There is
a sense in which the ongoing confrontations in the streets
of Abuja, Lagos, and other state capital cities in Nigeria
between security forces on the one hand and pro-subsidy
forces on the other could appropriately be characterized as
the battlefields of oil wars although they might not involve
the exchange of bombs and bullets. After all, the cold war
that lasted for decades between the east and the west did
not involve such ballistic exchanges, yet it was dubbed
“war” nevertheless.
So let’s
face it: Nigeria is currently in a state of war, what with
Boko Haram bombs going off every other hour in parts of the
North, this certainly is not cold but hot wars. Oil is an
inflammable substance and it comes as no surprise that it
has generated this highly inflammable and combustible
atmospherics in Nigeria. And the press is agog with reports
and viewpoints with everyone trying to win the propaganda
wars. Superficially, though it would appear that all that
needed to be said or written has been said or written on the
raging issue of the day--fuel subsidy. Presently, the
Nigerian and even foreign media are literarily floating on
the raft of fuel subsidy. However, much of what one reads in
the media are mere reactions with scant analytical stuff.
And quite curiously, if not suspiciously, all the talk is
about the temporary pains and not the permanent gains. It's
all about the hardships the removal would allegedly inflict
on the masses and never about the benefits, at least
potentially, derivable from the measure. Raw emotions are
ruling the waves leaving the substance unaddressed. Yet in
those same pains and hardships of today lay buried the seeds
of the blessings that cometh tomorrow.
As far as
this writer is concerned, therefore, emotions don't belong
to the issue at hand but somewhere else. Sure enough,
emotions and sentiments have their places in human affairs,
because after all, we are all emotional beings. It is even
more so for those, who rightly or wrongly, perceive
themselves of being unjustly robbed of their assumed social
entitlements as indicated in the fuel subsidy from their
government, never mind that the oil itself belongs only to
certain parts of the country and not to all parts of it.
However, it is the mark of the cultured individual to hold
emotions at bay when dealing with certain fundamental issues
such as the one at hand requiring rational, thoughtful, and
sensible consideration. Therefore, maintaining a rigid
position about subsidy retention no matter what, is to deny
the harsh realities on the ground with regards to the
nation’s unenviable economic and social conditions. When
purely economic decisions affecting the lives of nearly 200
million citizens and future generations are reduced to
emotional fireworks on populist stage platforms in the
streets of Abuja, Lagos, and other state capitals, the
nation is unmistakably and inexorably headed downhill and
our collective future thereby mortgaged.
Permit
me, therefore, to start this piece with a simple question:
Suppose Nigeria were to go back to the regional era where
the four regional governments were in complete control of
natural resources within their respective regions; with the
northern region in control of cotton and groundnut; the
mid-western region in control of rubber and timber; the
eastern region in control of palm oil; and the western
region in control of cocoa and, with the federal government
at the center in control of nothing: (1) which regions or
states would be in control of crude oil and gas in today's
Nigeria; (2) what would the federal government at the center
be controlling? The answer to the first question could be
found simply by identifying the oil and gas producing
regions or states in the federation and the identified
regions/states would be the ones in control of oil and gas.
These states are currently located in Ondo, Edo, Delta,
Bayelsa, Rivers, Akwa-Ibom, Imo and Cross River.
Collectively they are known as the oil and gas bearing
states. These are the states that would have been in
complete control of oil and gas in Nigeria today if the
nation was still operating the First Republican
constitution, which was in force till the first Major Nzeugo
military coup of January 15, 1966, which brought General
Aguiyi Ironsi to power. And the answer to the second
question is equally simple, too. The federal government
would be in control of no natural resources with the
exception of offshore oil and gas in our present situation,
as in fact, was the case in the First Republic before the
exigencies of the Nigerian civil war caused the Gowon regime
to radically alter the federal structure to
federal/states/local governments.
This, in
fact, happens to be the case in the equally federated United
States, where the states are in control of the resources
within their respective territorial jurisdictions with the
federal government only having authority and control over
offshore oil and gas, notably in the Gulf of Guinea.
