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Disputed oil wells: Nigeria may lose territorial waters – Reps P\8

Nigerian Content Act:

Strengths, weaknesses

P\10 President Goodluck Jonathan

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AUGUST, 2012

Derivation fund and development issues in oil communities

Abia calls for fresh boundary delineation Pipeline vandalism impacts on states revenue allocation State deploys 30% of derivation to oil communities development

92 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12

Nigeria may export 70 oil cargoes next month

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HERE were indications that Nigeria could export about 70 cargoes of crude oil in September, down from 77 cargoes in August, representing a sharp decrease in daily crude exports. According to shipping schedules, the country will export 70 cargoes totaling 64.1 million barrels, or 2.14 million barrels a day, the least loading schedule since March 2012.

Disputed oil wells: Nigeria may lose territorial waters – Reps 8


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Contents 4 8 12 16 18 19 30 34 37 38 40 42 44

COVER

Derivation fund and development issues in oil communities

OIL Disputed oil wells: Nigeria may lose territorial waters

FOCUS

Our problem in Abia is poor funding—ASOPADEC Chairman

GAS

Nigeria can save $1.25bn from LPG

FINANCE

Fuel subsidy scandal and NEITI audit report

FEEDBACK

The trouble with onshore/offshore dichotomy

POWER

Electricity privatisation: Companies hopeful of winning multiple bids

SOLID MINERAL

Fidelity Bank to fund mining projects

TECHNOLOGY Wind Energy Technology basics

INSURANCE

Insurers target 100% oil, gas participation

LABOUR

Our expectations from new PIB—PENGASAN

FRIEGHT

Local Content: LADOL freight wins N2.5bn rig deal

COMMUNITY

Work resumes on abandoned roads

Sweetcrude is a publication of Vanguard Media Limited

THE TEAM Ag. EDITOR Clara Nwachukwu CORRESPONDENTS Victor AHIUMA-YOUNG Godwin ORITSE Yemie ADEOYE Jimitota ONOYUME Samuel OYANDOGHA Oscarline Onwuemenyi Emma Arubi Rosemary ONUOHA MANAGER, MARKETING Ubong NELSON PAGE LAYOUT/DESIGN

Francis AYO & Johnbull OMOREGBEE

Printed and Published by Vanguard Media Limited. Vanguard Avenue, Kirikiri Canal, P.M.B. 1007, Apapa.

Enquiries Call: 08098051103 WEB:

www.vanguardngr.com www.sweetcrudereports.com All correspondence: P.M.B 1007, Apapa, Lagos.

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rom this edition, Sw eetcrude begins a series on the 13 percent De rivation Fund throu gh which additional hundreds of billions of Naira accrue to nine states from the Federation Account. The series is with a view to determini ng what State Governments that b enefit from the fund do with the fund with regard to dou sing tension in the restive oil communities in Nig eria. Accordingly, this edit ion takes off with Ab ia State, one of the few states tha t have a development commission to deal with agitation s and development issues in the oil communities. The State Governor , Chief Theodore Orj i, in our focus seg me nt exp re s sed con ce rn ove r t h e co n tin u e d marginalisation of Ab ia in revenue alloca tions on account of losing many of it s oil wells which he sai d should have belonged to the stat e. The Chairman of AS OPADEC, Mr.Samu el Nwogu, on his part explained that Abia allots 30% of its derivation fund for development purposes in the oil com munities. In the wider energy industry, a lot of dev elopments had taken place in the va rious sub-sects. The Petroleum Ind ustry Bill was rece ntly sent to the National Assembly , even as some PIB Technical Committee member s noted that there w ere significant changes in what the y submitted and wh a t wa s sent to the legislators. In the power sector, Canada’s Manitoba recently took over management control of the Tran smission Company of Nigeria, while the Bureau of Public E ntreprises, last week published a list of 25 bidders for th e 11 distribution companies unbund led from the Power Holding Company of Nigeria. In keeping with our tradition, we also bring you developments in the gas, solid min erals, labour, insurance, maritime and communities.


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Cover Story

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Derivation fund and development issues in oil communities

Abia calls for fresh boundary delineation Pipeline vandalism impacts on states revenue allocation State deploys 30% of derivation to oil communities development

Clara NWACHUKWU

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he introduction of the 13 percent Derivation Fund in 1999 for oil and gas producing states in Nigeria has continued to generate issues both for and against the policy. Indeed, differences on the issue a couple of days ago pitched the northern region coalition, the Arewa National Congress, ANC, against their South South peers, Ijaw Youth Congress,IYC, with both parties throwing mud at each other. The furore continues to rise despite Federal Government’s declaration through the Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, that every natural resource rich state in the federation is equally entitled to the same amount of derivation to douse tension in the polity. Beginning with this edition, Sweetcrude in its series on the 13 percent derivation tries to x-ray, the issues surrounding the controversial derivation, and in particular, how the beneficiary state governments are utilising these addition funds to enhance the standard of living in the oil producing communities in their respective states. Hydrocarbon derivation Experts describe the use of derivation as “a criterion for revenue allocation is associated

with changes in the social state of welfare that results from production activities and the compensation of losers by gainers in production activities. As production takes place in any society, value is created for some members of the society while some members suffer losses due to externalities.” Accordingly, nine states in the federation, including Abia, Akwa Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo, and Rivers were originally

legally recognised to benefit from the derivation fund. However, it is uncertain under what circumstances Sokoto and Ona/Asaboro, were included in the 13% derivation, as revealed in the revenue allocation for the sharing of over N990.266million in February and March 2012, respectively. The funds were derived from the Nigerian National Petroleum Corporation, NNPC’s 6th and 7th tranche refund which were withheld from the Federation

Abia State experience It was difficult to access current statistics on how much each of the states receive every monthly, as electronic search on the Federal Ministry of Finance, www.fmf.gov.ng; and its subsidiary, Office of the Accountant General of the Federation, www.oagf.gov.ng official websites could not offer much help, despite assurances given by their officials.

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ut past statistics from the Finance Ministry, Distribution of Revenue Allocation to FGN by Federation Account Allocation Committee, FAAC, showed that Abia

State received the sum of about N444.56million in January 2011, and N343.61million in the same corresponding period of 2010. The amount accruable had since dropped significantly, due to restiveness and insecurity in the host communities, which are compounded by crude oil theft and pipeline vandalism. In spite of these menace, the Abia State Governor, Chief Theodore Orji (Ochendo), told Sweetcrude that if revenue allocations were done equitably and based on crude production, the state will have more funds at its disposal to execute development projects to boost community and state economies. Oil Commission Against this background, the Abia State Government through an Act of Parliament instituted the Abia State Oil Producing Areas Commission, ASOPDEC, to tackle these issues by deploying at least 30 percent of the 13 percent derivation fund accruable to it for development projects in the host communities. The ASOPADEC Chairman, Mr Samuel Nwogu, explained that, “The primary objective of the commission is to alleviate the suffering of the oil producing communities and Abia State in general. Oil was found in Abia State in commercial quantity in 1958 in Owaza community in Onikwa LGA of the state. He revealed that since the inception of oil exploration in the state, and the derivation fund in 1999, only the administration of Governor Theodor Orji, dimmed it fit to provide this umbrella to support and alleviate poverty in the oil communities. “The Commission derives its funding from the 13 per cent derivation. If Abia State gets 13 per cent, the law permits the state

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Derivation fund and development issues in oil communities

Oil spillage

CONTINUED FROM PAGE 4 government to give ASOPADEC 30 per cent of the derivation fund. So it is with this 30 per cent from the derivation fund that the Commission did all we have achieved since 2010. From inception, the governor directed the Ministry of Finance to release our funds as at when due because it is statutory,” he added. Initial challenges Nwogu revealed that the Commission was faced with a number of teething challenges, associated with start up in view of the crisis in the state at the time of its inauguration in 2010. He said, “As at 2010 when we came on board, Abia was in crisis, associated with kidnapping, and it was predominantly in the oil producing areas and we were challenged on how to start. The Governor called us and asked us what we planned to do because no one could go near those areas. However, but we thank God for the intervention of the military. “We made use of 11 Opara Avenue Government House Umuahia. After renting the office, we furnished it to taste as you can see today. We also faced the challenge of purchasing our official cars; we bought nine Toyota Camry cars, two Hilux and one bus. We also purchased a 100KVA generator, and then we were good to go.” Wealth distribution Just as the state allocates 30 percent of the fund to the Commission, the ASOPADEC boss disclosed that management also devised a formula for redistributing the welth. He said, “Note also that the law permits us to give 60 per cent from the 30 per cent that is given to us to the oil

producing local government which in Abia is only Ukwa West. That is why if you go to that area you have more of what we are doing than what we are doing in other areas. “We also have what we call 10 per cent pipeline. The communities that have pipelines running through their areas like fuel pipelines that go to the north, those pipeline communities are part of it. “We also have what we call Equality share. Because it is a state law, for it to go through the House of Assembly, members insisted we must carry them along; so we have 20 per cent for Equality for all the local governments, and that is why you can see our projects in all the local governments in Abia State. “There is also have another 10 per cent for “NICOIL Oil” and in this area we look at Ugwunagbo Ukwa West and Ugunagbo Ukwa East. Development projects To start off, Nwogu said, “We came up with an idea after we carried out a survey in the areas and found out that almost all the school buildings in the oil producing areas were highly dilapidated. We decided to embark on schools renovation. But because we could not send any contractor to that area due to the kidnappings, as the money we will use to do the renovation will be used to bail the persons, we adopted a direct labour approach, under the Community Development Committees, which we constituted in those communities. So what we did was use those boys to start up the projects.” Education We started by renovating 55 schools, and between that time and now, we have embarked of 72 school renovation projects in Abia State in

We also have what we call Equality share. Because it is a state law, for it to go through the House of Assembly, members insisted we must carry them along; so we have 20 per cent for Equality for all the local governments, and that is why you can see our projects in all the local governments in Abia State general. About 41 of these have been completed, and the rest 31 are still ongoing and almost 70 per cent completed. While we were doing this, the kidnapping issue was seriously on and there was a high level of poverty where people could not feed, and we came out w i t h t h e A S O PA D E C Yo u t h s Empowerment Artisanship Programme Scheme. Our target was the down trodden indigenes, those who could not afford to feed themselves, because during that period, people were not going to their farms, all farms were abandoned for years; and there was no food anywhere. This Programme was taking from us almost N25million every month, and it lasted from September 2010 till last year October. The people were paid this amount, and they were selected from various communities, but Ukuwa West was getting almost N15million. The people were selected by commissioners because every commissioner knows his people and when they were selected; their names were submitted to the Welfare

Department along with their passport photographs, before identity cards were made for them. These monies were paid into various bank accounts and at the end of the month, members of the communities will go with their IDs which will be verified by the banks, to withdraw various sums that were approved - N10,000, N20,000 to help them in feeding. We had to stop it because we could no longer fund it anymore due to low funding from the Derivation Fund. What was coming to us was not coming anymore because our people were now vandalizing the pipelines and as a result, our crude oil was not received at the terminals. From December last year, we could hardly pay salaries due to oil bunkering. Kidnapping was stopped, and the people went into bunkering. Water When we could not afford to pay the monthly N25million, we looked for another project to replace it with, and we went into construction of water boreholes. We received letters

from oil producing communities that they don’t have water and their aquatic life were highly destroyed because of oil pollutions. And In Owaza, which is the biggest oil producing community we sunk some boreholes. In Abia State, we have what is called Motorised Choke Solar system. Our aim is to put generator and also put solar panel. Since the people look at the generator as government property, nobody cares to look after them but with the solar panel, the power automatically pumps water for the people. We did four in Owaza communities, we are d o i n g t h r e e i n U k w a We s t community, three in Ukwa East and each one is 100,000 gallons. We did one at Ikem-Ubosi in Isiala Ngwa South; we also did one at Centercus Secondary School in Umuahia North. In the schools that we are renovating, we intend to provide water and toilets so that the students don’t go into the bush to ease them and get beaten by dangerous animals. But because of funds, we have not been able to provide these things but we will start doing it in schools like Central School in Olokoro, Umuahia South, we have one there now. In Umuowa Alaocha Central School in Umuahia North, we also have one there. Environment We have also been able to provide drainages. We have a problem, there is a place called Ukuwado in Aba Jos Road, the road has not been used for over 20 years now, but we have intervened. Because the road is a flooded area, we carried out a survey and discovered that we cannot channel the flood to anywhere, so we were advised to drill wells; we drilled 30 boreholes of 13 inches. We bought a plot of land there and did the well, we have commenced work there, which is ongoing but the governor has commissioned it that is the only road that leads to the Ariaria Market. We also reconstructed Our Lady of Love East by Aba Road about 500 meters and it has been handed over to the governor for commissioning. We rehabilitated the Amieke water project, they came here to inform us that they don’t have drinking water and they share water source with cattles, which led to an outbreak of cholera that took the lives of about 13 persons. We helped them to rehabilitate the only water pump they have in their village and it has touched a lot of lives and they cherished it a lot. Traditional institutions The traditional rulers in Unukuwa West requested His Excellence to buy them cars which is their entitlement, coming from that local government so that they can look like other traditional rulers in the oil producing local governments of other states. Because it falls on our budget to do that, the governor directed that

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distributed 100,000 exercise books with bags and pencils and other writing material to almost all the schools in Abia State, (350 schools). We organised quiz competition for Science schools in Abia State, the fisrt prize winner was given a Hummer bus which was Government College Umuahia, the second prize winner was given N2million that is Aba Girls Seconday School, the third prize N1million went to All Secondary School, and they will use it to equip their labs. The N2million was given to them to equip their school libraries. We were directed by the governor to build two six classroom blocks in Ezebubele Primary School to enable Asa High school to move to that place. We are also building two six classroom blocks at Igiruki autonomous community.

Oil spillage

Derivation fund and development issues in oil communities CONTINUED FROM PAGE 5 we provide them with cars. As at present we have provided them with about 20 sport utility vehicles, SUVs, that is traditional rulers in Unukuwa West, we are still buying another 28 vehicles, and we have been directed to buy for Unukuwa East that is oil producing community. And we provided four buses for the traditional rulers in Abia South, Abia North and Abia Central and one other bus for the traditional ruler that we call Unguwa Supreme Council of Traditional Rulers. We also had a request from the Abia State University, to provide them with generating sets. We got approval for their request and we installed a 1000KVA Caterpillar generator. I spoke about East by Unguwa Road it is 500 meters, it is in Aba South local government area and it has been commissioned by the governor.

areas and it is our duty to ensure that they have motorable roads by grading the road. So in 2010 November/December, we built about 100 roads in all the local governments of Abia State, and last year December we graded about 50 roads. But from November last year the allocations went down and we had no option than to manage ourselves. Then we did one major intervention on Port Harcourt/Enugu Express Road, we paid a courtesy visit to NEMA office here in Abia State, and we informed them that the road is totally bad and we pleaded with them to help us fix the road but they said they don’t have money. At that point we sought the approval of His Excellence and we used between N15billion and N20billion to buy mixed materials to fill the road from Nntiga junction which is in Isiala Ngwa to Aba Road.

