The crude oil anointing!

Since 1956 that crude oil was discovered in Nigeria to date, the effect of the country being in the ivy league of crude oil producers has not been felt in a positive way as much as in a negative way. The mismanagement of this free gift from Mother Nature has resulted more in squalor, misery, and outright reversal in fortune for almost all the oil producing states of the Federal Republic of Nigeria. Apart from states like Akwa-Ibom, Rivers, Edo and Bayelsa where there are some modicum of development, there is really nothing much to show for this money-spinning resource. Dissecting the reason(s) for this as well as proffering a way out is the focus of Drillbytes for the week.

Before the discovery of oil, Nigerians have been engaged in other sources of livelihood like, farming, trading, fishing etc. When oil was discovered, attention shifted from agriculture because it was fetching the people and the country good money and quickly too. With petrodollars came petro-politics and with petro-politics came all kinds of baggage. Those vested with the singular responsibility of protecting the country’s commonwealth were the same people who destroyed it for pecuniary benefits. As if that was not bad enough, diverted petrodollars were stashed in private accounts outside the country. These monies went a way to develop the economies of such countries. We end up, and we always do, going to them, cap in hand, to beg for one financial assistance or the other. A very smart move indeed! Let’s pause a moment and imagine what all these looted funds would have done to Nigeria’s economy if invested in Nigeria. How many jobs such monies would have created. How many Nigerians such monies would have empowered and how healthy the Naira would have been as against its present state of asphyxiation.

Nigeria has made so much money from crude oil over about six decades with very little to show for it. Now that the crude oil price has crashed from its glorious days to its sorry days, now that revenue available to government has reduced drastically, the question is, have we learnt our lessons? If indeed, we have met with our epiphany as did Saul of Tarsus and obviously too, because we do not have any choice in the matter, it will seem the right place to go is back to agriculture and mining of solid minerals which together can make up, over some time too, the balance deficit created by an oil price crash that will remain south for some time to come. If we can create the right foundation upon which solid mineral mining and agriculture can thrive particularly under a public private partnership with strict result oriented and investor-friendly regulations, Nigeria may as well be on its way to recovering from the economic slumber and lassitude occasioned by the crash of the price of its major export commodity. By the time we create a robustly grounded culture of fiscal discipline among ourselves such that capital flight is reduced to the barest minimum we would have matured enough to know the best thing we can do for ourselves is to help ourselves. If we do very well here, maybe when the oil price surges, that will come as an added bonus. The United States of America has petrodollars making up about 10% of its accruals. Why should we hang on to only crude oil to generate about 80% of our accruals? It is time to diversify the economy away from oil forever. It is time to revisit a structured fiscal federalism.

Of all the oil producing communities in Nigeria, the Kingdom of Bonny in Rivers State, Nigeria is an example to trail in its consistent management of relations with Oil companies and service companies through well grounded and structured memorandum of understanding away from the routine and periodic handouts to village youths, village elders, village women etc. Handouts that end in private pockets and are expended almost as soon as they are received. Bonny Kingdom is a shining example of what the unity of action and tenacity of purpose can do to a people and to this day, it remains one of the very few Kingdoms this column can refer to as benefitting from the crude oil anointing in Nigeria. Other oil producing communities in Nigeria can take a cue from the Bonny example.

The Arabs built Dubai and Oman from petrodollars and today, some of these countries belonging to the United Arab Emirates have invested their petrodollars away from oil and are making a lot of money outside of oil. In spite of the crash in the crude oil price, the Arabs are contracting more oil drilling rigs much more than any other region in the world! Why are they doing this? They know, this is the time to drill cheaply and more efficiently because overhead costs have since plummeted. They will drill and store products waiting for a price surge before selling. This makes more economic sense than waiting for a price surge before drilling. Our public hospitals are in dire need of “Intensive-care”. Inter-state roads are in desperate need of rehabilitation. Darkness has taken over the land like some epidemic. Living like a human being is more expensive in Nigeria than living like an animal. All of these and so many societal ills are the result of our crude oil anointing!

• Kayode Adeoye in an energy analyst in Lagos.