Regulatory authority over these offshore resources in the
outer continental shelf are vested in the Mineral Management
Services (MMS) established in January 19, 1982, and later
renamed
Bureau of
Ocean Energy Management, Regulation, and Enforcement
(BOEMRE) on June 21, 2010. This was further reorganized on
October 1, 2011 into Bureau of Ocean Energy Management
(BOEM) and the Bureau of Safety and Environmental
Enforcement (BSEE). The United States is therefore an oil
producing nation just like Nigeria with a combination of
both onshore and offshore oil production. The only
difference is that it consumes more oil that it produces and
must, therefore import the shortfall from Nigeria and other
OPEC nations. Yet it imposes fuel tax on its citizens not
subsidy even though the United States is the wealthiest
nation on earth. Isn’t there are lesson to be learned from
the United States in that regard? I think there is.
Now, to
be in control does not necessarily mean that the states
"own" the resources but have the authority to legislate on
them. Ownership is a different issue altogether. So, if the
states were in control of natural resources within their
jurisdiction rather than the central government, in what way
or manner would the states mentioned above grant fuel
subsidy to all Nigerians at their own expense? Would the
states mentioned above have granted fuel subsidy to their
own indigenes much less to all Nigerians? The answer is
capital no. More to the point: Would the NLC and their
collaborators be in any position to compel the states
mentioned above to subsidize fuel consumption throughout the
nation or even internally within those states? Again the
answer is capital no. So, what gives the NLC and their
collaborators the right to compel the federal government to
provide fuel subsidy to all Nigerians? Where is the moral or
legal case on which such strange and unusual demand and
advocacy could legitimately be founded?
Some
might answer that it is because the federal government is in
control of oil and gas and indeed other minerals in the
states. That’s what gives the NLC the power to deal with the
federal government in that manner. But where is the legal or
moral basis for that, though? The federal government is in
control of so many other things including universities,
teaching hospitals, et al. Would the NLC compel the federal
government to subsidize education and healthcare if it
wasn’t already doing so? I doubt very much because it has
absolutely no standing for doing so. But if the federal
government is in control of state resources are the states
even now totally bereft of any entitlements to the resources
in their domains? The answer is no, because the states are
entitled to certain percentage of oil proceeds on the
principle of derivation, by law. Only offshore oil and gas
are wholly owned and controlled by the federal government
as indicated earlier, not onshore resources lying within
state domains, which the federal government can only exploit
on behalf of those states and distribute the proceeds
thereof in accordance with the provisions of existing laws.
Therefore, the oil and gas bearing states are proper and
legitimate parties to any arrangement affecting oil
proceeds, and by no stretch of the imagination is the
federal government to be conceived of as a sole
administrator of these resources unless we are prepared to
do violence to the laws and the constitution as well as the
federal principle, which dictate otherwise.
Is it not
the case then that when the federal government, which is
only acting as agent on behalf of these oil and gas bearing
states, is compelled by NLC and their collaborators to
provide fuel subsidy for all, they are in effect indirectly
asking these oil and gas bearing states to part with their
legitimate entitlements from oil? Is it not the case that it
is these states that are being asked to bear the brunt of
the oil subsidy though it is only the face of the federal
government that we see publicly? The answer is obviously in
the affirmative. It is the case then that the NLC and its
collaborators are compelling the federal government to
literarily seize parts of the proceeds accruing to these
states to fund oil subsidy for all Nigerians, not even their
own indigenes alone! This must be the case because the
states are part owners of the oil and gas in their domains
and indeed all the states too. In our present constitutional
arrangement oil and gas bearing states are entitled to at
least 17% of the proceeds thereof. That amounts to 17%
ownership rights in law.
The
almighty question then is this: Has the NLC sought the input
or position of these states in regard to its demands for
subsidy? If not, why not? Is it that the inputs of the
states do not count or matter, or that the states concerned
have delegated general authority to the federal government
to speak and act on their behalf with respect to the oil
subsidy issue? The answer to this question is important
because the last time I checked Nigeria is a federation
operating a federal rather than a unitary constitution. Has
the federal government the authority to speak and act on
behalf of these states or for that matter make any
concessions that have direct bearings on state entitlements
from oil and gas proceeds? It is not clear to me that such
authority exists under our constitution and the extant laws
governing federal/state relations.
If,
therefore, the federal government is compelled at gun point
to grant fuel subsidy at any point in time during its
negotiations with labor, it must do so within the strict
limits of its own allocations from the federation accounts
and no more, because it has no constitutional or legal
rights to commit federal revenues accruing to the states in
general to any federal program or projects by whatever name
called behind their backs without their express or implied
concurrence or approval. Only the state legislatures have
the constitutional rights to part with any portions of their
state revenues and not even state governors could do so
unilaterally on behalf of their states. This is the
constitutional requirement that must not be overlooked or
flouted with impunity. Whatever agreement that is reached in
Abuja between labor and the federal government would have no
effects whatsoever on the federation account unless and
until the states have endorsed it and their legislatures
have approved of it because oil revenue is owned jointly
between the states, federal ,and for that matter, local
governments.
