In this interview, a Senior Advocate of Nigeria and a former President of the Nigerian Bar Association, Olisa Agbakoba, speaks on the state of the nation and the way out of the present economic crisis, among other issues. He urges President Bola Tinubu to resign as the Minister of Petroleum Resources because there is a vacuum and that vacuum causes a lot of damage beyond what Nigerians are thinking of. Excerpts:
How would you react to the problem of recurring fuel crisis in Nigeria?
It is sad that we have been having this problem for many decades. My father was the head of the Red Cross in the East and Pat Utomi’s father was in the business of fuel stations. My girlfriend then, who later became my wife, actually had to go to Pat Utomi’s father in Ibuzo, now Delta State in order to get scarce fuel in 1974. That was in 1974, today as we speak, more than 50 years after, we are still in the same problem. What is wrong? That is the issue.
Will the 150-day duty-free import window for food items recently announced by the Federal Government resolve the current food insecurity in Nigeria?
We have grain reserves but they are all empty. When you say importation, recall what happened with the cement issue. The government of Lagos State in collaboration with the Chagoury family divided the maritime approach of Nigeria into two, taking one half called Eko Atlantic.
Assuming there is a road that has 10 lanes, so that 10 cars can go at a time, traffic would be reduced. Somebody comes and says ‘this half, we will close and we will build houses.’
I raised a point in the context that Nigeria is now an extremely unattractive maritime country because it has no lean approach but the channels are blocked.
So, the 150 days appear as an emergency food lift. I do not think that will resolve the problem. The thing that will resolve the problem is in fact our resilience. We are at a brink where things would have been aflame by now but somehow, we have managed it.
I think that is what will resolve it and not depend on food imports. How many vessels will come here to feed 200 million people? At the end of the day, what will help is for the government to change its policies in respect of borrowing. Why are we borrowing when we have assets? If you borrow, is it going for development or for contracts?
“President Tinubu should resign as minister of Petroleum. How can he be two persons? Where have you seen in the world that the president of a country is also a minister? I think they are two different things”
It appears that you are uncomfortable with the rumoured plan by the Nigerian National Petroleum Company Limited to borrow another $2 billion?
Because they think it is about oil contracts. Does the government of Nigeria, in doing what it does, think of its 200 million people? If it does, why would they continue to borrow money in the way they are borrowing? Assuming borrowing is a good idea, where are the results? We do not see them. So, it is obvious that the borrowing is to drive that contract policy of sharing and they meet their bills, called operational expenses (OPEX). It has not helped us.
Why are we not resolving the issue of corruption in Nigeria?
I know a journalist from the Netherlands who opened my eyes to two issues. She said: ‘What is the bigger issue; incompetence or corruption?’ They are both bad but incompetence is bigger than corruption.
The percentage of corruption and its impact on the economy is far less than incompetence. Yes, corruption is a problem but what is the percentage in terms of the Gross Domestic Product (GDP), when you look at corruption versus incompetence? Incompetence means you do not know it.
What I see here is that incompetence is bigger than corruption. We can actually incorporate corruption and be developed though it is not a good idea. After all, corruption is everywhere in different degrees. I would rather have a competent corrupt government. I am left to think that the only reason why what is going on is happening is because of incompetence or lack of knowledge and they are all the same thing.
If our government understands section 44 of the Constitution, why do they make International Oil Companies (IOCs) co-partners, when they are not co-partners? What is this incompetence that the government exhibits? It is bigger than corruption. Corruption is a problem but it is a minor problem compared to when you do not know what to do. So, you are lost. Anyone who comes and tells you something; you swallow it.
Incompetence is the biggest problem we have. How can a person ‘chop’ $2,000 breakfast and you have an agency that vets this process to make sure that the IOCs do not overload their invoices? Does it not see it? That may be corruption but I think it is incompetence because incompetence is the problem why gas keeps getting flared.
Is the country’s oil and gas sector being managed well by the government?
It is the fundamental objective of the government to look after the welfare and security of the people. It is a primary purpose of the government. And section 16(1a) of the Constitution commands the Federal Government to harness the resources of the nation, promote national prosperity and create an efficient, dynamic and self-reliant economy.
Section 16(B) says to control the national economy in such a manner as to secure the maximum welfare, freedom and happiness of every citizen. There is section C; I am not sure I agree with it but that is what the law says; manage and operate the major sectors of the economy. Oil and gas is clearly a major sector of the economy. Then many other things follow; from this cornerstone of the constitution, oil and gas is clearly something within the control of the federation.
To emphasise the nature of control, section 44(3) of the Constitution says that all mineral resources, oil and natural gas in and upon any land in Nigeria shall be managed by the government of the federation. So, there is no question that constitutionally, oil and gas falls squarely within the purview of the government in a way that ownership belongs to it.
