It has been observed that not much good news have greeted President Goodluck Ebele Jonathan since his return from the Holy Pilgrimage to Israel. The Boko Haram insurgents‘ struck in Bama (Borno) killing about 30 people and also in Maiduguri where an unfortunate groom was among the numerous victims after a wedding ceremony. It is unfortunate to have such bad news when ‘ODUAGATE‘ (coined by the mischievous media to describe the purchase of armored vehicles) is fastly receding into its
characteristic Nigerian base.
If the problems of corruption and violence (wanton destruction of life and property) are no more news to many Nigerians, it is because their final resolution is yet to be discovered. It can be said that the authorities are trying their possible best, even if the best might not be good enough to justify the absolute confidence of the populace. However, the best that could be said or hoped for is that with much determination, the end would justify whatever harsh method used in the process.
The other equally disturbing news of the week was the alarm of the hard-working Minister of Finance and the Coordinating Minister for the Economy, Dr (Mrs.) Ngozi Okonjo Iweala. The bad news was that with the dwindling income from oil, the federal government revenue could be down by about $12 billion at the end of the current year. The alarm became necessary in view of the constant murmurings of the State Governors on late or inability to receive their monthly allocations as at when due. Many analysts have expressed misgivings about the utilization of oil money (being reduced by domestic theft and vandalisation of pipelines).
It is a well known fact that oil provides about 80 per cent of federal government revenue and crude oil of about 95 per cent of the country‘s total export earnings (foreign exchange). The revenue is shared between the Federal Government (52%); 36 States; 774 Local Councils and Abuja Federal Capital Territory.
It is instructive to know that the Federal Government has been critically warned by many about the danger of relying on oil as the mainstay of the economy without any visible re-action. The stubbornness of the center is being shared by the states and local governments who rely on monthly allocations (about 85% of their respective budgets) for their survival.
The advantage of oil money should be the provision of capital for infrastructural development and not to supplement the budget (70 per cent of which is devoted to consumption – recurrent expenditure). The serious problem is that both the Government and the Opposition in all tiers of government are wedded to the same concept of exporting crude oil and importing foreign conspicuous commodities. Hence, the foreign exchange policy becomes punitive to an import dependent nation.
Even the Sovereign Wealth Fund (SWF) and the Excess Crude Account are different things to different people. According to the Federal Government, the Sovereign Wealth Fund was created to redistribute oil wealth for the benefit of the present and future generations. According to the Central Bank of Nigeria, the Fund which is about $1 billion (N155 billion) is being invested overseas in real and financial assets such as Stocks, Bonds, Real Estates, Precious Metals, etc.
Some analysts who believe in the concept of Sovereign Wealth Fund would question the rationale of its investments. Of what use is the investment of SWF in foreign stocks and bonds to the decaying economy, which borrows money from abroad at a cost to develop its own infrastructures? Rational thinking would support the use of oil money to fix the domestic economy to produce more goods and offer better employment opportunities.
It is believed that if the economy is truly diversified and domestic manufacturing is flourishing, the shock attributable to volatibility of oil prices could be managed. It is conservatively estimated that oil theft, even after rigorous vigilance, is about 70,000 to 80,000 barrels a day. Crude oil is not air that is invisible and the celebrated thief is not a ghost. It is possible that the ghost and the guard are the same person – human being who warns the owner about possible theft he organizes. But the question is who owns “our oil”?
According to the Federal Government, oil activities ‘in any part of the country are vested in the ‘Government of the Federation‘. But to MEND and other Niger Delta militant groups, this oil is “our oil”. Some could not see the wisdom of complaints against owners taking a small part from their property, even if it is illegally done. Perverted thinking, but real. A frail young man innocently told me a story that he was told how government officials would say “don’t worry, everything in the pipeline”. One day on opening the pipeline, it was discovered that everything that was there could fetch good money.
The time has come to determine the ownership of Nigerian oil which is currently being produced by Nigerian Federal Government and multi-national oil companies. These foreign companies are owned by their shareholders and the proceeds from oil activities do not go into the pockets of their home governments (except some taxes) but directly to the companies.
In the Nigerian example, the proceeds of oil activities go straight into the Consolidated Fund (which is shared amongst all tiers of government). The Federal Government at present, with others, in a joint venture, finances the operations of the oil industry and shares the returns. It is a question of “monkey works, baboon chops” in respect to other states and their local governments.
Oil Ownership
If the ownership of ‘our oil‘ is determined, many of the problems would be solved. My suggestion is based on this formula: Oil Producing Areas – 60%; Federal Government -20%; Other States – 20%. Therefore, Production costs and revenue would be shared according to share holding. It is recognized that only a genuine National Government could tackle and resolve Nigeria‘s many troubles.
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