A Port Harcourt based pressure group, the Niger Delta Activists Forum (NDAF), has described as discriminatory the Federal Government’s policy to allow Zamfara State mine gold found in the area for commerce while disallowing the Niger Delta from doing the same to its oil resources.
The group has, therefore, called on the Federal Government to hand over the sale of oil to the people of the Niger Delta.
The group made this position known in a statement by its National President, Mr Success Jack, urging the Federal Government to hand over the operation of onshore and offshore oil blocks to the people in the region.
Jack expressed surprise that the Federal Government would allow Zamfara State to mine gold for commercial purposes while disallowing the Niger Delta region from exploring its oil for sale.
He noted that there were two opposing sets of the Extractive Industry law operating in the country: the Petroleum Act and the Mining Act.
According to him, while one set of the law restricts the people from processing the oil found on their lands for sale, the other law allows a state to mine its gold for commercial purposes.
He described as double standard the unwillingness of the Federal Government to accede to the demand of the Niger Delta to allow the federating units own and control their God given resources and pay an agreed tax to the centre in line with the practice of true federalism.
He said it was a breach of the Nigeria’s Constitution which places mineral resources on the exclusive list for Zamfara State Government to mine gold in its domain in commercial quantities.
Meanwhile, the group has urged the Federal Government to reverse the recent hike in the pump price of petrol and relieve Nigerians of its untold hardships.
By: Tonye Nria-Dappa
‘Fuel Subsidy Removal Inevitable’
Director General of the Budget Office of the Federation, Mr Ben Akabueze, has stated the need for urgent and decisive measures Nigeria must take to avert the public debt crisis.
Top among this, he said, is the removal of subsidy on Premium Motor Spirit (PMS).
Akabueze, who said this while speaking on the topic, ‘“The National Debt Burden: Causes, Effects and Realistic Economic Solutions”, at the “Annual Conference/Awards of the Institute of Chartered Secretaries and Administrators of Nigeria (ICSAN)”, threw light on Nigeria’s debt situation.
“Since 2020, public debt in Nigeria has risen to N32.9 trillion, equivalent to $86.4 billion. It got to N39.6 trillion, equivalent to $95.8 billion at the end of 2021, and this has risen to N41.6 trillion, equivalent to $101.1 billion as at the end of March this year.
“Meanwhile, debt service was approximately $7.7 billion in 2021, an increase from 6.4bn in 2020, and because public debt is domestic debt, domestic debt service is also a significant proportion of debt service”, he explained.
The DG, who was represented virtually by his technical adviser, Olumide Ayodele, said the government believes that investment is required to bridge the infrastructural gap and provide public sector services to the people.
“But the service exceeds the available resources of the government, which leads the government to borrow to finance and use for a critical development project that would eventually improve revenue capacity generation for the economy, improve the business environment and sustained over time to avoid a debt crisis”, he said.
In his welcome address, the President of ICSAN, Taiwo Owokalade, noted that the country has not only amassed huge amounts of debt, but has kept borrowing at a fast rate, thus struggling to service the interest on the debt.
Nigeria Deserves More From Gas Reserves – Osinbajo
Vice President, Yemi Osinbajo, says the use of gas as a transition fuel will help in stemming deforestation and advancing Nigeria’s broader development goals.
He said Nigeria had one of the largest gas reserves in the world and deserved to reap more from it, adding that other developing countries would also benefit from the adoption of gas as a transition fuel.
The vice president highlighted the need for Nigeria to continue the exploration and use of gas as a way of arresting deforestation.
He said it would also help in transiting away from dirtier fuels like diesel, kerosene and petrol, while at the same time ensuring that the country had the necessary energy baseload for industrialisation.
Noting that Nigeria had one of the largest gas reserves in the world and should benefit from its exploitation, he highlighted the significance of Nigeria’s Energy Transition Plan (ETP), which is the first in Africa.
Osinbajo had discussed the ETP during his recent visit to Washington D.C., where he met with his American counterpart, Kamala Harris, at the White House, among other top US government officials.
Before the recent US trip, the Federal Government had launched the ETP at a global virtual event.
Recall that Osinbajo’s spokesman, Laolu Akande, in a statement in Abuja, said the Vice President received the U.S. Special Presidential Envoy on Climate Change, John Kerry, at the Presidential Villa, last week.
Kerry was on a working visit to Nigeria. Prior to his meeting with the Vice President, Kerry had also met with President Muhammadu Buhari.
The Vice President and Kerry also discussed the issues of renewable energy sources and the global transition.
