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Options For The Niger Delta Summit By Dr. Emmanuel Ojameruaye
Due to poor planning and poor judgment by the Federal Government, there are already strong indications that the long-awaited Niger Delta Summit will be dead on arrival (still born). Even if the summit is “delivered”, the baby (result) may suffer from “kwashiorkor” and die pre-maturely joining the statistics of infant or “under-five” mortality. Even with this ominous sign in the horizon, the Federal Government appears bent on holding the Summit in spite of strong opposition by some groups and leaders from the Niger Delta region. The Guardian of June 18, 2008 reported that President Yar'Adua and Prof. Agboola Ibrahim Gambari would meet in Abuja next week to set the stage for the proposed Niger Delta summit. The newspaper also reported that Vice President Goodluck Jonathan has pledged amnesty for militants who are prepared to lay down arms. Jonathan reportedly told members of the Rivers State Truth and Reconciliation Commission, who visited him at the Presidential Villa, Abuja, that "for those who as part of the seeming agitation may have fallen foul of the law but are now willing to make amends, the Federal Government will grant them amnesty." A day later, in response to the Vice President, the spokesman of the militant group, MEND, dismissed the “olive branch” offered by the Vice President while calling on the Federal Government to free the MEND leader, Henry Okah, who is now standing trail. Two days later, MEND staged a spectacular attack on Shell’s Bonga oil production platform, some 120 kilometres offshore, leading to a shut-in of 200,000 barrels of oil a day. The next day, another group of youths attacked Chevron’s Abiteye-Olero pipeline leading to a further loss of about 120,000 barrels a day.
It will be recalled that a few days earlier, President Yar’Adua had tasked his Vice to prevail on those who are opposed to the Summit to change their mind. In my reaction to this task, I noted that “there is little to nothing that Vice President Goodluck Jonathan can do to resuscitate the Summit. In fact, going ahead with the Summit or asking the VP to "step in" to "prevail on the opponents" of the Summit will only serve to undermine the political base of VP (and of his advisers and other prominent Niger Deltans in the administration) and demonstrate his increasing irrelevance and "loss of touch". The opponents have made a very strong case why they oppose the Summit and the appointment of Prof. Gambari as a key player. No amount of "prevailing" will change the situation, unless by prevailing we mean financial inducement or settling of some opponent. In the end, the Summit will turn out to be another waste of time and treasure”.
Meanwhile, some political leaders from the Niger Delta region are already jostling to participate in the Summit. The Rivers State Governor has assured that leaders from the region would fully participate in the forum in order to directly engage the Federal Government on the problems of development in the area. According to the governor, "there is need for dialogue and for the people of the region to engage the Federal Government. It is important for the public and the Federal Government to know what the problems are in the Niger Delta region and suggest ways to solving them." It is mind-burgling to suggest that the Federal Government (and the public) does not know the problems (and solutions) to the Niger Delta problems and that there has not been enough engagement on this issue. For crying loud, the Vice President was a Governor of Bayelsa State, a key state in the region and, perhaps, the “hottest” bed in the burgeoning crisis. There are also ministers and special advisers in the administration as well as members of the National Assembly who had (and some still are) in the vanguard of the Niger Delta struggle. Some groups have voiced their displeasure over the non-inclusion of their representatives in the Summit Steering Committee while some individuals are already lobbying for invitation to participate in the Summit, more for recognition and financial spin-off (expected seating allowance).
Still, many people believe that the Summit will be a “jamboree” and a waste of time and treasure. Others see it as a mere diversionary and deceptive tactic meant to buy time as the federal government intensifies its military solution to the crisis. These critics argue that the Federal Government does not have the political will to resolve the crisis as expected by the majority of people from the region. What then can the Federal Government do to change the mind of these critics and opponents of the Summit or to prove them wrong? There are at least three options open to the Federal Government, namely:
1) Ignore the critics/opponents and go ahead to hold the Summit with Prof. Gambari as the Chairman of the Steering Committee. 2) Drop Prof. Gambari and hold the Summit with a more acceptable (and less controversial) person as the Chairman of the Steering Committee. 3) Postpone the Summit and “do first things first”, i.e. prepare a more solid foundation and enabling environment for the Summit by implementing the decisions/recommendations of the 2005 National Political Reform Conference (NPRC) on the Niger Delta crisis.
Clearly, option (1) is likely to fail. Prof. Gambari has become as issue and a liability to the Summit. As a respected diplomat, I think he should withdraw honorably and save the Summit. It is clear from the debate so far that Prof. Gambari does not command the respect of many of the critical groups and stakeholders in the crisis including MEND and MOSOP. There is no reason why the FG must insist on having Prof. Gambari. He will be perceived as a representative of the Fulani/Hausa oligarchy rather than that of the United Nations. His actions and inactions in the execution of Ken Saro-Wiwa and the “Ogoni Eight” are too fresh to endear him to many people in the Niger Delta. Furthermore, Prof. Gambari is not known to have scored remarkable diplomatic successes at the United Nations (UN). His widely publicized diplomatic foray with the military junta in Myanmar (formerly Burma) early this year did not yield any remarkable breakthrough or dividend. Thus, replacing Prof. Gambari as Chairman of the Steering Committee will clearly address one of the bottlenecks to the Summit.
