President Goodluck Jonathan

P\21

28

U P D A T E SMONTHLY BASKET PRICE

Aug-12 109.52

Jun-12 93.98

Apr-12 118.18

Feb-12 117.48

Nov-11 110.08

Sep-11 107.61

Oct-11 106.29

Dec-11 107.34

Jan-11 111.76

Mar-12 122.97

May-12 108.07

Jul-12 99.55

Sep-12 110.73

104

100

92Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jul-12 Aug-12 Sep-12Jun-12

Daily | Weekly | Monthly | Yearly 108.21 US

98

118

120

P\14

A Vanguard Monthly Review Of The Energy IndustryOCTOBER, 2012VOL 03 N0. 41

108

112

Subsidy, unending economic crisis

FG earns $269b in nine years from oil sector

Shale gas demand may stall LNG projects in Nigeria-Experts

Shale gas demand may stall LNG projects in Nigeria-Experts

ELECTRICITY DISTRIBUTION: Assessing investors’ competence

NIMASA introduces Sea Protection Levy

igeria’s apex maritime Nregulatory organ,

Nigerian Maritime

Administration and Safety

Agency (NIMASA), has

introduced new Marine

Environment (Sea Protection)

Levy for various types of

vessels.

A copy of the directive signed

by the NIMASA Director-

General, Mr. Ziakede Patrick

Akpobolokemi, and dated 8th

of June, 2012, imposed the

following levies: $ 1.25 per

gross tonnage on vessels of 100

to 1000 gross tonnage, $ 1.00

per gross tonnage for ships of

1,001 to 10,000 gross tonnage,

$ 0.75 per gross tonnage for

A silent socio-economic revolution going on in CRS

CONTINUES ON PAGE 15

COVER

FOCUS

GAS

Contents488

1212

2020

3030 SOLID MINERALS

2

1818

POWER2828

3636

3434 TECHNOLOGY

INSURANCE

FEEDBACK

4040

3838FREIGHT

4444 COMMUNITY

LABOUR

Sweetcrude is a publication of Vanguard Media Limited

OIL

CORRESPONDENTS

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PAGE LAYOUT/DESIGN Francis AYO & Johnbull OMOREGBEE

Victor AHIUMA-YOUNGGodwin ORITSE

Jimitota ONOYUMESamuel OYANDOGHAOscarline Onwuemenyi

Emma ArubiRosemary ONUOHA

Enquiries Call:08098051103

Ag. EDITORClara Nwachukwu

THE TEAM

MANAGER, MARKETINGUbong NELSON

Subsidy unending economic crisis

Subsidy scam: Guilty parties should pay

Scarcity DPR to seal depots fleecing marketers

Investors perspective on the PIB

Shale gas demand may stall LNG projects

Electricity distribution: Assessing investors competences

National Metallurgical centre to go commercial

Alduco Energy: Active Nigerian services company in Gulf of Guinea

Nigeria at 52: Insurers capital utilisation still low

Why Nigerians oppose downstream deregulation —TUC

We have achieved zero oil theft in some areas

Crude theft: JTF set up new outpost to battle crime

is must t e orst nd p nd nceh be h w I e e e c l r N g e i a h v

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CONTINUES ON PAGE 5

4Cover Story

Eight months after the contentious fuel subsidy protest that shook the administration of President G o o d l u c k J o n a t h a n , Nigerians are yet to feel the impact of the promised palliatives, following the increase of petrol pump price from N65 to N97. The administration had promised to es tabl ish re f iner ies through a public – private

partnership arrangement. The plan was distinct from the other refineries that would be set up by other private sector concerns.

Apart from the refineries, the government promised to execute mass public works to provide employment for the y o u t h s , f a c i l i t a t e a c o m p r e h e n s i v e m a s s transportation system for workers and students by

providing 1,500 buses, build and re-habilitate select key roads around the country. The government also promised to build and extend the nation’s r a i l w a y n e t w o r k a n d i m p l e m e n t s o c i a l programmes targeted at women, children and the elderly.

he proceeds from the subsidy removal were T

to be invested in realising the new agricultural strategy which is focused on job creation and boosting the contribution of the sector to the entire economy. Most importantly, the government promised to ensure that all aspects of the withdrawal of subsidy were managed in a transparent and accountable manner.

But the promises of the Jonathan government as regards the palliatives are in tandem with those of past administrations, whose p r o m i s e s y i e l d e d n o meaningful results. For example, the Olusegun Obasanjo administration increased fuel price about 10 times, but the increase effected in 2004 aroused widespread condemnation and protest. In an attempt to

Right from the days of former military president, Ibrahim Babaginda, Nigerians have been made to pay higher costs for refined petroleum products with

unending promises of unfulfilled economic promises. However, Sebastine Obasi, writes that as in the days of military, nothing has changed under the democratic dispensation, as the higher subsidy the government promises, the worse the quality of life of the people

Apart from the refineries, the government promised to

execute mass public works to provide employment for the

youths, facilitate a comprehensive mass

transportation system for workers and students by

providing 1,500 buses, build and re-habilitate select key roads around the country

Subsidy, unending economic crisis

Queue at a filling station

5Cover Story

douse the prevailing tension, the government set up the I b r a h i m M a n t u – l e d committee to fashion out a f ramework tha t would cushion the effects of the policy on the people.

O n e o f t h e recommendations of the committee, was the provision of a minimum of N100 million as grant-in-aid by the federal government to each state with a 200 percent matching contribution by each state government for on-lending to b o n a f i d e t r a n s p o r t owners/operators. The interest was not expected to be higher than three percent, with input by the state governments in the routes plied and fees charged. It w a s a g r e e d t h a t t h e contributions of the state governments should be charged to their share of excess crude oil proceeds. Other palliatives included the reduction of duties on buses from 22 to 10 percent and a reduction of duties on pharmaceutical drugs from 20 to five percent.

T h e c o m m i t t e e a l s o recommended building of more refineries as a way of resolving the intractable problems in the downstream sector. That is not all. Recommendation was made for the “establishment of a modular mechanism to

stabilise domestic prices of petroleum products and mitigate the impact of upward movement in crude oil prices in the domestic products markets.” These recommendations did not see the light of the day due to poor co-ordination and faulty implementation.

igerians experienced Nanother plethora of fuel price increases during the eight-year rule of military P r e s i d e n t , I b r a h i m Babangida. Within the period, increases were effected not less than six times, with the attendant promises of palliatives that would mitigate the sufferings of Nigerians. The usual promises of infrastructural provision were broken sooner than they were made. As a matter of fact, every Nigerian government since 1973 increased fuel prices except Muhammadu BuharI and Umaru Yar’Adua.

A t t h e c e n t r e o f government’s argument for subsidy withdrawal is, the inability of the four existing refineries to meet the g r o w i n g d e m a n d o f petroleum products. Nigeria, the sixth largest producer of oil, with a population of more than 140 million, has only four ref ineries with a c o m b i n e d c a p a c i t y o f 445,000 barrels per day, whereas Venezuela, with a

population of 29.33 million, has three refineries with a combined capacity of 1.26 million BPD.

Similarly, Saudi Arabia, with a population of 27.13 million has seven refineries with a combined capacity of 2.1 million BPD. Libya has five

refineries with combined capacity of 378,000 BPD, which serves its population of 6.03 million. Cote d’Ivoire’s one refinery with a capacity of 62,200 BPD serves its population of 18.01 million.