I can understand that in the early 50s and 60s, as we grappled with the new find, we were inexperienced and we brought in foreigners to assist. But I cannot understand why today the Federal Government abandoned the sector. In fact, what the Federal Government is doing in the oil and gas industry is unconstitutional.
So, what are you going to do about it?
I am going to challenge in court the so-called scheme by the Federal Government by which they create Joint Ventures (JVs). A Joint Venture (JV) is simply another word for joint ownership. So, these JVs that the Federal Government creates with IOCs contradicts the Constitution because a section of the Constitution says ‘we the government, we owned.’
Why did I say it is a contradiction? Please look up the content of a JV. A joint venture is between the Federal Government and an oil company.
The Federal Government tells an oil company; we are going to manage OML000 as an oil well. So, there is an agreement they refer to as a joint venture. So, my submission here is that the nature of this JV ownership contradicts what the Constitution says. The Constitution does not allow the Federal Government to invite private participation and that is the source of the problem.
There is a reason why sections 16 and 44 vest natural resources in us (Nigerians). It is our inheritance and our sovereignty. It was given to us for a particular reason and that is why we spoke about development oil, which is what Saudi Arabia uses. In Saudi Arabia, the role of the IOCs is strictly limited. It is limited to service provision. There is no co-ownership in relation to oil and gas in Saudi Arabia between the Saudi Arabian government and any IOC.
What is the case in Nigeria?
In Nigeria, on the contrary, there is a co-ownership. Take time to read the Petroleum Industry Act (PIA); there is no one mention, apart from the host community, of us. The thing is for us but nobody refers to us. So, if a law is made pursuant to constitutional provision and I have said that this is our natural inheritance, why are we not mentioned? Why is it that it mentions license, regulations and compliance? Compliance with who and for who?
Is it not time to dismantle the existing oil and gas legal framework? Has it benefited us? If it has to be; how should it be? People do not get the feeling of the resources coming. Rather, a typical JV would say 60 per cent for you and 40 per cent for you. So, it is all about contracts, it is all about sharing between the Federal Government and the IOCs. What about the people? Where are we in the scheme? So, this IOC, you own is 60 percent, the other, will say you have not paid your own.
It was because the Federal Government did not have the money that the clever IOCs now came back with a new scheme, which they call Production Sharing Contract. They said ‘you know what, since you do not have money, do not worry.’ The Federal Government has now ceded ownership and the IOCs said ‘we will now take over everything; then either you pay with crude or whatever we make, we remove cost oil.’ Suppose it is N100 million, they will be laughing at us.
We are like monkeys in a zoo that the whites come to feed. They will say ‘it is time to feed’ go and give them food. I cannot understand how it is possible for a country like Nigeria with its resources. Why does Nigeria need money from the IOCs? We have 40 billion barrels of proven oil reserves, leave gas. The Federal Government issues a treasury bill which is a piece of paper that simply says if you buy one million it guarantees that in one year you will be paid.
Why do you buy it; because you have the fate that the Federal Government is backing it? So, the Federal Government knows how to raise money. If the Federal Government knows how to raise money by selling paper, why does it become senseless when it comes to oil and gas? Why can’t it use its oil and gas resources to raise money that the so-called IOC’s pretend they want to pay?
So, my submission is that we do not need the IOCs as far as money is concerned. They do not add any value because we can raise the money within our system by using our oil and gas resources.
Are you saying IOCs are not needed?
I agree that in the world of technology and economics, there is inter-connectivity in the context of doing business. So, I am not suggesting that the IOCs should disappear. No! They have value. But the point is that the value must not overwhelm our own interest. Right now, it is overwhelming our interest. I do not see what we have got. If you go round Nigeria, the whole country has broken down. We do not have water and electricity, rather we have floods, rains and so many other things that you will begin to wonder, is this a country that is supposedly the world’s no five exporter of oil.
Where are the benefits? I have not seen any benefit. Even though I am wearing a tie, I do not feel any benefit. I am very sure that none of you has even got a penny from the government in terms of education and health. So; is it not time that we say to ourselves, the reason why this thing is not working needs to be interrogated?
What do you think should be done about it?
I call upon President Bola Tinubu to immediately embark on a complete review of our oil and gas legal structure. Everybody was fooled by the PIA because we were all excited and I was excited that the NNPC has ceased to be an influencer in the system. All they did was to add ‘L.’ That was what they did to pretend that they were not the old NNPC. They just put ‘L’. But they are doing the very same thing they were doing before.
