Goals, MDAs; the Ministry of Niger Delta; Niger Delta Development C o m m i s s i o n , N D D C ; education, aviation and health sector,” he asserted.

He added, “Nigeria, with its current financial muscle and fuel subsidy in place can tackle all these frontally if only President Jonathan will follow his mind rather than l is ten to stupid pol icy formulators, who in between the line of such policy have

hidden agenda to either steal further from the system or p l u n g e t h e G o o d l u c k administration further down the ladder.

“Why should it be President Jonathan that should be removing fuel subsidy knowing that it will adversely affect the ordinary man and why at this crucial time of our national life? As far as I am concerned, those who advised him on this policy, indeed, are not in tune with the reality on the happenings in the country.

“Even military junta as much as possible used the subsidy to attain cheap popularity, what is it the Jonathan administration intend to achieve by this issue? There are already too many challenges confronting the nation and President Jonathan is the centre of them all.”

Ekiyor further argued the president “should focus on the small possibilities and deliver on them, rather pursue big impossibilities. Nigeria is not

there yet to implement certain American models in isolation, we must consider at all times the reality on ground, even though we seek the ideal.”

The youth leader also pointed out, “The three new refineries are still on paper, while the old three are barely struggling. The coastal road project is perhaps in the pipeline and crying for attention now, as not much has been heard after the fight between the ministry and N D D C o n w h o a w a r d s consultancy for its design. The price of cement is still yet to drop to the prescribed N1000 per bag, even though the big importers promised to respond to Mr. President’s orders, so what are we talking about?

“How can you increase fuel price while trying to drop cement price. Certainly, we are double speaking. More so, if we build refineries, there will be nothing to subsidize on imported petroleum products since we can meet our domestic consumption and would have also created jobs for our team unemployed young graduate.”

ARRI- NIGER

Delta activist , WComrade Paul

Bebenimibo, weekend, said the

support for President Goodluck

Jonathan by the masses was

waning across the country

because of his planned

removal of petroleum subsidy

and non-fulfillment of his

electoral promises.

Bebenimibo, who described

the planned removal of the fuel

subsidy as a betrayal of the

confidence of the masses and

an indication of gross failure by

the gover nment , u rged

President Jonathan not to

succumb to the anti-masses

agenda.

His words, “The masses’

support for Jonathan is

d w i n d l i n g b e c a u s e t h e

electoral promises are not

forthcoming, but are veering to

a harsh economic hardship.

Jonathan should listen only to

the masses to avoid chaos and

total collapse of support for his

government. He should not

listen to crooks and the

business people who are only

after profit to the detriment of

the masses.”

“The issue of fuel subsidy

was at its peak before President

Yar’Adua died, Jonathan came

and stabilised the price of

petroleum products, and that

was why the masses loved him

and voted for him. To remove

the subsidy now will be a total

disservice to the masses and

making money available for

the governors and the private

businessmen who do not have

the interest of the masses at

heart. It is taking Nigeria back

and it will make nonsense of

the minimum wage which they

just implemented, as cost of

living will skyrocket,” he

added.

Bebenimibo argued that the

problem with Nigeria is not

really a lack of funds, but

improper u t i l i sa t i on o f

available funds, pointing out

that huge sums of money have

been appropriated for various

projects with nothing tangible

to show. The activist cited the

Benin-Ore and the East-West

roads, which have gulped

several billions of naira but

remained impassable.

He, therefore, urged the

National Assembly not to yield

to the temptation of removing

the fuel subsidy if the members

were really representing the

peoples’ interest.

‘Jonathan’s image diminishing over subsidy’

Emma AMAIZE and Akpokona OMAFUAIRE

President Goodluck Jonathan

48

The Sir Emeka O f f o r F o u n d a t i o n , S E O F , h a s commenced the

second phase of the donation of study materials to schools in Niger ia , cut t ing across p r i m a r y , s e c o n d a r y , polytechnic and universities.

The education materials are courtesy of the United States n o n - g o v e r n m e n t a l organisation, NGO, Books for Africa, BfA, and are being shipped into the country and distributed to beneficiary schools by SEOF.

Receiving a delegation of Books for Africa, BFA, at the Chrome Group Headquarters in Abuja for the signing of M e m o r a n d u m o f Understanding, MoU recently, the Chairman of thee oil and gas group, Sir Emeka Offor, said SEOF and BFA will collaborate with the NGO to distribute the education materials within the next 24 months.

According to him, “This s e c o n d p h a s e o f t h e distribution of the education materials, which include books, computers and a host of other equipment, is mainly for the South-South region. In the third phase we will go to another region and even beyond Nigeria to other ne ighbour ing count r ies because education is key to national development.”

He recalled that the first donations were made in June, and promised that the books will not be sold and will get to the target beneficiaries.