With the current price of N97 per litre, Nigeria’s petrol

sti l l remains the most expensive among OPEC countries. In Algeria, Kuwait and Qatar, petrol is sold at an equivalent of N49.30, N34.80 and N31.90 respectively, just as it is sold in Libya, Iran, Iraq and Venezuela at N20.30, N4.50, N4.50 and N3.20 respectively.

F o l o r u n s o O g i n n i , Chairman, Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Lagos zone, said that the problem of perennial fuel scarcity in Nigeria is self-inflicted. “The problem of Nigerians in perennial fuel scarcity is Nigeria itself, midwived by the NNPC as the industry umpire. It is therefore laughable when NNPC that is riddled with the huge

CONTINUED FROM PAGE 5

President Jonathan

Subsidy, unending economic crisis

The problem of Nigerians in perennial fuel scarcity is

Nigeria itself, midwived by the NNPC as the industry umpire. It

is therefore laughable when NNPC that is riddled with the

huge burden of corruption, struggling to save itself,

masquerading as Nightingale

Petrobras charged in refinery spill prosecutor from Brazil’s

Public Ministry has Acharged state-run oil company

Petrobras with environmental

crimes for a spill at its Duque de

Caxias refinery that allegedly

contaminated the mangroves

and estuary of Guanabara Bay

off Rio de Janeiro.

Public Prosecutor Renato

Machado also charged two

employees of Petrobras, Reuters

reported, citing a statement

released on Monday.

The spill occurred in June

2011.

“The Reduc (refinery) acted

with complete negligence. They

knew since 2007 at least that

the treatment stations were

obsolete and not functioning

adequately and they did

nothing,” Machado said,

according to the news wire.

The prosecutor did not

mention a fine or compensation

value sought.

Local courts are considering

charges against US oil company

Chevron and driller Transocean

that could carry fines of up to

$20 billion and possible jail time

for foreign executives in relation

to a spill last November off the

coast of Brazil.

CONTINUES ON PAGE 6

6Cover Story

burden o f co r r up t ion , struggling to save itself, m a s q u e r a d i n g a s Nightingale, whereas it is in s h e e p s k i n w h i c h International Oil Cartels (IOCs) and their local c o l l a b o r a t o r s u s e d t o subjugate the people, the economy and the nation, is the body being proposed for full commercialization with 100 percent government equity,” he said.

According to Oginni, to address the challenges of fuel subsidy regime, government must not allow any further rise in the pump price of fuel. Also, government should rehabilitate the existing refineries, drive competition through the organised private sector for the building of at least six new refineries within 30 months, with a combined capacity of one million barrels of crude oil per day.

e also pointed out Hthat gover nment should allocate crude oil to the refineries at special rates, as distinct from the export dependent prices. Oginni f u r t h e r e n j o i n e d t h e

CONTINUED FROM PAGE 5

Subsidy, unending economic crisis

government to monitor the local refineries to ensure that output equals the quantity of crude allocated to forestall diversion, while the NNPC must be unbundled to become publicly quoted companies with government having not more than 10 percent shares in any of the companies.

Oginni also said that

importation and exportation of finished products such as PMS, AGO and DPK should be banned upon completion of the refineries for five years in the first instance to stabilize the local petroleum market and protect the new and existing investors. According to Oginni, an automated refinery can be built within 24 months. That explains why

That explains why Singapore, a non oil producing country has about 62 refineries. He further stated that Petrobas,

Brazil’s national oil company, which was established the

same year as NNPC, has more than 700,000 workforce,

whereas at NNPC, records kept are at variance with those

kept at DPR, its subsidiary

S i n g a p o r e , a n o n o i l producing country has about 62 refineries. He further stated that Petrobas, Brazil’s national oil company, which was established the same year as NNPC, has more than 700,000 workforce, whereas at NNPC, records kept are at variance with those kept at DPR, its subsidiary.

But Faruk Mohammed, principal partner, Nextier Advisory, a petroleum, power and agricultural consulting firm, stated that Nigeria could adopt the Ghana model of subsidy removal in order to make a meaningful headway in the sector. According to him, in January 2004, Ghana government realised that world oil prices would remain high and it could no longer afford the fuel subsidies. C o n s e q u e n t l y, G h a n a launched a poverty and social impact assessment (PSIA), which was completed with guidance f rom a c o m m i t t e e o f k e y stakeholders.

In February 2005, the government increased fuel prices by 50 percent, using t h e P S I A r e p o r t a s justification. It showed empirical proof that subsidies

benefitted the well-off and not the poor. As a follow up, the Minister of Finance announced programmes to be funded with the subsidy savings.

The government developed measures for t racking progress on the intervention programmes. The measures were transparent and easy to track by the public. One of the measures included immediate elimination of school fees at government – run primary and secondary schools, as well as massive inves tments in publ ic transport network.

Also there was continuous communication from the government on how the savings are being spent. Mohammed enjoined the government to encourage private investments in refineries to meet local demand, reduce pressure on fo re ign exchange and enhance production capacity of the economy. He also said that to reduce unsustainable s u b s i d y b u r d e n , t h e government should start to issue bonds for subsidy payments.

Liberia: Resource expert welcomes Liberia’s oil sector reforms

The Analyst — A v i s i t i n g E u r o p e a n resource expert, Professor Paul

Collier, says Liberians can make use of the immense opportunities derived from natural resources in a very meaningful way that would b e n e f i t n o t o n l y t h i s generat ion, but future generations.

Dr. Collier, who is also an Oxford University professor said oil discovered in Liberia can probably end or increase poverty depending on which example Liberians prefer to follow. “If you find yourself at the crossroads, it’s your determination that can lead you to the case of Botswana or Ghana and not other worse oil scenarios in the world, the r e n o w n e d e c o n o m i s t observed.

Professor Collier, who concluded a two engagement last week in Monrovia, met with President Ellen Johnson Sirleaf, and held round-table discussions with members of the national legislature, the

judiciary, the Liberian Business Association, the L i b e r i a n C h a m b e r o f Commerce, Civil Society Organizations and other stakeholders on Liberia’s emerging oil and gas sector.

T h e D i r e c t o r o f t h e International Growth Center observed that Liberia is

following the foot steps of Botswana by opening up oil deals and intensifying public engagement that will erase suspicion in the minds of many Liberians.

He spoke of the need for Liberians to partner with government and institutions like NOCAL in formulating

the rules, institutions and the critical citizenry that will eventually lead to speedy and v ibrant deve lopmenta l growth.

Speaking of the discovery of oil in Liberia, the Oxford Professor said the amount of oil discovered doesn’t really matter. “What matters most is

the effective management of the resources that you as citizens must look at with keen interest, because it is the resources that will give hope to the people.”

Professor Collier: “Nigeria has trillions of dollars of oil, but much of the population is living in poverty.

7Cover Story

Derivation: Cross River commits to human development

Last week, the National Assembly urged the Federal Government to appeal the International Court of Justice, ICJ’s ruling, which ceded the B a k a s s i P e n i n s u l a t o Cameroon. The development followed revelations that N i g e r i a m a y n o t h a v e presented a proper defence and evidence to make it retain the oil rich region.

H o w s u b s e q u e n t developments will turn out hereafter, will depend on how s e r i o u s l y t h e F e d e r a l Government pursues the case, because in about three weeks from now, the region may be lost forever. Viewed against the backdrop of the displaced people of Bakassi, who, by a sudden ruling are now neither Nigerians nor Cameroonians, the issue portends grave consequences.