Roads Rehabilitation We have also rehabilitated Umoge Road, church and Mosque in Michael Road and Oceanic Bank junction. All these are in Aba including Park Road by Saint Michael Road, old cored by DanFodio to Unguwa Road Aba, Kent Road, from Cameroon junction through Eyin Road to School Road Aba. Old cored Road by Eyin Junction Aba, Unguwa road by Ohakuru Road Aba, Fox Road by Airline to the Express road is 1.2 km. You know Abia State is made up of 17 local governments; we only have two towns here which are Aba and Umuahia. Others are in the rural

Electricity provision The Commission ensured that the Owaza communities have electricity supply. They were not connected to the national grid but they had power supply from Shell generating set. They beckoned on the Commission to hook them to the national grid and we did that by providing them with high tension poles and as we speak, Owaza community is on the national grid. Because they are the highest oil producing communities, we want to ensure that they don’t suffer much, we decided to be paying N200,000 monthly bill for their power consumption because they don’t

We were directed by the governor to build two six classroom blocks in Ezebubele Primary School to enable Asa High school to move to that place. We are also building two six classroom blocks at Igiruki autonomous community have any meters, so the PHCN officials come with their bulk bills and we paid for them. Ibere community is in Ukualo in Abia State. We also hooked them to the national grid, because of the nature of that place almost all the electricity poles were swept away by flood. We supplied them with 100 electricity poles with cables and insulators in order to connect them to the national grid, and as we speak they have power supply. Umuiku-Isiasa in Ukwa West we did an extension of resuscitating job in the community. In Ugborogbe, which is in Unukuwa East we also embarked on a security job there that on three occasions after doing one, storms will come and destroy them then we will go back and fix it again. Unukuwa also have internal problems they have areas where their poles were destroyed by storms and we have been able to fix them. By God’s grace when our funds increase we will go back there. In Udide-Ibeku in Umahia North of Abia state we did an electricity

project there and it has been completed, they now have electricity. We are also rewiring the Faculty of Law ABSU, we are also constructing solar power street lights at Emehin Housing Estate Umahia area, and it is ongoing. We donated one 33KVA transformer to Uzakoli in Mbede local government. There is a community called Nndia k u - O w u w a - Ay a n w u t h e y beckoned on us to give the electricity because they don’t have electricity due to a faulty transmitter, we donated one transmitter to them and they now have power. We also donated a 200KVA generator to Principal F1 in Umahia. We donated the generator to them they are part of Abia state even dough it is a Federal government property. In this year we have donated four number of split units to Abia State Broadcasting Commission. Education In the education sector, we registered and paid for the exam fees of 500 indigene students for WAEC and NECO for 2010/2011. We also

Waste management Abia State like you all know generates a lot of waste in places like Aba, Umahia and Obe. We don’t leave the whole job to the Waste Management Commission; we too are also into environment clean up, we spend so much money to ensure that our state is clean, mostly in the oil producing areas. Security To enable our oil flow, we have to put security in place and as we speak, we have military personnel in place to ensure that the state doesn’t suffer from oil bunkering, military personnel are securing our pipelines and we bought utility boats for them. Security in any state is very expensive to maintain; security in the state is to help the governor to secure our pipelines, which is solely our business and to ensure that our oil producing communities are in peace. We went into partnership with the Kings, the youths and the women organisations to ensure that there is peace in the state that also takes a lot of money, security is indeed very expensive. I want to say that Abia State is one of the safest states in the Federation because of what the governor and the President is doing on behalf of the state. We built two six classrooms block at Asa High school. The school was to be used for Amnesty Camp for hoodlums who were involved in kidnapping but the hoodlums rejected the offer, then the school was turned into a full military base now. We also partnered with Police Officer Wife Association (POWA). There is this school that POWA was handling TPS Umahia, and they beckoned on us to assist them and we donated a cash of N5.8million to enable them complete the building and they completed and the former IG wife came and commissioned it. Project Office Our law makes provision that provide what project offices where oil is produced, so we have project office at Unukuwa West, at Obehe and we furnished it to give them a sense of belonging. So every petition, every complaint goes to the office. We also decided to have our own office, about seven plots of land were acquired where we built a two story building and it cost us about N75million. Our rents for our current office will expire in 2014, but we intend to move into our permanent site before that time.


SWEETCRUDE PROMO


Oil Disputed oil wells: Nigeria may lose territorial waters – Reps … Urge FG to call NBC to order over border delineation

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B U J A – Legislators representing Cross River State in the National Assembly have raised the alarm over the possible loss of Nigeria’s internal waters to international territorial sea due to the current proposal by t h e Nat i onal B ound ar y Commission to The Revenue Mobilisation, Allocation and Fiscal Commission, RMAFC, had at a retreat in August 2008, redefined the maritime boundary between Cross River and Akwa Ibom states. The Commission also d e c i d e d o n t h e declassification of Cross River state as a littoral state and the transfer of 76 oil wells from Cross River in favour of Akwa Ibom state. The implication of this is that Cross River is no longer an oil producing state. According to the legislators, these far-reaching decisions were taken without the participation or any recourse whatsoever to Cross River state. They also lamented the plight of the people of Bakassi Peninsula in the hands of Camerounian gendarmes, since the peninsula was

ceded to Cameroun by the International Court of Justice, ICJ. The legislators, who spoke on at a Roundtable on Oil, Politics and Security organized by the Oil Justice Movement (OJM) in Abuja, regretted that the International Court of Justice’s decision to hand the peninsula to Camouroun in 2006 had opened a can of troubles for the neighbouring states of Cross River and Akwa Ibom. Speaking in a paper, Oil and Conflict in Communities and States: A Historical Perspective, Senator Bassey Ewa Henshaw, observed that much of “maneuvering that has gone on in Bakassi can be traced to the resources in the peninsula, namely the seafood, but more especially the oil.” H e a d d e d , “ T h e Camerounians and their masters the French, and indeed the Germans long before them, have always had their eyes on the territory and nothing was going to stop them from taking it. “Having now taken Bakassi ‘legally’ in the eyes of the world, Cameroun is determined and unrelenting in imposing their will and authority on the Efik people who live in Bakassi in complete violation of Article 3 of the Green Tree Agreement. There is constant harassment,

igerian CONTENT INITIATIVE Dr. Ibilola Amao

Can we update the NOGICD Act and pass the PIB simultaeously

Nigerian Oil Well

Oscarline ONWUEMENYI

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seizure of fishing gear and catch, imposition of tax, and rape by the gendarmes.” Noting that the Bakassi people are ready to take their fate into their own hands, Bassey said, “You know that at some point when they can’t take any more, they will be prepared to fight back.” On her own part, the member r e p r e s e n t i n g Calabar/Odupkani constituency in the House of Representatives, Hon. Nkoyo Toyo pointed out that the delineation of the border between Cross River and Akwa Ibom states by the National Boundary Commission, may lead to loss of territorial sea by the country. Toyo noted that the ICJ judgment that ceded Bakassi to Cameroun clearly established the baseline for the demarcation of internal waters from the territorial sea at the mouth of the Calabar estuary using the outermost southern tips of the land mass on both sides of the estuary as coordinates. She said, however, that the National Boundaries Commission (NBC), in a bid to show that Cross River is not a littoral state, has moved the baseline inwards to the mouth of the Calabar river.

Sunday, March 4th, 2012 04 March 2012, Sweetcrude, Lagos - The delayed passage of the PIB has a grievous impact on the psyche of all players in the Nigerian Oil and Gas industry. The passage of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, almost two years ago, heralded a gust of activities, plans and pronouncements most of which can not be actualised without the appropriate projects. With Fiscal Terms set to change with the PIB, most investors have shied away from Nigeria and turned their Foreign Direct Investment to more stable and predictable countries such as Ghana and Angola. As we begin to look at clause 102, that states: “subject to the approval of the Minister, the Board shall conduct a review of the Schedule to this Act at such intervals as it may determine but not later than every two years with a view to ensuring a measurable and continuous growth in Nigerian content in all projects, operations, activities and transactions in the Nigerian Oil and gas industry for onward transmission to the National assembly” This implies that we should expect some positive changes that would not only correct the gaps in the schedule but also correct the anomalies in the letter of the Act by the time that the Ministers amendment has passed through the legislature. Indeed these are exciting times for the Oil and Gas industry. We should as a minimum expect: 1. The schedule to capture: man-hour, tonnage, volume, area, liters, length, numbers, usage, contract, numbers as secondary to spend. All the independent units of measurement save spend must be secondary to and tracked alongside spend. Spend must be maintained as the primary yard stick for measuring Nigerian Content as “in-country” spend is critical to value addition. All other units can be slashed and measures as secondary values for historical and analytical references. 2. Harmonisation of the line items in the schedules of the Act with that on the NIPEX portal and the DPR activity categorization is critical for performance tracking in license reissue and vendor development. 3. Inclusion of areas that critical to the general wellbeing of Nigeria and Nigerians Products Transportation, Marketing and Trading is necessary. A good question that we should be asking ourselves is when would Nigeria begin to trade finished products in its own spot market? Neither has Nigeria so much as exported barrels of finished products nor traded crude on the spot market for the maximum value and return on investment possible? The Act must go beyond first consideration to auditing the usefulness of first consideration. What have been achieved by those that were awarded blocks in the past to alleviate poverty and create jobs through effective and efficient optimisation of our natural and human resources?. We would like to see more of Iinvestment opportunities and asset ownership (factories, industries, machines, equipments etc.), marine vessels, Rail, waterway that are privately owned with the ownership tied to the execution and successful completion of Oil and Gas projects and contracts. The need to track spend, “in-country” investment, visible assets etc can not be over-emphasised in the implementation of Nigerian Content. The long awaited PIB must provide tax incentives and fiscal terms that would encourage expenditure on infrastructure (Fabrication Yard, roads, bridges, water, electricity, residential estate, schools, hospital), Education and employment of youths, linkages to critical sectors of the economy such as IPP (Gas utilization), Downstream (Refining, Petrochemical, Chemical, fertilizer), LNG, LPG. We need to tie Schedule of the Act to the development of the iron & steel (Ajaokuta & Aladja) industries in Nigeria or we have not started expanding the envelope of growth and development for the application of any strategic thrust.


Oil

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PEF to end manual loading of products by New Year Oscarline ONWUEMENYI

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B U JA – T h e Petroleum Equalisation F u n d (Management) Board, PEF(M)B, has announced the achievement of a 48-hour claims payment to marketers for distribution of petroleum products across the country months after the launch of the electronic claims management solution termed ‘Project Aquila’ which is designed to enhance tracking of the movement of products in the downstream sector. The original plan was to ensure payment of claims after a couple of weeks, but PEF(M)B said the 72-hour payment for claims was achieved after only a few months of operating the electronic solution platform, even as plans are already afoot for the launch of the next level of e-loading system appropriately tagged Aquila 2. The General Manager, Corporate Services of the Board, Mr. Goddy Nnadi, who disclosed the milestone achievement to Sweetcrude in an exclusive interview in Abuja, also noted that over 200 staff of the Fund have been trained on the application of the software, while more than 500 marketers of petroleum products have also been trained in application of the e-loading technology. Nnadi also disclosed plans by the agency to end manual loading of petroleum products at various depots across the country by the end of the year, adding that effective from January 1, 2013, all marketers are expected to fully embrace the e-loading platform. He added that until date, more than 12,000 trucks carrying products nationwide have been tagged in the Project Aquila platform, with more being tagged every day. In a recent briefing to announce the launch of the project in Abuja, the Executive Secretar y of PEF(M)B, Mrs. Adefunke

Kasali noted that the new electronic solution would bring more transparency in the products distribution in the sector. She pointed out that one major advantage of the e-loading system is that it will enable the industry to generate accurate data on the petroleum consumption patterns across the country, a phenomenon that will greatly enhance distribution and marketing trends for the downstream sector. According to her, “The Aquila project is expected to enhance monitoring of distribution of petroleum products and speed up the processing and payment of marketers’ claims. Project Aquila will bring about s p e e d , e f f i c i e n c y, transparency and accuracy in product movement and claims settlement. “It is outstanding in its effectiveness in determining the volume of petroleum products bridged across the country, including accruals to the marketers and transporters and also

Electronic loading of fuel

transparency in processing and easy release of funds to support marketers,” Kasali stated. The training for marketers

The Board has also started an enlightenment programme across the nation to educate marketers and transporters on the benefit of the new system to their businesses facilitate accordingly.”

S

payment

he noted that in the past, processing of claims was done manually with the physical movement of files from one location to another, thereby causing delays which impacted the marketers’ businesses a d v e r s e l y. “A l s o , t h e movement of petroleum products has gone unmonitored, thereby making it difficult to confirm or certify deliveries at designated depot areas. The new solution will result in faster claims processing, faster payment of claims,

and operators which lasted several weeks and across the six geopolitical zones of the country covered technical areas including application roles, charging of the Radio Frequency Identification (RFID) Moble System/CN3 System and truck registration and tagging. “Staff of the Fund and marketers were also trained on Loading Transactions Data Entry and Truck Dispatching, local National Transportation Average, and other important applications which they would encounter as the project rolls out,” Kasali explained. According to her, ‘Project

Aquila’ would be applied in i m p r o v i n g t h e q u a l i t y, consistency and speed of reports generated from the supply and distribution of petroleum products for both internal and external uses, as well as for forecasting and long term planning. She explained that the new system will process claims in a computerized framework which minimizes the need for human intervention, thereby reducing delays and enhancing products distribution, availability and sale at government approved prices.

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h e s a i d t h e inauguration of the project and its deployment would begin in May, 2011, adding that it would become operational at the fund’s 51 depots nationwide by the first quarter of 2011. “Aquila is a Latin word for Eagle, a bird renowned for its strength, speed and swiftness,” she explained. “The Board has also started an enlightenment programme across the nation to educate marketers and transporters on the benefit of the new system to their b u s i n e s s e s . T h e implementation programme will require marketers to

register their outlets, and truck owners to register all trucks used for the distribution of petroleum products,” Kasali further explained. She pointed out that with the project in place, transporters claims will be processed on First-in-Firstout (FIFO) basis and all claims documented by the system forwarded immediately for payment. The PEFMB Chief Executive stressed that the system would eliminate wastages, and encourages greater service delivery. “Project Aquila would also bring about a reduction of human errors in processing the national transportation allowance for products bridged as well as ease tracking of transactions,” she added. She noted that under the scheme, however, marketers and transporters would be required to register their details with the Corporate Affairs Commission (CAC), the Department of Petroleum Resources (DPR) and the Nigeria National Petroleum Corporation (NNPC), as well as provide the addresses of their retail outlets and trucks for tagging.


Oil

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Nigerian Content Act:

Strengths, weaknesses Yemie ADEOYE

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he Nigerian Content Act was signed into law on April 22, 2010, thus signaling the first most significant achievement of President Jonathan after his reelection. Two years down the line the story has been one of success and great expectations, as several indigenous players agree that the Act was long overdue. However there are still some challenges being faced by indigenous operators in the oil industry, Yemie Adeoye, takes a detailed look into some of the achievements of the Act in the period under review as well as pointing out areas for review and improvement. WHEN the Nigerian Content Development Act was signed into law in 2010, not a few people in the industry hailed the Goodluck Jonathan-led Government for such a swift response upon assumption of office as the Acting President, even as some see the move as a little too hasty, especially as the Petroleum Industry Bill, PIB, supposed the single piece of document regulating the entire oil industry was yet to be passed.However, two years down the line, the C o n t e n t Ac t h a s b e e n established as a welcome development, as Nigerian companies now play a significant role in oil and gas activities across board, even as engineering plants and

President Goodluck Jonathan

companies, which were hitherto dormant have all bounced back with several activities to keep them in business.As a result of this Act, American energy giant, ExxonMobil, pioneered the use of made in Nigeria pipes in the oil and gas industry. The company is also set to deploy Helical Submerged Arc Welded (HSAW) pipes fabricated locally by SCC Pipe Mills for its Usari-Idoho pipeline replacement project in Akwa Ibom State.The E x e c u t i v e S e c r e t a r y, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Earnest Nwapa, said that the project was in the shallow water oil fields of ExxonMobil and that the pipes would be used to replace the 24-inch oil pipeline connecting the Usari and Idoho platforms, which in water depth of 21meters.

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his will be the first time made in Nigeria pipes are used for an oil and gas project in the country by any international or local operating company and is expected to unlock investments in pipe mills and other oil industry support facilities,” said an excited Nwapa, who expressed optimism that the next FPSO integration would happen in Nigeria, as over five years of studies have been carried out in this regard.According to him, a number of investors have made plans to establish

pipe mills and related facilities in Calabar, Koko and Gbaran Ubie, and this can only be attributed to the existence of an existing law, which stipulates all that investors need to know regarding their operations in the oil sector. Not a few industry watchers acknowledged that besides the PIB, which is yet to be passed by the National Assembly, the Nigerian Content Act remains the single most important piece of legislation in more than 50 years of oil production in the country. Mr President himself already noted that Nigerians and the national economy can only derive maximum benefits from the oil and gas industry if the Nigerian Oil and Gas Industry Content Development Act is implemented to the letter. Speaking recently while commissioning the Abang & Itut Satellite Field Development Project Platforms-designed and fabricated at Nigerdock Island Integrated Free Trade Zone for Mobil Producing Nigeria, President Jonathan explained that merely earning money from the sale of crude oil to pay salaries and build infrastructure is not helping the economy in the desired way. According to him, “Until we make sure that the requirements of the industry; at least a reasonable per cent are produced in the country, Nigeria as a nation cannot benefit from the industry.”Our gross national earning from

Mr President himself already noted that Nigerians and the national economy can only derive maximum benefits from the oil and gas industry if the Nigerian Oil and Gas Industry Content Development Act is implemented to the letter the sector is more than 80 per cent, so it is from the oil sector that we can become industrialised.

