By Constance Meju
For Nigerians to get a better deal from being oil producing, the need for government to address good governance through applying transparency and accountability in the management of oil and gas resources while putting communities first has been stressed by civil society organizations.
They called for re-orientation among the citizenry for more interest in monitoring how proceeds from oil are being managed by state and local governments on their behalf, lamenting that there is much suffering in the country and underdevelopment because of governance failure.
The CSOs called on Niger Delta governors to develop a master plan for life beyond oil, and to put the BRACE Commission to action so more benefits and development can get to the Niger Delta region.
The calls were in response to a research presentation on “Oil and Gas Sector Management and Quality of Life in Nigeria” conducted by Adeola Adenikunju and Aderoju Oyefusi unveiled to them at Echelon Heights Hotel, Port Harcourt February 18, 2020.
The study stated that, “Natural resources can transform an economy and lift living standards of citizens if effectively managed”, noting, “depending on natural resource rent management, their presence in a country could be a blessing or a curse”.
Nigeria is among the top oil and gas resource countries but the impact of the trillions of dollars that the government has earned from the resource do not tally with the living standard of the citizens nor available services.
Minimum monthly wage in selected oil exporting countries pitch Nigeria at the bottom: In 2013 for example, minimum wage was $230.5 in Algeria, $797.9 in Bahrain, Ecuador $318, Equatorial Guinea $219.36, Iran $318, Nigeria about $50, Norway about $3,432, Saudi Arabia $800 and Oman $800.
Oil and gas resources have peculiar characteristics: they are depleting (exhaustible) resources, subject to price volatilities (up-and-down movements in prices), could have high negative environmental impact, are not usually evenly distributed across all regions of a society and require significant, long term capital investment and technical expertise.
Unfortunately, according to the findings of the study, Nigeria failed to recognize these and has not managed her oil and gas sector effectively.
The research identified key failures in the management of the oil and gas industry to arise from the absence of an effective saving/stabilisation fund, absence of wholesome and effective legislation governing the industry, lack of transparency and accountability, non-performing refineries, fuel subsidy.
Failure to attract Gas Based Investments (GBI), inadequate control of environmental impact of oil and gas, ineffective property rights, revenue sharing and failure to develop the Niger Delta, source of the resources were also identified as key failure factors.
According to the study, the continuous dominance of oil and gas in government revenue and foreign exchange earnings easily and heavily affect the government economy and ordinary Nigerians. The 2014-2016 oil crash brought severe effects on the economy and quality of life of Nigerians.
It noted that lack of recognition of any form of property right and fiscal jurisdiction of States and communities in the Niger Delta over Oil and Gas resources have negatively affected Nigeria’s Oil and Gas sector and its effect on the quality of life of Nigerians.
The impact of existing oil revenue sharing arrangement on development of the Niger Delta region impacts negatively and effective fiscal buffers in the form of saving and stabilization funds with guiding rules would have mitigated the effect of the 2014-16oil price crash on the economy and standard of living of Nigerians and direct cash transfer is becoming increasingly attractive as a more effective way of making citizens benefit from resource wealth.
On the effect of a long delay in passing the regulatory industry bill, it stated: “Delay in passage of PIB has led to significant disinvestment by oil majors. Nigeria’s President is currently “begging” other national oil companies to come and invest in Nigeria’s oil and gas sector. Early and wholesome passage of the Bill would have led to greater investment and better management of Nigeria’s oil and gas sector and huge resources lost to shady deals in the oil and gas sector could have made a difference in the lives of ordinary Nigerians”.
Effective domestic refining capacity could have saved the country FOREX earnings, created more jobs and led to diversification within the oil and gas sector and wasting gas resources through flaring in the face of low oil prices and dwindling oil revenue is not good home keeping. The cost of environmental damages caused by gas faring and regular oil spills are overwhelming and money spent on remediation such as the huge amount to be spent on the restoration of Ogoni land could have financed growth and development, the study further revealed.
Also, Nigeria loses more from a defective property right/fiscal jurisdiction and revenue sharing structure over mineral resources and from failure to develop the Niger Delta region than it gains. More effective arrangement would have prevented recurring civil conflict, led to stable and increased oil production, encouraged greater commercial exploitation of other mineral resources, led to more viable federating states and brought about greater cohesiveness.
The study found the fuel subsidy adopted to transfer benefits to citizens as unproductive and a conduit pipe for corruption and called for reforms.
“The use of fuel subsidy as a social transfer mechanism for citizens to benefit from Oil and Gas wealth has failed to realize the purpose. Fuel subsidy payments has promoted corruption and benefited a few at the expense of all, leading to greater inequality. Huge resources spent on subsidy over the years could have financed education, health, electricity and roads. Just a fraction going to individuals and households as cash transfers could have given millions hope. Iran, once in the same or even worse situation, undertook reform. Savings from subsidy were transformed to unconditional cash transfers to citizens thereby lifting millions out of poverty”.
It condemned lack of commitment to investment in gas infrastructure which could have reduced environmental abuses.
“Adequate commitment to investment in gas infrastructure would, have reduced gas flaring, secured greater revenue from gas resources and made it easier to give electricity to more households and businesses. This would have had multiplier effects on the economy and living standards of Nigerians”
And, called for a review of the country’s oil and gas policies.
“Oil price fall affects the economy negatively; all sectors of the domestic economy and all groups in society are affected: farmers, students, civil servants, government contractors, households, traders, big businesses, small and medium scale enterprises, and persons in the middle class of society, even politicians. This effect is pronounced because of the poor management of the oil and gas sector
“Nigeria must now develop effective plans to reshape her economy and exploit the linkages between the Oil and Gas sector and other sectors of the economy to achieve agricultural and industrial transformations.
“With its huge oil and gas reserves, abundant solid minerals, vast arable land and a large and youthful population, Nigeria certainly has the potentials to do better in terms of development than it is presently doing and to give her citizens a higher quality of life. But policies and methods of doing things will have to change”.
The research recommended a review of some policies proven to have added to Nigeria’s woes, stressing a “need to revisit some policy failures in the Oil and Gas sector that have proven to contribute to the country’s woes and the impoverishment of its people”.
It called for collective action to get things right. “This Study provides some direction. However, the exact position to be taken in respect of each of the factors identified will require deliberations by all stakeholders, including the citizens who are the actual owners of the nation’s oil and gas wealth”.
Welcoming participants earlier, Philip Kalio, executive director of the Support Initiative for Sustainable Development and Stakeholders said the study, funded by Forster should be used as an instrument by CSOs to engage government to engender sustainable development for the citizenry.
He urged the CSOs to disseminate and step down information gleaned from the presentation to generate awareness among the people and help policy advocacy with related organs of government.
“This presentation can help us bring about needed change as an accountability instrument, help us engage better with government to request for possible impact of oil revenue and sensitize the citizenry for collective accountability. The idea is to replicate dissemination of the impact of the study”.
The objective of the study was a comparative analysis of local and international oil sectors and creation of enough awareness among Nigerians to push for change where necessary, he added, pointing out that Nigeria has the lowest GDP among oil producing countries.
“If change starts with CSO, services will become transparent and sincere; it can work. There is need to effect change from within-need for CSOs to get into the system to help change processes. Help generate conversations, challenge the ears to hear, the hands to do something”, Kalio charged participants.
There were pledges by both media and CSO members to expand the reach of the findings and use it to engage policy makers for better dividend from Nigeria’s oil and gas wealth.