07 Jul

The week ahead – Doing new things

There was some mild political theatre on the floor of the Senate at the resumption of a three-week recess on July 4, when a point of order was raised, that Senate President, Bukola Saraki was Nigeria’s effective Acting President. Lawmakers in the upper house had received a letter from Acting President, Yemi Osinbajo, seeking the confirmation of Lanre Gbajabiamila, as the Director General of the National Lottery Regulatory Commission. Legislators were furious about the letter owing to the fact that Osinbajo had earlier in the month reportedly said the Senate had no power to confirm nominees – an act which the Senate’s says would make them suspend confirmation of nominees until issues relating to its power to confirm executive nominees are clarified. Senator Eyinanya Abaribe (PDP, Abia South) then raised a motion stating that the country had no President or Acting President at the moment as President Muhammadu Buhari and Osinbajo were not in the country at the time.

The leader of Nigeria’s lower house of parliament, Yakubu Dogara says it is worrisome that the country’s military essentially functions as its police force, calling the current situation, akin to a permanent state of emergency. Dogara, who addressed a session on security organised by the House of Representatives in collaboration with Policy and Legal Advocacy Centre (PLAC) on July 3, cited Section 217 of the Constitution which spells out the functions of the military, to buttress that the army was no longer aiding civil authorities “but has become the civil authority itself.” Section 217 lists the responsibilities of the armed forces to include: defending Nigeria from external aggression, maintaining Nigeria’s territorial integrity and securing [the] borders from violation from land, sea or air.

The FEC has approved a national gas policy that aims to reduce the country’s dependence on crude oil by increasing gas exploration and facilities. The policy was passed in last week’s cabinet session but only made public on July 5. Nigeria has the world’s ninth largest proven gas reserves, at 187 trillion cubic feet. A move to using gas could reduce the drain on foreign exchange that importing refined oil products requires. If coupled with infrastructure investment, Nigeria could also improve its creaking power grid. The 100-page National Gas Policy seeks to set up a single independent petroleum regulator. It also aims to separate upstream from midstream operations and to separate gas infrastructure ownership and operations from gas trading, the oil ministry said. The policy will also divide the Nigeria Gas Company into separate transport and gas marketing companies and introduce “market-led wholesale gas pricing” after a transitional period.

The CBN and the NCC have intervened to save Nigeria’s fourth largest telecoms firm from collapse after talks with local banks to renegotiate a $1.2 billion failed loan. The NCC said Etisalat Nigeria and its creditors have reached a resolution on key issues on the indebtedness and that a transition process was continuing on mutually agreed terms. It said the resolution would ensure that Etisalat Nigeria was maintained as a going concern regardless of changes in the company’s shareholders. As a result, the company has appointed the central bank’s deputy governor Joseph Nnanna as chairman, Boye Olusanya as chief executive and Funke Ighodaro as chief financial officer. This information was told to Reuters by Etisalat Nigeria’s vice president for regulatory affairs, Ibrahim Dikko.. Chief Executive Matthew Wilsher resigned after Chairman Hakeem Belo-Osagie departed, July 3. An unnamed NCC source says the new interim board made up of six members will operate for six months and will include a member representing the shareholders.

Suggestions

  • The drama in the Senate this week is more than idle political theatrics. The country’s lawmakers have been in a dramatic tussle with the Executive arm over appointments, one that may have important legal and policy consequences. Until now, it has been taken for granted that lawmakers legally possess the power to confirm the President’s nominees. That is, until Ibrahim Magu. Magu, acting head of the Economic and Financial Crimes Commission since 2015, has been rejected twice in Senate confirmation hearings for failing an ‘integrity test’ but, Aso Rock has mysteriously, committed to sticking with him. The Presidency’s contention clearly flies in the face of the well- established separation of powers doctrine- a cornerstone of all democracies; and may require a Supreme Court pronouncement. On the policy front, the Executive’s habit of refusing to make small political concessions in order to be able to drive its wider agenda, may hinder its ability to govern effectively if opposed by the National Assembly.
  • The deployment of the military across the country for internal security operations is as a result of the failure of national security, and the broken nature of the Nigerian Police. Eleven months ago, we focused on this. The situation has only marginally improved, because of the FG’s interest in raising oil output from the Niger Delta. To address this in the interim, we believe that neighbourhood watch kind of security outfits should be encouraged and trained. The big risk with them is the tendency to commit jungle justice but training and well enforced consequence management, will take care of these consequences. In the medium to long term, these, and a decentralised Nigerian Police Force should be merged. Only a system of community policing can guarantee local order, prevent crime and maintain the peace. This was one of the APC’s campaign promises and we urge them to expedite action on it to bring the nation back from the precipice.
  • We believe that the frameworks for upstream, midstream and downstream sectors are mostly good. However, the success of the gas plan is very dependent on implementing pricing reforms. The government needs to let go of price controls or else the sector will continue to be stunted. Another fear we have is a repeat of the country’s experience with crude oil. Currently, all of Nigeria’s gas supply is from the Niger Delta. There are other identified potential gas reserves in Anambra, the Benue trough, and the Gongola basin. Hopefully, we will not have another concentration risk like the crude oil and the Niger Delta. Finally, a model where the government pays contractors to liquefy and market the gas is dead on arrival.. No one is going to build a massive liquefaction facility and wait for the FG to pay them as a contractor. When the gas reaches the LNG facility, ownership has to be transferred to the LNG facility. Government should be interested in regulating and taxing profits of companies involved, not ownership of the resource itself. These are issues that need sorting before the new policy really takes off.
  • Etisalat Nigeria is the biggest foreign-owned victim of dollar shortages which have plagued the country due to low oil prices, a recession and short-sighted economic policy. The CBN is said to have provided assurances to lenders but have not invested any funds. Questions remain over the legality of a CBN Deputy Governor sitting on the interim board and the ties of key management personnel with Aliko Dangote, a potential precursor in yet another sector by Africa’s richest man but Etisalat may prove to be the poster child of the clear and present dangers of doing business in Nigeria. We urge all those concerned to provide clear answers to these concerns, especially for the foreign investor audience who will be keenly interested in the outcome.