The reality is that Nigeria lost

N

Liyel Imoke,

its continental oil shelf and the a t t e nd a n t o i l a nd g a s resources that go with it. Cross River State caught in the middle of the whole saga, looks up to the Federal Government for respite in view of its huge financial b u r d e n , w h i c h w a s aggravated by the loss of Bakassi. As a result, the state lost its littoral status, which resulted in the loss of the 13 percent revenues from the Derivation Fund.

The loss of the 76 oil wells in April to sister state, Akwa Ibom, was nailing the coffin for Cross River, which thought that notwithstanding the loss of Bakassi, it is still entitled to the oil wells. Imoke had criticised that “the judgment lacked justice and equity.”

But, as was noted at that time, awarding the oil blocks to Cross River would have

m e a n t l o s i n g t h e m t o Cameroon. The Supreme Court in its ruling, said, “The plaintiff (Cross River) has no maritime territory since the cessation of Bakassi Peninsula and the Cross River estuary which used to be part of the state prior to August 2008.”

Before becoming landlockedUntil April this year, Governor Imoke revealed that Cross River state was getting up to N4.2billion per annum or about N350million monthly from the 13 Derivation Fund, which he ploughed into development projects. Most of these projects were geared towards human capital development in order to add value to the lives of the people, as according to the governor, “greatest infrastructure any state can have is its people.”For him, human capital is more i m p o r t a n t t h a n a l l t h e skyscrapers, all the highways and all the technology any economy can build, saying, “Until we invest in these people, we have not developed ,no matter the big buildings, expressways and flyovers that we have; until we invest in the people there is no real development.”

The governor maintained t h a t a l l o f h i s a d m i n i s t r a t i o n ’ s development efforts are geared towards uplifting the standard and quality of life. “Through this, their incomes improved, and poverty reduced with a view to meeting the Millennium Development

Goals, MDGs target in 2015.”S o m e d e v e l o p m e n t achievements? Healthcare – zero infant mortality in one local

In continuation of our series on Derivation Fund, Clara Nwaachukwu assesses how far the Cross River State Governor, Senator Liyel Imoke, can go with N1.1billion internally generated revenues in the face of over N2.2billion overhead costs amid loss of derivation

funds, even as the governor is optimistic that a political solution will bring some succor as he strives on with investments in human capital

Cross River State caught in the middle of the whole saga, looks up to the Federal Government for respite in view of its huge financial burden, which was

aggravated by the loss of Bakassi

government with similar healthcare services to expand to 19 other local government areas targeted at 300 families per facility.? Education – renovated 60 secondar y schoo l s and recorded more than 5,000 enrolments. Now No. 7 in Nigeria with 56 percent pass rate in English and Maths. Set a Cross River Standard, which includes science laboratories, computer laboratory for each school in addition to teachers training programmes and a host of others? Condition Cash Transfer, CCT and skills acquis i t ion programme, valued between N5,000 and N15,000 for 30 vulnerable families per ward depending on the level of skills to be acquired.? Road construction – done kilometers rural roads in Phase 1, selected by the communities based on access to the big a g r i c u l t u r e p r o d u c i n g communities. with African Development Bank, ADB, for 492-kilometer roads in Phase 2.? Rural electrification - have connected 150 communities to the grid? Water programme – declared best Rural Water Supply programme by the United Nations, UN.IGR and other resource effortsImoke argues that it is no longer fashionable to depend on the Federal Government for handout, äs such, the state has beefed up its internally generated revenue, IGR, drive, which has paid off handsomely by raking in about N1.5billion in December 2011, on account of tourism boost with the Annual Calabar Festival. Furthermore, he says that in view of the loss of its oil and gas wealth ,as well as the loss of its share of the environment impact fund, the state is

falling back on its solid minerals resources, as it has discovered some precious stones, which he hoped would at t ract new 13 percent derivation fund.

FocusF 8

SUBSIDY SCAM:

Guilty parties should payI

ntegrated Oil and Gas Limited is one of the companies that has had it rough with the subsidy investigations; in this exclusive interview with Clara Nwachukwu and Kunle Kalejaiye, its Executive Chairman, Capt.

Emmanuel Iheanacho, a former Minister of Interior tells Sweetcrude that the guilty parties should pay. Excerpts:

What has been the effect of the subsidy probe that began five months ago on oil marketers?

The subsidy issue has really caused us a lot of problems. This is something that started about five months ago when allegations were badly circulated about monies that were paid on the PSF programme.

We saw our name included in the report of the House of Representatives, which was really out of the blue that the sum of N13.2 billion has been drawn and we were very surprised because, there was no such thing, because every penny that we draw from the s u b s i d y i s v e r y w e l l accounted for in the records and it is derived simply from an arrangement that we have with the PPPRA, whereby we import petroleum products and we sell the petroleum products at control prices indicated by government and we then go back to the same PPPRA to give us an a u t h o r i z e d i s s u e , authorization to import the products in the first place to recover the di f ference between the actual selling price and the cost of importing the product.

So when we saw the N13.2 billion allegations, we were very startled and we have since of course gone to court to challenge the people who made those allegations to try t o s u b s t a n t i a t e t h o s e allegations because we know for a fact that it was absolutely untrue.

We k n o w a l s o t h a t , subsequent to the first report b y t h e H o u s e o f

Representatives, Aigbgoje Aig- Imoukhuede ministerial committee was set up actually to look at this matter. T h e A i g - I m o u k h u e d e committee worked with the records that they had at the time and came up with a different set of observation. Again, they stated that some money was received but it was completely different from what they said was in the House of Representative report.

A lot of people complained a lot of marketing companies who felt that the Aig-Imoukhuede report really had not addressed the issue and in reality a lot of thing they said were incorrect.

S o , a g a i n t h e f i r s t committee was disbanded, the second committee under Imoukhuede was set. We have been at it for nearly four to five months. The effects

that this has had on our businesses is that, in all of that time, we have not been able to trade any cargos on

our account and our fixed cost that is what characteristic of the business that we are in. We have fix cost in terms of the

cost of maintaining all those who work in our tank farms and within our ships and those cost are there and we continue to pay them.

As far as it concerns us, we are owed a huge amount of money under the PSF scheme, by our own account we are owed about N8.4 billion and this money has been outstanding for a long time. But what worries us is that from time to time, we see publications that is made by the ministry of finance saying that we have been paid, they have made it about twice and in all of that we have not actually received anything from them, so we have not been paid we are still owed

about N8.4 billion and if we don’t find that money and pay back to t h e b a n k s w h o advances us those money in first place to buy the products, then we will be in serious trouble, so we are still waiting to be paid those m o n i e s t h a t a r e outstanding to us.

The first time they made the publication, we have not been paid any money, if you recalled that there was a face-off between the un ions in the o i l industry and ministry of finance and at the end of the day it was agreed that the minister of f i n a n c e w o u l d g o forward and pay oil marketers.

S u b s e q u e n t l y, a publication was put out that we have been paid, but we have not been paid. On this occasion they talked about the publications that came out last week that shows that we have been paid but we have not been paid.

I have information that approval have been given for us to be paid. I have to explain to you that the payment comes in tranches because we are owed a batch of N2.8 billion, another batch of N2.7 billion and another batch of N800 million. And we have actually sourced money, a further loan from the bank to go and pay the PEF and the admin charges for the N2.8 billion.

When we went there to collect the money, we did not see that money at all. We were paid the N1.3 billion and we did not understand why

CONTINUES ON PAGE 9

When we went there to collect the money, we did not see that money

at all. We were paid the N1.3 billion and we did not understand

why that was the case and we have since advised them that we would

rather collect full amount in respect of which we have already paid the PEF and other charges

Capt. Iheanacho

9Focus

that was the case and we have since advised them that we would rather collect full amount in respect of which we have already paid the PEF and other charges.