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he President noted that it was through the development of local capacities and owning of assets used in industry’s operations that the sector can increase employment opportunities, produce and utilize more locally manufactured goods and components.He expressed dismay at the failure to attain the targeted 70 per cent local content in the industry by 2010, a development he blamed on limited indigenous capacity, adding that the accomplishment by Nigerdock will boost capacity building in other companies.The President described the completion of the Satellite Fields Development Platforms- the first to be achieved completely locally-as a proof that the Nigerian Content Act

was already yielding the expected transformation results. According to him, “What we have witnessed today is a demonstration of the rightness of the local content law. When you consider that oil and gas sector accounts for over 80 percent of the country ’s income then you will appreciate the importance of what the law can do to t r a n s f o r m o u r e c o n o m y. ” C o m m e n d i n g Nigerdock for the feat, the President also reassured investors and other stakeholders of his administration’s commitment to the full implementation of the Nigerian Content Act.The M i n i s t e r o f Pe t r o l e u m Resources, Mrs. Diezani Alison-Madueke, on her part recalled that for several decades, similar ceremonies were celebrated in yards located in Asia, Europe and the Americas where the Nigerian oil and gas industry


Oil

Alison-Madueke dismisses investors’ worries over PIB

11 FDI: Cakasa boss tasks govt on Security

A

Oscarline ONWUEMENYI

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he Minister of Pe t r o l e u m Resources, Mrs. Diezani AlisonMadueke on Tuesday described the draft Petroleum Industry Bill recently sent to the National A s s e m b l y b y Pr e s i d e n t Goodluck Jonathan as a viable document capable of providing a win-win scenario for all stakeholders in the oil and gas industry in Nigeria.Alison-Madueke, who was speaking at a high level Investment Summit organised by the Ministry of Trade and Investment in conjunction with the Bank of Industry, BOI, in London, called on investors around the globe to take full advantage of the enormous opportunities the proposed oil industry reform law has to offer.In a presentation titled: Investment Opportunities in Nigeria’s Downstream Oil and Gas Value Chain, the Minister noted that apart from providing a healthy deregulated environment for private sector participation in the downstream sector, the PIB offers a refreshing fiscal regime with strong incentives for production.”We have a fiscal regime by royalty and tax which is now predicated on production as opposed to terrain and investment as was previously done. Royalty by production as we have outlined in the bill will capture the output of company as opposed to its location; it will create a fair balance between small and big operators operating in the same terrain, it will give operators the opportunity to make fair returns during field decline, and it proposes lower rates on condensate from large fields as well as ultra deep water fields,” Mrs. Alison-Madueke said.She explained that the royalty by price ensures a trigger mechanism which provides

Mrs. Alison-Madueke

the existence of fair and balanced pricing which is fair to all irrespective of the terrain of the operator since it comes with a self adjusting rate based on the price of crude oil and the natural gas price.She further noted that the new bill provides for a robust and efficient tax regime based on CITA (Corporate Income Tax), the Natural Hydrocarbon Tax and Production Bonus based regimes. On the reported concerns raised by some operators over the proposed increase in government take from 61 to 72 percent in the deep and ultra deep offshore, the Minister stated that in ar riving at the figure, Government considered all the variables taking into

a r o u n d t h e w o r l d l i ke Norway, Indonesia and even Angola. You recall that the 1993 Production Sharing Contract term (PSC) was based on $20 per barrel crude oil prices real time but since the start of production in the PSC fields crude prices have been upwards. So it was very necessary to look at the terms again,” Mrs. AlisonMadueke submitted.She noted that the new regime offers an avenue for fresh investments due to its incentive for production which is designed to attract extra investment in that regard.”In all, the proposed Petroleum Industry Bill 2012 comes closest to what we consider a win-win situation for the Nigerian Government, the Nigerian economy and people as well as other stakeholders and potential investors in the oil and gas industry,” she stated.The event which was attended by a large number of would be investors also drew a large number of Nigerians in Diaspora. They include key Nigerian business men, the Minister of

Mrs. Alison-Madueke submitted.She noted that the new regime offers an avenue for fresh investments due to its incentive for production which is designed to attract extra investment in that regard account the interest of the nation as well as what is obtainable in other jurisdictions across the world.”The proposed increase of Government to 72 percent is competitive when we look at the scale of other entities

Finance and Coordinating Minister of the Economy, Dr. Ngozi Okonjo -Iweala, Minister of Trade and Investment, Olusegun Aganga, Governor of Ekiti State, Kayode Fayemi.

new storage facility, being constructed at the Lekki Free Trade Zone by the Pinnacle Oil and Gas Limited, is capable of generating up to 20, 000 new jobs upon completion, the Managing Director and Chief Executive, Mr. Peter Mbah, has said. Mbah disclosed this at the weekend during the facility tour and opening of the 2012 Eko-Expo and the Lekki Free Trade Zone Investors’ Forum, which was declared open by the Executive Governor of L a g o s S t a t e , M r. Babatunde Raji Fashola (SAN). The Pinnacle boss said the project, expected to gulp about $250million, which will comprise a 400,000 Metric tonne, MT tank farm for storage on the shore that will be connected to a Single Point Mooring, SPM and Conventional Buoy Mooring (CBM) facilities. The facility also includes an 11kilometer sub-sea and onshore pipeline network with a capacity to handle up to 80 percent of the total national refined petroleum products demand, According to Mbah, the facility when in place will eliminate any need for lightering or other transshipment operations as the norm in the Nigerian downstream industry today, and will also negate any need for investment in the construction of a shore side jetty. Furthermore, the mooring facilities will enable petroleum cargo vessels of between 5,000MT DTW and 155,000MT DTW capacities to anchor and discharge products with minimal vessel congestion as compared to the current situation on the Apapa/Kirikiri axis. In line with the above, Mba stated that Pinnacle Oil has entered into a Joint


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13% derivation should be based on oil production – Gov. Orji

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ow did your administrati on come up with the idea of the Abia State Oil Producing Areas Development Commission, ASOPADEC? A committee was set up to look into the creation of the commission in 2010, and with the bill the committee came up with specifics. The chairman of the Commission is from an oil producing area of Abia state, and since we created the commission, we are keeping to the dictates of the law. How are the accruable funds disbursed or utilised? From the 13 per cent of what we derive we give 30 per cent of it to ASOPADEC; we don’t add we don’t remove. Once the 13 per cent comes, 30 per cent goes to the Commission’s account and it is a standing order and we have been religiously being doing that. The chairman of the commission has been doing very well, and I am sure they must have shown you projects they have carried out in every sector of the state economy - is it education, water or electricity, security, construction of roads and youth empowerments. Paying of school fees and WACE fees for indigent students in SS3 class? To be honest with you, I’m proud of

Abia State Governor, Chief Theodore Orji, tells Sweetcrude team, Clara Nwachukwu, and Ubong Nelson, in an exclusive chat on the 13 percent derivation fund for oil and gas producing states is not equitably distributed, as derivation should be based on production capacity. Excerpts: preferential treatment is that oil comes from Ukwa West, all Gov. Orji the traditional rulers there were given sport utility vehicles, SUVs, from that money so that they can have a what the Commission has must have told you that we sense of belonging, and for done so far. have sent kidnappers packing them to say, yes, this is what In terms of power, we have and they have devised a we a gaining from the money evacuated power from Ohia means of making money and gotten from our communities. sub-station; it is from the 13 that is by attacking the The gesture was also meant percent we got the money to pipelines, stealing the crude to boost their energy and the do the project. We also use 30 o i l , s e l l i n g t h e m , a n d passion to chase away per cent on infrastructures, sometimes refining them anybody that is destroying empowerment, and we gave which affects our allocations N100million to the state at the federal level and this the pipelines, and they can University, Polytechnic and allocation is based on what we also provide us with useful information about the people College of Education. produce. who carry out the act of We a r e r u n n i n g f r e e When these boys engage in pipeline vandalism and education from primary to these nefarious acts, there are kidnapping. secondary school levels here, at times that we receive very When we are paying for so the students don’t pay l i t t l e f r o m t h e f e d e r a l anything. We have to show example that we are an oil producing state, and it is from our 13 per cent derivation that we fund most of our projects. We a l s o s u p p o r t o u r students for external competitions which they attend and perform very well. Recently, the chairman of the commission told me about a presidential essay competition/debate organised in Abuja, in which we came second, and Bauchi came first. There is another competition and our students are doing extremely well. g o v e r n m e n t , a n d w h e n examination fees, we also money does not come like that give preference to that area In your opinion, would you 30 per cent of 13 per cent even though it is for all say the funds are being derivation fund that we give Abians; we still give them utilised judiciously and are t o A S O PA D E C w i l l b e preference so that they don’t the host communities given drastically be affected. become restive, and start preferential treatment in the Yes, the oil producing areas saying that they are not disbursement of the funds? a r e g i v e n p r e f e r e n t i a l seeing anything from the oil We are indeed very prudent treatment because that is c o m i n g f r o m their in the utilisation of this 13 per where the money is coming communities. cent oil derivation. But of recent, I’m sure the chairman from. An example of such

In terms of power, we have evacuated power from Ohia substation; it is from the 13 percent we got the money to do the project. We also use 30 per cent on infrastructures, empowerment, and we gave N100million to the state University, Polytechnic and College of Education

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We understand that there is no particular formula for arriving at the derivation, is that true? Yes, there is no particular formula in allocation sharing and that is why we are asking for the restricting of the partner of revenue allocation at the federal level. You cannot imagine Abia that is producing oil receiving less revenue allocation while a state that is not producing oil is getting more than the oil producing states; maybe their population is bigger than Abia. In revenue allocation, population is included when the sharing is done, and by the last census, we were 2.8 million people. What we are saying is that if the revenue is to be shared, it should be done very well, equitably distributed and based on what we produce. Like I said earlier, when the issue of pipeline vandalism started in our state, it affected our revenue allocation drastically because they check the quantity that comes from your oil wells, and based on that they do the allocations. So if you don’t produce anything, nothing comes to you from the federal level. Akwa Ibom, Rivers, Delta and Bayelsa are states that are wealthy because of the number of oil wells they have. Speaking about oil wells, what is the situation with the disputed oil wells is the state still pursuing the case? The truth is that they (Boundar y Commission) have to come and streamline the whole thing as they use demarcation in determining oil wells. The oil wells have already been shared that is why Rivers State is protesting, and we too are protesting. Some oil wells are for us but other states are c l a i m i n g i t . We , t h e governors have discussed it severally so that they can come and do proper delineation of boundaries, and the federal government should do it to resolve all these boundary issues. Looking at other government agencies such as the NDDC and Niger Delta Ministry, set up to assist in the development of the oil region; do you collaborate with them to CONTINUES ON PAGE 13


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13% derivation should be based on oil production – Gov. Orji CONTINUED FROM PAGE 12

support your development projects? We are a member of the two bodies, since we produce oil we belong to Niger Delta D e v e l o p m e n t Commission, NNDC, and the Ministry of Niger Delta also takes care of Abia and we partner with them. In terms of their projects we are there and some projects are allocated to Abia. They do road projects; they build bridges, housing, education, scholarships etc. We see the adverts on the pages of newspapers, although, preference is also given to some states because you cannot, for instance, compare Abia State with Akwa Ibom in terms of production and in terms of money. Since the money that is used for the projects is gotten collectively, common sense demands that it should be shared that way. If you produce 90 per cent and when you are doing a project, they give you one percent, will you be happy? And give somebody who is producing 30 per cent and they him 90 per cent for his project. They give preference to the quantity of oil you produce. What about your relationship with the oil companies like Shell that is operating in your state? Usually we have to force them (oil company) to come and do something. Also, they give the local governments preference and say the oil is in control of the local government chairman; because those are the people that battle them. And I believe once the money comes whether it is given to us or the local government it comes to Abia State. You will not believe that all the revenue that comes, Shell pays to the local government

goo d at pay ing we will keep bec ause the oil well is located within the local government territory. In terms of projects too, the communities have to force them to come give them good roads, electricity and other basic amenities. Would you then say the oil companies are living up to their responsibilities? Not at all, not at all compared with the advantages they derive from here. And that is why you have these agitations and restiveness in Niger Delta area, and kidnapping; it is because of this. The oil companies that is operating here don’t perform as expected. If they gave performed as expected, the youths here will be happy and every other person will be happy, but because they are performing you will find the youths fighting and kidnapping. In view of dwindling resources on account of pipeline vandalism, what are your plans to continue to support the various projects in the oil communities? We have alternative plans and that is to increase our Internally Generating Revenue (IGR) because that is where the salvation will come from. Even if they are not good at paying taxes, they have to pay; we cannot say that because they are not

quiet. In Abia, especially in Aba, go and ask who is paying tax, they will start laughing because when we go on sensitiasation programmes or rallies, we will ask them to show us their tax receipts, and they start to laugh because they have none. But we have to make them to be conscious of their civic responsibilities that they have to pay tax. We have to get the money from

If t h e expected revenue comes in, we will not be worried that much but because the state is not generating enough revenue, we have to depend on the allocation at the federal level. Energy is identified as key to development, what policies have you put in place to boost the sector? Energy is the key to good governance. If we don’t have it nothing will work; production will be zero, factories will not run, there will be nothing moving and that is one of the reason why we are moving on a slow rate

Not at all, not at all compared with the advantages they derive from here. And that is why you have these agitations and restiveness in Niger Delta area, and kidnapping; it is because of this.

the people through tax, which is legitimate and they, in turn, will see what we have used them for, in providing their basic needs. We have to achieve this by shouting and we have to be aggressive about it on generating internal revenue. We have also employed consultants that will help us and we are seeing results, as we now get money from IGR.

in terms of development because of lack of energy. Conscious of that, in Abia we have this energy project in Alaoji which is close to completion. When it is completed, the whole of Aba and beyond will be energized. In that same Aba, Osisioma local government which is very close, we have another private power project by Geometric Power that will

inject 188, MW, (mega watts) into the system which is about to be completed. It is also targeted at Aba and environs and even Onitsha, in Anambra State because these are productions areas. When that one comes on stream and the one in Alaoji comes on stream too, the issue of power will have been solved. There is one 32KVA Sub power station, there is power there but our problem was how to evacuate them to the feeder station to feed the people. That has been done and it was commissioned by the Minister of Power, Prof. Barth Nnaji, and that is why wherever you are staying, be it in an hotel or anywhere, there is constant power supply. It was not like this before, if it was before since we started this interview, power supply will have gone off about two to three times and we will be battling with our generating sets. But now there is no noise from the generators, which indicate that the source of the power is direct from the transmission we have done. We want to extend it because this one has captured the whole of Umuahia and environs, it has also been extended to Mbaino, that is in Imo state and they are enjoying it, we will extend it to Isiala Ngwa North and South which we are currently working on. When we have achieved that then we will know that we have taken care of the whole of this place, and will be waiting for Geometric to take care of Aba, and then we will be home and dry. Apart from that also, we are discussing with a foreign firm that wants to come and put a power plant in Abia, but we are still discussing on that, the ones we have seen is the one that we are sure to work with.


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Abuja and approached the National Economic Reconstr uction Fund, NERFUND, and they agreed to partner with us. So they are bringing in 50 per cent of whatever we can bring to equip these people after the training.

Samuel Nwogu

Our problem is poor funding

-ASOPADEC Chairman

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amuel Okezie Nwogu, is the Chairman of Abia S t a t e O i l Pr o d u c i n g Development Area Commission, ASOPADEC, the Commission created by Governor Theodor Orji, in March 2010, to alleviate poverty in the oil producing communities. In this interview with Clara Nwachukwu and Ubong Nelson, Nwogu, tells Sweetcrude how Abia State, has been able to execute development projects both in the host communities and the state in general, despite its meager allocation resources. Excerpt:

S u r p r i s i n g l y, y o u r C o m m i s s i o n h a s i n a u g u r a t e d n u m e ro u s projects in Abia State so much that one wonders if you get additional funds to execute these projects? Sometimes we get about N150million, but the highest we have gotten since inception of the Commission is N160million. If the state gets N400million, we receive 13 per cent of it. Most of the things we do here are through direct labour. If a school needs zinc, we give them the money; they go to the market and get the items. We are also working with charity organisations, and we are partnering with widows. We have also done a lot of

If we have more money we will do more. Our people are really suffering, and there are lots of projects we can still execute to alleviate their sufferings things including social welfare by buying wheelchair, assisting people in hospitals like feeding them, taking some sick people to India for treatment. Our team is really devoted to the course of helping the people in the oil producing communities. The youth

programme which we initiated was backed with skills acquisition programme, and we are partnering with Smiting and MPE to provide the skills and provide them with start up funds after they have acquired the skills. Due to lack of fund, we went to

The 13 percent is derived from crude oil production, what is the situation with some of your disputed oil wells? We have almost 47 oil wells that went to Rivers State. But t h e y ( B o u n d a r y Commission) said they have returned 42 oil wells back to us; and if they have, Abia should have been the fourth largest oil producing state in the county. If that is the case, why is Abia State the poorest in terms of allocation. Cross River gets more revenue than us every month. It is there on the website. Next month sharing formula will be on the website, you can go to www.economyconfidential.c om or www.fmf.gov.ng. These two websites will give you what is shared. That is why we have been crying to know the yardstick, if Abia is the fourth producing and they share N114 billion. Was there no agreement on the sharing formula? It is purely based on the federal government’s decisions. If they do the sharing according to how we produce, there is no way Ondo State will get more revenue than us. Our major problem is that the allocation to Abia State is too poor. If we have more money we will do more. Our people are really suffering, and there are lots of projects we can still execute to alleviate their sufferings. How much oil does Abia produce? Abia has about 130 oil wells, we have three flow stations, one associated gas plant, we have Abia/NNPC gas plant, it is the gas plant that will supply gas to PHCN to generate electricity, and it will supply gas to Geometric in Abia and to Abia Industry. We produced 36,000 barrels of crude oil per day, Imoturu produces 23,000 barrels per day and Isimili flow station produces over 8,000 barrels CONTINUES ON PAGE 15


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Our problem is poor funding -ASOPADEC Chairman

