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Some unresolved issues: Political and Economic Matters

By Adisa Adeleye
IN the last few weeks, the nation has been thrown into a bit of confusion arising from the absence from the country of the President, Umaru Yar‘Adua.  That the President is ill and receiving treatment in Saudi Arabia is no longer news.  What is perplexing is the strange and confusing behavior of the ruling party in sorting things out without rancor or litigation.

Many Nigerians would feel disappointed, if not ashamed, that the country‘s President could not get necessary medical treatment in his country (reputed to be wealthy through oil) but had to seek medical aid in another oil producing nation.  This  shows the poor state of the nation‘s healthcare system which encourages every important Nigerian to seek medical treatment ‘abroad‘ at the slightest excuse.

The pity goes to the admirable Vice_President, Jonathan who by goodluck should be reigning and ruling during the period of distress and agony caused by unnecessary killing of good Nigerians by bad Nigerians in Bauchi and Jos.  The ugly episodes portrayed vividly, deficiency of our security system inspite of unaudited copious funds available to our rulers and security agencies.

In the midst of acrimonious debates on the absence of the President and the lamentations over fratricidal killings in Bauchi and Jos, the sufferings of motorists continue unabased through the long queues at petrol stations and extortions by greedy marketers.  The NNPC (the organization which is responsible for free flow of petroleum products ) seems to be at lost, but day dreaming of that glorious morning when all refineries would work at near full capacity and petroleum products would flow ceaselessly.

Observers believe that serious deregulation would enjoy every marketer to buy its own crude, refine it according to its specification (market share of products), collect products into its own storage depots and retail through its networks.

If the NNPC (under deregulation) is acting on behalf of other marketers, it would do the same in the purchase of crude, refining at home or our neighbouring countries and distribute based on the product requirement of each marketer.

The operation would be strictly on cash basis.  Any desirable subsidy by the government would be through reduction on price of crude allowed for domestic consumption.  It would amount to deceipt for the government to think of full deregulation and be fixing pump prices.

If, as it appears the Federal Government is still confused about the full implication of deregulation of the downstream sector of the oil industry, it seems to be trying on its own (howbeit ingenious) way to tackle the problem of managing the upstream sector (gas and crude production).  It is being reported that the stocks of Oil Joint Venture (to be owned by Nigeria and foreign partners) would be traded on the Nigerian Stock Exchange.

This, according to the proponents, would afford Nigerians the opportunity to own shares in the local oil industry.  Nigerians would be able to own up to nine per cent in the new Incorporated Joint Ventures (proposed Petroleum Industry Bill (PIB).  This represents a shift from the earlier stand of 100 per cent government participation in the new venture.

Also, the oil producing communities would be entitled to 10 per cent of the ‘net revenue profit from crude oil sales‘ which would be managed on their behalf by trust companies.

However, there might be confusion when it comes to the Shell Joint Venture.  As the Special Adviser to the President, Dr. Emmanuel Egboaga was reported to have said, ‘when it comes to the Shell Joint Venture, it will not be nine percent that will be available, it will be nine per cent  minus five, but the oil communities continue to hold 10 per cent across the board‘

From the face of the presentation, the government might appear to be coming to terms with the demand of the oil communities to have a stake in the oil industry and according to some, to control their resources.

The Federal Government in its wisdom has granted the continuation of the 13 percent derivation as enshrined in the 1999 Constitution and has proposed a juicy package of another 10 per cent across the board.  The pertinent question is whether this proposal means the same thing as ‘managing‘ or participating in the resources in the Delta region.  To me, this proposal falls short of the demand for which many innocent souls have been lost.

I think full participation means full participation _ to be subject to the reality of the present situation.  The Federal Government derives about 80 per cent of its revenue from crude oil sales and distributes it according to the dictate of the Constitution. Nigeria has 36 States and 774 Local Government Councils  _  none could be said to be economically viable.

The framers of our Constitution were neither influenced by the principle of ‘true federalism‘ nor the RAAMC, the distributors of funds, mindful of federal fiscal responsibility‘.

It is a comical scenario of State officials, caps in hands going to Abuja to collect their booty.  The oil money takes care of everything under the sun – personnel cost, (civil servants) salaries and allowances of legislators.  Security votes (unaudited), sinecures of political officials and also allowances for sponsored pilgrimages.  Little is left for capital development and hence, the consequences of dilapidated infrastructures, mass unemployment and deepening poverty.

The problem of the Federal Government is how to sustain the colossal waste and at the same time, satisfy the legitimate demand for True Federalism and fiscal responsibility.  First, the resources of the Federal Government is in 60 per cent in all Joint Ventures (oil companies hold 40 per cent) and in Shell Joint Venture, government holds 55 per cent and oil companies 45 per cent.

The realistic proposal should be the redistribution of 60 per cent of government shares in all the Oil Joint Ventures to be Federal Government – 30 _ per cent; Oil communities _ 30 per cent;  other States – 25 per cent and interested Nigerians  _ 15 per cent.

It is believed that this arrangement (or a negotiated one) would douse tension and under fiscal responsibility, ensure that share holders contribute to production cost and share in the revenue accordingly.  At present, the Federal Government alone responds (sluggishly) to Joint Venture calls.

It may be expedient to examine the Central Banks‘ role in managing the inflow of oil dollars into the country.  The CBN (whose purpose is to help control and stabilize the monetary and banking system in co_operation with Finance Ministry) pockets the inflow; converts it to naira at its own rate (smaller) for distribution to statutory recipients and resells  dollars to purchasers at its own rate (higher).  When the nation is awash with naira, the Central Bank smells ‘excess liquidity‘ and embarks on mopping exercise (at a price to the nation).

One cannot but sympathise with LES LEBA (a Vanguard Columnist) for his insistence on Dollar Certificate as a substitute for Naira -a means of stimulating the economy.  The problem is that the CBN is the home of those hard_headed conservatives who are modern disciples of the economists of depression and slump of the 1920s and 1930s.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.