I don’t want to comment on how much they have paid, I’m just trying to get the monies that are due and outstanding to my company. If they say that they pay N289 billion, it well could be the case, all I am saying is that we are owed an outstanding both in terms of subsidy, PSF refunds that are due in terms of deduction that they had made. In terms of interest payments, about N8.4 billion that is what we are owed and the sooner we are paid that money, the sooner we can go back into importing and distributing petrol because, in the past five months, we haven’t done it. Our business is absolutely under extra -ordinary stress and we would like to really get back in doing our business, creating jobs in the industry, and in creating profits in the economy.

When Pipelines are in good condition, do we still see oil m a r k e t e r s i m p o r t i n g petroleum products?

That is not the reason why we import fuel into the country, it is not because pipelines are bad, it is because there is deficit when you look at the quantity that we consume on a daily basis and what is produced in our refineries, we do not produce enough to satisfy local demand and also the issue of the p rob lem wi th the pipelines, then there is a need

to import products and d i s t r i b u t e i t t h r o u g h channels other than the pipelines, that is to say road transport.

Can the money used in setting up a tank farm business be used to build more refineries in the country?

I agree with you that the solution to our problems is to build refineries. But there are some institutional problems that need to be dealt with in relation to that proposal.

For instance, refineries require very expensive equipment or facilities and not a lot of people have the money that they can simply go to their pocket and bring the money to build the refineries, they have to go to the banks. So if you go the bank, you have to do a detailed feasibility proposal and to how you are going to recover the outlays in the investments and pay back the loans that you borrowed.

Now if you are operating in a regulated environment, where the price you are to sell

the products is determined not by market forces but by government, then a lot of b a n k s a n d f i n a n c i a l institutions are skeptical and they will never lend you the money to take out investment in refinery capacity.

So it is very important that when we talk about the requirement for us to build refineries, yes, it is a solution to our problems, but, we have to deal with the institutional and market arrangement so that who so ever will be investing in refinery should be at liberty to determine the volume that will be refined and the price at which it would be sold rather than to be dependent on the regulations of the government agencies

Guilty parties should pay

calling the shot in these variables.

Does it also translate to reduction in petroleum price?

It would certainly translate to reduction in price because, if you refine products where the products is actually produced locally and the transporting of the crude to f o r e i g n m a r k e t s a n d transporting the refined products back into the Nigeria market is completely eliminated, it is bound to impact significantly on the end price that people pay for the product that is refined.

So, certainly to be able to refine and sell products in the Niger ia market would

definitely engendered a downward trend in the price of the products that will be consumed.

W h a t h a s b e e n t h e response of the banks since oil marketers have not been paid?

I would say that some of the banks have been showing understanding because they know that we are in between the rock and a hard place. The problem we have is that the banks automatically charges interest whether or not it is government or whoever is holding your money.

So, we are the ones that is suffering because at the end of the day, there is no provision in the contract that we have with the banks that says because this is a force-mar-jure and it is occurring w i t h i n c i r c u m s t a n c e s beyond our control, therefore we will not charge interest, that is not happening.

So the delays, five months starting from when they made the allegation of subsidy been paid to people. It is killing the business, it is absolutely placing marketers under intolerable pains but we are praying to God that this issue will be resolved very soon so that we can go back to doing our business, creating jobs, sustaining them and making profit.

The Role of the PPPRA in the subsidy saga

I know that the PPPRA s h a r e s s o m e o f t h e f r u s t r a t i o n s t h a t t h e marketers have. The only thing is that the PPPRA is a government agency and there is a limit to what they can be vocal in pushing the case on behalf of marketers.

As far as I know, they are doing the best they can, they are advising based on their experience and they do have a lot of experience in this market to say that some of these issues that have been brought to the fore in regards to how the PSF scheme has been operated and not really as bad as some has been reported. They are trying the best they can, but being a government worker there is limit to which they can indeed articulate some of these issues.

CONTINUED FROM PAGE 8

Capt. Iheanacho

I agree with you that the solution to our problems is to build refineries. But there are some institutional problems that need to be dealt with in

relation to that proposal

FocusF 10

Human capital, key to real

development –Imoke

How do you feel about the loss of Bakassi and its effect on Cross River?

The Supreme Court judgment raises some issues in the sense tha t the Supreme Cour t judgment ruled that it was as a result of the loss of Bakassi that Cross River lost its littoral status and became a non-oil producing state.

What this means is that, it has revived the Bakassi agitation and since the Supreme Court acknowledged the International Court of Justice, ICJ’s decision, the consequence is the loss to the people of Cross River and the people of Bakassi.

Bakassi people are now saying that they are not part of the ICJ’s agreement, they were not party to this and they were not asked where they wanted to settle. At the end of the day, the Bakassi people are being punished for what they had no hand in and they are calling out to Nigerians to respond to this.

I think that is basically where we have to arrive at some point of mediation, and political solution.

The political solution basically should be addressed for the interest of peace. The political solution is one that we have seen applied in the past. So it is not something new, it is something that the parties involved can come together and agree.

Why do I say that? In 2002 and in 2004, the Supreme Court ruled that no littoral state can make claims to offshore production and which was then defined as onshore/offshore dichotomy. So the Supreme Court was very categorical and what that meant w a s t h a t , a l l o f f - s h o r e productions belonged to the federal government. Cross River state now agitated strongly and Akwa Ibom who was the greatest loser at that time led that agitation, by Obong Victor Attah.

What happened at the end of

the day was that, we arrived at a political solution. Even under an administration of someone like former President Olusegun Obasanjo, who said we needed to have peace in this region.

There were several meetings and it was agreed that we must find a way to deal with the law which the Supreme Court had delivered because the judgment was strictly based on the law. But there were social issues that were to be addressed, and in addressing these social issues, President Obasanjo set up a c o m m i t t e e t o m a k e recommendations and that committee was chaired by Chief Anenih.

T h e y m a d e s o m e recommendations to abrogate the offshore/onshore dichotomy and the two or three paragraph legislation was drafted and sent to the National Assembly. What that legislation said was that states, littoral states will now b e n e f i t f r o m o f f - s h o r e production, the 13 per cent derivation will be applied to them.

What that meant was that more

With over N2billion in overhead costs, and the sudden loss of its status as an oil producing state, the Cross River State Governor, Senator Liyel Imoke, in this

interview with Clara Nwchukwu and Ubong Nelson, reveals how his administration is coping with economic and development issues. Excerpts:

revenue will be accrued to them and the greatest beneficiary was Akwa Ibom State, because they did not have any on-shore production. So Akwa Ibom today is an oil producer as a result of that political solution. So when there is a will, there is way and there is precedent. What I have

just told you is something we can make reference to in trying to find a solution.

At the federal level they are trying to mediate the political solution, how soon can this happen?

We hope that it can be in place very soon. We met with the president and he has given us his assurance. He is very familiar with the case because he handled it when we were trying to arrive at a political solution at the initial stages.

We think that the agencies can come together and arrive at a solution but, in the interim, even the environmental impact funds that we were gett ing as compensations, we don’t even get them anymore, thus putting us in d i f f i cu l t f inanc ia l conditions.

Literally, we are the only state in the Niger Delta region as it were that is suffering from the consequences of a judgment without a political solution, and making us the only state that is not producing when nothing has

c h a n g e d p h y s i c a l l y o r geographically.

What side are you going to be on if there is no political solution?

