2015: Lagos’ll become Africa model city ─ says Fashola

The Lagos State Government has said it is determined to achieve its dream of becoming Africa’s model mega city by 2015.

FASHOLA
BABATUNDE RAJI FASHOLA, GOVERNOR OF LAGOS STATE.

It added that more private sector investments were being attracted to the state internationally and locally to create jobs and increase productivity.

The spokesman for the Ministry of Commerce and Industry, Jamiu Dosunmu, in a statement on Tuesday, said the state Governor, Babatunde Fashola, made the statement during the celebration of the Lagos State Day at the just concluded International Trade Fair.

The governor observed that the mega city status of the state placed on it the responsibility of developing strategies that would help to harness public and private investments in order to have a dynamic economy.

Fashola, who described the theme of the fair ─ Promoting the Nigerian Economy as a Preferred Investment Destination ─ as apt, added that more investment influx into the state would reduce unemployment.

The governor, who was represented at the event by the Permanent Secretary of the ministry, Mr. Wale Raji, said, “Although the state government has developmental business plans in place, massive business investment is still key to keeping the leading role of the state as the economic hub of the country and Africa.

“It is the desire of the state government to continue to make life meaningful for investors and formulate policies that will make business thrives.”

The Commissioner for Commerce and Industry, Mrs. Olusola Oworu, said the annual event was an avenue for both small and big business owners to showcase their products to both the local and international community.

She said the fair helped promote a healthy and productive networking which had in turn stimulated the demand for products and services and ultimately facilitated the enhancement of their productivity.

The President of the Lagos Chamber of Commerce and Industry, Alhaji Remi Bello, commended the efforts of the government in making the deadly Ebola Virus a history in the state.

Source: THEPUNCH

He he he… Broken, Looted Economy: Get Ready For Suffering – Ngozi Okonjo-Iweala Tells Nigerians

Diezani -0il goddess and Pres. Jonathan
Diezani -0il goddess and Pres. Jonathan

Nigerians should brace for tougher economic times ahead, the Minister of Finance, Ngozi Okonjo-Iweala, has said as crude oil prices slipped to a four year low on Wednesday.

New York Mercantile Exchange (NYMEX) December WTI oil futures sold at $75.20 per barrel on Wednesday, down $1.98, from $74.96 per barrel the previous day, the lowest level for a most-active contract since September 2010.

Though the price of sweet crude, the blend of oil export from Nigeria, rose marginally at the close of trading on Wednesday to $76.96 per barrel, it has already crashed below the $79 per barrel benchmark approved in the 2014 Appropriation Act, concerns are mounting that tough times are indeed ahead.

At the end of the Federation Accounts Allocation Committee (FAAC) meeting for September, Federal, States and Local Governments were only able to go home with N603.5 billion allocation after they resolved to borrow about $2.76 billion from the Excess Crude Revenue Account to augment shortfall in revenue generated during the period.

The Federal Government had attributed the declining revenues to the fall in prices at the international oil market.

After drawing from the ECA, Minister of State for Finance, Bashir Yuguda, said the balance in the account had dropped further from $4.1 billion to about $1.34 billion at the moment.

But Mrs. Okonjo-Iweala said in Lagos on Tuesday that the economic indicators show there are tougher times ahead.

Though she said the country’s External Reserves rose from $36.6billion at the end of June to $39.48billion by October 16, and the balance in the Sovereign Wealth Fund at $1.55billion, accruals from oil exports have been poor.

According to her, Nigeria would begin to feel the impact of the dropping oil prices at the international oil market, which commenced since the first half of the year.

“The country must brace up for tougher times ahead”, she said. “We need to review our expenditures and build economic buffers through budgets that would be based on modest oil prices.”

She underlined the importance of a sound macro-economic management to Nigeria at this time, particularly the need to plug all revenue leakages.

“We have not yet seen the impact of the falling oil prices in Nigeria. It will start this month. We have to drive the non-oil revenue base to be able to weather the storm that is coming,” the Minister said.

The minister said the fall in the prices of export commodities such as gold, iron ore and agricultural produce such as cocoa, cotton and coffee was bound to affect most African economies, which relied on commodity export for the sustenance of their economies.

Source: NewsRescue

Despite poor state of the national economy, Aregbesola scores Osun Economy high

aregbesola
Aregbesola
The economy of the state of Osun has continued to match forward on all fronts in spite of the poor state of the national economy. This is as a result of the prudent financial engineering introduced into the system by the present administration in the state.

The Governor of the state of Osun, Ogbeni Rauf Aregbesola stated this at the 2014 Lagos International Trade Fair held at the Trade Fair Complex, Lagos.
Speaking through the Commissioner for Commerce, Industry, Cooperatives and Empowerment, Mr. Ismaila Jayeoba-Alagbada, the Governor said it is an open secret that, the global economy is facing huge challenges but in the state of Osun, the economic ship has remained afloat through divine providence and the sagacity, ingenuity and immense resource management adopted by his administration.