This is a
position that has not yet been advanced in the media because
the federal government is perceived in Nigeria as the Alpha
and Omega with the states as mere appendages. But the
constitution and the laws recognize state rights, including
the rights to federal revenues, which the federal government
only holds on behalf of itself and the states. So it is not
just a matter for the Jonathan administration but for the
states as well. If the states want to give away their
entitlements as subsidy fine, but they should come out and
say so expressly and legally too, otherwise there can be no
deal with NLC by the federal government that is binding in
law. Am I making this up or this assertion has any legal and
constitutional backing at all? I will not answer this
directly. Let the constitution itself speak out the answer
as provided in section 162 thereof:
162.
(1) The Federation shall
maintain a special account to be called "the Federation
Account" into which shall be paid all revenues collected by
the Government of the Federation, except the proceeds from
the personal income tax of the personnel of the armed forces
of the Federation, the Nigeria Police Force, the Ministry or
department of government charged with responsibility for
Foreign Affairs and the residents of the Federal Capital
Territory, Abuja.
Note:
"the Federation Account" is not a federal government
account, but an account for the entire federation consisting
of the federal government, states and local government
councils. In other words, it is a joint account belonging to
all three tiers of government as indicated above. Proceeds
from oil and gas are paid into this account for distribution
to all tiers of government and this is specifically provided
for in subsection 3 of section 162 thus:
(3) Any amount standing to the
credit of the Federation Account shall be distributed among
the Federal and State Governments and the Local Government
Councils in each State on such terms and in such manner as
may be prescribed by the National Assembly.
Provisions for the observance of derivation principle in the
revenue sharing formula to be placed before the National
Assembly are also included.
It is
abundantly clear, therefore, that the federal government
cannot unilaterally give away any funds in the federation
account without the imprimatur of the states and local
governments. If, however, by some construction the states
and local government councils have delegated their authority
to the federal government to speak and act for them,
shouldn't we assume then that the federal government is
speaking and acting for them in dismantling the subsidy? And
shouldn't we take the fact that none of these states has
spoken against the measure even as both Senate and House of
Reps are playing politics on the matter, as their
acquiescence in and approval of the federal government
decision? Silence is certainly acquiescence more so as the
president had consulted them before taking the action. That
would be a reasonable assumption. Wouldn't it?
The fact
of the matter though is that Nigerian Governors' Forum (NGF)
had endorsed the measure as did the federal government. And
the Nigerian Employers' Consultative Assembly, (NECA), has
equally endorsed the measure. There is no reasonable
individual evaluating the so-called fuel subsidy that would
not ask for its disbandment. It is robbing not only the
federal government but the states and local governments of
much needed funds while achieving practically nothing of any
significance or value. There is absolutely not tangible
achievement attributable to fuel subsidy in its decades of
existence. It should come as no surprise, therefore, that
the federal government, the states and the local government
councils, would band together to dismantle this wasteful
infrastructure of corruption to be replaced with something
more productive, meaningful, enduring and, above all
sustainable.
Thus
while is the president alone is taking the heat it is a
decision jointly made by them and can only be reversed in
the same manner if at all. I cannot imagine any circumstance
in which they would do so for the simple reason that they
are the ones running the executive branch of government and
therefore know precisely where the shoes pinch rather than
lawmakers looking for sitting allowances and all kinds of
perks. They have nothing to worry about because no one is
holding them responsible for delivering the dividends of
democracy. The chief executives know better. In fact many of
them have been running to the capital market to raise funds
with interests when they can easily get more from the
federation account with the removal of subsidy. As a matter
of fact, one of them, the Benue State governor, has publicly
stated that his state stands to get N4bn more in federal
allocation monthly, which amounts to N48bn annually. That is
money that could be put to good use even if it is for just
salaries of civil servants with no repayment and no
interests. Were the state to go to the capital market to
raise that amount in would wind up in debt with huge
interests that would be borne by future generation. This is
one reason why fuel subsidy is a big curse rather than a
blessing. And this is why no state governor including
opposition governors of ACN is trashing the president for
removing the subsidy because they their states stand to
benefit from the extra revenues that could be used for
development rather than borrowing from the capital market or
taxing the citizens directly.