So we were the ones who foolishly fell into that trap and we said since Nigerians are concerned about NNPC Ltd being a regulator and operator, let us pass the PIA, the story will stop. Nothing has changed. So, I take the view that it does not matter whether the state controls the oil and gas, what matters is the impact that is made and that impact is not occurring because the outsourcing of our oil and gas revenues to the IOCs is overwhelming in such a way that the value chain benefits the foreigners in an amazing level.
Take a typical rig with 6,000 people; there is probably going to be 5,800 foreigners onboard and they charge the Nigerian government for the services they say they are rendering, one of which that I laughed at was food. The breakfast for this 5,800 people is more than $2,000 per breakfast for a person. Then the few Nigerians, who sweep get nothing and at the end of the day, when the books are being balanced, that is what they present. They say, this year, the cost of oil was this, so we are giving you this.
If the IOCs leave Nigeria what will happen?
Nothing. There are capable Nigerians, who will be filling the gap that will be left if suddenly there was a void because they keep threatening and our government keeps falling for that threat. The time has come for Nigerians to claim back our inheritance otherwise we are going to be in this thing for an extremely long time. When will Nigeria be good? What happened in the United Kingdom is what ought to be happening here.
The British people said to themselves in the last 14 years of the Conservative government, we have seen nothing, could you please step aside so that we can vote for the Labour Party. But here, we vote but it does not count, so we do not vote. We are helpless in whatever the government of the day says.
So, we can only appeal to President Tinubu to cease to be minister of Petroleum because the work of a president is so tasking to also be the minister of Petroleum. We need a minister of Petroleum who can absolutely review those issues. There is a need for a switch from contract oil.
Are you saying that President Tinubu cannot function well as president and Minister of Petroleum?
President Tinubu should resign as minister of Petroleum. How can he be two persons? Where have you seen in the world that the president of a country is also a minister? I think they are two different things. The English language says president of Nigeria and minister. The president and minister in the cabinet are two different people. It is only in the Third World where the president wants to be the minister of Defence. I do not think President Tinubu needs to be minister of Petroleum Resources. It means there is no minister.
When there is no ‘oga’ at home, people do all kinds of things because there is no one to take immediate decisions because the President is sitting in Aso Rock and the Ministry of Petroleum is in the Central Business District (CBD) and there is no minister. So, nothing works because nobody knows what is happening.
It goes back to the tenure of former President Olusegun Obasanjo. I do not know that any president as minister has ever sat on the seat of the minister of Petroleum Resources in the office of the ministry. So, there is a vacuum and that vacuum causes a lot of damage beyond what we are thinking of.
President Tinubu recently announced a plan to inject N2 trillion into the economy……
I am aware and I applaud President Tinubu for his N2 trillion marshal plan but that will go nowhere. N2 trillion is so small in the context of what needs to be done. What I would have expected was a plan that will be able to pull us up from where we are; N2trillion cannot do that.
“I am aware and I applaud President Tinubu for his N2 trillion marshal plan but that will go nowhere. N2 trillion is so small in the context of what needs to be done. What I would have expected was a plan that will be able to pull us up from where we are; N2trillion cannot do that”
Can we achieve N100 trillion?
I think we can. We can because we have the assets. It is a matter of having people who are able to clean through a plan.
If I am sitting here and as an ordinary citizen and I have faith that a plan that can equal N100 trillion can be created, why is the government not able to see it? Let me give you just one example of how it is possible. When we talk about economic planning; you now go into the field of Econometrics. People must sit down and plan it. Can we raise the money? Yes! How is it that money is raised abroad? One of the most effective ways is by tax.
The tax net is tight enough that the return into the tax net is substantial. I think the last time, I made the point about how we even supply information to government offices in respect of what they should be taxing that they have no awareness of. So, I think that the tax net is a huge resource that can bring in a lot of revenue.
The second one that brings in a lot of revenue is our assets in oil and gas. If you contract our natural heritage; it is clear that the return will be a lot lower. So, if you switch from contract oil to development oil, one of the big impacts will be a jump in revenues. There are so many examples. But I am not the Nigerian president, so it is for the Nigerian president to worry about whether N2 trillion is such a figure that will achieve its development plan.
It is talking about the East West road; the infrastructure generally has broken down. You have about 130 million Nigerians in abject poverty. You have a food security crisis; you have an internal geographical crisis. There are crises all over the place. With all these, can N2 trillion be enough? What exactly does that N2 trillion represent? It is too small.
So, in raising N100 trillion, there are so many interlocking issues. The nation must be properly balanced. You have to have a lean government. You have got to expel a lot of people who pretend that they are working in government, so that you can free resources. That is why I think that N2 trillion is not what it ought to be.