Umuahia, capital of Abia of crude oil per day. Then four oil wells in Izaku go to Obigo flow station. About 30 oil wells from my village go to Umuri and about eight oil wells from Umurie go to Afam. So what then are you doing to stop pipeline vandalism? We have improved on internal security, and local surveillance. But we found out that the military and local surveillance cannot handle the situation independently because the military does not know who is who, so we needed the services of the local surveillance to work with the military. Is pipeline vandalism in Abia more of sabotage or integrity failure? It is more of sabotage because Shell on their own has been trying to replace their pipelines with a more durable pipe. Since you mention Shell, how is the oil company helping to sustain peace in Abia? The oil company is doing totally nothing about it. As a former youth leader from an oil producing community in Owaza, I know most of the issues. We had very bad roads; Shell did not construct any road. Every year, Shell will come with a budget but they will not tell you that they want to do business with you

or what they have for us in the New Year. But Shell will wait until there is crisis before acting. All that Shell does is to stay in their offices and come up with a policy and impose it on the communities. Apart from the Uwaza community road that links to the Ring Road that was constructed in 1996, Shell has not done anything else in that community. The water that they supply to the c o m m u n i t i e s i s contaminated, and their staff don’t drink the water because they come with bottled water. Research carried out on the water showed that it is dangerous to health. Besides, they don’t employ our people, they don’t give us preference. This thing they call Local Content is not working for us because they don’t award us contracts. Shell normally gave the excuse that we don’t have qualified people to do, but I argued that we do, and on one occasion some of our people went for tests and they came out tops, but still nothing happened. I know how Shell operates, their policies and other things about them. But thank God for Uchendo (Governor), all the people in our oil producing communities are being empowered by the Commission – the traditional rulers, our youths; we now have good houses, good roads and we are embarking on scholarships, we want to

send some of our students to Malaysia to study. What about the NNPC, are they doing anything to help the communities? NNPC is the worst of them; but if you touch their pipelines you will go prison. … But it was reported that

shuts in. Oil does not flow like water, it comes from a r e s e r v o i r, s o w h a t e v e r happens to the pipelines, it sends a signal immediately to the Christmas tree and the tree regulates what flows through it. Also, where is the map that provides the line for these pipelines that they are doing? You will see that there is no Awaza community in the map. So when it comes to revenue that is meant for the state you will find out it does not come to us because our oil producing communities are not on the map, and it is the same map they use to give other states their allocations. The governor is on top of the situation to ensure that what is meant for the state is what the state gets in the allocation of 13 per cent derivation. What about other agencies like NDDC and Niger Delta Ministry? A p a r t f r o m t h e Commission, we also have

All that Shell does is to stay in their offices and come up with a policy and impose it on the communities. Apart from the Uwaza community road that links to the Ring Road that was constructed in 1996, Shell has not done anything else in that community the kind of oil spill that occurs in Abia will soon over-run that of the Niger Delta? Whoever said that does not know what he is saying. Let him tell you which pipelines the spills are coming from. They stay in their offices and say things they don’t really know about. But the truth remains that it is very difficult to break the pipelines, some of which are between 8 and 11 inches thick. Let me explain something many people don’t know; when you go to a Christmas tree that is not producing you cannot take oil from it because it has an automatic valve that

t h e N i g e r D e l t a Development Commission, NNDC, and the Niger Delta Ministry. But we all know the politicking that goes on there. They will do big projects yet they will not commission them, especially the NDDC. For instance, there are more than 20 water projects with that have not been commissioned in my community. But the Niger Delta Ministry is doing their best because they are constructing good roads. Back to the derivation fund, is there a forum where

stakeholders meet to decide which community gets what? Our people are happy with the little they see because in previous years we did not see anything. Also, there are lots of things the oil communities are benefiting from the state because they have commissioners from those communities. They get other state appointments, and youth empowerment programmes. They also have their share of state contracts; that is why the governor is happy with the work we are doing because we are complementing the job he is doing for these communities. The state government is really trying with the little that comes from the 13 per cent derivation allocation. After the Commission has made all the necessary payments, it will still have to fund so many other projects; meanwhile the people are not willing to pay tax. Lagos State can do without allocation from the federal government but that is not the case with Abia. Sometimes, the governor will tell us to manage what we have. When we started constructing roads, he was surprised, but I told him that with the funds that we get we can construct good roads. We are not here to build houses for ourselves overseas; personally, I have not travelled out of this country since I became chairman of the Commission. All we want to do is to give back to the community and make them feel comfortable and to have a sense of belonging. Is there anything your Commission is doing toward conflict resolution? Yes there is. We are partnering with Civil Society Organisations, Women’s groups because mothers are affected more by their children’s vices. We provided funds to train some youths in non-violence system. Those of them who were trained now realise that they were being used to carry out nefarious activities within the state.


Gas

Cooking Gas

public and private companies with the capacity to produce”. He also said that the regulation of the LPG final price should be the responsibility of the government. He said that if Government can encourage the use of LPG, it would reduce the huge foreign exchange spent on kerosene yearly and also prevent irregular supply of kerosene, which had always created hardship. Venkatapathy said that most of the challenges confronting LPG consumption in Nigeria include: the decline in the demand of the product; roadside LPG cylinder to cylinder transfer; and lack of specific regulations. He said that for home use, the challenges include high cost of LPG to the common man. He suggested that government should pass a legislative bill that LPG cylinders be marketed by approved big LPG marketing companies. Mr Chima Ibeneche, President of NGA, in his

Nigeria can save $1.25b from LPG Kunle KALEJAYE

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xperts in Nigeria’s oil and gas sector have expressed optimism that the country can save up to $1.25 billion (N200 billion) if kerosene consumers switched to the use of Liquefied Petroleum Gas (Cooking Gas). It is believed that Nigeria consumes about 11 million litres of kerosene daily, out of which eight million litres are consumed by Nigerians who were under-privileged. One such experts, is the Managing Director of The Nigerian Independent Pe t r o l e u m C o m p a n y

(NIPCO), Mr Venkataraman Venkatapathy, who urged the Federal Gover nment to formulate a policy that would promote use of Liquid Petroleum Gas (LPG) as cooking gas in the country. The NIPCO boss stated this during the Nigerian Gas Association (NGA) 2012 First Quarter Business Forum in Lagos. Venkatapathy said that the Nigerian cooking gas market is very large with high demand potential, but yet to be tapped, adding that LPG could substitute imported kerosene for domestic energy use. H e , h o w e v e r, u r g e d government to waive taxes,

duties and levies on imported LPG kits to reduce cost and increase affordability. “The rural poor need an additional income of N800 million per day to meet their kerosene consumption needs,” he said. As a result, he urged government to “ waive VAT on domestic LPG sources; remove all forms of duties and levies on LPG imported kits, cylinders and accessories. All levies like land tax, DPR Levies, and other government taxes be waived for setting up LPG kits and bottling plants in the country,” he said. Venkatapathy said that for massive LPG growth programme, “government needs to approve capable

remarks, said that “The association has come a long way in its quest to contribute to the development of Nigerian gas industry. “I am delighted to state that NGA have been part of the evolution of a vibrant gas industry characterised by high energies in building consensus between the private and the public sectors in fashioning out Nigerian gas structural plan,” Ibeneche said. He added that, “the task today and in the years to come is to ensure sufficient gas supply to industries and homes in Nigeria in line with the gas revolution declared by President Goodluck Jonathan.

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Ghana announces more oil discovery

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he state-owned Ghana National Petroleum Corporation (GNPC) has announced that another oil discovery has been made in the West African state. In said in a statement issued in Accra that the Wawa-1 exploration well, located in the DeepwaterTano (DWT) Block offshore Ghana, discovered 20 metres (65 feet) of gas-condensate column and 13 metres (42 feet) of oil. Samples of oil recovered from the well indicate that it was of ‘high quality of API values of between 38 and 44 degrees’. GNPC said pressure data i n d i c a t e d t h e Wa w a discovery was separate and distinct from the adjacent Tweneboa, Enyenra and Ntomme (TEN) cluster of discoveries. It said further evaluation of this well would be conducted after which the well would be suspended for possible future use in appraisal and development operations. According to Mr. Thomas Manu, Director of Exploration and Production a t G N P C , “ t h e Wa w a discovery is a confirmation of the prospectivity of the offshore Western Basin. The discovery has enhanced the value of the TEN (Tweneboa, Enyenra and Ntomme) complex, for which the plan of development is currently being discussed among the partners.’ He hinted that further ex p l o r a t i o n d r i l l i n g i s planned within the block before the end of the year. GNPC has 10 percent carried interest in the DeepwaterTano Block and has the option to acquire additional paying interest of 5 per cent upon declaration that the discovery is commercial. The other Partners in the Block include Tullow Oil plc (49.95 percent working interest and operator), Kosmos Energy (18 per cent working interest), Anadarko (18 per cent working interest) and Tano Block Sabre Oil & Gas Holdings Ltd (4.05 per cent working interest).


Gas FG targets 250 exhibitors for Onne oil, gas forum

Brent rises above $106 B

Onne port,

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he Federal Government said it is targeting about 250 local a n d international exhibitors in the 2012 oil and gas forum slated to hold at Onne Free Trade Zone, FTZ, Rivers State. Chairman, Organizing Committee, Director (Trade) in the Federal Ministry of Trade and Investment, Mr. David Adejuwon, said in a statement that the mandate of his committee is to organize an international Trade and Investment Forum on Oil and Gas, and also to showcase the success story of the Onne FTZ, to attract more investors both locally and internationally. He said the Committee has inspected the facilities that will be put in place for the Forum, adding that lots of activities have been identified with timelines and responsibilities assigned to various organizations that will midwife the success of the event. He promised that his committee intended to mobilize over 150 investors operating in the zone, as well as investors from Middle East, Europe, and America and all over the world, adding that over 4000 square meter space has been made available within the Onne FTZ for the event.

Adejuwon said that the committee intended to attract more investors to the FTZ to complement the companies already operating in the zone, which occupied about 30% of the space. “We have had good discussions with a good number of participants from Doha and Asia, and we intend to attract more companies for this event through our foreign Embassies”. Already, the Nigerian Embassy in South Korea, is in touch with South Korean Chamber of Commerce in ter ms of mobilisation, and we intend to maximize Nigeria's participation at the ongoing Yeosu Expo in South Korea to attract more companies."

He further said that the forum will provide a good platform to showcase the successes that have been recorded by the present administration in growing the e c o n o m y, b y a t t r a c t i n g credible investors to the downstream and upstream sectors of the oil and gas industry. The Chairman pointed out that despite the security challenges, Nigeria still had a lot of credible investors that are doing good businesses and taking advantage of the high rate of retur n on investment in the country. “They never closed shop for a single day even in the volatile region and this underscores the fact that Nigeria is a very safe investment designation."

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rent crude inched above $106 a barrel on Friday on concerns over supply from the Middle East and the North Sea, though worries over a slowing global economy capped gains. The US Congress passed a new package of sanctions against Iran that aims to punish banks, insurance companies and shippers that help Tehran sell its oil. This builds on oil trade sanctions signed into law in December that prompted buyers in Japan, South Korea, India and others to slash their purchases of Iranian oil. Brent crude had gained 43 cents to $106.33 per barrel early on Friday, while US rose 36 cents to $87.49. Both prices are on track for their second weekly loss. “The fighting in Syria, tensions in Iran, the North Sea maintenance plan and reduced Opec daily supply are all coming together and providing support to Brent (prices),” said Nick Tr e v e t h a n , s e n i o r commodities strategist at ANZ Bank in Singapore. Maintenance work in the British sector of the North Sea will cut oil production in September. The Brent contract is based on four North Sea crude oils -Brent, Forties, Oseberg and Ekofisk - and export programmes for September were expected to show a sharp drop.

Seaborne oil exports from Opec, excluding Angola and Ecuador, will fall by 120,000 barrels per day in the four weeks to 18 August, UK consultancy Oil Movements said. Adding to supply uncertainty, Iraq’s semiautonomous region of Kurdistan plans to halt oil exports on 31 August if the central government does not make all outstanding payments, the region’s minister of natural resources said. Middle East tensions increased with former UN S e c r e t a r y- G e n e r a l K o f i Annan quitting as international peace envoy for Syria, frustrated by “fingerpointing” at the United Nations, while the armed rebellion against President Bashar Assad becomes increasingly bloody. Also providing support, US crude stockpiles last week fell by their most since December, while cr ude imports dropped and oil products also posted unexpected declines, federal government data showed on Wednesday. Domestic stocks of crude, excluding oil held in the Strategic Petroleum Reserve, fell 6.52 million barrels to 373.59 million barrels in the week to 27 July, the Energy Information Administration reported. Analysts polled by Reuters had forecast a much smaller drop of 700,000 barrels.

Nigeria hits record high oil output

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igeria’s crude oil production hit a record high of 2.7 million barrels per day on Wednesday, the state-run oil company said on Thursday. The results come despite ministers and oil companies saying recently that oil theft had caused output to fall. “I am glad to report to you that in crude oil production, yesterday, we recorded an all

time high of 2.7 million barrels. This has not been recorded before,” Andrew Yakubu, Managing Director of the Nigerian National Petroleum Corp (NNPC), said in a statement, according to Reuters. Nigeria is a member of the oil producing group Opec, which has set the West African country a crude oil output limit of 1.67 million

bpd. Nigeria’s oil and finance ministers and the central bank governor have said in recent weeks that rapidly rising oil theft and the damage it causes to infrastructure is significantly cutting oil output. Shell and the Nigerian government estimate somewhere between

150,000 and 180,000 bpd is being stolen, while an unknown amount is deferred due to pipeline sabotage. Loading schedules showed Africa’s top oil producer was set to export 1.81 million bpd in September, its lowest in 11 months.


Financing

Fuel Station

Fuel subsidy scandal and NEITI audit reports Oscarline ONWUEMENYI

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HE recent furore that engulfed the nation over the mismanagement of more than a trillion naira of public funds through fuel subsidy scam – and the alleged bribery of House Committee members who are supposed to be investigating the scam – has thrown up numerous issues with regards to the fight against corruption in the nation’s oil and gas industry. Most strikingly is the blatant inability or handicap of different administrations to apply the steel when it comes to implementing reports by local and international agencies. In this case, many stakeholders have blamed the current bribery mess in the National Assembly and the fuel subsidy fraud on the refusal of the government to act on several reports of corruption in the nation’s oil and gas industry presented

before it over the years, especially the ample audit reports from the Nigeria Extractive Industries Tr a n s p a r e n c y I n i t i a t i v e , NEITI, which has covered more than a decade of oil and gas production in the country. The former Chairman of the National Stakeholders Working Group, NSWG, of NEITI, Prof. Asisi Asobie, who spoke to SWEETCRUDE at an E x p e r t Wo r k s h o p o n Developing a Module on Training of Corruption Risk Assessors, organised by the Independent Corrupt Practices and other Related Offences Commission (ICPC), in Abuja, asserted that issues of corruption revealed in the fuel subsidy probe by the National Assembly was “the first time that Nigerians were made aware of the presence of huge reports that have been in the public domain already about the issues in the nation’s petroleum industry, which was produced by NEITI over the years.” According to him, “NEITI has diligently produced

The most important government body in the anti-corruption fight is the Office of the AuditorGeneral of the Federation, and NEITI regularly submits its reports to that Office

information that covers over ten years of the issues in the industry, but the problem is that Nigerians did not know about it until the oil subsidy probe came. The problem we see today is partly because the legislature itself refused to act on the reports over the years that the problem persisted. “NEITI reports are supposed to be submitted to the National Assembly; in other words, they should have been holding public hearings on these reports since 2006, when the first report was published and they should have been holding it every year since then. If they had done that, there would be no need for

this probe and the attendant scandals,” he added.

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e stressed that if the right things were done years ago, what the industry would be dealing with presently is the remediation aspects of the report, which were also enumerated by the NEITI audits. According to Asobie, a lot Nigerians were mistaken in their perception that the anticorruption agencies including the EFCC and ICPC were the last bastion in the fight against corruption. “The most important government body in the anti-corruption fight is the

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Office of the Auditor-General of the Federation, and NEITI regularly submits its reports to that Office. The AuditorGeneral’s office compiles every report about corruption in the public sector every year since 1999, and they have been putting that before the National Assembly. The National Assembly has not acted on these reports.” Over the years, the management of NEITI had faced the question of what has been the noticeable impact of its activities on poverty reduction in the land. Many citizens anxiously wonder about the efforts of the agency in generating more revenue for the national coffers, thereby making more money available for poverty reduction and wealth creation. Ingrained in the urgency of these questions is the fact that the impact of an agency in the mold of NEITI would most probably be measured mainly in its ability to create the necessary environment to make poverty reduction interventions more efficient and effective. The Executive Secretary of NEITI, Mrs. Zainab Ahmed, explained at a recent workshop to discuss the fiveyear strategic plan, that in terms of the scope of the value chains, the depth of information and data disclosed, and the number of years covered, the NEITI audit reports are unparalleled in the history of the EITI globally. She further explained that the impact of the NEITI on the Nigerian society can be measured indirectly. First, she notes, through its core function of disclosing and publishing company payments and government receipts of revenues from the ex t r a c t i v e i n d u s t r y, t h e governments and people of Nigeria are ‘empowered’ to demand their rightful share from the Federation Account, accordance with the law. “In addition, through its financial, physical and process audits of the industry, the NEITI monitors and publicizes the extent to which gas penalties are paid by oil and gas companies, and the degree to which the penalties serve as disincentive to continued gas flaring in the Niger Delta,” she added.