The trade fair with the theme: Promoting the Nigerian Economy as a Preferred Investment Destination” is to engender Lagos, Nigeria’s commercial nerve centre, global operators in commerce and industry to impact our national economy positively.

The Governor stressed that the present administration has provided some facilities such as construction and rehabilitation of roads, establishment of a mid-regional market, tagged O-Hub at Dagbolu, rehabilitation and modernization of the old railway station, establishment of modern and international markets to sustain commercial, industrial and overall economic development.
He further stated that, the efforts of the State Government in the area of industrial promotion is yielding fruitful results, as there have been an upsurge in the number of industrial investors who had indicated their intention to establish their businesses in the state.
The Commissioner therefore, on behalf of the Governor congratulated the Lagos Chamber of Commerce and Industry for another successful fair. He later assured them of Osun cooperation in all efforts to place our dear country and her constituent States on a path of sustainable economic development.

RED Alert on Nigerian Economy under Jonathan Administration in retrogression situation!

President-Goodluck-Jonathans-officeWe have been saying it before now that there is RED alert on Nigerian Economy, under President Jonathan, many said it’s a lie! Now I just wanted to share brief evidences that our economy is in retrogression situation.

Nigeria Naira against Dollar is now more than N170. Crude Oil is sold for $75.5/barrel. Foreign investors have withdrew their Investment from Stock Market for its crashing.

Market Capitalization of Stock Market has crashed to N11.00trillion from N14trillion that Sanusi Lamido left it. All Share index is 33,216 from around 40,000 that it was around January this year.

Banking capitalization that was around 8trillion has gone down to around 5trillion. What a government?

Now, how do we survive when the quantity of crude Oil we sell has reduced beyond reasonable level. I doubt it if Nigerian Economy could make it through 2015.

Which area is where our President is so good? This answer is left for him because we can’t even predict which area he could handle perfectly.

The best thing is for Nigerians to ask him to go home and rest at his home town, for if he continues, it is dangerous and injurious to our economy and future of many Nigerians.

By Abiona Wahab Abiodun

A MUST READ: Politicking With Economy In Face Of Hunger, No Jobs

Minister-of-Finance-Dr-Ngozi-Okonjo-Iweala-360x225
Minister of Finance Dr. Ngozi Okonjo-Iweala
The federal monthly allocation to states for sometimes now has nosedived. Consequently, serious political discussion on the implication of it on the welfare, and economic development of the nation is on-going. The governors for a very long time become victims of this very unusual anomaly. Even in war time, between 1966 and 1970 the situation was not this horrendous. Some states could no longer pay workers salaries; others are choked up with accumulated loans
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To worsen the situation, the Debt Management Office (DMO) recently issued an advisory letter to banks not to grant short -term loans to states. The Nigerian economic situation has a knock-on effect not only on the economy, but also on virtually all sectors of human life. From the look of things it appears Nigeria has been brought back to the National Party of Nigeria (NPN) days when the Shehu Shagari main interest was only on the retention of power at the expense of the economy and the wellbeing of the citizens. Despite the warning by Chief Obafemi Awolowo, the leader of the Unity Party of Nigeria (UPN), that the ship of the economy was fast approaching shipwreck, but the ruling party ignored the warning, that led to economic collapse.

The failure to meet the nation cash-call obligations in upstream joint ventures has compounded the financial challenge of the Federal government. Nigeria that used to produce 2.5 million barrels a day is merely turning out 80, 000 barrels per day in a deficit of over $60 billion. Major oil company that was formerly producing 2.5 million barrels has merely produced 80, 000 barrels per day confirmed that all is not well with our economy. Despite the falling oil prices, the federal government kept on frivolous expenditure.

The economic managers kept painting the economy as healthy, yet the reality on the ground is economic depression. Economic experts have argued that the situation in Nigeria today is not as a result of oil theft, but mismanagement of the resources Nigeria solely relies on. This mono product is killing all of us and we seem not to be bothered about it. Before the military intervention, regions were financially independent and strong enough to earn enough to manage and run their individual administration. Each region was developed at its pace.

The current centralisation of revenue has weakened the states and turned even the rich states to mere beggars. . Given the differences in the capacity of each state to generate revenue to meet each state needs, the constitution has provided a mechanism for the redistribution of resources from those with excesses to those with little or no internal revenues. If this mechanism is adhered to, this will ensure equity and fairness amongst the federating entities and encourage equal development and foster cordiality.

The return of the civilian administration to the running of government since 1999 has further compounded the financial challenges confronting various states in the country. The fierce battle to control the central government has been identified as the struggle for economics control. The central purse gave the Federal government the latitude to sit over the national wealth. It also encourage profligates by the ruling class at the expense of the welfare of the majority of the people that are daily dying of hunger and starvation, ill health without opportunity to good health care services.