I believe very strongly that we cannot ignore the consequences of oil production, so I don’t believe that you can make a case for the state not to benefit from the o f f-shore product ion because there is a serious environmental consequence from the off-shore productions.

But I don’t think the solution is t o g o b a c k t o t h e onshore/offshore dichotomy, I think that from my perspective, we are also a state that is s u f f e r i n g s i g n i f i c a n t c o n s e q u e n c e s f r o m o i l production, and so if we can address the impact to Cross River State which is important and is similar to Akwa Ibom.

We feel strongly that the onshore/offshore dichotomy abrogation law was a good law. It is a law I think that was meant

CONTINUES ON PAGE 11

We think that the agencies can come together and arrive at a solution but, in the interim,

even the environmental impact funds that we were getting as compensations, we don’t even

get them anymore, thus putting us in difficult financial

conditions

Liyel Imoke,

11Focus

Human capital, key to real development –Imoke

to bring about peace in the region and I think we need to sustain the law and the law should benefit all the players.

N o w t h a t t h e re i s a n opportunity to re-visit the Bakassi case, as a Governor you are doing nothing

We are doing quite a lot; but as a governor, I understand the fact that when it comes to issues of boundaries between nations and i n t e r n a t i o n a l d i p l o m a c y, regrettable, states cannot interfere. But what we can do, is to restate our case at the highest level of government and listen to the Bakassi people and take their own case.

We don’t want to create an aggressive situation in the region, and as a responsible government, we don’t think we need to revisit the case. It can be lost, given that the National Assembly and various experts h a v e s p o ke n a b o u t t h i s extensively and it is not proper for me to go out to the public or the media to start shouting that

this is an injustice.What we have done, which is

appropriate, is taking the case to the Attorney General, we have met with the President and others on this matter. We have also made our presentation and we hope that with the support of Mr. President and others, there will be lasting resolution to this matter.

If the territory is lost, then let the people be compensated and there must be a measure of compensation in place. All that the people are asking for is compensation. Even if the government of Cross River State wants to take your land, for the overall public interest, you must be compensated. So why can’t the federal government pay compensation to the people of Bakassi?

The evidence we have in SWEETCRUDE is that the Federal Government did not pursue the case at all?

The Bakassi people have come to me and I have told them that I cannot object to their making those requests. They have a right

and those rights are guaranteed by our constitution and the UN Charter.

So I think it is very important that the federal government takes a second look at this matter and before the time lapses we will address them, and I hope that we will be able to convince them.

Have you ever been to Bakassi?I have been to Bakassi before it

was lost and several times after it was lost and of course now that we have the new Bakassi. Someone asked me about security in Bakassi and what I am doing about it. It has not dawned on the people that we have lost Bakassi, and he was asking the governor of Cross River about security in

Cameroun. That is the reality. Nigerians have not come to the terms with the fact that we have lost Bakassi, and that is because we do not understand why the Bakassi territory was lost.

What has Cross River been doing with the derivation funds before the loss of Bakassi?

One thing that we may not have done well generally speaking is to invest in the greatest assets we can invest in. The greatest infrastructure any state can have is its people. Until we invest in these people, we have not developed no matter the big buildings, expressways and flyovers that we have; until we invest in the people there is no real development.

So for me, I think what is critical in terms of what we do with those resources is how much do we extend or invest in our people to a point where their quality of life, their standard of living, their incomes have improved, and poverty reduced. How close are we through that investment, to m e e t i n g t h e M i l l e n n i u m Development Goals, MDG target

in 2015, and can the South- South region meet the MDG targets in 2015?

If we don’t, we may not have invested even if we have built expressways. So that really is where I want to respond from. If you narrow it down to Cross River, for us we are happy to say that our infant mortality rate has reduced significantly. We have achieved zero infant mortality in one local government, which is no child death during delivery because of our investment in the people. We started with two local governments in healthcare services, now we have expanded the programme to 14 local governments this year, and more than 18 will be captured next

year. In education for instance, we

have renovated about 60 schools. The amazing thing is that, the level of enrollment has increased as a result of the investment. Two things have happened; more than 5,000 enrollments have been made in the schools. Kids that were leaving communities schools for private schools are coming back to government schools.

More importantly, we set internal examinations that are unique to Cross River. We have the f i r s t s choo l l eav ing certificate we introduced in Cross River, and we have mock exams before you take WAEC.

Now for us, those are the things we will like to mention in terms of the impact. In 2006 or 2007, the pass rate for WAEC in Cross River was less than 18 per cent including English and Maths. In 2004 or 2005, it was than six per cent. We were c lass i f ied as one of the educational dis-advantaged states.

In 2012, the pass rate including English and Maths is

56 per cent; we were No. 7 in the country. To me these are m e a s u r e s o f i m p a c t o n development. And there are other indices that we looked at. We have made the investment in critical sectors, and we have i n t r o d u c e d f r e e h e a l t h programmes. Free health in Cross River State makes sense. We have free healthcare for all children under the age of five, and all pregnant women in the state. And again, free healthcare in all public health facilities in all local governments. We have expanded access to healthcare. We have increased healthcare facilities, and we have doubled all health facilities in all our local governments, so we have community health facilities.

We have set target of 300 families to a health facility as what we think should be the standard. We are building more and equipping more. Do you know the beauty of what we are doing? Like I said that you need to be creative. In some cases, we e v e n h a d s o m e o f o u r communities donating to the health facilities. And our health programmes are participatory, so the communities take ownership at the primary level. So for us, the investments that we make are improving on the livelihood of the rural dwellers and of the average people.

And we have done the same thing for the education sector. We have 60 secondary schools that have been renovated under what we call the Cross River Standard. And our Cross River standard is not difficult to achieve. Our Cross River standard basically is defined that we should not have more than 40 students in a class; we should have enough classrooms in all schools to ensure good standard is achieved. The basic things that were in place when we went to school like football fields, labs,(Physics, Chemistry and Biology) and now Computer Labs in each secondary school, so we have that in our schools. There is also teacher’s training which is compulsory to make sure that the quality of education is achieved, so it is not just the renovation of the buildings. We also have re-introduced the ministers (prefects) of assembly halls. Basically, all these standards have been achieved and the quality of the renovation is also part of what we are trying to achieve.

And in trying to do that of course, we have experienced some challenges but of course these challenges have been surmounted. We have what we call the CCT programme, the “Condition Cash Transfer students.” When I came in as the Governor, I always felt we don’t have an appropriate social welfare programme, that caters for the most vulnerable in our society, and that as society evolves, it is dependent on extension family; the extended family system, which has kept all of us and the poor in the community growing. We now

CONTINUED FROM PAGE 10

We have set target of 300 families to a health facility as what we think should be the

standard. We are building more and equipping more. Do you

know the beauty of what we are doing? Like I said that you

need to be creative Liyel Imoke,

Oil 12

DPR to seal depots fleecing marketers

SCARCITY:

CLARA NWACHUKWU

To forestall further

s w i n d l i n g o f

c u s t o m e r s , t h e

D e p a r t m e n t o f

P e t r o l e u m

Resources, DPR, said it will from

next week, seal any depot located

anywhere s in the country found

selling petroleum products

above the prescribed ex-depot

prices to marketers.

The Operations Controller,

DPR Lagos Zonal Office, Mr.

Gbenga Koku, who made the

declaration yesterday in Lagos,

at the annual general meeting of

DPR and petroleum products

d e p o t o w n e r s , s a i d t h e

development was necessary in

order to curb the profiteering

habits of some depot owners.