Feedback

Fee dback

The trouble with onshore/offshore dichotomy

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r a t h e r intriguing game of muscle flexing has been quietly going on between President Olusegun Obasanjo and the governors of the nine oil-producing states over the actual quantum of naira that the 13 per cent derivation translates to. While the governors claim entitlement to 13 per cent of proceeds from total crude oil and gas production, the President insists on applying the derivation formula based on onshore production only, which in his estimation amounts to 60 per cent of total production. The argument that is often thrown around to support this computation is that offshore oil belongs to the Federal Government and not the state. Therefore, the argument goes, oilproducing states cannot derive any extra income from this offshore production to which they have no title in the first place. Three Federal statutes and the constitution of the Federal Republic of Nigeria (1999) all contain unambiguous provisions on the ownership, management and control of all minerals, oil and gas in place. Section 44 (3) of the constitution “as well as the Petroleum Act Cap 350, Exclusive Economic Zone Act Cap 116, Territorial Waters Act Cap 428 and The Te r r i t o r i a l W a t e r s (Amendment) Act of 1997 all expressly vest the ownership and control of “minerals, mineral oils and natural gas in, under or upon any land, territorial waters or Exclusive Economic Zone of Nigeria in the Government of the Federation. Therefore, unless a constitutional amendment is effected, there can be no contest as to who owns the oil and gas in Nigeria, be it onshore or offshore. However, Section 162 (2) of the constitution states, inter alia, that in determining the revenue allocation formula of the Federation Account, “the principle of derivation shall be constantly reflected in any approved formula as being not less than 13 per cent of the revenue accruing to the Federation Account directly from any natural resources.” Read in conjunction with Section 44 (3) and the Extant Statutes earlier referred to,

what this Section 162 (2) simply provides for is to the effect that, even though all oil and gas wheresoever it is found belongs to the Federal Government, in distributing the revenue accruing therefrom, 13 per cent of it should be shared among the states from which this federal revenue accrues. When we recall the socio-political antecedents that gave rise to this thoroughly negotiated clause in the federal constitution, it is not surprising that a clear, unambiguous distinction between onshore and offshore resources was avoided. Thus the emphasis is on rewarding the states that host these revenuegenerating oil and gas activities and not some complex legal definition of state and federal geographic boundaries. In the circumstance, ownership is irrelevant while the intent is to ensure equitable distribution.

By Austin Avuru

In the circumstance, ownership is irrelevant while the intent is to ensure equitable distribution

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he history of the derivation principle in revenue sharing in Nigeria is particularly interesting for its illustration of the political nature of the exercise. Between 1951 and 1970, five revenue allocation arrangements by colonial and post-colonial governments emphasised derivation. The HicksPhillipson Commission of 1961 and the Binn Commission of 1964 both recommended 50 per cent derivation proportion to the area generating the resource, 35 per cent to the Regions and 15 per cent to the Central Government. By contrast, the Chick Commission of 1953 had recommended 100 per cent derivation for resourcesbearing areas. In 1958, the Raisman-Tree Commission

disco ntent a n d protests from oilproducing communities during the Babangida regime, the derivation factor, which had fallen to 1.5 per cent from 45 per cent in 1970 was increased to 3 per cent. When OMPADEC was set up in 1992 and allocated twothirds out of the 3 per cent derivation, Section 2 (2) (1) of the enabling decree provided that funds from the allocation received by OMPADEC are “to be used for the rehabilitation of the oil mineral producing areas on the basis of their production ratio and not on the basis of the dichotomy of offshore or onshore oil production.” This provision was interpreted as conferring oil producing status on littoral states and effectively abolished the dichotomy introduced by the 1971 Act. Thus Akwa Ibom and Ondo states joined the club of oil producing states. Following further escalation of community crises in the Niger Delta, particularly the Ogoni crises and the Kaiama declaration, the constitutional conference in 1995 recommended further increase in the derivation factor from 3 to 13 per cent. This was adopted and engraved in the 1999 Constitution. My suspicion, however, is that the actual computation of the full value of the 13 per cent derivation was only done for the first time by the present government who found the sum involved to be far beyond their wildest estimation. Every unconventional effort is therefore being made to reduce the sum due these states to a figure that is

recommended derivation (50 per cent) Regions 30 and the Central Government 20. At the end of the civil war the offshore revenues act of 1971 was enacted which reserved revenues from offshore oil exclusively for the Federal Government while pegging derivation at 45 per cent of onshore proceeds. This was the first time a clean distinction was made between onshore and offshore proceeds in our revenue allocation formula. The Aboyade Technical Committee of 1977 and the Okigbo Commission of 1979, in fact, recommended that the derivation principle be abolished altogether. But following widespread

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acceptable to the central government. Unfortunately, under the current dispensation, the only viable options open to the Federal Government is to pay what is constitutionally stipulated or seek a constitutional amendment. The political implications of the offshore/onshore dichotomy make the legal arguments pale into insignificance. To expunge offshore production from the derivation calculation is to expel Akwa Ibom and Ondo states from the club of oil producers. Their membership of NNDC, including their stout representation at the board of NNDC, would have to be annulled. In the face of such an action, can Mobil continue to operate its offshore fields? Will their Qua Iboe Terminal continue to function? Will the Itsekiris and Ijaws of Delta State allow Chevron to operate their offshore fields from Escravos? How will you tell the restive Ijaws and Ilajes of Ondo State that their modest oil-producing privileges have been severed and still expect Chevron, Conoco, Consolidated oil and Cavendish to continue their western offshore operations? And in the face of all this, how will Obasanjos campaign train be welcomed in these states come 2003?

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believe the true spirit of revenue sharing, especially in the mold contemplated by the constitution is an astute balancing of political and economic considerations. If commercial quantities of crude oil were eventually discovered in Lake Chad, I don’t know who would convince Borno State that they are not an oil-producing state. A littoral state that is bearing the full burden of hosting oil exploration and production activities cannot be said not to be resource bearing. To do so would be to open a Pandoras box of grave political and community crises that will make nonsense of the efforts of the past 10 years to bring stability to oil and gas operations. This would amount to the proverbial act of throwing the child away with the bath water.


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Clara NWACHUKWU


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Electricity Transformers


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Electricity Workers laying power cables


Power Clara NWACHUKWU

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number of companies are hopeful of w i n n i n g multiple bids from the Power Holding Company of Nigeria, PHCN, electricity distribution companies, DISCOs that have been put up for sale by the Bureau of Public Enterprises, BPE. There are 11 DISCOs including Abuja, Benin, Enugu, Eko, Ibadan, Ikeja, Jos, Kaduna, Kano, Port Harcourt and Yola that were created from the unbundling of PHCN. A breakdown of the 54 bidders that met the July 31 deadline for the submission of technical and financial proposals for the purchase of the companies showed that some of them submitted more than one bid. The highest number of bids was submitted by Integrated Energy Distribution & Marketing Ltd, which bided for four of the companies including Eko, Ibadan, Ikeja and Yola. A total of four companies, a m o n g t h e m Ro c k s o n Engineering Company Ltd; Skipper Nigeria Ltd; ENL Consortium Ltd; and KEPCO/NEDC Consortium bided for three each. While Rockson put in a stake for B e n i n , I ke j a a n d Po r t Harcourt DISCOs; skipper put in for Abuja, Ibadan and Kaduna; ENL for Abuja, Eko and Ibadan; and KEPCO/NEDC for Eko, Ibadan and Ikeja, respectively. About six other companies including OANDO Consortium, Interstate Electrics Ltd, RENSMART Power Ltd, West Power & Gas, NAHCO Power Consortium; and Honeywell Energy Resources International Ltd all bided for two companies each. Further breakdown of the bids showed that more companies were interested in the Ikeja DISCO, which attracted 10 bids, possibly because it is the largest in the country. This is followed by Eko which got nine bids, Benin and Ibadan got seven each, Abuja 5 and Enugu 4. The fact that the northern DISCOs, Jos, Kaduna and Kano got very low bids, two

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Electricity privatisation: Companies hopeful of winning multiple bids respectively, may not be unconnected with the insecurity situation in that region of the country, in view of the mayhem unleashed by Islamic militants, Boko Haram.

Furthermore, Port Harcourt, which analysts expected to attract more bids in view of its status as Nigeria’s energy hub, also had a poor outing with three bids, which may be linked with the crisis in the

Niger Delta region, which is slowly being resolved through presidential amnesty. How the bids were spread are as follows:

T h e Pr i v a a t i s a t i o n Bureau noted that “Prospective core investors, who must be l o c a l a n d / o r inter national power distributors or investors with power distributors as technical partners, will be responsible for o p e r a t i n g t h e distribution companies, making the necessary investments to improve the distribution network and customer service in line with the objectives of the Federal Government of Nigeria.” It is uncertain if local content capacity will come into play in selecting the core investor, and if this happened, companies l i k e R o c k s o n Engineering, which already has vast experience in power generation by building the Omoku (Rivers), Alaoji (Abia), Gbaran (Bayelsa), and Egbema (Imo) independent power plants, IPPs, will have an edge over other bidders. Similarly, the Oando Consortium, which bidded for two of the DISCOs- Eko and Ikeja, has also been playing a key role in the Lagos electricity sector, with the construction of the Akute power plant. All transactions regarding the bids for either the DISCOs or the generating companies, according to BPE timeline are expected to be finalised in the last quarter of the year. “The announcement of the preferred bidders for the generating companies is October 9, 2012 while October 23, 2012 is the date for the announcement of the preferred bidders for the d i s t r i b u t i o n companies,” the Bureau added.


Power Oscarline Onwuemenyi

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BUJA - The Nigerian Electricity Regulatory Commission, NERC, said last week that it would no longer issue power generation licenses without clear evidence that all necessary inputs are in place to guarantee that the project would actually deliver electricity. The Chairman of NERC, Dr. Sam Amadi, made this declaration during a press briefing in Abuja, where he also said that the Commission’s has made the final approval of the revised methodology of estimated billing and methodology for connection charges. He said, “Many of the licensees have not been able to develop or produce power four, five years after receiving the license. Many have their projects in places where they can’t access gas supply or where there are no transmission facilities for evacuation. Going forward, with the bulk trader now in place, the changes going on in the transmission component of the sector, we are now building a system that allows for systematic planning of power. This means that we are no longer going to be licensing people except where the gas, feedstock, transmission and everything is in place. “And the system operator would have indicated that there is capacity to receive this amount of power or there is need to procure x amount of power and therefore there would be public option. So the regulation which we are putting out, which we have advertised for public comment and we are going to have a public consultation with all industry stakeholders, is to streamline a bulk procurement guideline and that guideline will now tell us how to procure power at the least cost in a competitive way,” Amadi said. NERC has repeatedly come under fire for the many nonperforming power licenses issued by the Commission. The licensees often blame their inactivity on inability to access gas or finances among others.

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NERC tightens regulation for new licences

Electric bulb

It has so far issued over 40 licenses to potential I n d e p e n d e n t Po w e r Producers for the supply of new electricity on-grid generation capacity of more than 10,000MW. Amadi said he was confident that this new regulation to streamline procurement of power would particularly solve two major problems; one of which is allowing for cheaper cost of power as licenses would be granted only to the entity with the most efficient plan of procuring that power.

“It helps us to have a more systematic way of planning for our power so that when you have a license you are sure that the power would be generated in a place where there is gas and transmission facility or where the plant and the needed facilities are being built at the same time,” he noted. Consultations with stakeholders in line with NERC’s laws are scheduled for the next two to three weeks. Meanwhile, NERC in line with the newly revised

methodology for connection charges, new customers must now go to DISCOs to get the list of materials needed for connection. Amadi explained that, “What that means is that henceforth, nobody should be asked to pay any money for connection, but you will be responsible for the cost of connection. It would be their responsibility to get a technician who is approved by the distribution company and that technician would use those materials to connect you.”

He, however, added that the regulation allows distribution companies to vary the materials, such that if for example in difficult terrains, the distribution company can apply to the Commission with a different set of list of materials for approval for them to connect customers in those areas. “What we have done is remove the facility of conflict and disagreement on how to connect new customers. So there is clarity now. So no distribution company will ask you to pay them money to connect you,” Amadi said.


Power

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Group to monitor power procurement

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Nuclear power plant

Expert queries Nigeria’s preparedness for nuclear power By Kunle KALEJAYE

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e s p i t e assurances b y t h e Federal Government to secure Nigeria’s first nuclear power plant, a university don has expressed scepticism about government’s preparedness to execute the project. Professor Hilary Inyang of University of North Carolina Charlotte USA, in an interview with Sweetcrude, noted that it was one thing to have the concept and the desire to achieve it, but quite another thing to have the capacity to execute it. Recall that while explaining the rationale for Nigeria’s incursion to nuclear energy, the Minister of Science and Technology, Prof Ita Oko-Bassey Ewa,

that Nigeria is in dire need of diversifying its energy generation base as part of the overall goal of providing sufficient energy for the people. This, he said, is the reason for the inauguration of the Nigeria Atomic Energy Commission, NAEC, in September 2011, by President Goodluck Jonathan, as the pivotal promotional agency to achieve this objective. The Fukushima nuclear disaster opened the eyes of the world to the dangers of n u c l e a r p o w e r, a development that caused Japan to begin to reconsider its views on nuclear power, with Germany promising to end generating power from nuclear power plants by 2022. While these two

technologically developed countries are phasing out nuclear energy, Nigeria, strangely, is hoping to build one. Analysts insist that Nigeria should learn from the Japanese experience as well s from the worst nuclear accident in humankind h i s t o r y, t h e U k r a i n i a n Chernobyl disaster of 1986, that was ranked seventh on INES, The Ukrainian disaster was blamed on human error, when engineers testing the turbines of a reactor to see if it could produce more energy whenever there is power loss caused a lethal explosion. The faulty design of the Chernobyl power plant exacerbated it. But speaking at the opening of the Nuclear Security Summit in Seoul, the South Korean capital in March 2012,

President Jonathan assured the global community that Nigeria would do everything possible to ensure that adequate safety measures were deployed when the country introduced nuclear power into its energy mix. According to the President, “Nigeria remained fully committed to complying with all international legal and regulatory requirements for safety and security in the use of nuclear energy.” However, Iyang, who served as a Technical Judge in the USA Nuclear Regulatory Commission in 2008 under the President G e o r g e W. B u s h administration, argued that “Nuclear power plants require a level of care that is very big because we have many hazards associated with that because it is not something that somebody gets involves in it and goes to work very late. It is not something that you can have inadequate protection from even weather elements.”

he Nigerian C o n t r a c t Monitoring Coalition has launched a project to monitor procurement processes in the power sector with the conclusion of a threeday training programme for procurement observers. The Coalition, which is a division of the West African Contract Monitoring Coalition regionally coordinated by the Ghana AntiCorruption Coalition ( G A C C ) , i s implementing a World Bank-IDA supported project titled “Multistakeholder Engagement for Effective Public Procurement Process in Nigeria.” A c c o r d i n g t o MsSeember Nyager, a member of the group in a statement said that under the project, the Coalition is deploying observers, comprising engineering professionals and representatives of civil society organizations, to monitor procurement processes for power projects in Lagos, Ibadan and Abuja. Current members of the coalition, according to her include the Bureau of P u b l i c Pr o c u r e m e n t (BPP), the Nigerian Society of Engineers, a media representative and civil society organizations such as Public and Private Development Centre (PPDC), which is the national Convener; Media Rights Agenda (MRA), Centre for Organizational and Professional Ethics (COPE-AFRICA), I n i t i a t i v e f o r Fo o d , Environment and Health Society (IFEHS). A h e a d o f t h e monitoring exercise, Nyager noted that the Coalition held a training workshop in Abuja for its proposed procurement observers.