Thus, option (1) is a better approach than (2). If the FG wants a UN stamp on the Summit, it can ask the UN Secretary General to appoint another envoy, preferably a former foreign head of state or top diplomat, such as Tony Blair, Bill Clinton, Jimmy Carter, Collin Powell or Kofi Annan. If the FG wants a Nigerian, there are a host of more acceptable candidates including Wole Soyinka (a Nobel prize laureate) and Emeka Anyaoku (former Secretary-General of the Commonwealth). However, before appointing a replacement for Prof. Gambari, the FG must clearly articulate the goal and objectives of the Summit, the expected results and produce a draft agenda. This should be the responsibility of the FG, and not that of the Steering Committee. The role of the Committee should be to review the draft agenda and “steer” the Summit to achieve the goal, objectives and results as defined by the FG. This way, the FG will feel more obligated to implement the decisions of the Summit.
Attractive as option (2) appears, I believe that the third option (3) is the best. Under this scenario, the FG should first take necessary actions to build trust and convince the Niger Deltans that it is serious about addressing the crisis from all angles. In this regard, the FG should first implement the three main recommendations of the 2005 NPRC on the Niger Delta, namely:
"i) appoint an expert commission to study all the ramifications of the industry including revenue allocation with a view to reporting within a period of not more than six months, how the mineral resources concerned can best be controlled and managed to the benefit of the people of both the states where the resources are located and of the country as a whole;
ii) increase the level of derivation from the present 13% to 17%, in the interim pending the report of an expert commission. Delegates from the South-South and other oil producing states insisted on 50% as the irreducible minimum. Having regard to national unity, peace and stability, they agreed to accept, in the interim, 25% derivation with a gradual increase to attain the 50% over a period of five years
a) In line with recommendation (ii) above, President Yar’Adua should send a bill to the National Assembly recommending an increase in the derivation percentage to 20%. A few days ago, the President sent a bill to the National Assembly to modify the current revenue allocation formula. The FG should include in that bill a proposal to increase the derivation percentage. The bill should also provide for direct funding of NDDC from the derivation fund instead of the current haphazard system of funding the NDDC. With this amendment, the federal and state governments as well as oil companies will no longer be required to contribute to NDDC and the latter will be assured of regular and predictable funding from the federation account via the derivation fund. The increase in the derivation percentage is consistent with the section 162(2) of the constitution which provides that “the principles of derivation shall be constantly reflected in any approved formula as being not less than 13% of the revenue accruing to the Federation Account fro any natural resources”. In other words, any derivation percentage between 13% and 100% is consistent with the constitution.
b) In line with recommendation (iii) above, President Yar’Adua should also send another bill to the national assembly to guarantee some top positions for the representatives of oil producing states to ensure that they are duly represented in the mechanism for the control and management of oil exploration and production. These positions will include: a) either the Minister or Permanent Secretary of the Ministry of Petroleum Resources; b) either the Group Managing Director of NPPC or Director of the DPR; c) at least 30% of the 20 top management positions in DPR and NNPC and its affiliates and at least 20% in the top 20 top management positions (and/or boards) in all the major oil companies. These positions will be distributed among the oil producing states in proportion to a weighted average of cumulative and current oil and gas production and reserves.
c) In line with recommendation (i) above, President Yar’ Adua should appoint an expert commission to study all the ramifications of the industry including environmental degradation, revenue allocation, resource control, governance, transparency and accountability in the use of oil revenue, poverty reduction, peace and security, and how oil revenue can best be controlled and managed to the benefit of the people from the oil producing areas and the country as a whole. The expert commission should complete its work and submit its report within six months. The report of the commission should then be the subject of discussion and adoption by the proposed Niger Delta Summit. The Summit should be convened not later than one month after the submission of the report of the commission. The report should also contain a draft agenda for the Summit including Resource Control vis-à-vis Derivation, Environmental Abatement, Poverty Reduction, Sustainable Development, Jobs Creation, Physical Development, Peace and Security. The Summit must have the status of a “sovereign national conference” in the sense that the decisions reached will become binding on the federal government. The expert commission does not need to re-invent the wheel. The commission should draw from the existing body of reports and studies on the Niger Delta crisis including the 2006 Niger Delta Human Development prepared by the UNDP, the 2004 Oil of Poverty in the Niger Delta report prepared by ANEEJ, the 2002 Gen. Ogomudia Panel Report, the Niger Delta Peace and Security Strategy report and a host of other reports and studies.
