Whereas the game of football unifies Nigerians whenever the national teams are involved, oil is simultaneously a unifying and a divisive national commodity with all the attributes of a game. In fact oil seems to always pitch Nigeria against herself. And in over half a century of commercial oil exploration in Nigeria, neither the country nor the generality of the people is winning. Real economic growth is a major casualty of the politics of oil in Nigeria which now assumes an alarming militancy. A World Bank report put the country's GNP per capita at US$320 in 2002. This is lower than the US$370 figure in 1985, which is even lower than what obtained at independence.
The two-term administration of President Olusegun Obasanjo has made some spirited efforts including legislative instruments to address the multi-faceted problems bedeviling the oil industry and by extension the Nigerian economy. Some of the ills of the industry which accounts for about 90% of the countrys foreign exchange receipts include:
- Inadequate local participation in the countrys number one industry in terms of equity (discounting governments holding in the JVCs), technological know-how and human capital utilization which occasions high expatriate quota in the industry.
- Nigeria ranks tops among countries venting or flaring associated gas. This global bad practice is a safety measure for the drilling companies where they lack infrastructure to transform associated gas into a finished product on commercial basis. This means that there is lack of depth in investment in the oil sector as Nigeria is said to be contributing 16% to global gas venting and flaring put at over 100 billion cubic meters annually.
- Lack of transparency and accountability in managing the countrys oil proceeds.
- Environmental degradation and pollution in the communities where the multinational oil companies drill oil, chiefly in the Niger Delta Area, South Southern Nigeria.
- Absence of or appalling infrastructural facilities in the areas where oil production take place in the country.
- The anomalies and economic sabotage that make the country to depend on importation of refined petroleum products with the attendant influence of increasing petroleum product prices on spiraling inflationary trend in the country.
Governments policy on ending gas flaring has recorded a good measure of success as no fewer than three LNG production train have at various times since year 2000 begun production and export. The fourth and fifth productions trains are now nearing completion, and the NLNG has signed several long-term purchase agreements with some customers. The government also promised not to increase the prices of petroleum products in the 2006 fiscal year, while it has continued to encourage indigenous companies to bid for oil blocs it puts up for sale.
However, oil has continued to contribute a high crisis quotient to political negotiations in the country. In this regard, the absence of idealistic framework in resolving the crises within the context of federalism is the biggest growth challenge of the Nigerian economy. It is the reason for the trade off of the countrys broad based economy at independence for a structurally deformed mono-product based Nigerian economy of today. This is easily substantiated recalling how resource control or fiscal federalism has flourished in public discuss in unofficial circles since 1999. Yet, it is the same issue that could not be discussed at the national conference conveyed by the government in 2005. In fact that singular issue brought the conference to its abrupt ending.
Perhaps the increased militancy in the Niger Delta which now involves hostage taking is fuelled by the over bearing dominance of dictatorial measures in the management of the countrys oil wealth. These measures are often disguised in big project approaches like the defunct OMPADEC and the PTF. It remains to be seen the way the NDDC will go. It is unprecedented and apocalyptic the threat militants now pose to the oil industry with many of them fatally armed.
With the economy already showing signs of recovery, a slide into large scale violence that can jeopardize investments in the country is most unwelcome. At the wake of the hostage taking of four expatriates working at a Shell flow station, the Anglo-Dutch oil giant had to shut in production from the EA field resulting in production deferment of 111,500 barrels of crude oil per day (bpd). But the economy is projected to continue to attract FDIs this year. A sectoral growth projection of the CBN in a recent document shows that agriculture and oil are to lead GDP growth rate into as much as two digits from this year.
The report also targets modest GDP growth rates in the manufacturing, services, mining and quarrying, construction and wholesale and retail sectors. The telecommunication sector will also attract some investment this year as the Nigerian Communications Commission (NCC) is set to implement unified licensing policy for the operators.
A broad based discussion between the government and legitimate interest groups in the oil producing communities which is intentioned at accelerating development in the area may reverse the current recourse to violence. Many analysts had criticized the government when last year it chose to accord recognition to Asari Dokubo by inviting him for negotiation. Although he is now in detention, the impression may have been conveyed that it is the threat of violence that induces the government to negotiate. But aligning our federalism with the apposite fiscal policy is an option that is not strange to this country. It was the policy the country practiced that propelled the economy to its zenith before 1966.
In the meantime the finance commissioners from the 36 states of the country have accused the federal government of under-reporting accruals into the federation account by about N67 billion for December, 2005. However, the figure is less than 25% of the N290 billion which the NNPC is reported to have unaccounted for from November 2004. These revelations can undermine the scorecard of the reform policies of the government, signaling that the country is still playing games with key requirements for economic development.
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