He noted that at ex-depot price

of N87.90k and 43.70k for

Premium Motors Spirit, PMS or

petrol, and Household Kerosene,

HHK or kerosene respectively,

there are already reasonable

margins built into the cost for the

depot owners by the Federal

Government.

He said, “It is unacceptable

that in pursuit of excessive

profits some marketers are

arbitrarily distorting this price

regime. Clearly, this practice

n e g a t e s t h e F e d e r a l

government’s efforts to provide

these products to the Nigerian

public at affordable prices.”

While urging all depot owners

to partner with the Federal

government in order to reduce

the sufferings of Nigerians,

Koku promised that the DPR will

double efforts to monitor

compliance with the pricing

reg ime and ensure tha t

perpetrators of profiteering are

brought to book.

Koku also informed that the

agency will kick off the renewal

of depot licences next week as

part of the efforts to streamline

the process, while also creating a

platform to effectively capture

data of trucks used in conveying

petroleum products from the

depots.

“In the near future, we intend

to release guidelines for

registration of such trucks and a

timeline for implementation,” he

said, adding that the agency will

continue to monitor the quality

and quantity of products being

loaded from the depots to ensure

that it met specifications.

ccording to him, “We Aintend to embark on

regular sampling of products

from depots storage tanks to

ensure that unwholesome

products are not allowed to get

into the distribution chain. We

also urge all operators to ensure

that only third party laboratories

are engaged when recertifying

imported products. These tests

must also be witnessed by DPR

representatives and signed off by

competent personnel in the

laboratory.”

Stressing on health, safety and

environment issues, the Director,

DPR, Mr. Osten Olorunsola,

noted that although there has

been no operational fatality in

Lagos area, however, “the use of

unsafe equipment in depot

facilities can result to total loss of

investment and lives.”

Accordingly, he reiterated that

all depot modifications or

changes relating to physical

structures or functions must be

approved by the industry

regulator. “DPR should be

informed and involved s the

process of modification goes

along and at each milestone.”

He added that the directive also

covered tankage expansion, as

it had become the practice

among depot operators to expand

tankage capacity irrespective of

the attendant HSE issues.

Like the zonal controller, the

director, spoke on a number of

other issues including renewal of

licences, operational issues,

products transportation, quality

assurance and a host of others.

It is unacceptable that in pursuit of excessive profits some marketers are arbitrarily

distorting this price regime. Clearly, this practice negates the Federal government’s efforts to provide these products to the Nigerian public at affordable

prices

Queue at a filling station

OandoAd

Oil 14

FG earns $269b in nine years from oil sector

Goodluck Jonathan

KUNLE KALEJAYE

Au d i t r e p o r t conducted by t h e N i g e r i a E x t r a c t i v e I n d u s t r y

Transparency Initiative, ( N E I T I ) o n N i g e r i a ’ s petroleum industry from 1999-2008 indicated that the Federal Government earned a total sum of USD269 billion.

NEITI is the national version of the global multi- stakeholders initiative that promote transparency and a c c o u n t a b i l i t y i n t h e management of extractive resources with a view to a i d i n g s u s t a i n a b l e development with specific target on poverty reduction, elimination of social conflicts and creation of peaceful business environment.

The audit, carried out under the oversight of professor Assisi Asobie, also indicated that within this period, USD92 billion was received from oil specific taxes, the sum of USD5 billion from non-oil specific taxes from oil companies

while USD172 billion was received from the sales of government equity crude.

However, during the same period, Nigeria lost a total sum of USD2.6 billion due to leakages in the system.

C h a i r m a n , N a t i o n a l S t a ke h o l d e r s Wo r k i n g Group, (NSWG) of NEITI, Mr. Ledum Mitee who spoke during NEITI’s stakeholders’ e n g a g e m e n t o n t h e Petroleum Industry Bill, PIB in Lagos, said the agency reports also revealed that a whopping sum of $9,890 billion is an outstanding recoverable fund due to the Federal Account from the companies.

According to him “This amount is equivalent to N1, 373 tril l ion at current exchange rate which is huge enough to wipe out the federal government of Nigeria current fiscal deficit i n t h e 2 0 1 2 b u d g e t s financing.”

“This, no doubt is a significant step in the NEITI efforts and process to promote transparency in the petroleum industry.”

Speaking on the PIB, the

Executive Secretary of NEITI, Mrs. Zainab Ahmed said the PIB is an important bill expected to drive the reform in the Nigeria oil and gas sector. She explained that the bill will provide a solid foundation for the regulatory, structural, commercial and fiscal frame works for the operation of the oil and gas sector in order to halt the mismanagement, inefficiency and lack of transparency in the sector.

As an agency set up to

develop a frame work for t r a n s p a r e n c y a n d a c c o u n t a b i l i t y i n t h e N i g e r i a ’ s e x t r a c t i v e industries and to ensure c o n f o r m i t y w i t h t h e principles of Extractive Industries Transparency Initiative, (EITI), Mrs.Zainab said NEITI has legitimate stake in the petroleum industry bill adding that the PIB is an important milestone in the implementation of the E x t r a c t i v e I n d u s t r i e s Transparency Initiative in

Nigeria.

“We in NEITI believe that the Bill must emerge as a law t h a t r e s p e c t s f a i r competition, efficiency, professionalism, openness and p r udent resource m a n a g e m e n t w h i l e promoting investor interest.

NEITI also thinks that financial, physical and governance issues provided in the PIB should be such that citizens of Nigeria will feel the impact of the natural resources.”

rench oil group Total, is

banking on a string of FAfrican projects to help fuel a

25 percent rise in output over

the next five years, with growth

accelerating after 2015 to top 3

million barrels of oil and gas a

day for the first time.

Europe’s number three oil

and gas company, to ld

investors on Monday that 70%

of the fields on which it is

basing its forecast for the 2015-

17 period, are already either

producing or in development.

Three of the projects that will

help deliver the post-2015

surge are Egina (Nigeria),

Kaombo (Angola) and Moho

(Republic of Congo) - all west

African projects in deep and

ultra-deep water - an area

where To ta l i s a se l f -

proclaimed specialist.

Total and other top oil firms

like BP and Shell are ramping

up spending on exploration,

often in relatively under-

developed regions like Africa,

to take advantage of the

historically high price of oil,

which averaged $113.6 a

barrel in the first half of 2012,

up 2 percent on the year.

At its annual investor day in

London, Total also announced

it had joined the race to exploit

the potentially huge resources

offshore Mozambique in east

Africa, where it already has

operations in Uganda and

Kenya.

Total targets Africa for ambitious output growth

This, no doubt is a significant step in the

NEITI efforts and process to promote transparency in

the petroleum industry

15Oil

KUNLE KALEJAYE

The past years have witnessed an upsurge in the n u m b e r o f marketers who

began construction of filling stations without an approval to construct, and then later applied for a waiver from the Department of Petroleum Resources, DPR, a DPR official has said.

According to the official, “This is an outright violation of the laws governing the construction of filling stations and an appropriate penalty will soon be in place for this.”

Assistant Director, Products Depots and Jetty of DPR, Mr. Lanre Buraimoh, stressed that marketers are reminded that the construction of filling stations and fabrication of underground tanks should be

undertaken only by DPR accred i ted consu l tan t , adding that all oil and gas equipment suppliers must be also be accredited by DPR.

Buraimoh who stated this at t h e 2 0 1 2 a n n u a l Independent Marketers meeting with DPR in Lagos explained that the need to ensure strict oil industry

s t a n d a r d a s p r a c t i c e d worldwide cannot be over emphasized.