The Project Manager, SEOF, Mr. Inno Anoliefo, who introduced the guests, said that SEOF will be the major partner of BFA in Nigeria and the West African region, as the foundation will be responsible for the distribution of the study materials and other facilities in the sub-region.

He said the intension of the partners is to enhance the quality of education in its entirety in Nigeria as well as the sub-region, adding that if a long term improvement is to be achieved in the education sector, then there has to be access to study materials.

As he put it, “If we make books and o ther s tudy materials available to pupils across all education cadre, then the quality and standard of education will rise. All schools will be equipped with enough study materials to relieve government of some of the burden of education

Clara NWACHUKWU

Study room

development.” He also explained that the

BFA team is on a fact finding and consolidation mission with a view to identifying other areas of need in the education sector and easing supply issues.”

He said that education is at the heart of the foundation’s

corporate social responsibility, adding that SEOF has made educational donations to many tertiary institutions worth hundreds of millions of naira.

A l s o s p e a k i n g , t h e C o o r d i n a t o r , S E O F, Honorable Tony Obi, who revealed that the value of the expected materials to be distributed in this phase is about $7million, also said that by the end of next year, the p a r t n e r s w o u l d h a v e distributed materials worth $21million.

The Executive Director, BFA, Mr. Pat Plonski, who led a five-m a n t e a m , w i t h representatives from the International Foundation for Education and Self-Help, IFESH, said, said the goal of the American NGO is to

provide Africa with as many book as possible to help the education system in the continent.

H e n o t e d t h a t g i v e n Nigeria’s huge population, BFA expected the country to get more books, but pointed out that this can only be facilitated with the support of local partners like SEOF.

Plonski said, “Nigeria is getting the single largest donation this time around, as SEOF has agreed to pay for the shipment and freight of the e d u c a t i o n a l m a t e r i a l s . Hitherto, Ghana and Ethiopia used to get the largest donations. We have already sent one consignment of eight conta iners and we are planning to send a second consignment of 16 containers.”

He revealed that the BFA

team will also meet with the US ambassador to Nigeria, Mr. Terence McCulley, to intimate him the NGO’s activities in Nigeria, adding that the organization is a grassroots one and that book and materials donated are from individuals, schools, libraries, corporations and publishers.

H e s a i d t h a t B F A partnership with SEOF will last for as long as there was an education need and partners continue to cooperate, adding that the mission of the latter “is to end the books famine in Africa and we will continue until this is achieved.”

Commenting, Dr. Mike Essien, also from BFA, commended the Sir Emeka O f f o r F o u n d a t i o n f o r accepting the responsibility of shipping the books to Nigeria, noting that the country has produced excellent students who have been able to hold their forte in various fields of endeavour.

49

SAPELE-L ARGE q u a n t i t y o f bitumen allegedly from pipel ines

belonging to Asca Bitumen C o m p a n y l o c a t e d i n Ogorode, Sapele, Okpe

h e K E F F E S communities in Bayelsa State may T

be heading on collision course with the Nigerian affiliate of American oil c o m p a n y, C h e v r o n , f o l l o w i n g a l l e g e d disagreement with the managements on social issues.

KEFFES an acronym for Koluama I & II, Ekeni, Fish Town, Foropa, Ezetu I &II a n d S a n g a n a r u r a l communities.

The communities, which are situated on the Atlantic fringe of the state, have threatened to disrupt explorat ion and gas drilling activities at Oil Mining Lease, OML 86 located in their area.

Representatives of the communities also want Chevron Nigeria Limited, CNL, to make public the Environmental Impact Assessment, EIA Report, it conducted before work commenced on the drilling project.

The representatives of communities who met in Yenagoa, the state capital, expressed disappointment at CNL’s management over the exploration and gas drilling of OML 86, North-Apoi, Funiwa in their territory without recourse to making public the EIA report.

The communities in a letter addressed to the m a n a g e m e n t o f t h e c o m p a n y s i g n e d b y Bravery Salgbe, Oweizidei Abaka, Uriah Idon, Job Co le among o thers , demanded for copies of the EIA Report as well as 50 per cent of the vacant positions from the Agbami oil field, which they claimed fell within the KEFFES territory.

The letter was also c o p i e d t h e S t a t e C o m m i s s i o n e r f o r E n v i r o n m e n t , t h e Commander of the Joint Task Force, Director of the State Security Service, S S S a n d t h e S t a t e Commissioner of Police

Emma ARUBI

Council Area of Delta State was late Tuesday night spilled into the sprawling residence of Nigeria’s first Finance Minister, Late Chief Festus Okotie-Eboh.