The current revenue sharing formula has been critically criticised by several bodies. The federal government allotted 52.68% to itself, paid 13% derivation to oil producing states and gave 26.72% to the states and 20.6 to Local Government Councils. The federal government has continued to enjoy its own share of the allocation but has developed a carrot and stick method of sharing the 26.72% of the states allocation. What kind of federalism are we operating?

A situation where the federal government dictates who gets what is unacceptable. What exactly does the FG spend its 52.68% allocation on?   For instance, Rivers state monthly allocation has since been reduced from N26 billion per month to N12 billion without any rational explanation.   Osun has its revenue slashed from N4.6 billion to N2.3 billion for no just cause. Let s look at this slashed allocation. Osun pays N 3million to his workers monthly and 600 million to his pensioners. That is without other obligatory expenditure monthly. So, how does Osun survive with N 2.3 billion monthly. But for his sagacity and economic wizardry, Rauf Aregbesola would have been unable to cope.
The dependence on oil wealth no doubt made the drive for Internally Generated Revenue (IGR) less important.

National Bureau of Statistics (NBS) revealed that N16.07 billion IGR was generated by other states with the exception of Lagos in 2012; Lagos alone generated 38% of total IGR in the country. In Osun within three and half years of Aregbesola’s administration he increased Internally Generated Revenue from 300 million naira to 1.6 billion naira without increasing tax. IGR seems to be the last resort for few state governments who do not want to be necessarily waiting for allocation that may not be available in the nearest foreseeable future. Unfortunately, most of our leaders hardly pay tax. They only rush to tax office when and where such tax receipts are required for election purposes. Even when they pay, they under-pay and cheat the nation, an offence that carry imprisonment in other clime.

The Federal government has not deemed it necessary to re-strategise over the danger posed by the current dwindling of revenue acquiring to the nation due to recent drop in the world oil price that has fallen to 83 dollars the lowest in four years. While the states are grumbling for shortfalls in the monthly allocation, the Federal government is jetting out of the country in private jets with millions of dollars of oil money for one reason or the other. The Minister of Finance Dr. Ngozi Okonjo-Iweala kept telling the nation that our economy is buoyant. Who cares whether economy is buoyant or not if it does not impact on the lives of the people? Economic buoyancy is only within the top echelon of the political elites especially those in government in Abuja.

The door of our tertiary institutions were shut for over six months this year over poor funding, and yet the institutions of learning are still awaiting the promised or agreement reached before the industrial strikes were called off. The buoyancy of the economy has not translated to good condition of services to the Nigerian Medical Association (NMA). Our hospitals have continued to be mere consulting clinics. If Lagos state and Rivers states have not risen to the occasion, Ebola virus epidemic would have killed several people in Nigeria.
What is the way out for the states?

The governor of state of Osun opined that the whole fund for the nation per annum is about 4 trillion. This amount he said cannot improve the lot of the people. However, he strategically stated that if people of working age can be gainfully engaged to earn at least 20, 000 naira per month for a year, and that by so doing the working class will be able to earn 16.4 trillion naira per annum, instead of the 4trillion naira that all of us are dying over. In line with Aregbesola’s opinion, it is pertinent to note that Section 17 sub section 3(a) of the 1999 Nigeria Constitution provided that the government in the nation should provided enabling environment for the people to be gainfully employed.

Although it is impossible for the government to employ all jobless people, some basic steps that a reasonable government can take is to provide vast arable lands, modern farming equipment for the youths and able bodied interested in farming. Agriculture can reduce poverty, hunger and penury among our populace if properly organised, before the discovery of oil in Nigeria we have survived and runs our regions with farm produces.

The Western region produced cocoa and coffee that earned the state substantive income, the North lived and developed through groundnut pyramid, the East made a lot from palm oil. The states can also motivate others to go into fishery, poultry, and piggery. The artisans should be mobilised to update their knowledge in their various trade and arts. Financial assistance should also be granted as the Osun government has done for its people. Market women and men should also be assisted financially in terms of short term loans to enlarge their trade.

• Obaditan wrote in from Osogbo, State of Osun.

The Coming Digital TV Revolution -ATCON

ATCON
ATCON
Except something unexpected happens, by July 31 next year, all analogue TV transmission in Nigeria will cease. Essentially all our existing TV stations – Channels, NTA, State TV stations and several others will cease to broadcast signals that can be directly received on our television sets. The world is transiting to digital TV broadcasting and July 31, 2015 has been set as Nigeria’s cut over date. Every television signal will have to pass through a set top box or decoder before being received by a television set.