Now let's
take our binoculars and look a little farther into the
future of oil in the global market in the light of the rapid
development and deployment of renewable energy forms into
the market, and pose this simple question: What is the
future of Nigeria as a mono-cultural economy in the event
that crude oil no longer commands its current prestige and
pre-eminent position in the global basket of energy
resources? A nation that cannot plan for the future is as
good as dead in this acutely competitive world as every
single technology based company knows too well. There is a
reason all major economic powers are racing ahead to invest
massively in renewable energies such as bio-fuels,
photovoltaic cells, otherwise known as solar energy, wind
farms and the rest of them. The prospects of crude oil being
rendered redundant in the near future are starring us in the
face.
Nigeria
has been relying on oil for decades with very little to show
for it by way of social infrastructures. The reasons for
this pathetic picture are not at all farfetched. Apart from
corruption that gets all the bad press a third of oil
proceeds built in annual budgets is wasted on fuel subsidy
and personal emoluments of public officials consumes the
remainder leaving little left for real development. And
that's why the federal government cannot build and maintain
roads; it cannot build and maintain first class health and
educational institutions; it cannot recruit and fully equip
law enforcement agents; it cannot provide electricity and
portable water for its citizens; it cannot modernize the
nation's armed forces; and it cannot provide security
either, which is supposed to be its first order of duty.
Everywhere one looks one looks the quantity and quality of
Nigeria's social infrastructures are subpar with those in
less endowed countries around her. Yet Nigeria is way richer
than all of them combined but her riches are being frittered
away on wasteful programs like fuel subsidy. This has got to
stop and stop now! Temporary pain is no reason not to stop
the subsidy. But the irony of it all is that those fighting
for fuel subsidy today are the very people who mock the
nation for its failure to develop, totally oblivious to the
fact that fuel subsidy is taking away huge chunk of
development funds from the nation. The
bottom line is this: If Nigeria cannot wisely and
judiciously utilize the proceeds from its crude exports to
develop other sectors of the economy now while the sun is
still shinning she will meet a certain death in the
not-too-distant future when the glory of crude oil fades
away due to new energy forms popping up in commercial
quantity across the global market. This is the time,
therefore, for the government to think outside the box and
do what is needed to avert future catastrophe of historical
proportions. I don't see how Nigeria can survive without oil
if the other non-oil sectors remain undeveloped as they are
today. This is the strategic choice for the Nigerian
government. It's beyond subsidy. It's about the future of
the nation.
Should
the Jonathan administration bow to subsidy pressure it would
not only show the president himself as a weak leader not
worthy of followership for going against his own conviction
and policy choice, but more importantly the nation would be
winning the present only to lose the future. Granting
labor's desire would, of course, earn him immediate applause
and adulation and a dose of popularity too. But that would
not in any way, shape, or form help him to deliver real
development for the nation and leave behind a solid legacy
worthy of mention. It would be a whole lot better for the
president to lose the present and win the future. That means
stiffening the spine of his administration and standing up
to labor with the unpopularity and name-calling that goes
with; in other words, losing the present. But he should be
rest assured that doing so will enable him win the future;
in fact, it is the only way short of imposing crushing taxes
on Nigerians to raise development funds, which would meet
with even greater resistance.
It would
be a sad thing indeed for the Jonathan administration to
come this far only for it to capitulate to un-elected
leadership of NLC that is pursuing a contrarian agenda that
would leave the nation perpetually underdeveloped. President
Jonathan has an historical duty to resist them with all the
powers at his disposal as the states and employers are
solidly behind him, and march forward with his wholesome
agenda. After all, he is the one elected into power by
Nigerians and the one that would be held responsible for the
failure of his government to deliver development to
Nigerians, not NLC. I don't know about you, or the federal
government itself, for that matter, but that is not my wish
for this administration. I want it to succeed where others
failed. And that would require every resource and every kobo
it can get, not giveaways. In times like these the
presidency must stay strong and focused trusting in the
wisdom of its judgment to ride out the tempest. I don’t see
Mr. President going back to the status quo ante because that
would only mean that he was wrong to begin with and put us
through this crisis without first thinking it through. But
if he does this administration is as good as dead and no one
would believe in it anymore.
Franklin
Otorofani is an attorney and public affairs analyst
Contact:
mudiagaone@yahoo.com
PS: This
piece was written before the protests were called off on
01/16/2012
Published
January 17th, 2012