The spill , which was

discovered in the night by the wife of a tenant in the compound, has allegedly devastated living things such as fowls, frogs, rats and lizards and non living things around and within the

premises. The bitumen company runs

some of its pipelines and loading bay right behind the building of late Okotie-Eboh’s home, even as some of his children have dragged the company to court over the location of their bitumen plant.

The spill was allegedly caused by a leakage from one of the pipeline joints, which the General Manager of Asca, Mr. Karten Asher, described as “unfortunate” in view of the loss of bitumen worth millions of naira to “acts of vandalism”.

He alleged that the pipeline was deliberately vandalised to sabotage and discredit the company’s reputation.

Asher, who spoke with newsmen, revealed that the incident is the second time Asca’s installation was being vandalized in recent times, thereby, causing the bitumen spill.

Although he could not confirm the quantity of bitumen lost so far, he, however, denied knowledge of the death of animals or fowls belonging to the late Okotie- Eboh’s family as a result of the spill, and sued for the protection of the company’s installations.

On his part, Mr. Godfrey Okotie- Eboh told journalists that his attention was drawn to the spill by a tenant at about 7pm on Monday, and immediately called on the company’s accountant who later came with some engineers to clamp the pipeline.

He claimed that animals like goats, fowls, lizards and rats had died as a result of the spill, adding that movements in and out of the premises have also become restricted due to the spread of the product and called on the Federal Ministry of the Envi ronment , and the Department of Petroleum Resources, DPR, to come to their aid.

KEFFES Communities demand transparency in EIA

Samuel OYADONGHA

Bitumen spilage

50

Th e B a y e l s a S t a t e G o v e r n m e n t has called on the Ijaws in

Diaspora to return home and invest in the cause of transforming the state from a resource based economy into a knowledge-driven one, so as to catch up with the rest of the world.

Such investments, it said is aimed at revitalising the ailing educational sector and prevent the state from r e l a p s i n g i n t o y o u t h militancy.

Governor Timipre Sylva, made the plea in a paper entitled, “Ijaw Nation: A Time to Reflect,” delivered in London on the occasion of the 2011 Isaac Boro Day Celebration, organised by t h e I j a w P e o p l e ’ s Association, IPA of Great Britain and Ireland.

The governor said the desired transformation of the Ijaw nation would be a m i r a g e w i t h o u t t h e d e v e l o p m e n t o f i t s educational sector and collaboration of its sons and daughters in foreign lands.

Sylva also said, “The principal challenge of our

Samuel OYADONGHA time is how to get our people t o a c q u i r e t h e r i g h t knowledge and ideas to make them productive and competitive in the global economy. We must get education, the right kind of education, backed up with technological skills to transform Ijaw land into an industrial hub renowned for q u a l i t y p r o d u c t s a n d service.”

According to him, “Ijaws in Diaspora have a significant role to play in the effort to protect and improve our collective legacy. Our people all over the world must be on the same page with the government and people of our native land in the work of educating the current and next generation of Ijaw citizens and preparing them t o c o n t r i b u t e t o t h e productivity that we need to sustain our civilisation.”

Continuing he said, “As a government, we have made the education of our people a priority. We have launched a campaign to educate our people to know the things we need to do now and those we must avoid in this generation in order not to endanger the next generation. We have tried to position our people to appreciate the changing t imes, understand the

science of change and how to harness change for societal benefit.

“Our people in foreign lands must endeavour to be committed partners in the collective effort to build a m o r e i n f o r m e d a n d responsible society. I am confident that if we roll up our sleeves and get to work right away, we can achieve the Ijaw land of our dream by individually contributing our quota in the propagation of this gospel.”

H e c o m m e n d e d M r. President for thinking along this line by approving the establishment of six federal

universities, one in each of the six geo-political zones with the one for the South South zone already cited in the heart of Ijawland in Otuoke, Bayelsa State.

As part of the amnesty programme, the governor added that a number of the youths who were fighting from the creeks were sent abroad for training to enable them acquire skills so that they can stand on their own and be useful to the society. He, therefore, called the Ijaws in Diaspora to support in whatever way they could to make this dream a reality.

He pleaded, “I urge you to come home and invest in this cause of transforming our community from a resource-based economy into a knowledge-based economy so that the Ijaw man can sit among those who own the future and not be among those left behind to regret lost opportunities.”

In h is remarks , IPA President of Great Britain and Ireland, Mr. Isaac Namabiri, reiterated the willingness of the Ijaws in Diaspora to assist the government in its effort to r e v i t a l i s e t h e s t a t e ’ s educational sector.

He said plans were afoot to dispatch some of the best b r a i n s i n t h e U n i t e d Kingdom to help in drawing up a sound curriculum for the planned model schools in the state.

ARRI-THE Tax

regime currently Win operation in

Delta State is within the ambit

of the tax law in the country,

just as those grumbling over

same have been advised to

take their case to the National

Assembly.