“To this end, the Department is in advanced stages for the implementa t ion o f the Trucking Policy which is envisaged to enhance tanker t rucks usage, ins t i tute orderl iness in trucking activities at the depots,

m i n i m i z e p i p e l i n e vandalism, check diversion, theft and adulteration of petroleum products and enhance road users safety, amongst others,” he said.

s the end of the year is Afas t approaching , Buraimoh stated that it is expected that usage of petroleum products will increase. It is in line with this expectation that we wish to encourage marketers to ensure product availability to the public at this critical period.

“Marketers are therefore, strongly advised not to engage in acts that may lead to creation of products scarcity, and other associated ills such as hoarding and p r o d u c t d i v e r s i o n f o r profiteering.”

He maintained that DPR

will not hesitate to impose the necessary sanctions on erring marketers found violating the laws, adding that the department will begin the normal process of r e n e w a l o f l i c e n s e s effectively from October 2 0 1 2 f o r 2 0 1 2 / 2 0 1 4 operating year.

“All petroleum products marketers are advised to submit their applications promptly so as to facilitate early issuance of license. Marketers who fail to renew their license by March, 2013 shall have their operations suspended indefinitely,” Buraimoh asserted.

Application for renewal, according to Buraimoh must be accompanied with copies of expired license, valid p r e s s u r e T e s t C e r t i f i c a t e / R e p o r t o f Underground tanks, Current Tax Clearance Certificate, appropriate application fees in a certified bank draft, and photographs of the station with evidence of installed standard price boards and adequate safety equipment endorse by DPR staff.

He also explained that a re-inspection and assessment of all retail outlets will be conducted before renewal of license in order to ascertain c u r r e n t s t a t u s a n d compliance with statutory requirements.

H e w a r n e d t h a t d i l a p i d a t e d s t a t i o n s operating with sub-standard facilities will not be renewed for operations.

This is an outright violation of the laws governing the

construction of filling stations and an appropriate penalty will soon be in place for this

igeria's apex maritime regulatory Norgan, Nigerian Maritime Administration and Safety Agency (NIMASA), has introduced new Marine Environment (Sea Protection) Levy for various types of vessels. A copy of the directive signed by the NIMASA Director-General, Mr. Ziakede Patrick Akpobolokemi, and dated 8th of June, 2012, imposed the following levies: $ 1.25 per gross tonnage on vessels of 100 to 1000 gross tonnage, $ 1.00 per gross tonnage for ships of 1,001 to 10,000 gross tonnage, $ 0.75 per gross tonnage for ships of 10,001 to 100,000 gross tonnage, and $ 0.50 per tonnage for vessels of 100,001

NIMASA introduces Sea Protection Levy

gross tonnage and above. For Nigerian-registered ships, the rate of the Marine Environment (Sea Protection) Levy is as follows: N500.00 per gross tonnage for ships of 100 to 1000 gross tonnage, N 350. 00 per gross tonnage for vessels of 1,001 to 10,000 gross tonnage, N300.00 per gross tonnage for vessels of 10,001 to 100,000 gross tonnage and N250. 00 per gross tonnage for ships from 100,00 I gross tonnage and above. The regulation further stated: "The rate of levy payable by an offshore installation and oil pipeline shall be (a) in 'the case of an offshore oil installation that is

producing. Processing, storing, or transferring oil, including buoys used for the loading and/or receiving of oil, NI5,000,000.00 (fifteen million naira) per annum: "(b) in the case of an offshore oil installation used or constructed for the purposes of exploring for oil, N 10,000,000.00 (ten million naira) for each oil well drilled by that installation; "(c) In the case of an oil pipeline, N I, 500.00 per cubic metre of pipeline volume from the high water mark to the termination point offshore." The Marine Environment (Sea

Gas station

CONTINUED FROM front page

16Oil

Local Content:

Bristow Helicopters as pioneers

Th e N i g e r i a n Content Act is for the promotion of value addition to t h e N i g e r i a n

economy, th rough the utilization of local raw materials, products, and services in order to stimulate g r o w t h o f i n d i g e n o u s capacity.

But, before this became a reali ty when Nigeria’s President, Dr. Goodluck Jonathan, signed the bill into l a w i n 2 0 1 0 , B r i s t o w H e l i c o p t e r s ( N i g e r i a ) Limited had commenced its Nigeria Content Plan in the early eighties. This was long before the idea of developing N i g e r i a n s t o a c t i v e l y participate in the Oil and Gas Industry became a policy of the Federal Government of Nigeria.

The focus has from the outset largely been on the development of Human Resources , Capac i ty / Capability Development; Technology Transfer and Localisation.

The ef fort at Human Resource Development is focused on two key core areas namely:

1.Pilot Training2.Aircraft Maintenance

Engineers Training.

Pilot Training:In 1984, Bristow commenced training of Nigerians who already had the Commercial Pilots Licence (Aeroplanes) as helicopter pilots at its Flying Training School, Redhill, United Kingdom.

I n a d d i t i o n B r i s t o w Helicopters Nigeria Limited sponsored a number of candidates through the then Nigerian Civil Aviation Training School (NCAT), in Zaria, Kaduna State through Fixed-Wing Courses. These candidates were later sent to the Flying Training School in the United Kingdom to convert them into helicopter pilots.

The NCAT sponsorship programme was identified as inadequate to meet the need to replace expatriate pilots, as it took approximately three to four years to complete the C o m m e r c i a l P i l o t s programme. A decision was made to accelerate the programme by starting a sponsored programme, whereby Nigerians selected

through a rigorous selection process would be sent to the Flying Training School in the United Kingdom. This would reduce the 3-year programme in Zaria to 15 months. This sponso red Cade t P i l o t Programme started in 1986. This Cadet Programme continues today and has proudly produced over 200 Nigerian pilots.

Aircraft Maintenance Engineers Training:

B r i s t o w H e l i c o p t e r s (Nigeria) Limited (BHNL) in a d d i t i o n t o s t u d e n t s sponsored through the Engineering Training School at NCAT, Zaria, recruited self-s p o n s o r e d N i g e r i a n nationals. In addition to sponsorship at NCAT Zaria, a n ‘A p p r e n t i c e s h i p Programme’ was started in 1988 whereby selected candidates were trained in the United Kingdom for 2 years. Following the downturn in training activities in Zaria in the nineties, this programme continued in the United Kingdom.

In recent time, Bristow has collaborated with NCAT to reduce money spent abroad

and domicile some training cost by working with NCAT to facilitate some part of the training program in Zaria, before students are sent to the Bristow Academy for further intensive training.

Today, Bristow Helicopters Nigeria act ivi t ies and contributions have proven that, the enactment of the Nigerian Content Act, was a step in the right direction.

Bristow Helipad

Conoil initiates door-to-door distribution of gas, lubricants

e a d i n g p e t r o l e u m

m a r k e t e r a n d Lmanufacturer of industrial

and automobile lubricants

and liquefied petroleum gas

(LPG), Conoil Plc, has

introduced a new dimension

to the distribution and

marketing of lubricants and

domestic gas to mechanic

workshops and homes.

The concept is aimed,

among several benefits, at

improving the delivery of

lubricants and cooking gas to

the door steps of customers on

real-t ime basis and at

affordable prices.

The new initiative, simply

known as COSA (Conoil

S e r v i c e s A s s o c i a t e s ) ,

g u a r a n t e e s p r o d u c t

availability through branded

motorcycles and tricycles.

Through COSA, the first of

its kind in petroleum products

distribution and marketing in

the continent, the volume of

the company’s lubricant sales

is projected to increase by

over one million litres in one

year. Another value addition

of COSA to retailers, and

invariably end consumers, is

reasonable reduction in price.