Power By Yemie ADEOYE

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OLLOWING agitations by workers in the power sector o v e r t h e takeover of the Transmission Company of Nigeria, TCN, a high powered delegation of the Federal Government met with the Management of the Power Holding Company of Nigeria, PHCN, to foster a peaceful transfer of operatorship. The Minister of Power, Prof. Bart Nnaji, accompanied by the Minister of Labour met the workers at the Corporate Headquarters of the PHCN in Abuja, where they held a two-hour crucial meeting with workers and the management of PHCN successor companies, in order to brief them about the final phase of the power sector reform exercise. With the Minister were also the Minister of Labour, Chief Emeka Nwogu, the M i n i s t r y ’ s Pe r m a n e n t Secretary, Dr. (Mrs) Dere Awosika, and members of the Government-Labour Negotiating panel as well as other directors of the Ministry of Power. Nnaji stated that he came to have a face-to-face interaction with the workers and to answer questions that may be agitating their minds over the ongoing privatization exercise. “It is important for you to see me, ask me questions and get straight answers, rather than depending on thirdparty information that are often doctored by people with ulterior motives,” he said. He informed the workers that the reform of the power sector has entered a final stage and that government is ready to do what is necessary to see it to conclusion, including taking care of workers’ welfare. A statement by the office of the Minister of Power indicated that as early as 8.00 a.m., the Conference Hall of the PHCN was filled to capacity by staff and management of the company but that midway into the session, a supposed Labour officer came to ring a bell and to announce that Mr. Joe Ajaero, the Secretary of NUEE, “has directed all workers in the hall to leave

FG, PHCN meet on electricity reforms … As Labour walks out on delegation

Prof. Bart Nnaji

with immediate effect.” Many of the workers immediately complied. This, however, did not deter the team which went on to deliver the message to the management and a few workers who were left behind. Nnaji was said to have reaffirmed that no PHCN worker would be sacked as a result of privatization. “The plan is to pay severance benefits to workers; the funds for this is ready and will be disbursed at the appropriate time,” he said. The government position was reaffir med by the Pe r m a n e n t S e c r e t a r y,

Awosika, who said that she was appalled by the fact that workers of PHCN are being deliberately misinformed about the reform exercise and how it affects them. She also confirmed that the severance package for workers has been set aside and shall be disbursed in accordance with the reform time-table and called on workers not to be misled by their leaders to think that government does not have the will to implement the reform. No amount of chanting or blackmail will deter the gover nment from going ahead with this reform, she said.

Labour Minister, Chief Wogu, said he accompanied the Minister because he is keenly interested in how the parties are comporting themselves as the reform enters the crucial stage. It is important to reaffirm that the reform cannot be reversed, and that government will ensure that workers get their rights, he said. The meeting was at the behest of the GovernmentLabour Negotiating Team which requested the Minister to directly address the workers and explain the government position. Following this, the management of the PHCN met with the workers at the Corporate Headquarters, and agreed to give the Ministers and the Negotiating Panel a hearing.

33 Electricity reform: FG explains benefits, calls for calm By Yemie ADEOYE

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OLLOWING several aspersions cast on the federal government over its electricity reform agenda as well as incessant power outages years after the Po w e r Ro a d m a p w a s launched, the federal Government has given a detailed insight into happenings in the power sector. The Minister of Power Professor Bart Nnaji, made this disclosure at the annual Herbert Macaulay Memorial Lecture organized by the Faculty of Engineering, University of Nigeria, Nsukka. The Minister also took a swipe at the two main industrial unions in the power sector, the National Union of Electricity Employees (NUEE) and its senior staff counterpart, (SSAEIC) accusing them of selfishness and insensitivity. In an effort to emphasize government’s passion for transparency the Minister also told his audience that the Economic and Financial Crimes Commission (EFCC) now participates in the bid handling process, especially during the acceptance of the bidding documents. “Electricity has long been recognized as the fulcrum of modern development. In other words, modern civilization is driven by electricity. Yet, electricity supply in Nigeria has over the decades been anything but satisfactory. The Nigerian press has an imagistic word for the performance of the power sector: epileptic. Still, electricity supply and the performance of the entire sector did not seize the popular imagination until 2010, despite the enactment of the Electric Power Sector Refor m (ESPR) Act in 2005.


Solid Mineral

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Fidelity Bank to fund A mining projects By Joseph ERUNKE

BUJA — In view of some difficulties b e i n g experienced in carrying out some activities in the solid minerals sector due largely to inadequate funds at the disposal of the Ministry of Mines and Steel Development, a commercial bank, Fidelity Bank Plc, has pledged to take up the challenge of funding some mining projects. The bank said it was ready to collaborate with the ministry in order not only to explore the potentials in the mines and metal sector of the nation’s economy, but expose the solid minerals products to the outside world for higher patronage. Its position was in response to the request of the Minister of Mines and Steel Development, Mr. Mohammed Sada, who had called on commercial banks in the country to come up with programmes that would enhance the professional skills of mineral title holders, saying there was the need for innovation so as to repackage the solid mineral products for improved patronage. Deputy General Manager of Fidelity Bank, Hassan Imam, made the bank’s pledge during a visit of the management team of his organisation on the minister in Abuja, during which the bank presented a brand new Toyota Hilux jeep to assist the Ministry in carrying out work on its project. Imam said the purpose of their visit was to seek for collaboration with the ministr y towards the growth of the nation’s minerals and metals sector as well as to donate the vehicle which he called ‘’project vehicle” to the ministry in order to enhance its mining operations. “The minerals and metals sector is a major sector of the economy and we do believe sincerely that if it is properly harnessed, it will generate a lot of economic activities

Miners in the tunnel

thereby creating wealth for the nation,” he said. While assuring the minister of more things to come in areas of partnership towards the development of the minerals and metals sector, he said the sector

provides another opportunity for the diversification of the economy of Nigeria. He disclosed that the Fidelity Bank was ready to organize seminars for all stakeholders in the sector on how to access funds from commercial banks for the financing of their mining projects. The minister had tasked commercial banks to particularly organize workshops for mineral title holders in order to expose them to the mode of packaging their mining projects to satisfy the requirements of their

customers. He said it was high time commercial banks take up the funding of mining operations in Nigeria. Sada reaffirmed government’s proactive steps in supporting mining projects through the establishment of the Solid Minerals Development Fund which he said, would be used to provide infrastructure for the mine sites, improved geosciences data as well as other supports for the sector. He applauded the role of Fidelity Bank over what he described as “being a

partner in progress in the development of the country’s minerals and m e t a l s s e c t o r, maintaining that government would continue to create a conducive environment for the sector so as to create wealth in line with the transformation agenda of the present administration.” The minister assured that government was committed in its efforts at diversifying the nation’s economy and ensures self -sustenance in the minerals and metals sector of the country.


Solid Mineral

Miners in search

Zamfara mining disaster: Still a human rights debacle Oscarline Onwuemenyi

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t is a fact that after decades of mining activities in the country, the fortunes of the nation’s m ining industry has not necessarily translated into wealth or social security for the communities in which the resources are extracted. Starting with the Jos tin mines in Plateau State, the Enugu coal mines which commenced operations in 1909, the discovery of crude in Oloibiri community in 1956, in present-day Bayelsa State, and recently, gold mining in Zamfara State, host communities have faced the brunt of greedy exploitation in an environment of lax

regulations and laws, construed to keep them at a disadvantage. Mining communities in the country have historically fared very poorly and have had to contend with government, mining corporations and artisanal miners for the protection and fulfillment of their human rights. The recent tragic events that led to the death of over 450 children from lead poisoning in Zamfara State, for instance, brings to stark focus, the negative environmental impacts of mining on communities across the country. Till date, more than 2000 children are said to have received treatment for lead poisoning, as a consequence of

unregulated gold mining activities in the state. The exact number of adults affected have not be ascertained, however, it has been confirmed to have led to higher rates of miscarriages among adult women and impaired livelihoods and health challenges for thousands. The human rights violations in mining communities are obvious, including the right to life, to a healthy environment and violations of their socioeconomic rights. The less obvious social impacts of mining are often ignored, such as increased migration of skilled miners and related service providers which put pressures on limited amenities, increased social

security risks and destruction of culture, are other ways through which the human rights of host communities are potentially abused. Violations occur when government does not address the strains these incursions put on the communities or does not fulfill its obligations to citizens in host communities. With regards to the Zamfara State saga, many human rights organizations have argued that, while there are regulations for artisanal mining in the country, not much is done by government to actively regulate these activities. The Nigerian government, they added, was characteristically slow to respond to the Zamfara

35 disaster, coupled with the back and forth trading of blame between the Federal and State governments over whose responsibility it was to respond to the crisis. The Mining Act of 2007, vests mining within the exclusive purview of the Federal gover nment, through the Ministry of Mines and Steel Development. However, state governments have a responsibility for the regulation of the environment through the state Mineral Resources Management Committee (MIREMCO). The MIREMCOs were primarily set up to ensure some level of citizen participation in the governance of natural resources located in their communities. Unfortunately, the various state MIREMCOs have been slow to take up their responsibility and are yet to fulfill the rationale behind their establishment. In the view of Mr. Abiodun Baiyewu, the Country Director of Global Rights in Nigeria, government agencies at both Federal and state levels have not responded appropriately and adequately to the Zamfara d i s a s t e r, t h e r e b y endangering the lives of citizens. “Their failure is not limited to events after the mining disaster; they in the first place allowed the situation to develop by overlooking dangerous practices and failed to take corrective action once they were aware of the danger,” he said. Rights violation Baiyewu contended that the violation of the right to life, which is the most fundamental of all human rights, is the most obvious breach in the Zamfara scenario. However, “socioeconomic rights such as right to decent work, right to health, right to adequate standards of living, and the right to housing were also violated by the government’s failure to supervise mining in Zamfara State. The presence of children working at mine sites also points to child labour rights violations.” According to her, it is the constitutional duty of the three levels of government to respect, protect and fulfill the human right of the citizens.


Solid Mineral

FG signs MoU on geosciences data, information

Comply with quarry, regulations else, —Minister warns By Joseph ERUNKE

By Joseph ERUNKE

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BUJA - In its bid aimed at not only facilitating t h e dissemination of Nigerian geo-scientific data but also for information, the Federal Ministry of Mines and Steel Development has signed a M e m o r a n d u m o f Understanding (MOU) with Fugro Nigeria Limited/Fugro Airborne Surveys (pty) Ltd. The processes which culminated in the event, started about eight years ago when the ministry embarked on various ambitious programmes to reposition the solid minerals sector and make Nigeria a major mining destination. The agreement which was signed between the ministry ’s representative, Nigerian Geological Survey Agency and Nigeria’s leading Environmental and Geotechnical laboratory fir m, will make solid minerals data universally and widely accessible in an affordable manner. Speaking at the occasion in Abuja, Minister of Mines and Steel Development, Mr. Mohammed Sada, said unless products derived from activities in the solid minerals sectors were easily available and accessible to the public, all efforts of the ministry in repositioning the sector would not achieve their desired results. Some of the programmes the ministr y embarked towards innovation in the sector, according to the minister, included massive generation of geo-scientific data through airborne geophysical surveys which he further hinted, resulted in the 100 per cent airborne geophysical coverage of the entire country, enactment of the new Minerals and Mining Act and Regulations as well as the establishment of a transparent Mining Title

36

Liquid Steel

Administration. “Gover nance and institutional reforms have also been put in place to address lapses that had hindered the progress of the sector for long. These include the change of the role of government from o p e r a t o r t o regulator/administrator,” he said. He noted that geo-science data was a public good and needed to be widely disseminated to maximise its impact, stating that the value of geo-science data was not in its inherent commercial value, but in contribution to stimulating inward investment to a country. “For this to happen in a vibrant and dynamic way and to generate a conducive climate for sustainable growth and development of the mining sector, and for data to realise its full potential, data has to be made universally and widely accessible in an affordable

m a n n e r. T h e p r o a c t i v e approach being adopted by the ministry envisions a platform by which the public can enjoy unhindered access to these date through a userfriendly interface. The aim of this project is to attract serious players in the industry,” he said The minister explained that the ultimate objective of his administration was to fulfil the mandate of the ministry which was to facilitate the exploitation of the nation’s mineral endowments in an environmentally sustainable manner and establish a vibrant minerals and metals industry for wealth creation, poverty reduction, promotion of economic growth as well as contribution to the Nigerian Gross Domestic Product. “The current economic liberalisation and continued mining sector reforms have renewed international interest in Africa. Countries like Ghana, South Africa, Zambia and Namibia, have benefitted from the huge

Foreign Direct Investment to their respective countries. Nigeria cannot longer afford to be a passive player in this ever evolving and changing climate,” he said. For Nigeria to maintain her investment competiveness in the global arena, according the minister, “the need to improve her attractiveness by maintaining an investorfriendly environment had become imperative. “I am very optimistic that we are at the threshold of a major breakthrough in the mining activities as a result of the new gateway. This is in addition to the fact that the sector has for the first time started contributing its quota to the federation account of the country,” he reiterated. He said the arrangement would not foreclose other efforts the ministry was making to market the country ’s solid minerals potentials, hinting that the establishment of Investment Pr o m o t i o n U n i t i n t h e ministry was geared towards the project.

B U J A MINISTER of Mines and Steel Development, Alhaji Mohammed Sada, has war ned operators in quarry industry in the country to carry out their activities within the ambit of the law, failure of which he said government would not hesitate to wield its big stick on defaulters. This is even as he observed that complying with the laws, rules and regulations guiding quarry operations would be in the mutual benefits of the operators, their host communities and the government. Speaking when members of Ondo State Q u a r r y Owners/Operators Association paid him a working visit in his office in Abuja, the minister advised the operators to t a k e c a r e o f environmental and community related issues in carrying out their activities. He noted that quarry was a very important aspect of mining which he said, was growing fast in the country, adding that everything was being done by the Federal Government for its sustainable development. The Minister thanked the association for the visit and advised them to communicate any operational challenges with the Ministry, which he said, was ready to assist them. Speaking earlier, the leader of the delegation and Chairman of the Association of Ondo State Quarry Owners/Operators, Mr. Sylvester I. Enabunlele, said the purpose of their visit was to thank the Minister for lifting the ban imposed on quarry operations in Ondo State in September 2011, due to operational lapses.


Technology

Phone: 08027181717,

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e-mail: jimlaw2004@yahoo.com

Wind Energy Technology Basics INTRO

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everal electricity providers today use wind plants to supply power t o t h e i r customers. But wind power is not new; from the sailing ships of the ancient Greeks, to the grain mills of preindustrial Holland, to the latest high-tech wind turbines rising over the Minnesota prairie, humans have used the power of the wind for millennia. Wind turbines, like windmills, are mounted on a tower to capture the most energy. At 100 feet (30 meters) or more aboveground, they can take advantage of the faster and less turbulent wind. Turbines catch the wind’s energy with their propellerlike blades. Usually, two or three blades are mounted on a shaft to form a rotor. A blade acts much like an airplane wing. When the wind blows, a pocket of lowpressure air forms on the downwind side of the blade. The low-pressure air pocket then pulls the blade toward it, causing the rotor to turn. This is called lift. The force of the lift is actually much stronger than the wind’s force against the front side of the blade, which is called drag. The combination of lift and drag causes the rotor to spin like a propeller, and the turning shaft spins a generator to make electricity. Wind turbines can be used as stand-alone applications, or they can be connected to a utility power grid or even combined with a photovoltaic (solar cell) system. For utilityscale sources of wind energy, a large number of wind turbines are usually built close together to form a wind plant. Stand-alone wind turbines are typically used for water pumping or communications. H o w e v e r, h o m e o w n e r s , farmers, and ranchers in windy areas can also use wind turbines as a way to cut their electric bills. Small wind systems also have potential as distributed energy resources. Distributed energy resources refer to a

Modern wind turbines tower above one of their ancestors-an old windmill used for pumping water. Credit: Warren Gretz variety of small, modular power-generating technologies that can be combined to improve the operation of the electricity delivery system. The Wind Resource The wind resource refers to how fast it blows, how often, and when–plays a significant role in its power generation cost. The power output from a wind turbine rises as a cube of wind speed. In other words, if wind speed doubles, the power output increases eight times. Therefore, higher-speed winds are more easily and inexpensively captured. Wind speeds are divided into seven classes–with class one being the lowest, and class seven being the highest. A wind resource assessment evaluates the average wind speeds above a section of land (e.g. 50 meters high), and assigns that area a wind class. Wind

American windmill used for water pumping, © Bundesverband WindEnergie

Wind farm Sintfeld for electricity production, one of the largest wind farms in Germany, © WWEA

Diagram above Showing How Wind Energy Works turbines operate over a limited range of wind speeds. If the wind is too slow, they won’t be able to turn, and if too fast, they shut down to avoid being damaged. Wind speeds in classes three (6.7 – 7.4 meters per second (m/s)) and above are typically needed to economically generate power. Ideally, a wind turbine should be matched to the speed and frequency of the resource to maximize power production. The Mechanics of Wind Turbines Moder n electric wind turbines come in a few different styles and many different sizes, depending on their use. The most common style, large or small, is the “horizontal axis design” (with the axis of the blades horizontal to the ground). On this turbine, two or three blades spin upwind of the tower that it sits on. Small wind turbines are

generally used for providing power off the grid, ranging from very small, 250-watt turbines designed for charging up batteries on a sailboat, to 50-kilowatt turbines that power dairy farms and remote villages. Like old farm windmills, these small wind turbines often have tail fans that keep them oriented into the wind. Large wind turbines, most often used by utilities to provide power to a grid, range from 250 kilowatts up to the enormous 3.5 to 5 MW machines that are being used offshore. In 2008, the average land-based wind turbines had a capacity of 1 . 6 7 M W. U t i l i t y- s c a l e turbines are usually placed in groups or rows to take advantage of prime windy spots. Wind “farms” like these can consist of a few or hundreds of turbines, providing enough power for tens of thousands of homes.