The State Commissioner for

Higher Education, Prof. Hope

Eghagha, stated this recently

during an official visit to the

Delta State Polytechnic,

Otefe-Oghara, adding that

the Delta State Board of

Internal Revenue, DBIR, is

working in tandem with the

tax law in the country.

He, however, advised

aggrieved parties to pursue

their grievances at the

National Assembly, with a

view to reviewing the tax law.

He insisted that the state has

looked critically at the

deductions being made by

D B I R a n d c a m e t o a

conclusion that the Board is

operating within the confines

of the Personal Income Tax

Act, PITA.

Eghagha, who commended

the Revenue Board on its

effort towards raising the

Internal Generated Revenue,

IGR of the state, observed that

the increase in the wage bill

of the state government

required corresponding

i n c r e a s e i n r e v e n u e

generation and that strict

adherence to tax laws is not

an exception.

According to him, “People

need to know this in the state.

The wage bills of Institutions

in the state are quite

enormous. Del ta State

University alone every month

gets about N368million. I

know that in Ogun State all

the tertiary institutions take

home about N300million

monthly and that is what

c o m e s t o D e l t a S t a t e

University alone here, not to

talk of the Polytechnics, the

Colleges of Education and the

different parastatals. The civil

service takes N2.1billion

every month. So that is the

reason why the state is

looking at Internal Generated

Revenue and that takes us to

the current tax regime, which

some workers have raised a

loud cry.”

Tax regime in Delta is within law —Eghagha

Emma ARUBI

51

WARRI-THE

W a r r i

R e f i n i n g

a n d

Petrochemi

cal Company, WRPC, in Delta

State has been commended by

the traditional ruler of Uvwie

kingdom, HRM Emmanuel

Sideso, Abe 1 for donating a

100kva Mikano sound proof

generating set to the Ekpan

General Hospital in Uvwie

Council area of the state.

The traditional ruler said that

the gesture would certainly

uplift the standard of medical

care delivery in the council area,

even as he noted that it is the

function of the state government

to provide such facilities for the

smooth operations of the

hospital.

He, therefore, appealed to the

relevant authorities of the state

to rise up to the challenges of

lack of infrastructure and

equipment in the hospital.

S p e a k i n g d u r i n g t h e

installation and commissioning

of the power generating set, the

Emma ARUBI

Managing Director of WRPC,

Mr. Simon Itua Ehiemua ,

charged the management of the

hospi ta l to embrace the

maintenance culture. He said

this would ensure a longer

service life from the generator,

saying that the donation is in

fulfillment of his promise to give

electricity to the hospital light as

requested by the royal father

when he visited him on

assumption of office early this

year.

The hospital has been without

a power generating set for long,

making medical operations

extremely difficult to both

doctors and patients who have to

put up with the epileptic public

power supply from the Power

Holding Company of Nigeria,

PHCN.

The President-General, Uvwie

Improvement Development

Union, Chief Tuesday Onoge,

noted that doling out cash for

developmental projects to

community leaders is the

primary source of crisis and

violence in most Niger Delta

communities.

He also commended the WRPC

for the provis ion of the

generating set, adding that “this

one will not bring any in-

fighting.”

The management of the

hospital thanked the company

for the gesture, but reminded

them that unless they go the

extra mile of providing at least

5,000 litres of diesel monthly to

power the set, it would make no

meaning to them as their

monthly allowance cannot

sustain a regular supply of diesel

to power the plant.

The hospital is also said to be

in need of some medical and

office equipment, building of

more structures, paintings of the

e x i s t i n g b u i l d i n g s a n d

landscaping/interlocking the

water logged hospital premises.

People in Hospital

Emma ARUBI

A R R I - F O U R

suspected armed Wr o b b e r s w e r e

allegedly set ablaze at different

spots in the oil city by angry mob

along the ever busy Airport Road

and Ajamimogha Road in Warri,

Delta State,.

The suspects, who had allegedly

been terrorising Warri and

Effurun residents, met their

waterloo during their nefarious

activities on Sunday and Monday

respectively.

Two of the thieves were caught

on Sunday when they snatched a

lady’s handbag and attempted to

escape on motorbike, while the

other thieves were caught on

Monday along Ajamimogha

Road and roasted alive.

52

The Joint Task Force, JTF in t h e N i g e r Delta code-n a m e d ,

Operation Restore Hope, has arrested over 100 suspects in the last three months for crude oil theft and operation of illegal refineries.

T h e s u s p e c t s w e r e n a b b e d i n s e p a r a t e operations launched in the creek of Bayelsa, Delta and Rivers States. Interestingly, the largest haul was made in the creek of Bayelsa around the Akassa enclave on the Atlantic fringe of Brass.

