NNPC as hostage-taker and the ominous signs ahead, By Emmanuel Ado

Posted by News Express | 20 July 2018 | 4,193 times

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•Emmanuel Ado

The first step towards success is taken when you refuse to be a captive of the environment in which you first find yourself” - Mark Caine.

As it has become routine, the monthly meeting of the Federation Accounts and Allocation Committee (FAAC), where the federal, the 36 states, the Federal Capital Territory and the 774 local governments gather to share resources generated by the cash-cows - the Nigerian Customs Services, the Federal Inland Revenue Service and the Nigerian National Petroleum Corporation - ended in a deadlock, for the uptenth time, due to discrepancies in the revenue figures declared by the NNPC, a notorious bandit that has been severally indicted for stealing from the common purse. 

The crisis naturally reverberated throughout most of the 36 states, the Federal Capital Territory and the 744 local government councils, because with the exception of few states, such as Delta, Lagos, Rivers, Kano, Kaduna, Akwa Ibom, the federal government and the other states will always feel the impact of the atrocious acts of the NNPC, as they depend virtually on the revenue from the NNPC to pay salaries and perform some activities of government. At the last count, about 14 of the 36 states were yet to pay their workers June salaries. While the governments might borrow to pay salaries, they won't borrow to pay local contractors. This has grave implication for an economy that's battling to exit a self-induced recession. 

Naturally, the governors and “concerned" Nigerians have every reason to worry. But, typically because Nigeria is a country of the immediate, that lacks a long-term view of things, the worry is temporary. Once the NNPC, which understands the psychology of the governors, throws them some good money, it can comfortably revert to its above-the-law way of life until the governors are shortchanged again. But the scaring long-term implication of NNPC’s actions is that Nigeria would continue to wobble and fumble. The overwhelming evidence stares us in the face - in low-life expectancy, in infrastructural deficits, in infant and maternal mortality, etc. 

NNPC is notorious world-wide for its poor governance and its impact on the well-being of Nigerians. It has mastered the act of organised disorder that enables it cream off revenue for itself at the expense of the people. This is the cost Nigeria must continue to pay due to its dependence on oil and gas. The 2017 Resource Governance Index, by the Natural Resource Governance Institute, for instance, ranked Nigeria 55, in terms of transparent management of the sector, while Ghana ranked 13th. Even Burkina Faso performed better than Nigeria, because it was adjudged as being more transparent. Nigeria, to date, lacks an idea of what volume of oil it produces, because the metres are deliberately tempered with by corrupt NNPC officials, in collusion with the multinational oil companies. The same confusion persists in the importation of premium motor spirit, due to corruption. 

Nigeria has made and would continue to make so much noise about the need to diversify its economy, which is the smart thing to do. The Buhari administration, like the previous ones, came up with the Economy Recovery and Growth Plan (ERGP), to diversify the economy to reduce the dependence on crude oil, and to avert the dire consequences for Nigeria, because of its volatility. Key objectives of the Buhari plan includes ensuring food security, employment through agro - allied industries, and the conservation of scarce foreign exchange spent on importing food - from ríce to vegetable oil. This is an enlightened self-interest. But, unfortunately, we talk more than we act. Sad, time is not on our side and the pity is that Nigeria will pay dearly for her failure to make hay while the sun shone. 

India, one of Nigeria's major customers, has a robust programme of going green by 2030. By 2030, it would only allow the manufacturing of electric cars. "Not a single petrol or diesel car would be sold in the country after 13 years" vows the fiery Union Transport Minister Nitin Gadkari. To the average Nigerian, this might sound too ambitious, and unrealistic. But, for a serious country that's determined to reduce avoidable deaths from pollution and reduce its high import bill for crude oil, it is more than achievable. In 2015, India lost 9 million people to pollution-related deaths, three times more than AIDs, tuberculosis and malaria combined. The first step for India is the plan to disincentive petrol and diesel vehicles; and the other is the continued advances in battery technology that will force more automakers to make the move over, as the campaign against emissions continues to gather steam.

Toni Seba, a futurist and clean energy expert, predicts that electric vehicles would destroy the global oil industry in the next decade. That by 2030, 95 per cent of people won’t own private cars, which would wipe off the automobile industry; and that would surely be the death of crude oil as demand would definitely go down and invariably the price, he asserts.