From the outside, horizontal axis wind turbines consist of three big parts: the tower, the blades, and a box behind the blades, called the nacelle. Inside the nacelle is where most of the action takes place, where motion is turned into electricity. Large turbines don’t have tail fans; instead they have hydraulic controls that orient the blades into the wind. In the most typical design, the blades are attached to an axle that runs into a gearbox. T h e g e a r b ox , o r transmission, steps up the speed of the rotation, from about 50 rpm up to 1,800 rpm. The faster spinning s haft s p i ns i ns i d e t he generator, producing AC electricity. Electricity must be produced at just the right frequency and voltage to be compatible with a utility grid. Since the wind speed varies, the speed of the generator c o u l d v a r y, p r o d u c i n g fluctuations in the electricity. One solution to this problem is to have constant speed turbines, where the blades adjust, by turning slightly to the side, to slow down when wind speeds gust. Another solution is to use variablespeed turbines, where the blades and generator change speeds with the wind, and sophisticated power controls fix the fluctuations of the electrical output. A third approach is to use low-speed generators. An advantage that variablespeed turbines have over constant-speed turbines is that they can operate in a wider range of wind speeds.

Historical Dutch windmill, © Bundesverband WindEnergie


Insurance Rosemary ONUOHA

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s part of efforts to curb capital flight, the need for increased capacity on the part of Nigerian insurers have become a subject of concern in order to effectively underwrite risks associated with oil and gas 100 per cent. The situation whereby some insurance companies serve as conduit pipe for transferring local oil and gas risks to international market, according to operators, is not wholesome. Managing Director of Niger Insurance Plc, Mr. Justus Uranta ,who made the assertion to SWEETCRUDE, noted that the local content initiative started with 10 per cent involvement and climbed to 40 per cent and the intent is for it to go up to 70 per cent in the future, adding “We hope that it will get to 100 per cent.” Uranta said that the initiative is a policy that government instituted to encourage local operators and not only the insurance industry. He said “What that does is that it has forced the local market to absorb increased capacity and also made us sit up in terms of improving our capital base because if your capital base is low, you cannot participate in the local content policy.” “If you are maybe in marine business where you are not directly faced with mitigating a loss, perhaps the scenario may be different ,but because of the nature of our business, whereby we are in a position where we have to meet a claim when a loss occurs, then we must be sure that our capacity is sufficient to carry such risks that have been bestowed on us.” Uranta therefore urged underwriters to continuously review and improve on their retention capacity to be able to take advantage of the local content exposure. Meanwhile amidst fears in some quarters that claims emanating from oil and gas risks have been huge and could impact negatively on the bottom-line of insurers, some operators are of the opinion that the business still

Mr. Justus Uranta

bite of the businesses coming from the oil and gas sector. Efekoha said that the first pool should be the initiation of the National Insurance Commission, NAICOM, and the second coming by way of some operators coming together in a kind of syndicate arrangement that would not be initiated by either NAICOM or the Nigerian Insurers Association, NIA. Efekoha however commended the effort of NAICOM in policing and ensuring that the local content is enforced adding that the oil industry was supposed to maintain the momentum that started with the local content project. According to him, this could not be, because there has been a little bit of caution due to the few incidents that have happened so far because the claims emanating from those incidents, no matter how small they were, are huge in terms of amount.

Insurers target 100% oil, gas risks participation remains a worthwhile venture. For Managing Director of Crystalife Assurance Plc ,Mrs. Oluseyi Ifaturoti with adequate re-insurance, oil and gas risk can be effectively managed. It will be recalled that the optimism and momentum that started with the local content project on insurance of oil and gas started declining as a result of quick maturation of risks and subsequent claims emanating from the accessed risks. As a result of the risks crystallizing earlier than expected, players are beginning to exercise caution so that they do not burn their fingers which could possibly affect shareholders’ fund. However, Ifaturoti was of

the opinion that the oil and gas business is still worthwhile because there is still a lot of premium to be earned since the re-insurance mechanism is here to spread the risk so that they are not over exposed. She said “Even the owners of the risk want to see your reinsurance programme for their risks to be sure that when a claim crystallizes, you have set in motion machinery that will ensure that their claims are settled.” For Managing Director of Consolidated Hallmark Insurance plc, Mr. Eddie Efekoha, the insurance industry needs a firmer and stronger oil and gas insurance pool arrangement. Efekoha said that the pool arrangement is necessary to help the market have a bigger

Uranta therefore urged underwriters to continuously review and improve on their retention capacity to be able to take advantage of the local content exposure

38 Insurance sector set for robust regulation

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he Nigerian insurance sector is set for a robust legal and regulator y framework that will ensure that it contributes positively to the principal objective of the Financial System Strategy 2020 (FSS 2020). The FSS 2020 is to make Nigeria, Africa’s financial hub and one of the 20 largest economies in the world by the year 2020. To this end, a new insurance draft bill is presently being reviewed by the Federal Ministry of Finance which is expected to be passed to the Federal Executive Council soon for onward presentation to the National Assembly. It will be recalled that in March 2009, the Honourable Minister of State for Finance inaugurated a committee to review all laws and regulations relevant to insurance in Nigeria under the chairmanship of Professor Joe Irukwu ,to address the constrain occasioned by poor legal framework. The Committee had since submitted its report. Also, the National Insurance Commission, NAICOM, organised a two day sensitisation retreat for members of the House of Representatives’ Committee on Finance recently. Commissioner for Insurance, Mr. Fola Daniel noted that the Committee members were a great s u p p o r t t o t h e Commission’s initiative to re-position the insurance sector in order to realise the objective of making insurance industry play a pivotal role in the development of the nation’s economy. According to the C o m m i s s i o n e r, t h e realisation of the various initiatives and reforms being embarked upon by the Commission is constrained by poor legal framework, poor public perception of the sector, as well as low awareness amongst the populace.


Insurance

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Fraudulent acts C to be checked S

Structural weaknesses favour foreign firms —Stakeholders

Rosemary ONUOHA

ommissioner f o r Insurance, M r. F o l a Daniel has said that the Nigerian Insurance Industry Database, NIID, would protect Nigerian government, individuals and corporations from the dangerous activities of fraudsters racketeering fake insurance certificates. According to Daniel, the NIID is of great benefit to all stakeholders in the insurance industry. These include but not limited to the various government at all levels, policyholders, shareholders of insurance firms and would be investors. Highlighting other benefits of the database, Daniel said the database is an instrument that would become very handy in the control of, or fight towards the eradication of fake insurances in Nigeria. He said “It is expected to facilitate easy collation and dissemination of statistical information relating to all classes of insurance in Nigerian and also serve as a platform for easy identification of genuine insurances by security agencies and other relevant authorities.” Daniel also noted that the NIID is coming on the heels of continued effort by the National Insurance Commission, NAICOM, to rid the nation of fake insurers and insurances in furtherance with its Market Development and Restructuring Initiative, MDRI. “Eradication of fake insurances and the sanitisation of the insurance industry is one of the cardinal objectives of the MDRI. We are of the belief that the launching of the NIID will go a long way in assisting the commission in this campaign,” he said. Meanwhile, Assistant Corps Marshal, Federal Road Safety Commission (FRSC) Mr. Ademola Lawal said that the FRSC would support the industry in all possible ways to ensure that the database achieves the purposes for which it was

By Rita OBOECHINA

Mr. Fola Daniel

Eradication of fake insurances and the sanitisation of the insurance industry is one of the cardinal objectives of the MDRI

designed and set up and make it the envy of other sectors. According to him, before now the commission has wondered when it would be possible to get a database of all insurance companies in the country, noting that with the launch of the NIID, this problem has been finally laid to rest. He said “At some of our management meetings in Abuja, we have wondered when there will be a database for insurance companies in the country. We

have our own database and now that the insurance industry has a database, it will be easy for us to harmonise them.” “ W e a r e endorsing this database and we will do everything in our powers to ensure that the database of NIA becomes an envy of all other industries,” Lawal promised. Chairman of NIA, Mr. Olusola Ladipo-Ajayi s t a t e d h i s conviction that the database, w h i c h h e described as a milestone by the industry would help to eradicate fake insurance. He noted that fake insurance is worse than fake drug, reasoning that fake drug affects only one person, which is the consumer while fake insurance affects b o t h t h e consumer and

other third parties who may be affected by the absence of genuine insurance protection in case of accidents. It will be recalled that the NIID is expected to serve as a vehicle for easy identification of genuine insurance documents by relevant authorised persons, monitor insurance transactions documents and reduce incidences of fraudulent insurance transactions.

takeholders in the insurance sector have decried the dominance of foreign firms in the insurance of oil and gas risk businesses saying that there still exist structural weaknesses in the system. Ac c ord i ng t o t h e m , structural weakness in the industry meant that most of the large insurance businesses were still being written by foreign companies. They however stated their preparedness to tap into the enormous opportunities presented by local content policy of the Federal Government in the oil and gas sector. Ac c o r d i n g t o t h e s e stakeholders, the Local Content Act holds significant potential for the growth of the Nigerian insurance industry. According to the Chairman of Sovereign Trust Insurance Plc Dr Ephraim Faloughi, the opportunities stem from the fact that the policy places responsibility on foreign oil companies to retain a substantial portion of their operations in the local economy. Faloughi said that aside from addressing capital flight, the regulation provides Nigerian insurers with an appreciable level of exposure to complex oil and gas underwriting risks that could rub off p os i t i ve ly on h um a n capital development and underwriting expertise in the industry. Chairman of Niger Insurance Plc Mr. Bala Zakariya’u, said that the National Insurance Commission, NAICOM, is forging ahead with its determination to deepen the market through its MDRI agenda to meet the N6 trillion premiums on vision 2020 roadmap. Part of the strategy is the enforcement of compulsory insurance which has been on since 2011.


Labour

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Our expectations from new PIB —PENGASSAN P

Victor AHIUMA-YOUNG

ETROLEUM and Natural Gas Senior S t a f f Association of Nigeria, PENGASSAN, has re-iterated its opposition to Petroleum Industrial Bill, PIB that does not address labour issues, among others. In a 10-point position paper, the umbrella body for senior workers in the oil and gas industry insisted that transparency and accountability in the petroleum industry must take priority. Specifically, PENGASSAN in line with transparency and accountability stance said “PIB must ensure a competitive, nondiscretionary licensing and tender processes, publish all licenses, tenders and contracts online, void confidentiality clauses for oil revenue and payment information, publish quarterly comprehensive production, export and import figures and publish NNPC annual reports and audits online as the case with the multi-nationals.” There should be community participation through Petroleum Host Communities Fund and clearer definition of community participation and ownership to foster enduring harmony and co-existence with the host communities. On licensing and contracting, PENGASSAN said “there must be simple and transparent technical licensing, elimination of the downstream allocation process, end to the Minister’s role in issuing licenses and all discretionary power of the Minister with regards to licenses of all kinds”, arguing that approval processes should be simplified. It called for a single

Pipeline repair regulatory authority for upstream, midstream and downstream, capitalisation and unbundling of Nigerian N a t i o n a l Pe t r o l e u m Corporation, NNPC. Similarly, the association said there must be reduction of government dominance in gas, phasing out gas aggregator and replacing it with a gas regulatory unit including tax, fiscal regime issues. On refinery, PENGASSAN demanded “the adoption of the Nigerian Liquefied Natural Gas, NLNG, model of 49%/51% Equity Shares and ensure that the management of each refining company is autonomous and fully responsible for its

success and failure. Effective incentives should be granted to allow for the development of private refineries alongside the existing refineries. For instance, granting of tax holiday and subsidizing crude for local refineries can encourage local refining. A mandatory minimum allocation of crude should be reserved for local refining.” Stressing on labour issues, PENGASSAN said “the PIB should ensure mandatory recognition of the right to freedom of association and effective collective bargaining by all companies operating or doing business in the Nigeria oil and gas industry, irrespective of where they are located .The

position of the 2008 original PIB position on this should be strengthened. In addition, the PIB must ensure that all companies operating in the Nigerian oil and gas industry comply with all international labour conventions that have been ratified by Nigeria; the collective agreements with the labour unions and the extant labour laws as a minimum in all their dealings with the Nigerian workers and their representatives. Workers shall transit to the new companies on same terms and conditions.” “There should be one representative each of PENGASSAN, Nigeria Union of Petroleum and

N a t u r a l G a s Wo r k e r s , NUPENG, Trade Union Congress of Nigeria, TUC and Nigeria Labour Congress, NLC, in all boards and committees set up in the PIB. Workers and their unions are strategic partners and stakeholders whose participation, initiatives, drive and inputs are important for the successful operations of the oil and gas industry. There should also be the inclusion of PENGASSAN and NUPENG in the Board of NNPC, and other Sector Agencies/Institutions as strategic partners with cognate knowledge.


Labour Victor AHIUMA-YOUNG

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RADE Union Congress of Nigeria, TUC, has called on the Minister of Power, Professor Barth Nnaji, to resolve all pending labour issues in order to have smooth reforms and privatization of the sector. President-General of TUC, Comrade Peter Esele, who spoke in Abuja, warned that any attempt to side track labour issues, would spell doom for the privatization process. According to him, “the Minister in charge of the Industry should quickly and honestly resolve all labour related issues within the sector, so that his stated plans for the sector may be accomplished not on the s u f f e r i n g s a n d impoverishment of the workers, but on sound principles, processes and motives. He should resist every attempt to shove the workers aside, as this would be resisted by Nigerian workers not only as represented by Senior Staff Association of Electricity and Allied Companies, SSAEAC, and the National Union of Electricity Employees, NUEE, but by every Nigerian worker as represented by the Labour centers. The present use of the instruments of the Federal Ministry of Labour, Employment and Productivity and sometimes the National Industrial Court NIC, to stop workers in the industry from defending themselves may eventually backfire. The only way to go is for the Ministry to bring sincerity and fidelity to the negotiation table. This will resolve the issues rather than trying to bulldoze its way despite the injuries it will inflict on thousands of workers and their respective families and dependents.” Similarly, the two unions in the industry called on Federal Government to ensure that labour issues are settled for a seamless privatization of the Power Holding Company of Nigeria,PHCN. Under the aegis of the Senior Staff of Association of Electricity and Allied Companies, SSAEAC, and the National Union of

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PHCN: TUC predicts crisis over labour issues

Protesters Electricity Employees, NUEE, gave the advise at an sensitization programme in Lagos. General Secretar y of NUEE, Comrade Joe Ajaero, said that the unions were confronted with issues of negotiation with government which had

lingered for the past fourteen months. He said that despite all the effort of the unions to let the government understand the reasons why workers benefit must be paid before folding up PHCN, “nothing concrete has been achieved by both u n i o n s . We h a v e b e e n

discussing with government in the last fourteen months now, on workers benefits but we cannot achieve any concrete agreement.” Ajaero however, urged the Federal Government to be more sincere in their move to privatize the power sector, and settlement of workers

benefits before the final taking over of the sector by the private investors, saying “We are asking for what belong to us, not separating us from our job when it is not time. Even if we are leaving PHCN today, they should settle us for what we have done.”

… Seeks Presidential intervention

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IGERIA Union of Petroleum and Natural Gas workers, NUPENG, has a p p e a l e d t o Pr e s i d e n t Goodluck Jonathan, to immediately intervene in the planned sale of 11 Power Holding of Nigeria, PHCN’s distribution companies to save the power sector from disaster.

NUPENG specifically pleaded with President Jonathan to prevail on Bureau of Public Enterprises, BPE, to extend the bidding period which the Bureau said it closed a week ago, to allow other interested parties and Nigeria investors to participate. It will be recalled that BPE had on Tuesday, July 31, 2012,

released names of 54 investors which it claimed bidded for the 11 distribution companies at the close of biding. However NUPENG claimed the process was very shady, aimed at allowing cronies and fronts of the ‘powers that be’”, to buy up the PHCN companies at ridiculous prices..

In a statement titled “NUPENG protests shady BPE deals on PHCN bids”, the union argued that the hurried closure for the bid of the sale of the PHCN companies, was not in the best interest of the power sector reforms that a lot of monies had been committed into.


