Nigeria plans to transfer 10% of all its oil and gas ventures to the inhabitants of the oil-producing Niger Delta, in a multi-billion-dollar bid to end the rebellion that has for years hampered production in sub-Saharan Africa’s leading energy supplier.
The initiative, which comes against the backdrop of a sweeping attempt to overhaul Nigeria’s oil industry, would if approved by parliament signal a bold new phase in the government’s efforts to broker a lasting settlement in the Niger Delta region.
However, first it has to overcome the expected objections of representatives of other regions.
The latest overture follows an amnesty that has lured into the open some of the main leaders of the militants who have led a sustained campaign in the Niger Delta region against the federal government and the oil industry.
Emmanuel Egbogah, the president’s special adviser on oil, told the Financial Times that President Umaru Yar’Adua had backed the idea of transferring to Niger Delta communities 10% stakes from the holdings of the national oil company in the joint ventures that exploit Nigeria’s vast reserves. Mr Egbogah said he intended to add the proposal to reforms the government hopes to enact by the year’s end, which would also impose tougher terms on oil companies but which are currently embroiled in a tortuous debate in parliament.
The plan for the Niger Delta was “a serious one, a major one, something quite revolutionary”, Mr Egbogah said.
The initiative is aimed at answering a longstanding demand from the delta’s fighters and activists, ethnic leaders, and aggrieved communities for a share in the ownership of the oil that generates 80% of government revenue.
All citizens of oil-bearing communities would be entitled to cash benefits, delivered through a trust-style mechanism, which they could use individually or pool for social projects.
It is not clear however how the government would apportion the stakes and avert competition between different communities for a larger slice of them.
The rest of Africa’s most populous nation could face reduced income although potentially this would be offset by higher output, if the initiative leads to a reduction in sabotage of the oil industry.
Mr Egbogah said the 10% stakes would pay dividends on revenues after taxes and costs to communities, bypassing powerful governors of the eight oil-producing states who are instead calling for an increase in the extra share of petroleum revenues they already receive. The stakes could not be resold.
The government hopes to provide a disincentive to oil theft and sabotage by linking the earnings of each qualifying community to production from the joint venture that extracts its resources.
“These benefits will flow directly to them,” Mr Egbogah said. “Every community, whether blind or deaf or dumb, every citizen will say: ‘I own a part of this business’.”
Attacks on oil facilities have cut production in Nigeria – an important supplier to the US – by as much as 40% in recent years.
A multi-billion-dollar trade in stolen oil has flourished while the majority of the Niger Delta’s estimated 28 million people live amid despoiled waterways often lacking basic services.
The misery persists in spite of the oil-state governments receiving an additional 13% of national petroleum revenues, making their budgets two or three times the size of those in some other regions.
Seven onshore joint ventures between the state-owned Nigerian National Petroleum Corporation (NNPC) and foreign oil groups in the Niger Delta account for 70% of Nigeria’s production.
The NNPC holds between 55% and 60% in each.
Officials believe the community stakes could see well over NGN 50 billion (USD 330 million, EUR 220 million, GBP 200 million) diverted to the communities in its first year.
Shell says its joint venture, which produced 17% of Nigeria’s output last year, has contributed USD 34 billion (NGN 22.9 billion, GBP 20.8 million) to the government in the past four years.
The Anglo-Dutch group says the government receives 95% of all onshore revenue after costs.
Source(s): Financial Times
#1 by Dozie on October 21st, 2009
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How Exactly Does One Determine a “Citizen” of the Niger Delta???
“All citizens of oil-bearing communities would be entitled to cash benefits, delivered through a trust-style mechanism, which they could use individually or pool for social projects.” I think this is ridiculous. How exactly does the Nigerian government plan to accurately categorize the current (and future) residents of the area as “citizens” or “non-citizens”? What happens if say your mother is a “citizen” and your father is not? Or what if you have grown up in that area all your life and contributed to its development but you are not a so-called “citizen”? Should such a person be included or excluded in this idiotic disbursement?
This is the typical kind of mindless, short-term, idiotic, wasteful, and, in the long-term, totally ineffective solution I expect from Nigeria’s government. If we had well-functioning state and local governments in the Niger Delta region, such an allocation of funds should go directly to those governments. Those governments would then disburse the funds as appropriate in the area to all RESIDENTS of the area, regardless of whether they are “CITIZENS” or not. Clearly, Nigeria is full of incompetent and dysfunctional governments at all levels (with a few exceptions, of course), so such an allocation given to the state and local governments would very likely end up further enriching a few cronies.
My suggestion: Clean up the current Niger Delta Affairs Ministry (or whatever it is called). Root out corruption in this ministry and install efficient and effective managers and systems. Allocate the funds directly to this ministry and have this ministry be responsible for disbursing the funds to relevant developmental projects in the Niger Delta region.
Ideally, these funds should have gone to the state and local governments. However, these governments have not yet evolved to the point to which they are able to handle such responsibilities effectively. If and when these governments prove themselves to be indeed effective, then the responsibility of funds disbursement can now reside with the state and local governments. For now, such responsibility should reside with the Niger Delta Affairs ministry because it is much more easier to oversee the affairs of one ministry versus a number of state and local governments. Also, the funds should be made available to all residents of the Niger Delta region regardless of whether or not such residents have Niger Delta ethnic backgrounds.
#2 by baby on October 22nd, 2009
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Oh Lord, here we go again. Another way for people to steal money. dont be suprised if names like Michael Jackson end up on the list of citizens. meaning the money will not be going to real people, it’ll be going back to the thieves in govt diguising under fake aliases.
So i guess the best way to earn an income is to strat a militant group. what happens to the remaining citizens of Nigeria who cannot eat, cannot send their children to school, cannot save their child’s life because they have no money?
they want to promote unity in Nigeria, and they create a tactic favorable to only niger delta pple.
the truth is that noone will complain if the govt fixed roads, created good schools, good health facilities, job opportunities. This stupid govt has no brain. lets dash pple money without them doing any work and we’ll see how much that helps the nation as a whole.
Nigerian Govt = Fools