The most obvious impact is that Nigeria will have to spend an estimated 700 billion naira to purchase decoders if they plan to continue watching television! The big question is how will this come about? Can Nigerian families really afford this, should they spend that much and what can anyone do to ameliorate the expenditure. The elephant in the room question is will it all be worth it?

To answer this question, let us look at the digital satellite TV service currently in the works from CWG and SES. SES is one of the leading communication satellite operators in the world. Her fleet of satellites include the Astra 2G craft whose foot print on the ku-band covers Nigeria and the rest of West Africa with high fidelity signals. SES also has considerable expertise in digital broadcast including operating the HD+ high definition service in Germany as well as being the partner of choice for a variety of other operators. SES’ expertise extend beyond satellites to also include content management and integration into worldwide content distribution networks. CWG has been SES partner in data communications for the past 20 years. CWG operates both a teleport for the upload of signals to SES satellites as well as a Tier 3 Data Centre that provide hosting services for storage and management of content and signals.

(L-R): James Agada, Chief Technology Officer, CWG PLC; Stéphane Goebel- Head, Sales Africa and Middle East, SES Platform Services; Jean-Pierre Kabanda, Vice-President Business Development, Africa SES; Wilfried Urner – CEO, ASTRA Platform Services (APS) and Dayo Abegunde- Associate Vice-President, CWG PLC during the Broadcast Summit in Lagos.

CWG and SES have introduced a service that allows any broadcaster to broadcast digital satellite signals that will be received using a variety of standard decoders. These signals will be received all over Nigeria and West Africa. The broadcasters will not need to change their existing equipment but will only need to make minor investment in digital encoders and they are good to go. This means for instance that Zamfara state TV can be received all over Nigeria as well as Osun State TV or Channels TV. IT means State TV broadcasting stations will no longer need to invest in expensive repeater stations in order to cover their states. The Enugu man in Lagos will happily see Enugu State TV in Lagos as well as the Enugu State man can easily see Lagos State TV. This is a staggering saving and expansion of reach for the regional or local broadcasters without the attendant significant cost outlay. For this alone, the television viewer will have received the value of digital television. Consider that as at today, it is impossible to keep up with local news if you leave the locality.

The CWG and SES service introduces a totally new dimension to television broadcasting. They are making it possible for any content owner – say a movie producer or a journalist or entertainer or school or church or consultant or government entity – to be able to broadcast 24 hour television which is viewable anywhere in Nigeria. We could be watching National Assembly TV as easily as we could be watching Open University TV or Catholic TV or NAFSAT TV. This is achievable because the CWG/SES system can accept live content as well as recorded content. It can also broadcast standard definition as well as high definition picture quality. We should be expecting an explosion of content of various forms.

TV can be used for not only entertainment but also for education. China’s education system utilizes TV heavily to reach remote locations with standard curricula. This can also be the case in Nigeria. Our falling standard of education can benefit a lot from standard curricula delivered by properly equipped teachers to all school classrooms. This immediately reduces variation in the quality of teaching and also improves the quality of the teachers.

The coming digital television revolution will bring incredible value and opportunities for both viewers, broadcasters and other content owners. CWG and SES aim to be at the centre of this revolution, working with other stakeholders to make the switch to digital TV worth every effort and expense.

Meet the youngest China’s hacker

A 12-year-old Chinese ‘hacking prodigy’ broke into his school’s computer system and a shopping website, but claims he’s only doing it to help fix security flaws.

Young hacker ... Wang Zhengyang
Young hacker … Wang Zhengyang

Wang Zhengyang hacked into his school’s system, then notified the software company of a security flaw that affected other schools using the program.

However, Wang points out he hacked into high school records, not his own, reports Want China Times.
CCTV reports Wang is also a first-year student at Tsinghua University, and that he began hacking to avoid doing his homework.

But he says it’s all to help websites improve their security, and that he is a moral hacker, or ‘white hat’.
“I meant to help fix the websites,” he told the Chinese Internet Security Conference in Beijing late last month.
“You have to attack the websites first to find its weaknesses.”

He also hacked into an online store, changing price of one item from 2500 yuan to 1 yuan, reports Shanghaiist.
Instead of buying the discounted item, he contacted the online store to alert them to the security breach.
“I think those who hack all day for profit are immoral,” he said.

“It is interesting to look for website security risks and I am overwhelmed with joy when I find one. But I will not use my talent for something illegal.”

Source: NEW.COM.AU

Lower oil prices put pressure on Nigerian economy

crude oilWith insurgency in parts of the North still taking a toll on agriculture and other economic activities in the region, the fall in the global oil prices, which began in June, is posing further threat to the country’s economy.

Oil prices have declined by 12 per cent from $105 per barrel a few months ago to about $92 currently. The price of OPEC basket of 12 crudes, which include Nigeria’s Bonny Light, stood at $90.33 per barrel on Friday, compared with $90.40 the previous day, according to the Organization of the Petroleum Exporting Countries’ secretariat calculations.