Freight

APM makes case for Greenfield port development

Godwin ORITSE

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AGOS Deep O f f s h o r e Logistics base (LADOL), has again secured another $15.6million (about N2.5 billion) contract for a rig maintenance, an indication that the local content drive in the nation’s Oil and gas sector is achieving positive results . The giant rig code-named N o b l e Pe r c y J o n e s i s expected to undergo a complete maintenance turnaround at the base for a period of ninety days, after which it would be certified fit for offshore operations for the next five years. Operations Manager of Noble Drilling Nigeria Limited, Mr. Dave Arthur, who conducted members of the Nigerian Content Development and Monitoring Board (NCDMB) round the vessels at the base, recently, said the company had chosen to undertake the repair works at LADOL, because it was sufficiently satisfied with the facilities as well as other logistics provisions as specified by the Board. “We are encouraged by the local content policy of Nigeria, coupled with the available facilities here in bringing our job to LADOL, rather than policy consideration”. He added. As part of the objectives of the Nigerian Local Content Development Act (NLCDA), government aims at empowering indigenous companies operating in oil & gas, and maritime service sectors to enable them secure jobs from international oil companies (IOCs). According to the Noble Drilling Manager, after considering other options for the rig maintenance, the company decided to do the job at LADOL since it has found the environment conducive in view of the prevailing security challenges in some parts of the region. It will be recalled that in 2011 alone, LADOL handled about three major repair jobs for Ben Avon, Transocean including one of the largest rig repair job ever executed in Nigeria, which is NoblePercy Jones rig repair. As the Transocean –Baltic rig just left the base few days back,

42

Godwin ORITSE

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Pix shows from fight Mr. Patrick Akpobolokemi, Director – General, Nigerian Maritime Administration and Safety Agency (NIMASA) with Right Honourable Ifeanyi Ugwuayin, Chairman House of Representative Committee on Marine (middle) and Deputy Chairman of the Committee Hajia Kaamuna Khadi

Local Content: LADOL wins N2.5bn rig deal Noble Drilling –Noble Lloyd Noble rig is cur rently undergoing repairs at the base. Also speaking with newsmen during the tour of the rig at LADOL base by a team of delegates from Nigerian Content Development and Monitoring Board (NCDMB), who were accompanied by officials of NAPIMS and Chevron, Dave Arthur disclosed that the rig repair which has created over 261 jobs for Nigerians, and will also generate the sum of $15.6 million in cost for the economy, added that the policy decision (Local Content Act) enabled Noble to use LADOL. Listing other reasons why the job was given to LADOL, Arthur who disclosed satisfaction with the level of works at the ongoing repair of the 29-year old rig, stated that the company chooses to repair at LADOL due to the fact that the base is located in a safe environment devoid of community crisis, which is capable of making business

Dave Arthur disclosed that the rig repair which has created over 261 jobs for Nigerians, and will also generate the sum of $15.6 million in cost for the economy to thrive. He added that the rig will be due for delivery on 1st October, 2012, after 100-day duration. Commending the local content drive at LADOL, Akintunde Adelana, Director, Monitoring and Evaluation, Nigerian Content Development and Monitoring Board (NCDMB), who described the team’s visit to LADOL as an eye opener and a pointer to the level of growth of indigenous capacity in the

nation’s maritime and oil and gas sectors, affirmed that there are potentials yet to be tapped by local and foreign investors in the sector. H e e n c o u r a g e d management of LADOL to keep faith in their projects, noting that the NCDMB would not hesitate at any time to support the base to overcome its market challenges. Earlier in her presentation titled: ‘Making Nigeria the Hub for Rig Repair in West Africa’, Amy Jadesimi, Managing Director of LADOL, noted that, repairing rigs in Nigeria, has helped the country to benefit from technological transfer through training of a pool of manpower, who took part in the repair process. According to her, LADOL in partnership with Samsung Heavy Industries is working on expanding its fabrication capacity from 10,000 tons to 40,000 tons with the integration of Floating Production Storage and Offloading (FPSO) fabrication facility in Nigeria, in order to centralize mega oil and gas and maritime fabrication jobs for West Africa in Nigeria.

OLLOWING the increase in cargo throughput, the Managing Director of A. P. Moller Terminals, Mr. Dallas Hampton, has said that container traffic into the Lagos ports area is expected to hit about two m i l l i o n Tw e n t y - f o o t Equivalent Units (TEUs) in the next six years. Hampton stated this while delivering a paper titled, “An over view of the Nigerian Ports’ Location as a Major Determinant of t h e G r e e n f i e l d Po r t Success in Nigeria”, at the First Nigerian Green Ports Development Summit, organised by Golden Edge Consult Limited in collaboration with the Nigerian Ports Authority (NPA) recently in Lagos. He said the maximum capacity that the ports and Inland Container Depots (ICDs) in Lagos can accommodate is about 2.2million TEUs. Represented by the company’s Media Advisor, M r. B o l a j i A k i n o l a , Hampton said that Lagos ports, made up of Lagos Port Complex, Apapa and T i n c a n I s l a n d Po r t Complex, are already congested and rely heavily on ICDs. “Lagos ports alone handle 90% of the cargo in and out of Nigeria. With container volumes forecasted for L agos, the combined capacity of Apapa fully developed and Tincan Island Port and all the ICDs in Lagos areas expected to be inadequate within the next six years,” he said. Hampton said the same situation also applies to general cargo terminals, noting that “A new port will be needed to keep up with the demand for capacity as the existing ports are surrounded by the city and cannot be further expanded.”


NIMASA AD


Freight

44 FG warns firms against manipulating manifest Godwin ORITSE

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NIMASA newly acquired armoured patrol boats

We have reduced crude oil theft by 70% —NIMASA

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OLLOWING t h e intervention of G l o b a l We s t V e s s e l Specialist Limited, in securing the nation’s maritime domain, the Nigerian Maritime Administration and Safety Agency, NIMASA, said the intervention has reduced crude oil theft by as much as 70 percent. Disclosing this to SWEETCRUDE in Lagos recently, NIMASA’s Director G e n e r a l , M r. P a t r i c k Akpobolokemi, said that the acquisition of 12 armored patrol boats will further reduce the criminals involved in stealing the nation’s crude oil. Akpobolokemi, who disclosed this during the visit o f t h e H o u s e o f Representatives Committee

on Marine Transport to NIMASA, stated that the agency in collaboration with other agencies have arrested a good number of criminals with their vessels so much that, NIMASA has decided to keep these arrests away from the media due to the negative effect it has on the country.. He explained that besides the stoppage of the nation’s crude oil theft, the agency is also making plans to stop the illegal aspect of legal bunkering noting that if the Nigerian National Pe t r o l e u m C o r p o r a t i o n (NNPC) must account for every drop of crude that leaves this country. His words, “As far I am concerned, that is the one that is very technical and which we are already

working on, so that at the end of the day we will be able to tell ourselves the volume of crude that is being exported at any point in time. “We will get that issue resolved before the end of the year hopefully with the support of every stakeholder involved in the matter.” He blamed the cartel working inside the Nigerian National Petroleum Cooporation for the current setback that is being experienced in the maritime sector, adding that there are some people in the NNPC who do believe that Nigerians do not have to be part of crude oil lifting business. “The same way the cartel does not want the local people to benefit is the same reason they are giving, there are people in NNPC that do not

feel that it is appropriate for Nigerians to participate in that business and the absence of Nigerians in that business is costly to the country. “That is why we do not have seafarers with the sea time experience, because, if we had ocean going vessels, it means that your citizens will work on board these vessels and you can see man power loss, revenue and capital flight, but I am happy that the government is not happy with the current situation in the maritime industry and they are doing something to change the situation. “It beats me to think of how we got to this level because I still do not understand what went wrong along the way,” he stated Speaking in a similar vein, Managing Director of Global We s t Ve s s e l S p e c i a l i s t Limited, Captain Romeo Itima, stated that although he could not aggregate the percentage in the reduction of crude oil theft, but, believes that the activities of oil thieves has significantly been reduced.

ARD times a w a i t s fraudulent shipping firms involved in the manipulation of ship manifest, as the Federal Government through its maritime safety agency, the Nigerian Maritime Administration and Safety Agency (NIMASA), has decided to apply severe sanctions against culprits. Giving this warning at a breakfast meeting with maritime stakeholders held in Lagos, NIMASA’s Director General, Mr. Patrick Akpobolokemi, s a i d t h a t t h e unwholesome practice is robbing government of h u g e r e v e n u e . Akpobolokemi stated that the agency will wield the big stick on anybody caught trying to short c h a n g e t h e government.He also directed that hence forth, all ship manifests must be submitted to NIMASA a week before the arrival of the vessel, that way, the agency will have ample time to process such manifest with a view to calculating the correct rate. He further warned that every unauthorized mid-stream discharge will no longer be tolerated as this is another avenue t h r o u g h w h i c h unscrupulous Nigerians with their foreign collaborators deny government of its revenue.“Any shipping firm that brings its manifest after the arrival of such vessel will be seen as a saboteur and will be treated as such. “The unwholesome practice must be brought to a stop and the government has shown every seriousness to deploy every of its apparatus to these criminals” he added. He disclosed that platforms are currently being deployed to checkmate the activities of the shipping firms, so as to ensure that due process is followed in the course of doing business with the government.


45

Samuel OYADONGHA

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h e n Governor Seriake Dickson o f Bayelsa State hinted that his administration would focus on the completion of the abandoned roads in the three senatorial districts, many dismissed this as mere rhetoric owing to the several failed promises by previous administrations to get the project completed. The roads, initiated by the former Governor, Diepreye A l a m i e y e s e i g h a administration were designed to link the oil and gas rich coastal enclave of the Sagbama, Ekeremor, Southern Ijaw, Ogbia and Nembe axis of the predominantly riverine and swampy state to mainland Yenagoa, the state capital with a view to opening up the areas to commerce and fast track development. The projects were however stalled owing to what sources blamed on poor funding. At a point, Governor Timipre Sylva had to call on the Federal Government to take over the construction of the three senatorial roads due to the huge financial cost. Although no other sector has aroused as much interest and debate as the construction of roads in the pre-dominantly riverine state, the resumption of work on the three senatorial roads could at best be described as the greatest challenge of the Dickson administration to link the waters and land of the state. The state government after painfully weighing the options of watching its citizens dying on daily basis on account of the boat mishaps and pirates attacks and buoyed by injection of funds into capital projects due to its tackling its bloated wage bill and the resultant sharp reduction in re-current expenditure re-suscitated the abandoned road projects. Interestingly, the hope of indigenes of these far flung communities in the mangrove swamp of driving to their homeland in no distant time was re-kindled last month when the construction firms handling

Road repair

Work resumes on abandoned roads the projects returned to site. This followed the release of N6bn to the construction firms by Governor Seriake Dickson to enable them mobilise to site. The breakdown of the funds released include N2bn for the construction of Yenagoa-Oporoma Road by Julius Berger, representing the Central Senatorial road project, N2.5billion for the construction of the Sagbama-Ekeremor Road in the West Senatorial district road to Setraco and N1.5bn to Chinese Civil Engineering and Construction Company for the execution of Etegwe Tombia Road. It was therefore a moment

of joy for indigenes of the state from the central senatorial district, which, over the years have had to contend with travelling by speedboats to their communities in the Southern Ijaw council area in spite of the attendant risk of boat mishaps and pirate attacks when Julius Berger mobilised to site. Heavy duty equipment and haulage trucks belonging to Julius Berger in a long convoy last week made a triumphant return to its abandoned base across the Ikoli creek to the admiration of Bayelsans. Julius Berger, it would be recalled pulled out of the Niger Delta at the height of youth militancy following the killing of its expatriate

personnel in a botched kidnap attempt at Rumuji near Port Harcourt, Rivers State. Already, traders around the Ikoli bridge on the Swali end have been dislodged to give way for the firm to fix the ailing bridge which was yet to be completed before the company’s forced pull out from the region, but commissioned by the i m m e d i a t e p a s t administration. The story was not different at the Sagbama-Ekeremor flank, where Setraco had mobilised to site while work had also commenced at the Ebeni bridge linking the Sagbama axis to the Amassoma-Yenagoa-Etegwe

stretch of the road. An elated indigene of Oporoma in the deep swamp of Southern Ijaw council area, Thomas Moneyman told Sweetcrude, “this is a dream come true for us. We are more than convinced that the present administration is committed to the completion of the senatorial roads.� Also speaking on the ongoing projects, the Commissioner for Works and Infrastructure Mr. Lawrence Erudjakpor, re-iterated the intention of the government to link the three senatorial districts of the state as well as change the face of the state. Describing Yenagoa as a huge construction yard is an understatement, he said given the number of projects embarked upon by government qualifies the whole state as construction sites and that Yenagoa is beginning to shed its provincial toga.


46

Azikel Group expands operations A Samuel OYADONGHA

zikel Group, a l e a d i n g indigenous conglomerate w i t h i t s operational base in Yenagoa, Bayelsa State, is diversifying into the oil and gas industry, the aviation and agricultural sector. President of the Group, Dr. Eruani Azibapu Godbless in an interview with media men in Yenagoa, said his company is not only out to contribute its quota to the development of the state by providing employment for the teeming youths, but also exploring other frontiers such as going into large scale farming in line with the state g o v e r n m e n t ’ s transformational agenda. Excerpts: Why are investors not keen to come and invest in the state, despite series of attempts to woo them to the state? Nobody would come to invest (Investors) in Bayelsa, except Bayelsans that are in business decide to invest to improve the local economy. The only exception to this trend are the multi-national oil companies that are operating in the Niger Delta; and it was for this singular reason that we (Azikel Group) decided to take the

Dr. Eruani Azibapu Godbless

lead in investing in the state and the Niger Delta region. Your company is going into oil and gas, why the interest in the sector? We have taken a critical look into the oil and gas sector and we have the capacity to become a major player in the field, based on a properly thought out and tested business model. Aside from that, as a leading firm in the Niger Delta, we want

to also serve our people and the entire country. We are interested in acquiring marginal fields, and I believe that we are strategically positioned to make a success of this venture following what I am confident would be a successful participation in the next round of bids. The operators of the private sector are into business primarily to maximise profit, what is your position on this?

S i n c e r e l y, t h o u g h , business is primarily about profit making, but for us in the Azikel Group, the key word is sustainability on a model geared towards providing customers with satisfaction. Once you achieve this, profit will naturally follow. For a clearer picture, are you saying that you have oil CONTINUES ON PAGE 47

Seplat donates water, electricity in Edo, Delta By Festus AHON & Godwin OGHRE

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GHELLI-AS part of its social responsibility to its host, Seplat Petroleum Development Company Limited, based in Sapele, Delta State, has commissioned several motorized water borehole projects across oil producing communities of the state and Edo State. T h e p r o j e c t s commissioned included; two 11/500kva stepdown transformers and street lights in Okeregbagha and Okunumerhe quarters of Amukpe community; two water projects at OgbeOgume, Ogbagu-Ogume, Elume, Ogiedi-Elume, Ituru-Elume in Delta State and two water projects at Iguelaba and Oben, and renovated block of classrooms at Oben primary school. At Iguelaba community in Orhiomwon Local Government Area, Edo State, where a water p r o j e c t w a s commissioned, the chairman of the community, Mr. John Odia, noted that the water project was supervised by the company and was c o m p l e t e d t o specification. At Amukpe community in Sapele Local Government Area, the company installed an 1 1 M VA s t e p d o w n transformer and another 5 0 0 K VA s u b s t a t i o n transformer to boost power generation in the area. At Oben community, also in Orhiomwon council, the company commissioned three water projects and renovated a community primary school.


47

The Question johniyene@yahoo.com

Oil Workers

Azikel Group expands operations CONTINUED FROM PAGE 46

blocs and if not what is the difference between marginal field and oil bloc? To put it right, we are not saying we have an oil bloc, what we are interested in, is the marginal fields. A marginal field is smaller while oil bloc is bigger, therefore we are commencing bid for marginal fields and as it stands, there are 59 marginal fields and 10 of them are in Bayelsa. And I think it is only right that we Bayelsans are actively involved in the process. As a key player in the private sector from Bayelsa State, don’t you think possession of oil bloc would be a better start. Are you partnering with the state government? Well, like said earlier, for us, the best entrance into the oil and gas industry is the marginal field. The Bayelsa State government has also shown interest in the marginal field as well. We are, however, not in a cross paths, so, the state government should go ahead with its interest as well. At some point in the future there may be a need for us to broker an understanding for mutual benefit. Indeed, we are making Bayelsans believe that we can succeed. At the moment it is a private initiative. Majority of the outfits that

We are also going to venture into large scale farming, and that would come under the Azikel Farms. We would engage in rice production and fish farming

are benefitting in the oil and gas sector operate in the marginal field. The reason for this is that marginal fields are proven fields. However, it is only a few indigenous firms that are in oil and gas sector that possess marginal fields. Are you not considering building a refinery to save cost in the long term? The model as it stands is for us (Azikel Group) to produce and sell to the market. In the long term, we want to have a refinery, but first, we want to go into oil production. However, few firms that have refineries are doing that primarily to sustain their fuel requirements. You said the Azikel Group is also delving into farm

business.. (Cuts in) Precisely, we are also going to venture into large scale farming, and that would come under the Azikel Farms. We would engage in rice production and fish farming, because we have comparative advantage in terms of arable land, climate for increased yield, amongst other variables, that would give us an edge in the competitive market. What benefit would the people of the state derive from your conglomerate? Indeed, Bayelsans own the business and we are going to engage them via employment to drastically reduce the ratio of unemployment and that would support government plans to re-direct their energies into profitable venture. So we would be partnering with government in this direction. The Azikel Group is into airline, christened Azikel Air, why airline, considering the high incidences of crashes and capital intensive nature of the business amongst other risks? It was our strong conviction and belief that we could do things differently from the norm that spurred us to register an airline, and frankly speaking, we are a developing society (country), air transportation remains the safest means of travelling, and as such every business has its own hazard.


Sweetcrude is a Publication of VANGUARD MEDIA LIMITED, Vanguard Avenue, Kirikiri Canal, P.M.B.1007, Apapa. Website: www.vanguardngr.com (ISSN 2251-0001) Ag Editor: CLARA NWACHUKWU . Phone: 08098051103, All correspondence to P.M.B. 1007, Apapa Lagos.

sweetcrude august 2012  

sweetcrude august 2012

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