A critical issue that the expert commission should study is the resource control issue vis-à-vis derivation. It is necessary to draw a distinction between both issues. According to Akpo Mudiaga-Odge, “derivation is the recognition of a prior beneficial right that was subsequently expropriated…if a form of compensation … section the proviso to 162(2) of the 1999 constitution” while resource control “is the desire of the state to control any natural resource found within its boundaries…it is not being recompensed for anything”. The Niger Delta struggle is more than a struggle for increasing derivation. It is about resource control as evidenced in the Ogoni Bill of Rights, the Kiaima Declaration and utterances by many political leaders from the region. Unfortunately, while the 2005 NPRC recommended increasing derivation it fell short of recommending ‘resource control’ although it acknowledged the “inherent right of the people of the oil producing areas of the country not to remain mere spectators but to be actively involved in the management and control of the resources in their place” . Thus report of the expert commission must include at least three options to resolving the “resource control” issue, viz:
· Narrowing resource control to 50% derivation as in the 1960 and1963 constitutions. To achieve this, two approaches should be considered: i) incremental derivation and ii) differential-incremental derivation (see my book, Political Economy of Oil in Nigeria, Xlibris Publications, 2006 for a detailed description of these approaches) · Replacing derivation with equity holding in major oil companies by oil producing states, i.e. allocating equity to oil producing states in oil producing companies such as Shell, Mobil and Chevron. For instance, the equity holding in the oil companies can be re-allocated as follows: 40% to FG, 30% to oil companies, 20% to SGs and 10% to LGs. · Combining derivation with equity holding by oil producing states and local governments. For instance, derivation can be pegged at 25% and 25% of equity in the oil companies allocated to oil producing state and local governments.
The operational details of the above options are described in my presentation “Pre-Requisites for Poverty Reduction and Sustainable Development in the Niger Delta region” posted on my website www.member.cox.net/emmaonueloj
Another related issue that the expert commission must consider is how to ensure that the people living in the oil producing areas benefit directly from oil revenue. As of now, the bulk of the oil revenue is appropriated by a few people – mainly politicians. In fact, it is safe to say that over 95% of oil revenue that accrues to the oil producing states is appropriated by (i.e. end up in the hands of) less that 5% of the population. To “democratize” oil revenue, the commission must consider the setting up a Petroleum Heritage Fund (PHF) for the oil producing areas similar to the Alaskan Petroleum Fund and similar sovereign wealth funds. In this regard, a percentage of the derivation fund should be allocated to the PHF. In turn, the PHF should be divided into two parts: the petroleum heritage future generation fund (PHFF) and the petroleum heritage dividend fund (PHDF). Fifty percent (50%) of the PHF should be allocated to the PHFF and the other 50% to the PHDF. The funds allocated to the PHFF will be invested prudently in the capital and money markets as well as in the real estate market for future generations and to earn interest income. On the other hand, the PHDF (plus interest income from the PHFF) will be distributed as direct cash payment to eligible residents in oil producing areas based on agreed criteria. For instance, if 5% of Nigeria's projected N4tr oil revenue in 2008 (i.e. N200b) is allocated to the PHF, then N100b will accrue to the PHFF for investment in the capital and money markets as well as real estate market for future generations, while N100b will accrue to the PHDF for distribution as cash payments to all eligible residents in oil producing areas. Assuming there are about 10 million eligible residents of oil producing areas, it means each person will get N10,000 while a family of 6 eligible residents will get N60,000! The PHF should be managed by professional funds managers with little overhead cost. The operational details of the PHF can be worked out based on experiences of similar sovereign wealth funds in other countries and taking into account the peculiarities of the Niger Delta region. For instance, it may be necessary to distribute the PHDF at the local government level in accordance with the oil and gas production quota of each LGA. In 2007 each eligible Alaskan resident received about $1,654 (about N200,000) from the Alaskan Permanent Dividend Fund.
Under the proposed model, the derivation fund will be shared between NDDC, PHF, State Governments and Local Governments. Thus, under the incremental derivation principle, an increasing amount of oil revenue will be allocated to the derivation fund and its components. The table below is an illustrative example of how the derivation fund can be distributed over the next seven years.
Of course, the percentage allocations can be varied until an optimal distribution is achieved. It is also possible construct similar tables based on the replacement of derivation with equity holding or a combination of both.
It is clear from the above that a technical “pre-work” is necessary for a successful Summit. Nobody expects most of the traditional rulers and politicians who will grace the Summit to have the competencies required for such a technical and rigorous study. It is therefore recommended that the proposed Summit should be postponed while an expert commission is set up to address the complex issues and prepare a report for review and adoption when the Summit is convened, hopefully within the next nine months.
However, the temptation will be great for President Yar’Adua to adopt option (1) above (i.e. ignore critics and go ahead to hold the Summit with Prof. Gambari as Chairman of the Steering Committee) in order to show that he is “tough” and will not be swayed by critics. But this will amount to shooting himself in the foot. But statesmanship demands that a leader should be willing and ready to retreat when a policy action is likely to fail. There are strong indications that the administration has opted for a military “surge” in response to the crisis as evidenced by the astronomical increase in security vote in the 2008 federal budget – up to about 20% of total budget as against about 6.5% in 2007. There is need for an equal politico-economic “surge” to the crisis by addressing the underlying political and economic factors responsible for burgeoning crisis. Properly organized with the blessing of all stakeholders, the Niger Summit can be a major step in the politico-economic “surge”.
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