12 May

The week ahead – A pipeline of hope increases expectations

The National Assembly signed off on a record ₦7.44 trillion budget for 2017 on Thursday. The budget is based on an assumed oil price this year of $44.5 a barrel, while global benchmark Brent crude is currently trading above $50. The plan also entails foreign borrowing of ₦175.9 billion and domestic borrowing of ₦1.488 trillion. Both chambers of parliament agreed to a bigger budget than the ₦7.298 trillion draft submitted by President Muhammadu Buhari in December. The plan includes ₦1.84 trillion to service loans and projects a deficit of ₦2.21 trillion, implying a deficit equivalent to 2.18 percent of GDP.

Shell is testing Nigeria’s Trans Forcados crude export pipeline for a potential restart with the Astro Perseus tanker expected to load the first cargo by the weekend, Reuters reports quoting sources. The pipeline has been mostly shut since it was bombed by militants in February 2016. After repairs, exports briefly resumed in October until a new attack forced another shutdown in early November. A spokeswoman for Shell declined to comment. Before the attacks, the Forcados stream accounted for 200,000 – 240,000 barrels per day (bpd). No loading programme is expected to be issued until the pipeline is fully tested.

The Senate, on Wednesday, began the screening of the 27 persons nominated by President Muhammadu Buhari as Resident Election Commissioners of the Independent National Electoral Commission. Eight of the nominees were screened on Wednesday while the exercise continues Thursday. The screening came seven weeks after the lawmakers suspended the consideration of the nominations in protest. The Senate had on March 28, 2017, suspended the consideration for two weeks to protest the retention of Mr. Ibrahim Magu as Acting Chairman of the Economic and Financial Crimes Commission despite the rejection of his appointment by the legislature. The ultimatum had expired on April 11, 2017, but the matter was not raised in the Senate chamber until May 2, 2017, when the lawmakers considered Buhari’s request for legislative approval on the nominations.

At least six Nigerian soldiers have been killed in a new military campaign against militants in the Niger Delta, security officials said on May 5. The southern swampland has been largely quiet since the start of the year because militants halted attacks against oil pipelines to give the government a chance to conduct peace talks. But in a new confrontation, army and security forces moved on Sunday into the Ajakpa community in Ondo state, to hunt down militants involved in oil theft and kidnapping. Apart from the soldiers, the leader of a gang operating in the Delta was killed, say military officials at a Yenagoa news conference. But the Ijaw Youth Council, representing the biggest ethnic group in the region, said the army had laid siege to the community and harmed civilians. The military rejected the allegations as propaganda.

A group of 82 girls held captive for three years by Islamist militants met Nigerian President Muhammadu Buhari in the capital Abuja on Sunday a day after they were released in exchange for several militant commanders, officials said. The girls were among a group of 270 schoolgirls kidnapped in April 2014 by the militant group Boko Haram, which has waged an eight-year-old insurgency to create an Islamist caliphate, killing thousands and forcing more than two million from their homes. The government secured the release with mediation by the International Committee of the Red Cross. A military source said three Boko Haram commanders had been freed in an exchange, but declined to give further details.

Suggestions

  • We are glad that the budget has finally been passed, bar any dramatics from the executive. However, when we look at budget performance for 2016, we see that it is not yet uhuru. Monitoring the 2017 budget performance is crucial. We have to ask, what systemic measures have been put in place to ensure the budget passes earlier in 2018? We believe this is a learning point we cannot afford to miss.
  • The current state of the Nigerian economy has confirmed what has always been known – its destiny is tied to the price and volume of oil it pumps. Nigeria desperately needs exports to resume from Forcados. The initial attempt to fix the line was truncated by the November bombings and the government will need to do all within its power to engage the militants to forestall such an occurrence. We believe the increase in the Amnesty budget is precisely for this reason and if utilized well, it will achieve the purpose in the short term. Oil prices have now settled around $40 per barrel, while production has settled around 2 million barrels per day. Addition of 200,000 barrels from the Forcados pipeline will indeed be most welcome. In the long term however, the fundamental issues in the Niger Delta must be addressed and it will require a rethinking of the whole Nigerian project.
  • Our reaction to the killings of six soldiers is as follows – we believe that the Niger Delta crisis will continue until there is a sense of justice and equality given to the people of that region and their environment. The Amnesty Programme has not proven to be successful in bringing about the Peace and may remain so, until the Federal Government approaches the region with a comprehensive offer that recognises community rights to property and minerals.
  • The screening exercise by the Senate is instructive for two reasons – it marks the commencement of a crucial and belated step on the road to a crucial and potentially fractious election season in 2019. It may also signal an up-tick in relations between the executive and the legislature which have soured significantly since the second half of last year and has stymied a significant chunk of government business, including an ambitious reform agenda and the approval of the year’s budget.
  • It is necessary for the FG to deploy all elements of national power to resolve the Northeast crisis, including the rescue of the remaining Chibok girls and other thousands of captives held hostage by Boko Haram. The military has done well in stabilising the region, but the far North of Borno state continue to be contested territory and a place where the insurgents stage attacks from. It is important, as we have pointed out in the past, for an evolution in strategy, in order to win the war, and the peace.