The decline is coming at a time when the Nigerian oil and gas industry is encumbered with several challenges, including oil theft, pipeline vandalism and the non-passage of the Petroleum Industry Bill that seeks to overhaul the industry.

“This current lower price trend is going to have a major impact on Nigeria if the trend continues for say about three months,” energy analyst at Ecobank, Mr. Dolapo Oni, told our correspondent, adding “The trend is likely to continue until the market adjusts the volume of oil supply available. OPEC is likely to make a major adjustment in November. Until then, the market is likely to remain over-supplied and prices could remain below $100 till then.”

“Lower oil prices have reduced the fiscal buffers of the Nigerian economy. Essentially, the amount entering the Excess Crude Account is going to shrink and can put some pressure on federal allocations, which often have to be supported with withdrawals from the ECA,” he further said.

The country relies on the oil and gas industry for around 95 per cent of export dollar earnings and up to 80 per cent of its revenue.

Revenue from crude oil has seen decline in recent times owing to large-scale oil theft, production shut-ins and the rise of shale oil production in the United States, resulting in sustained cutbacks in the US imports of Nigerian crude.

In August, the country’s total revenue fell to N601.6bn from N630.3bn in July. The decline in federal revenue in the month, according to the Federation Accounts Allocation Committee, was due to the force majeure declared by Shell and a series of shutdown of trunklines and pipelines at various terminals.

A Professor of Law at the Thurgood Marshall School of Law, Texas Southern University, US, Emeka Duruigbo, said in an emailed response, “Drop in prices translates into lower returns for the Nigerian treasury, possibly leading to budget deficits and a decreasing ability of the government at all levels to deliver on essential social services. Simply put, the economy suffers.

“When the economy is affected, the political arena invariably feels the impact. I would worry if I were President Jonathan or any other incumbent seeking re-election in the next few months.”

Duruigbo said prices were likely to go up if the Middle East producers felt comfortable about their social environment to cut down on production as well as if the economies of Europe and China recorded more robust growth and the US shale revolution hit a speed bump.

He, however, added that none of these was likely in the next few months.

Noting that the price of oil was expected to rise and fall, the President, International Association for Energy Economics, Prof. Wumi Iledare, said, “I must state unequivocally that the threat to the Nigerian oil and gas industry, and by association, the economy, is the lack of a pragmatic oil and gas policy to drive investment in the sector for sustainable economic growth.”

The Minister of Finance, Dr. Ngozi Okonjo-Iweala, had said in an interview with Bloomberg TV Africa on Saturday, “Knowing what we know about the volatility of oil prices and about the need to make sure that we capitalise on a diversified economy, we have been working hard.”

She said budgeting much lower than the market price and saving whatever was above would give a cushion, with about $4.11bn now in the Excess Crude Account.

For 2014, the Federal Government had projected a budget of N4.5tn, based on a benchmark oil price of $77.5 per barrel.

Okonjo-Iweala said, “Oil will continue to be important as a source of revenue, but we really need to drive the economy away from where we have 70 per cent of revenue in oil and 30 per cent from other sources.

“We want to drive it to where a third of our revenues come from oil and two-thirds from the non-oil sector. That is the vision for this economy. That is when we can see that we are capitalising on our very diversified base.”

Source

Nigeria’s economy faces difficulty over free falling oil prices

crude oil• CBN increases forex market intervention to $500m

• Lack of periodic review of policies bane of oil and gas industry, say experts

A GLOOMY prospect for the nation’s economy, which relies heavily on oil receipts may have been high with the free falling prices of the commodity at the global market.

The development, which is partly associated with the recent surge in Shale Oil production by Northern American countries, led by the United States of America, has seen crude oil fall steadily from one year high of $110.48 a barrel in May 2014, to a two-year low of $92.31 a barrel in September 2014.

The 6.2 per cent decline has, however, put pressure on the member nations of the Organisation of Petroleum Exporting Countries (OPEC), including Nigeria, which is currently reeling in fears for its low external buffers and 2014 budget performance.

The Nigerian Bonny Light, though at $95.2 a barrel, is still substantially above the 2014 Budget Benchmark Crude Price of $77.5 a barrel, the production volume since the year has largely underperformed the 2.38 million barrels per day estimation.

The development is also an indication of the potential macroeconomic challenges ahead, if oil prices sustain the free fall in price without a corresponding increase in production figures.

This has raised the need for sustained campaign for the diversification of revenue sources and broader economic structure, with urgency in the processes that are aimed at achieving it.

Though the funding scheme designed to support the development of the agricultural sector is a step in the right direction, similar efforts should be made towards the manufacturing, telecommunication, tourism, and transportation sectors, among others, to ensure the country leaps beyond identification of potentials, to realising them.