In his remarks, Kerry praised the plan and the efforts already being made in Nigeria to step up the use of renewables, especially solar and hydro-power, as major components of the energy mix.
He acknowledged that Nigeria ought to benefit from its gas reserves and urged an even more rapid adoption of renewables, especially electric vehicles, which were certainly the next wave in auto-manufacturing.
Kerry observed that the technology of renewables improved daily, adding that batteries were in production which lasted far more than those that were already in the market.
Upon a request by the Vice President, Kerry promised that U.S. would assist Nigeria with the expertise to scientifically determine the most appropriate energy mix toward the goal of energy for all by 2030 and net zero carbon emissions by 2060, without compromising the country’s energy security.
Unintended Consequences Of The EU Energy Emergency Plan
This week saw the European Commission’s President, Ursula von der Leyen, do something that would have probably been considered the opposite of democracy just a few years ago. She proposed that governments impose a ceiling on certain energy producers’ revenues and add a windfall profit for Big Oil majors.
Called “a solidarity contribution” or “a crisis contribution”, the windfall tax’s aim is the same as the aim of the revenue ceiling: manage energy costs in a runaway inflation environment and get some additional money to, according to the plan, distribute among those who most need it.
Like all grand plans, however, unintended consequences abound with this one, and one of the gravest is the discouragement of oil and gas investments at a time when global oil and gas investments are already lower than they should be in light of demand projections.
JP Morgan’s head of global energy strategy said it this week in an interview with Bloomberg.
“If you’re planning your capital budget, you have to think twice now that you have a new risk”, Malek told Bloomberg.
“It encourages majors to return cash to shareholders as they use that free cashflow that could have been used in investment”.
Per plans, the EU seeks to “raise” some $140 billion from windfall taxes on non-gas electricity generators and oil gas, and coal companies for their “extraordinary record profits benefiting from war and on the back of consumers,” to quote Von der Leyen.
Reaction from the industry was swift: Austria’s OMV said the consequences of such measures could be huge, adding that it was unfair to base the windfall levy proposal on oil companies’ profits from the last three years since these were not normal times, Reuters reported, quoting CEO Alfred Stern.
“We will keep an eye on that, as it can already have a massive impact”, Stern told media, noting, however, that the exact impact was difficult to glean because the proposal has yet to be fleshed out.
Per von der Leyen’s State of the Union speech, in which she listed the windfall tax among measures to cope with the energy crisis, the idea is to tax oil and gas companies with 33 percent of any current-year profits that were 20 percent above the company’s average earnings for the last three years.
OMV’s Stern noted that the last three years included two pandemic years when a lot of companies in the oil and gas industries struggled to stay afloat, let alone post a profit, with oil prices falling as low as $25 per barrel.
“Major oil, gas and coal companies are also making huge profits. So, they have to pay a fair share – they have to give a crisis contribution”, the European Commission’s President said in her speech.
If what JP Morgan’s Malek predicts is correct, this would mean less energy security for the future with less new oil and gas production outside Russia.
The key, Malek told Bloomberg, was whether the levy would stay for years or be quickly removed once the money was raised.
“It’s not the absolute number, it’s the uncertainty, the unpredictability of this,” he said. “There’s a risk this becomes recurring.”
Von der Leyen has assured the audience of her speech that the additional taxes were “all emergency and temporary measures,” adding that for long-term energy security, the EU needed to reduce its energy consumption.
Reuters noted in its report on OMV’s reaction to the speech that, according to analysts, the most likely targets of the new tax would be refiners in Europe since there is little upstream activity going on in the EU.
Yet integrated energy companies have integrated policies, and an additional tax on European refining may well have an impact on future plans for operations in, say, the Gulf of Mexico.
It’s worth noting that, at the moment, the windfall tax is only a proposal. It is certainly a proposal that comes from a high place, but it has yet to be approved by all EU members. According to an FT report on the topic, not all are on board with all the measures.
The report also quoted S&P Global’s Executive Director for Gas Industry in EMA, Laurent Ruseckas, as saying that the proposals put forward by Von der Leyen were “all extraordinarily complex” and “would be impossible to work out and implement in time for winter, even if there were political consensus behind them — which there isn’t.”
“It makes sense to agree to EU-wide targets and measures, but without allowing national flexibility on how to get there, we risk breaking the markets we’re trying to fix,” a European diplomat told the FT.
All this suggests that Big Oil might yet avoid the additional levy, although given its reputation as the Big Bad in climate change, the additional levy on the industry might be the only measure to receive wide support.
By: Irina Slav
Slav reports for Oilprice.com
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