I n f o r m a t i o n a t SweetCr ude disposa l showed that the men of the Joint Task in a single operat ion swooped last Thursday on 46 suspected illegal bunkerers including three women opera t ing in several Cotonu boats along the Akassa River in the m a n g r o v e s w a m p o f Bayelsa State.

This is aside, the fifteen t h a t w e r e a r r e s t e d penultimate week also along the Akassa flank of the state.

Also reportedly nabbed in the latest haul alongside the suspects along the Akassa river according to security sources was a giant cargo vessel, MV O m i e s a m w i t h International Maritime Organisation registration no 7048611 which was about to receive illegally refined petroleum products from the Cotonu boats before a patrol team of Joint Task Force swooped on them.

The Cotonu boats it was learnt destroyed by the security operatives as would be difficult towing them to Yenagoa while the vessel MV Omiesam and its eight man crew was escorted to Government Jetty Yenagoa by JTF gunboats.

Sometime in March, 2011, the Joint Task Force it was learnt intercepted two Cotonu boats along the Nun River carrying about 700 drums of illegally refined petroleum products which translate to about 1 8 7 , 5 0 0 l i t r e s o f adulterated fuel.

Parading the la tes t suspects in Yenagoa, the Media Coordinator of the Joint Task Force, Lt. Col

Samuel OYADONGHA

Illegal crude oil

Timothy Antigha said they were nabbed by a patrol team of the Joint Task Force along the Akassa river in Brass local government.

According to him, they w e r e a t t e m p t i n g t o

d i s c h a r g e t h e i r consignment of illegally refined petroleum products into a ship, MV Omiesam, an International Maritime Organisation IMO vessel w i t h r e g i s t r a t i o n n o 7048611 when security operatives swooped on them.

But the captain of the impounded vessel MV Omiesam, who gave his name as Fidelis Roland in an interview said, “Our company identified as Geo Fluids Marine Ltd sent us to Brass to load AGO and on getting there, we have not started loading before we were arrested by the soldiers.”

Lt Col Antigha who spoke to newsmen said the security the outfit would not relent in its crusade against crude theft and illegal refineries operators until the scourge is stamped out.

The JTF Spokesman said, “these suspects, who were nabbed by our patrol teams along the Akassa river were in the process of loading this vessel (MV Omiesam)

with il legally refined p e t r o l e u m p r o d u c t s . Presently, the oil vessel is d e t a i n e d a t t h e Government Jetty, in Yenagoa.

“The intercepted vessel has a crew of 8 and the other 38 suspects were found with 13 Cotonou boats and 1 speed boats that had assembled beside the vessel, with the plan to load it with the illegally refined products.

“The 13 Cotonou boats contained about 13 GP Tanks of various capacities, ranging from 500 to 1,000 litres, including numerous plastic drums that were a l r e a d y f i l l e d w i t h petroleum products.”

He said such products were sourced through s t o l e n c r u d e o i l o r vandalised pipelines and subsequently process in a crude manner.

“These suspects have contributed in no small measure to the destruction of the nation’s economy and the environment,” he said.

The JTF, he said, would not relent in its efforts to ensure adequate security of the country’s oil facilities and installations.

“The inimical activities of oil thieves and vandals w o u l d n o t o n l y b e contained, but also nip in the bud,” he assured.

He explained that with the latest arrest no fewer than 100 suspects had been nabbed in the last 3 months by JTF in Bayelsa, Rivers and Delta states on criminal a c t i v i t i e s o f i l l e g a l bunkering.

Aside, he disclosed that the JTF had destroyed over 2000 illegal refineries in the region in the last couple of months which operators relied on stolen crude from the nation oil facilities.

Some of the equipment allegedly used to pump stolen crude oil and other harbour engines being utilised to carry out their i l l e g a l a c t i v i t i e s o f siphoning oil from ruptured p i p e l i n e s w e r e a l s o recovered by the security operatives.

53

WA R R I -

D E L T A S t a t e Governor, D r .

Emmanuel Uduaghan, has charged community leaders in the state to assist in securing public properties in their areas of authority, even as he maintained that the myriad of problems confronting the education sector in the state cannot i n t i m i d a t e h i s administration.

The Governor made the c h a r g e a t t h e commissioning of a Science L a b o r a t o r y b u i l d i n g donated to Zik Senior Secondary School, Sapele, b y A g b a m i Pa r t n e r s , insisting that there was no going back in his plan to t a c k l e t h e p r o b l e m s confronting the education sector.

The Governor, who spoke t h r o u g h t h e S t a t e Commissioner for Basic and Secondary Education, Prof. Patrick Muoboghare, held that his administration was poised to leave a lasting legacy in the education

Emma ARUBI

sector.In his words; “We shall

tackle the problems and we shall not be intimidated by any problem. If schools are dilapidated, we shall rehabilitate them. They are dilapidated we know, but one thing I am certain of is that the brains of our t e a c h e r s a r e n o t dilapidated because in spite of these problems we are having our teachers are still putting in their best.