According to Seba, the global oil demand will likely peak at 100 million barrels per day by 2020, dropping to 70 million barrels per day by 203O, with the price plummeting to $25 a barrel. With the second most populous country shunning crude oil, the end of crude oil is obviously in sight. The big question is: what will be the fate of Nigeria, or better still where will Nigeria be? 

The attack is from all fronts. For instance, Sweden has set for itself a target of 50 per cent more efficient energy use by 2030, and 100 per cent renewable energy production by 2040. And it is on target to meet its renewable energy target many years ahead of schedule, thanks in part to wind turbines. In 2012, Norway and Sweden had reached a joint agreement to increase their production of electricity from renewable energy sources by 28.4 terawatt hours (TWh) by 2020. It must be noted, that since 2010, the global installed capacity of renewable energy has continued to increase, with Asian countries leading.

The other warning that Nigeria is ignoring is the pressure multinational  oil and gas companies - Total, Mobil, etc. - are facing from shareholders to shift from fossil fuel investments to renewable and cleaner energy. Norway's  $1 trillion Sovereign Wealth Fund, for instance, is barred from investing in oil, gas and coal corporations. 

For the states, the way forward is not the infantile and predictable walk-outs, which the NNPC has become accustomed to, which hasn't changed the criminal behaviour of the corporation and would never change it. What are the options for the states? The states must "device measures to run on their own steam", as eloquently argued by Dele Sobowale. The obvious way out for the states is informed reforms - from rationalisation of public expenditure to sustainable debt management. In 2016, the states and the Federal Government signed off on the 22-point Fiscal Sustainability Plan, with the objective of enhancing fiscal prudence and transparency in public expenditure. The various state governments were expected to abide by the strategic objectives of the FSPs, built  around accountability and transparency, increase in public revenue, rationalisation of public expenditure, public financial management reforms, and sustainable debt management. The ultimate objective is to assist the states travel the narrow path that will lead to fiscal sustainability, but this is music in the ears of most of the states. 

Before the surgical reforms performed by Ifueko Omoigui - former chair of the Federal Inland Revenue Service - on the then Kaduna State Revenue Board, the board traditionally generated a paltry N600 million monthly. But the figure has been climbing steadily to over N2 billion a month. And this was achieved through effective collection of tax, as no new tax has been imposed. "In short, the new tax law reduced some tax rates. What we did was to simply improve efficiency in tax collection," said Muktar Ahmed, executive chairman of the Service

Going by the current trend, Kaduna State, which in 2017 generated N27 billion, should generate more than N35 billion in 2018, going by the impressive figures the Service released. That is a glaring and concrete evidence that the various initiatives put in place by Governor Nasir el- Rufai are working. Had the governor not embarked on the reforms when he did, Kaduna State would have been thoroughly messed up; were collections still at N600 million a month, it would have found it difficult to perform the most routine of functions - payment of salaries, pension and gratuity - nor be in any position to fund its capital expenditure. 

Unwittingly, the NNPC, by its actions, might force Nigeria, and most especially the 36 states and local governments, towards taking hard and very long over-due decisions. Nasir el-Rufai, on assumption of office didn't think twice about reducing the ministries from 24 to 14, the urgency of embarking on biometric capture of all civil servants and the establishment of an efficiency unit. Part of the reason why he is unpopular among the elite is that the decision to reduce the ministries wiped out10 commissionership positions. This is the way states must go, but have refused to. And so the NNPC will continue to hold them to ransom. But for how long will the states allow the NNPC to hold them to ransom? And for how long will the Federal Government continue to bail them out? Sooner than later, the day will come when there will be nothing to share, there will be no FAAC, and the states will have no one to walk out on. And the Minister of Finance Kemi Adeosun, would not complain of an “unacceptably low” revenue remitted by the NNPC for sharing. Neither will NNPC claim billions of naira in repairs and other ventures that enable it shortchange Nigeria and Nigerians. 

The states know it for a fact, that if they continue to wait for the hand-outs from the monthly federal allocation, that they won't be able to provide their people with dividends of democracy. So, why have they continued to wait in vain? Is it the lack of capacity to do the needful? Or lack of an awareness of the urgency that stares us as a people. The governors must call the bluff of the stealing NNPC, which by the way would soon be history, considering that the world is depending more and more on renewable energy and less on fossil fuels. 

Parting shot: The Nigerian Labour Congress, which is demanding an increment in the minimum wage, should study carefully the unfolding events. Are its demands realistic?

•Emmanuel Ado is a Kaduna-based journalist. He can be reached via mayad497@yahoo.com

Source: News Express

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