Meanwhile, the Central Bank of Nigeria (CBN), had last week, increased its foreign exchange offering at the Retail Dutch Auction System (RDAS) from $300 million to $500 million.

The decision to increase the forex offering was attributed to cover-up for the second weekly auction, which fell on public holiday and assessed demand surge during the Eid-el-Kabir.

About 20 banks participated in the offering at the primary market segment of the RDAS at the marginal rate of N155.75/$, while the apex bank’s measure spurred gains in the naira, as it closed at N163.80/$, making a 15 kobo.

The naira equally strengthened by 50 kobo at the bureau de change segment to close N168.50/$.

According to Afrinvest Securities Limited, there is an anticipated pressure on the currency this week, as the bank holidays limit the number of days available for the auction.

Meanwhile, In all sectors, Nigeria does not lack good policies and ideas to make things work for its citizens. Rather, it is lack of policy inconsistency and inability to periodically review such policies to meet with ever changing realities that have been identified as the bane of national development.

Nowhere else is this also truer than the oil and gas sector, Nigeria’s mono-product managed by the Nigerian National Petroleum Corporation (NNPC).

At least these are the informed and insider views of three retirees of the corporation, Michael Olorunfemi, Akin Adetunji and Ade Olaiya, who started out with Nigerian National Oil Corporation (NNOC) before it transformed into NNPC. Together they have a combined industry experience of almost 100 years. They have documented these views in their new book Nigeria Oil and Gas: A Mixed Blessing? with A Chronicle of NNPC’s Unfulfilled Mission as sub-title. The book is scheduled for launch this month in Lagos.

Also, even in a democratic era, policies continue to tumble down from government in military-era fashion, with little or no consultation, as the Petroleum Industry Bill (PIB) seems to suggest, which has been bogged down at the National Assembly for almost 10 years now without being passed into law.

According to Adetunji, “One of the areas we looked at is inconsistency in policy and lack of periodic review of policy, which are the bane of policy implementation. And, what are the success factors of other OPEC countries as against Nigeria’s? Are we really following a clear-cut path to recovery? It was observed that our foreign reserve has fallen from $40 to $35 billion. Where we thought we would be increasing, we’re retarding. That spells doom for the oil industry. If we continue to decline, sooner than later, we will become a net importer of crude and not just finished product. Apart from revenue implication to government, it is also a disaster to national economic growth.

“So, what needs to be done is to ginger up exploration, to be able to add more to the reserve because one thing about oil is that what you find today does not come into your market until five years’ time or more. This is the kind of lag we now run; it needs to be arrested. We need to stimulate exploration path.

“We took a quick look at PIB itself that has taken a decade to come into being. It’s a good piece of legislation with good intention, but is that the best approach to it? Rather than going the omnibus way of compiling everything into one legislation, each of those areas had their own enabling legislation, which could have, on their own, be individually modified, and not constitute a new legislation but amendment. Those would have been implemented faster and should have helped the industry better than what we are now having, where for 10 years now the legislation is on hold, it’s dragging on. The industry is declining because investors are hesitant in investing, as there’s no clear cash-flow they can see because of fiscal measures that are not clearly spelt out; this does not help the development of the industry.

“In fact for now, I don’t know who has an idea of the bill’s exact intentions. What is in the legislation, it’s content? Really, what does it contain? What are its provisions? What are the fiscal measures? So, until the document comes out will we really know what it contains”?

The trio agrees PIB is another faulty policy formulation method, as it did not enjoy wide consultation among stakeholders. Adetinju notes, “Do we really need to go the PIB route to achieve our goal? But maybe it’s too late for that now because PIB is already on its way. We also propose that even our policy formulation method is faulty, and this cuts across the whole economy. You see, there is no wide consultation. It was part of what affected PIB; there was no wide consultation. By the time government came out with what it wanted to do, a number of stakeholders were not pleased, and they started complaining. But if there had been wide consultation, of course, there would have been compromises with various stakeholders.

“That is one aspect we’re concerned with. We are saying, ‘look, our policy formulation method must get wider perspective of consultation’. Also, policy must have periodic review. Policy comes up to deal with certain situation, and that situation would not be there forever. That situation will change, circumstances will change, and factors will change, and yet the policy would remain. That is the kind that has bedeviled some of our policies.”

Adetunji states that the much vilified oil subsidy is one clear example of lack of policy review in the public sector of the oil and gas industry. He argues, “Like we are having in oil subsidy issue today. When the policy of petroleum equalization was introduced, it had no subsidy. It was to be a zero, self-equating system. That was why it was called petroleum equalization fund. It equalizes itself, but then because the factors that were there then when the policy came out were never reviewed; one, crude price was so low it was $8 per barrel, and naira-dollar parity was in favour of naira. The naira was stronger than the dollar.