“Now we appeal to them

to continue to put in their best because no matter what the government says, if the teachers are not there to convert our expenditures to student’s product there is a hitch. I am happy to hear from the principal that with t h e i n t e r v e n t i o n o f Chevron and with the use of the laboratory even before the commissioning that the performance of the science students improved greatly at the current e x a m i n a t i o n s . I congratulate you and Chevron,” he stated.

According to him; “What Chevron has done is a call for partnership. They have partnered with us to build this laboratory and our counterpart contribution is to provide the teachers who will use the laboratory. I promise you, in the next

few weeks, we shall provide science teacher for this school so that the facilities g i v e n t o u s b y t h i s intervention will not be put to waste.

“I must appeal to community leaders, if after the laboratory is put to use for the next five to seven months and if we observe that the facilities are stolen, i t can be very, very d e p r e s s i n g a n d demoralising. Just as Chevron is partnering with us by providing this facility, the community must also p a r t n e r w i t h u s b y providing security for the things we are able to put in place, and the principal alluded to that when she w a s s p e a k i n g . S o community leaders and p a r e n t s / t e a c h e r s association, I appeal to you

to help and partner with us by providing security for whatever we are able to put in place.”

He further disclosed that this “School was one of the schools that was chosen by the Delta state government for complete overhauling and not just patching of buildings. And all those schools in that set, about eight of the contractors have mobilised to site and I am expecting that any moment from now the contractor handling this one will mobilise to site. Because if the interest shown by the community, I want a situation whereby w h e n t h e c o n t r a c t o r mobilises to site, I want a small ceremony like this to let the world know that we have started work.”

Public Building

54

Pe r e m a b i r i

community in the

Boma clan in the

Southern Ijaw

L o c a l

Government Area of Bayelsa

State, is on the throes of being

washed away by erosion, as a

large portion of the community

has already been eroded.

Last month, two persons, one

of them a graduate of the state

owned Niger Delta University,

identified as Ikioudo Abel, and

a secondary school leaver,

Stanley Dominic, lost their lives

when a landslide hit a section of

the community waterfront.

Indiegenes of the community

who are host to the Shell

Pe t r o l e u m D e v e l o p m e n t

Company, SPDC Diebu Creek

oil facility and the multi billion

naira moribund Peremabiri Rice

Farm, have launched a fresh

a p p e a l t o t h e f e d e r a l

government to save their

community from extinction.

Several homes are already

under water in the community

with a large portion of the land

lost to the rampaging Nun

River, as a result of what they

b lamed on the ongoing

dredging work by the oil giant

in the area.

The Peremabiri Community

Deve lopment Commit tee

Chairman, Dickson Peresuote,

while lamenting the plight of his

people said unless urgent

remedial steps were taken the

ancient settlement could be

wiped out.

According to him, “where we

are standing right now may be

inside the river sooner than we

can imagine. We have lost so

much of our community to the

River Nun. Even yesterday, as

some youths were playing

football in the field when they

chased the ball to the water

front, the ground on which they

stood collapsed into the river.

And, if you watch you can see

with me that the river has

advanced too close to the

c o n c r e t e r o a d i n t h e

Samuel OYADONGHA

community.”

He blamed SPDC for the woes

of the community saying, “If we

take a tape and measure, I am

sure the space between the River

and the concrete road is now less

than three meters in that section

of the town. Everyone in the

community is worried about this

threatening ecological issue.

When we were young, this

community was very far from the

football field. That is why

community leaders are not

happy with the way Shell has

continued to carry out dredging

a c t i v i t i e s w i t h i n o u r

e n v i r o n m e n t . S P D C h a s

continued to dredge at some

sections of the River Nun and

along the Diebu Creek every

three years or so without

recourse to Environmental

Impact Assessment.

“We are of the belief that what

Shell is doing is having a direct

relationship with this loss of land

to the river in our community.

And we want solution to this

problem. As a peaceful people,

we want the authorities to

prevail on SPDC and also

intervene on this matter. I should

use this opportunity to call on the

F e d e r a l G o v e r n m e n t

intervention agencies like the

Niger Delta Development

Commission, NDDC, and the

recently created Niger Delta

Ministry, to come to our aid.

Unless urgent steps are taken to

arrest the rapidly advancing

river, this community will

disappear soon. Yes, behind our

community is a swamp and, we

cannot go and build our houses

in the swamp. This is our

predicament.”

