11 Mar

The week ahead – Following due process will save us from needless headaches

Economic activities across the country took a severe blow this week following a strike embarked upon by the Nigerian Labour Congress (NLC) and affiliate groups during which electricity installations and petroleum depots belonging to the Nigerian National Petroleum Corporation (NNPC) were shut down. The angry workers barricaded offices and facilities of the NNPC protesting the government’s plan to split the NNPC into several other business units. However, the Minister of State for Petroleum Resources, Ibe Kachikwu on Wednesday insisted that the NNPC has not been unbundled. According to him, the Corporation is only being reorganized.

Meanwhile, the power instability across the country may worsen following a partial system collapse that occurred on Tuesday, and the continuous drop in electricity generation due to what the government says is the vandalism of pipelines that supply gas to the power plants. As a result, power generation dropped to 1,580.6 megawatts on Wednesday. Data from the Nigeria Electricity System Operator as well as information from senior officials of the different electricity distribution companies confirmed that power generation plummeted massively on Tuesday and Wednesday. The officials noted that this resulted in the reduction of the electricity load allocated to the Discos, stressing that this was why many parts of the country had been recording blackouts in the past few days. A problem at the Shiroro Power Plant dragged down electricity generation to as low as 1,233.4MW from a peak of 3,207.7MW recorded on the same day.

During the week, at a joint press conference with South Africa’s president who was on a state visit to Nigeria, President Buhari said that the failure of MTN to disconnect millions of unregistered subscribers had contributed to the killing of thousands of Nigerians by Boko Haram. Responding to a question from a South African journalist, the President implied that it was for that reason that the Nigerian Communications Commission (NCC) fined the telecom operator $5.2 billion (N1.4 trillion). The fine has been reduced to N780 billion. President Buhari said it was unfortunate that the failure of MTN to comply with the directive had enabled the terrorists to use the network. President Buhari, then directed renegotiation of the fine, and MTN has offered to pay N300 billion.

The Federal Government has ordered the Economic and Financial Crimes Commission (EFCC) to investigate the operations of the Central Bank of Nigeria (CBN), banks, bureaux de change operators and some businessmen, among others, over the scarcity of foreign exchange and the weak naira. The Attorney General of the Federation (AGF) and Minister of Justice, Abubakar Malami SAN, also said that any operator found guilty to have contributed to the fallen naira will be prosecuted irrespective of who such a person or group of persons are. Malami noted that there is an urgent need to review the foreign exchange market from the perspective of the degree of compliance with extant laws and regulations. He also noted that the current state of naira is not as a result of neutral economic factors or directly related to demand and supply forces alone, but rather by carefully orchestrated criminal conspiracies and manipulation by unscrupulous elements hiding under the cloak of ‘so-called’ market forces.

In Lekki, at least 30 people died while 12 others were rescued alive from a collapsed building. Many are believed to be still trapped in the building, while rescue operations continued at the time of going to press. An eyewitness said that the building, which belonged to Lekki Gardens and was located at Ikate Elugushi by Chisco bus stop, Lekki, was at the roofing level, when it came down. Those affected were mainly workers, the security man, those who ran into the building for cover during the rains and a woman with a one-month-old baby, who came to clarify an issue with her husband working at the site.

In an attempt to curb the menace of oil theft in Nigeria, the FG has instituted civil suits against international oil companies operating in the country in a bid to recover over N2 trillion in alleged missing revenues from over 57 million barrels of crude oil shipments that were believed to have been declared or under-declared between 2011 and 2014. In the suits filed on the government’s behalf by a team of lawyers led by Prof. Fabian Ajogwu (SAN) against the oil giants, the government is asking the Federal High Court to direct the oil firms to pay into its account with the Central Bank of Nigeria (CBN), the sum of over $0.6 billion (comprising $51,033,180, $462,681,780, and $145,551) in the first instance, being the value of missing revenues accruable to the government of Nigeria from the shortfall/undeclared/under-declared crude oil shipments made by the defendants.

COUNSEL

  • It unfortunate that the Minister of State, Petroleum, did not carry his staff and oil industry stakeholders along in his plans to unbundle or restructure the NNPC. Had he done so, this needless strike would not have happened. It speaks to this administration’s tendency to dictate and not dialogue. We must point out though, that an unbundling of the NNPC is important, but it must be done properly. First, a Bill must be sent to the National Assembly to modify, or repeal the NNPC Act of 1977.
  • The power sector problem is really depressing, especially as there appear to be no visible efforts to resolve it. We have no kind words for the government’s inability to stop gas pipeline vandalism, and to ensure uninterrupted supply of gas, or ensure the protection of power infrastructure. We are beginning to lose hope that this government can rise to the challenge of power.
  • Nigeria appears to have allowed South Africa to stampede it into waiving or reducing the fines imposed on the telecoms giant, MTN. MTN’s laxity allowed not just Boko Haram, but other criminal elements to operate without hindrance and trace. This matter of a national security breach must not be frittered away on the altar of diplomacy. We continue to believe that the fine was in order to serve as a deterrence to people/organisations, not to take actions that are detrimental to national security, and that the only negotiation Nigeria should have entered was on a structured payment of the initial amount.
  • We think that the Federal Government’s directive to the EFCC may be a right step in the right direction, in order to probe those responsible for forex speculation. However, we must sound a note of caution that they should not to drag honest businessmen and investors through the mud. Doing that will risk creating further uncertainty within the economy.
  • Preliminary investigations into the Lekki Gardens building collapse have suggested that the tragedy was as a result of defective engineering works and substandard materials used by the builder. We urge the Lagos state government to initiate a comprehensive inquest, and punish anyone found to have taken negligent actions that led to loss of lives.
  • We urge the government to go beyond the civil suit and actually incorporate foolproof protection of the oil and gas industry. It is sad that Nigeria, after decades of oil business, does not have a viable oil and gas security infrastructure. We urge the government to empower NEITI to monitor and properly regulate the sector, and make use of cutting edge technologies in the protection of the sector.