“At that time the bulk of petroleum product that was consumed locally was refined locally. So, we didn’t have to deal with imported inflation at all. But now those factors were never reviewed even as we cannot refine locally. So what was self-equalising became self-negating. Now because government has to sustain the same price it has to find more money from elsewhere to equalize it; that is why we are having this problem.”

Although it started on the path of a lofty mission as Nigerian National Oil Corporation (NNOC) in 1971 before transforming into NNPC, it has since become an agency achieving far below its set mission. It is the concern of these three former employees of NNPC, who say their book is designed to stimulate debate in the public sector of Nigeria’s oil and gas mono-economy.

According to Olorunfemi, “Our focus is on the public sector of the oil and gas industry. We have almost 100 years of combined industry experience at NNPC. The public sector started as a modest effort when it used to import petroleum products.

“But when oil was discovered in large quantities it put Nigeria on the international map; then it began to interest international players to come and prospect. It attracted the Americans more because we had the singular luck that the geology of the Niger Delta is similar to that of the Gulf of Mexico, where Americans were already operating.

“What we look at is, ‘how did policy start emanating? What are the achievements attained in comparison with other third world countries? What are the challenges? And how do we put issues in the sector in perspective? What we did wrongly in the past that we mustn’t repeat and what we need to be doing now to get things right? And what is the road for the future for us to realise success for our collective survival as a nation?’”

Continuing, Adetunji gives a historical narrative of NNPC’s set mission, “When NNOC started in 1971, it was at a time when Nigeria joined OPEC, and OPEC put out a resolution that every member country should have their own national oil companies to be able to derive the gains of the oil industry, to be able to participate and to be involved in the exploitation of their own strategic resource and that it should not just be left in the hands of multinational oil companies alone.

“So, these were the ideas that government had in mind. Instead of just regulating and issuing licenses, which NNOC had been doing before, it should participate, acquire the technology and at the same time be able to understand the industry.

“And so from the initial time, the stage was set for NNOC to be a company that really will be an international oil company, a profitable oil company, and a company that will be able to establish its rights with other third world companies being established at the time. So NNOC was created to be involved in direct exploration and production. And this was what it did; it’s in the records. NNOC found a number of oil fields because of the competent people it had.”

Like all government establishments, things soon began to fall apart. A clear lack of vision on the part of government and those managing affairs crept in, and as he posits, “NNOC was not able to develop those discoveries; they were then given out to other companies.

“Government did not give NNOC the financial wherewithal to do what it should be able to do. It was not capitalized and it could not borrow from outside; it was only involved in discoveries alone, and not in production, which is one major problem. Most other companies formed like NNOC in other countries are everywhere. This is what has happened to any company government has put its hands – railway, shipping, airways. So we ask, “what is wrong? Why can’t we move forward? We have beautiful ideas, but when it comes to implementation, we run into problems.”

For them, the book is “Intended to generate further debate in the public sector of Nigeria’s oil and gas. It is to throw challenge to other people to be able also to act, and have other opinion on how things are being run. It is to convey a message.”

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As US Shuts its Door on Nigeria’s Oil Exports – By Chika Amanze-Nwachuku

Diezani-Alison-Madueke-1609
Diezani-Alison-Madueke-1609

THISDAY NEWS ANALYSIS

Nigeria has become the first country to completely stop selling oil to the United States of America, the world’s largest oil producer and consumer, due to the impact of the shale revolution – an astounding reversal – as the country was only four years ago one of the top five oil suppliers to America.

According to the US Department of Energy, Nigeria did not export a single barrel of crude to US-based refiners in July for the first time since records started in 1973.

Preliminary data suggest the trend continued in August and September, the London-based Financial Times reported thursday.
Many oil producers have seen their exports to the US drop as domestic production rises thanks to the use of new technologies such as horizontal drilling and hydraulic fracturing, or fracking. But Nigeria is the first to fully stop exporting crude.

At its peak in February 2006, the US imported 1.3 million barrels per day (mb/d) from Nigeria – equal to roughly one super tanker the size of the Exxon Valdez every day. By 2012, Nigeria was just selling 0.5m b/d, but was still one of the top five suppliers to the US, alongside Saudi Arabia, Canada, Mexico and Venezuela. Earlier this year, sales dropped to a trickle of about 100,000 b/d. And in July, they completely stopped.

Nigeria, a member of the Organisation of the Petroleum Exporting Countries (OPEC) oil cartel, is Africa’s largest oil producer and international companies from ExxonMobil to Royal Dutch Shell and from Total to Chevron operate some of the country’s major oil fields. But most of them are divesting of these assets in the country, as they undertake a portfolio rotation of their assets to divert more resources in shale oil production.

The shale revolution has affected US oil suppliers unevenly, hitting particularly hard those in Africa such as Nigeria, Algeria, Libya and Angola, which produce high quality crude similar to the one pumped in the new oil fields of North Dakota.