Another indigene of the

community, Maurice Jonathan,

said, “To tell you the truth no one

is comfortable with way the River

Nun is expanding while the

community land is shrinking by

the day. It is like a story now

when we tell strangers that this

community has lost over

50meters of land in the last few

years. And, if the trend should

continue unchecked, we may

join the monkeys in the swamps

very soon. We are of the view

that the dredging activities of

Shell around us also have

negative effects that is leading

to the collapsing river banks and

expansion of the River here. We

are calling for assistance from

government before we are

wiped out from this location.

What are we going to tell our

children coming behind?”

The Field Coordinator of the

Environment Rights Action,

ERA, Mr. Alagoa Morris, who

was in the community to assess

the impact of the erosion

menace called on the federal

government to, as a matter of

urgency, take positive steps to

address the ecological threat in

Peremabiri and other Niger

Delta communities facing

similar conditions.

While calling on the people to

remain peaceful as they draw

attention of the authorities to

their plight, he pleaded with the

State and National Assembly

members representing the area

not to rest until something is

done to address the ecological

threat confronting the people.

Golly created by erosion

55The

Questionjohniyene@yahoo.com

The first point

to note about

t h e

downstream

sector of the

oil and gas industry is that it

is heavily deregulated and

just lightly regulated. Over

the years the NNPC got wise

to the fact that it could not

refine, warehouse, wholesale

a n d r e t a i l p e t r o l e u m

products all by itself. The

deregulation by legislation of

the downstream sector

produced new generation

operators such as Addax Oil,

Oando Plc, Capital Oil,

Masters Energy, Zenon,

Sahara Oil, etc, all multi-

million dollar concerns. The

Nigerian government and

her sympathisers would have

us believe that the regulation

ONLY of the pump prices of

Premium Motor Spirit ,

referred to on the streets as

‘petrol’ and Kerosene is

bringing down the Nigerian

economy. This argument is as

mathematically inaccurate as

it is fraudulent. The pump

prices of diesel and LPG are

deregulated and we have

neither seen nor enjoyed the

b e n e f i t s o f t h e i r

deregulation.

W h a t t h e N i g e r i a n

government seeks to achieve

is not deregulation but the

removal of the ugly tic in the

industry that is petroleum

price subsidies by the

insensate surgical means of

i m m e d i a t e l e g i s l a t i o n

instead of a gradual phasing

process that would take into

account the all important factor of

the purchasing power of the

consumer. Petrol and kerosene

a re cur ren t ly pegged by

government at N65.00 and

N50.00 per litre; according to an

International Monetary Fund

Staff Position Note published on

February 25, 2010 that advances

the reduction of subsidies,

“a pr ice subsidy is the

difference between the price

facing consumers and a specified

“optimal” benchmark price.”

The optimal benchmark price is

of course different from the

marginal supply cost which is

computed from the bare cost of

production and handling. The

specified optimal benchmark cost

is computed from production,

h a n d l i n g , p l u s n i c e

imponderables such as natural

disasters, speculative buying,

wars, reduced production by a

competitor, etc. Don’t be fooled,

all the rumpus over deregulation

in Nigeria is not about the

inability of the operators in the

downstream sector to access the

specified optimal benchmark

prices of petrol and kerosene

because they do thanks to the nice

facility called subsidy differential

which gets paid to them through

the facilitation of the Petroleum

Products Pricing and Regulation

A g e n c y, t h e t r u s t e e a n d

administrator of Nigeria’s

Petroleum Support [Stabilisation]

Fund. Thanks to this price

balancing mechanism Nigerian

companies make as much profits

as their counterparts in other

climes. The snag and the reason

f o r a l l t h e f u r o r e o v e r

deregulation is that government

feels unduly burdened by the cost

of the subsidy, something it

claims amounted to about

N1.3trillion in the last fiscal year.

The government argues that

this sum which accounted for

about 30% of its budget could

have been put into some other

p r o d u c t i v e v e n t u r e s l i ke

education, road construction, the

refurbishment of the refineries,

etc. Pray, what did government do

with the monies it did not defray

as subsidy payment before the

coming into being of this regime

of subsidy payments? Nigerians

stood by and watched members of

the National Assembly who

constitute less than 0.5% of the

country’s population appropriate

25% of our national budget to

cater for their welfare and all hell

is about being let loose because

80% of the people will continue to

enjoy the relatively stable pricing

of two very basic and yes, already

very expensive products. The

IMF, that meddling predator and

the motley of confused local

economists have argued on the

side of government that subsidies

have slowed our economic

growth, specifically the rapid

development of the downstream

sector. They argue that though

Nigerian authorit ies have

approved about 18 licences to

private companies to establish

and operate refineries, none has

commenced because of the

subsidy regime; the idea is that

with the removal of subsidies,

private investors would have the

incentive to commence private

refinery operations, employing

young school leavers, creating

sub-sector investments, promote

further diversification of the

sector for the overall benefit of the

Nigerian economy.

