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Fight Over Oil, Legal Precedent, and Way Forward By Rickie Dann
It has been alleged that before Nigerian Independence in 1960, the North gave condition under which it will participate in Nigerian Independence. The alleged condition was that each region of the Federation must keep 50% derivation of what it produces. Then, groundnut was big in the North. Cocoa was huge in the West. Palm produce was enormous in the East. The 50% derivation was enshrined in the 1960-63 constitution and was agreed upon by the founding fathers and it was called the people’s constitution. These regions were swimming in an ocean of revenues from their resources while minorities within the regions which now constitute the South-south geopolitical zone relied on subsistence farming, trading, and fishing for survival. They never begged for handouts until Allah blessed them with something that seemed to be mightier than groundnut, cocoa, and palm produce. Why the fight over oil if otherwise?
Now, starting from 1966, leaders from a particular ethnic group, with guns and bombs, dumped the people’s constitution of 1960-63, abandoned their groundnut production and lay claim to oil from other region. They laid oil pipelines from sources of origin to siphon their (kill) oil to their homelands in far away north of the country. They have advanced an argument that revenue from groundnut, cocoa and palm produce were utilized to finance oil exploration and production. Okay, let’s assume so.
In Finance, one of the capital budgeting tools used in evaluating capital investment projects is Pay Back Period. It simply means the number of periods or years it takes to recover or recoup initial investment. It is expected that by now, the North might have recovered or recouped their initial investment and therefore should recoil quietly into their shells. Assume that oil production started 50 years ago. Assume also that it took 5 years for the North to recover or recoup their initial investment. So, the period of time or years that the North was paid in excess of their initial investment is 45 years multiplied by 12 monthly disbursements = 540 times. They have been over compensated. They should be sued for refund if necessary.
My emphasis on North is because they are the only major opposition to resource control. They are the only group who went to Obasanjo’s conference to maintain the status quo that the conference was designed to dismantle in order to return to true Federalism.
On a more serious note, the argument for higher derivation to oil producing states, be it 25% or 50%, should not be based exclusively on sympathy on the suffering of the people or on environmental degradation of the area but it should be based more on legal precedent. I’m not trained in law but I do know that in law, once a legal precedent has been set, all subsequent similar cases are decided based on the past legal precedent. The point here is that since a legal precedent has been set in 1960-63 people’s constitution that each region must received 50% resource derivation, such must be applied today, tomorrow, and till the end of time unless there is an amendment to the constitution. And to the best of my knowledge, the 1960-63 people’s constitution has not been amended. All those military imposed constitutions should be thrown into dust bin of history.
In order to move Nigeria forward, the North should be made to sit down like a little baby and be told that it is not going to be business as usual and that their time is up. They should be told that advanced economies are not driven by handouts from the center. In United States, for example, other states of the union do not rely on handouts from resources of State of Texas, State of California or State of New York for their daily meal. So, the North should concentrated on food production for which they have comparative advantage and sell those food at market determined prices to other areas that cannot produce food. Similarly, those that cannot produce food but can produce oil or timber should sell their oil or timber to the North at market determined prices and use the proceeds to buy food. The outcome of all these are that productivity increases. GDP increases. Per capital income increase and standard of living increases. Any economy that is operating outside this simple logic of macroeconomic concept is bound to fail.
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