Middle East producers such as Saudi Arabia and Kuwait have suffered far less as they pump crude oil of a lower quality that US refiners continue to buy. Saudi crude oil exports year-to-date to the US have increased over the 2013 level. Kuwait has also sold more crude to the US so far this year than in 2013.

Overall, US crude oil imports hit a peak of 10.8m b/d in July 2005. Since then, they have fallen by roughly a third to hit 7.6m b/d in July as domestic production boomed.

The dramatic collapse in Nigerian crude oil exports to American refiners corroborates a warning a year ago by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, that shale was “one of the most serious threats for African [oil] producers”.
Nigeria has offset the impact of the drop in US sales lifting exports towards Asia, with India supplanting the US as Nigeria’s largest importer of her crude oil.

According to Platts, a specialised information service for the oil industry, Nigerian oil sales to Asia’s four largest oil importers – China, Japan, India and South Korea – have risen more than 40 per cent so far this year over the 2013 level.

Oil analysts believe that Africa-US oil trade could completely stop in the next two to three years as other leading exporters, including Angola, Libya and Algeria, suffer the same fate as Nigeria. If that materialises, Africa will have to find new customers for its oil, going head-to-head with Middle East producers in the key Asian market.

Analysts see the fate that has befallen Nigeria’s crude oil as a warning that the country must diversify its economic base if it must remain competitive on the global stage. As other major African oil producers and the Middle East search for alternative markets in Asia that consume less crude oil than the US, producers would be forced to sell at a discount to attract their custom.

Even more worrisome, said an analyst, is the fact that Nigeria would be mistaken by relying on Asian buyers, as the shale revolution has made almost every country in the world a potential oil producer. Added to this are several other African countries such as Ghana, Cote d’Ivoire, South Sudan, Equatorial Guinea, Ethiopia and Kenya, among many others, that have made commercial oil discoveries or are in the process of doing so.

What this portends is that some years down the line, the crude oil market would turn from a sellers’ market to a buyers’ market, as the likelihood of an oil glut forces prices down.

Nigeria has been complacent for too long. The time it should have acted on the diversification of its economy has probably passed the country by. It has failed to take advantage of its enormous gas resources by investing more in gas development for domestic use and new liquefied natural gas plants for export. The same could be said of other solid mineral resources, which largely remain untapped.

However, the reality of the US slamming the door firmly against Nigeria’s oil exports could be the wake-up call she needs. Nigeria, without doubt, has enormous natural and human resources that could still be tapped to stem her over-reliance on hydrocarbon exports.

However, Nigeria’s leaders would be mistaken it they think that advanced countries in the West and Asia got to where they are today by solely exporting raw natural resources that could be subjected to exogenous price movements over which they have control. It was through manufacturing, the services sectors, trade and tourism that sustainable diversification was achieved. That is the path Nigeria must follow, otherwise its future looks bleak.

B R E A K I N G: Microsoft unveils Windows 10 with Start Menu

MicrosoftMicrosoft has disclosed the first details of Windows 10 – its next operating system (OS).

The name is a surprise bearing in mind it represents a jump from the last version – Windows 8.

The software will run on a wide range of devices from smartphones and tablets to PCs and Xbox games consoles, with applications sold from a single store.

It also marks the return of the Start Menu, which had been removed from Windows 8.

In addition to offering a list of the user’s favourite applications, the menu also brings up resizable tiles – similar to those featured in Windows 8’s touch-centric interface – on PCs and tablets.

These provide a quick view of notifications from relevant applications, such as details of new emails, Facebook messages and weather forecast updates.

The company said the facility was intended to make the software seem familiar to both users of Windows 8 and Windows 7.

The behaviour of the OS will depend on the type of device it is being used on. Unlike its predecessor, users will not need to switch between Desktop Mode and the touch-focused alternative.

However, they can still spread a number of “live tiles” across the screens of two-in-one laptop-tablet hybrids to make them easier to use with both a mouse and finger presses.

Windows 8 had been criticised for being too different to the previous version, which deterred some organisations from introducing it.

It initially lacked a Start button altogether, and when one was introduced it only switched to the touch-centric tiled interface or – if a long mouse press was used – provided access to the system’s control panel and other functions.

Businesses typically wait about a year after a new operating system’s release before offering it to workers to give IT staff a chance to get to grips with the new technologies involved.

But it has been nearly two years since Windows 8 first went on sale and adoption is still low.

“It’s extremely important for Microsoft to get Windows 10 right,” said David Johnson, who covers Microsoft for the consultancy Forrester.

“Windows 8 is only being offered to employees by about one in five organisations right now. Windows 7 is still the de facto standard for enterprise in the desktop environment.

“For Microsoft to continue to be able to get the best and latest technology in the hands of the enterprise workforce all over the world, it has to have a vehicle to do that – and Windows 9 is its best shot.”

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