First of all, oil subsidies are not a

Nigerian peculiarity; if anything

we came late into the game we are

trying to exit before getting a

proper hang of it. According to the

IMF Staff Position Note quoted

earlier in this piece, “G-2O

countries account for 70% of tax

inclusive [oil] subsidies.” In April

2002, India, a country that

sources 75% of i ts crude

r e q u i r e m e n t s e x t e r n a l l y,

abolished its Administered Price

Mechanism and its Oil Pool Fund,

the counterparts of our PPPRA

and the PSF. India has since

reversed the policy and provides

heavy oil subsidies for its citizens,

the same as China, Mexico and

Indonesia. The United States

provides heavy oil subsidies to its

citizens by giving tax breaks to

every level of oil production. It is

elementary economics that a tax

that is below its optimal level

generates tax subsidies. Russia,

Trinidad and Tobago, Venezuela

and many other countries

subsidise oil. The Canadian

government paid between $3b

and $8b to the forest industry in

2000, $6b to mining, $700m to

fishing and $2b to the nuclear

industry, among many other

subsidy payments. It was only in

2004 that Libya removed about

$5b of subsidies from electricity,

fuel and basic food, leaving more

than three times that amount on

the same items. Qatar subsidises

nearly the whole existence of her

c i t i z e n s i n c l u d i n g l o c a l

telephone calls made via private

GSM carriers like Etisalat!

Nigeria subsidises nothing

except the pump prices of

kerosene and petrol; having

mismanaged this facility through

corruption and cronyism, we seek

the first point of exit in the face of

our first set of challenges and it is

on record that the government

has extended direct subsidy

payments to private operators for

only two years through the

PPPRA. Instead of investigating

the abuse that brought the

situation to such a desperate

level, we seek to abandon this

first attempt at reducing the

suffering of our people, forgetting

that about 80% of our population

live on less than $2 per day.

Let me also opine with the

boldness that the statistics accord

me that the removal of oil

subsidies in Nigeria would not

add a single refinery to the

Nigerian industry and economy.

Anybody who invests in a

refinery, a long term project, in

the present energy situation

would truly require a psychiatric

evaluation because with the

current pace of research efforts in

the industry, that party may be

left with a facility that refines

nothing. And it is simply not true

that banks will not invest in a

business that is dependent on

government subsidy payments.

After all, banks are financing the

importation of products for the

promise of subsidy payments

because of short term returns.

Subsidies are paid for products

not for the manner in which the

products hit the market.

The Nigerian government

should be equally hysterical

about the beautiful volumes of

sales recorded as excess crude

sales. Should we not know what

tiny percentage of the upstream

earnings account for the subsidy

payments? If Nigerians enjoyed a

g o v e r n m e n t s h e l t e r o f

N1.3trillion over petrol and

kerosene usage what did the

country make in the sale of

crude in the last fiscal year

or in the taxation of LPG,

diesel, bitumen, high and

low pour fuels, lubricants,

e t c ? I n s t e a d o f

undermining our economy,

subsidies have defined the

p o t e n t i a l o f t h e

d o w n s t r e a m s e c t o r,

stabilised supply and

promoted credit security in

the sector. And government

acts as though the money

p a i d t o m a r k e t i n g

companies and importers

as subsidy differential is

lost to the economy. Were

the monies dumped in the

Atlantic or in a real

serviceable sector of the

economy? Wouldn’t some

of that money go back to

g o v e r n m e n t a s t a x ?

Haven’t the banks been

boosted with deposits,

commissions, interest

p a y m e n t s , f o r e i g n

exchange earnings and

new jobs by virtue of the

injection of these funds into

the economy? What is the

level of the sale of the

s u b s i d i s e d p r o d u c t s

compared to the former

situation? We forget too

quickly that government,

the economy, political

activities and power is

about the welfare and

security of the people.

One is very mindful that

in canvassing the opinions

articulated in this piece,

one may have unwittingly

given support to the rabble

i n P E N G A S S A N ,

NUPENG and the other

trade unions that enter into

any and every fray for

vocational reasons. I would

like to dissociate myself

from that crowd; I have

found over the years that

within these unions are the

most unpatriotic set of

N i g e r i a n s w h o c a r e

nothing about driving us off

a cliff in so far as their

allowances and salaries are

in issue. They would not

accept pay cuts or sacrifice

their luxuries for corporate

survival. They are like the

unions that gave corporate

America the need for and

lexicon of outsourcing,

turning round to envy the

Asians their good fortune in

i n h e r i t i n g A m e r i c a n

manufacturing lines. They

use the masses both as

weapon and as shield, as it

suits their needs. Our views

may have found a point of

convergence on this issue

but they are no friends of

mine or of the Nigerians

whose interest they pretend

to serve.

John OWUBOKIRI

Refinery

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