COSA is also designed as

the company’s corporate

social responsibility, as it is

expected to create hundreds

of employment opportunities

a n d p r o m o t e

entrepreneurship among

fresh graduates.

According to a statement

released by the company,

“COSA will create direct and

i n d i r e c t e m p l o y m e n t

opportunities and reduce

unemployment ra te in

Nigeria”.

It would be recalled that

Conoil recently announced,

plans to invest N1.5 billion to

re-invigorate the totally

d e r e g u l a t e d a n d h i g h

margin-yielding lubricant

business over a four-year

p e r i o d w i t h p r o j e c t e d

revenue of N33 billion over

same period.

Towards achieving this

projection, the company

upgraded its filling lines at its

Apapa Plant and constructed

new ones in Port Harcourt

and Kano to generate

additional volumes.

This would reduce the 3-

year programme in Zaria to 15 months. This

sponsored Cadet Pilot Programme started in 1986.

This Cadet Programme

continues today and has proudly produced over 200 Nigerian

pilots

UBOG NELSON

Oscarline ONWUEMENYI

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18FeedbackFeedback

Investors perspective on the PIB

NEITI – PIB Stakeholders Forum

Mu t i u

Sunmonu

is Country

C h a i r ,

S h e l l

Companies in Nigeria and

Managing Director of the Shell

Pe t r o l e u m D e v e l o p m e n t

Company of Nigeria Limited

(SPDC). He graduated from the

University of Lagos in 1978 with

a f i r s t - c l a s s d e g r e e i n

Mathematics and Computer

Sciences. He joined the IT

department of Shell where he

held various roles. Following

three years in Aberdeen at Shell

UK, he returned to Nigeria in

1993 to become Head of IT

Infrastructure Services and in

1995 he became IT Manager for

the Shel l Petroleum and

Development Company. In 1997

he moved to the core production

side of the business as an area

production manager. In 2001 he

worked as Regional Business

Adviser at Shell Headquarters at

The Hague, in the Netherlands

where he helped develop the

initial investment proposal for

the China Wes t to Eas t

integrated pipeline and gas

suRpeptluyr pnrionjge ctto. Nigeria in 2003,

Mutiu was appointed General

Manager Production for the

SPDC Eastern operations. Two

years later, he joined the Board of

SPDC following his appointment

asA Effxfeacirust ivaen Dd irethcetonr CEoxrpecouratitvee

Director Production in 2006 with

overall accountability for the

c o m p a n y ’ s o i l a n d g a s

production activi t ies and

delivery. Mutiu was appointed

Managing Director of SPDC on 1

January 2008. And on January 1

2010, he also became Chairman

of Shell Companies in Nigeria.

He is married to Funke, and they

haMveu ftoiuu r cShuilndmreonn.u: Investors peNrsigpeercitaiv hea osn hthueg eP IoBi l and gas

resources. And with such

resources, the country should be

on any investors’ primary target

list. In this speech, Mutiu

argues that there are many

factors that would make Nigeria

an investment destination given

the presence of these resources.

But two related factors stand out

– a conducive operat ing

environment and fiscal terms

leading to competitive and

attractive rates of return. A

balanced PIB is required – one

that will provide optimal

revenue to the government

whilst providing sufficient

incentives for new investment to

fuel growth.

Ladies and gentlemen, good

morning. Nigeria is at the beginning of a

transformational shift in the

management of its huge oil &

gas resources which currently

stand at some – 35

billion barrels of proven oil

reserves, 187 trillion cubic feet

(TCF) of proven gas reserves

and an estimated 600TCF of

undiscovered gas potential as

well as potential crude oil

production capacity of 3.3 Mb/d.

With this level of resource,

Nigeria should be on any

investors’ primary target list as

well as Africa’s undisputed

energy giant and a major world

player. So, what would make Nigeria

an investment destination given

the presence of attractive

resources?There are many of course, but

two related factors stand out – a

c o n d u c i v e o p e r a t i n g

environment and fiscal terms

leading to competitive and

attractive rates of return. The

fact is that Nigeria is a

c h a l l e n g i n g b u s i n e s s

environment, costs are at the

high end of the global scale,

contracting and licencing can be

long and tortuous processes

and, onshore, there are a

multitude of security related

issues that have to be dealt with

on a daily basis – not least oil

theft and sabotage – leading to

lost production and even more

cost and resource pressures.

The Federal Government has

done and is still doing a lot about

these challenges, but we are not

there yet by any means. In the

recent past, militancy has simply

been replaced by industrial

scale oil theft and sabotage. We,

and others, have had to shut-in

significant production, spend

huge amounts on replacing and

r e p a i r i n g h a r d w a r e a n d

deploying massive resources to

clean up oil spills.

All of this has had a huge

impact on both cost and

revenues, but those of us who

have been here for several

decades look on these issues as

cyclical and can live with them –

though not for ever - provided

the underlying fiscal regime is

positive.

Solutions to these underlying

problems will take time, and the

PIB must take this operating

environment and its direct impact

on costs into account. I will come

back to this later.

The debate on PIB has been

going on for some time now and I

want to reiterate that, as

investors, we welcome a bill

that will bring to end fiscal and

legal uncertainties and pull

together under one roof the many

pieces of legislation pertaining to

our industry. The country needs

i t and the industry needs it.

The changing landscape...An avTohidea bclue rfruetnutr e PIB draft has highlighted the differences of views between industry and government. And I will be frank, there are still significant gaps to cloTshee.s e differences need to be

r e s o l v e d t o s u p p o r t t h e

underlying objectives of the

reforms. Like all responsible

stakeholders, industry needs to

work with government to find a

win-win solution. Dialogue is

ongoing and with the right level

of co-operation, industry and

government will obtain better

insight that will lead to a

resolution of the differences.

The consequences of the

c u r r e n t f i s c a l a n d l e g a l

uncertainty in Nigeria are very

visible – lower exploration

activity and very few final

investment decisions - meaning

fewer reserves and reduced

investments. This in turn means

that production is not being

replenished and there is serious

threat of a significant reduction

in production in the medium

t e r m w i t h a l l o f t h e

consequences for revenue

generation for the country.

So, we need the PIB as quickly

as possible as it will define the

environment for growth.

In the last few weeks the

industry-government dynamics

have been encouraging. There

h a s b e e n a n i n c r e a s e d

willingness to share data and

assumptions and this has

opened up greater opportunities

for mutual understanding and

progress. We need to continue

this dialogue – indeed build on it

– but time is of the essence.

The outside world is watching

and waiting. Analysts are

commenting – Woodmac has just

published its assessment of the

current state of play, and it’s not

flattering. The media is

portraying this as industry

versus government – which,

frankly, doesn’t help – and the

clock is ticking.

Implicit in this is that there is

one chance to ensure that the

PIB can encourage sustained

investment, assure growth of

revenue beyond the short term,

continue the gains of Nigerian

content, foster progress on

Mutiu Sunmonu

With this level of resource, Nigeria should be on any investors’ primary target

list as well as Africa’s undisputed energy giant and a major world player

CONTINUES ON PAGE 12

19Feedback

Investors perspective on the PIB

NEITI – PIB Stakeholders Forum

government aspirations for

p o w e r a n d i n d u s t r i a l

development and, of course,

encourage economic growth

from multiplier effects.

Expanding African Supply SoAunrdc eswe cannot ignore the

developments around us. There

have recently been large

discoveries in East Africa (more

than 100 TCF in one block in

Mozambique for example) and

additional ones in West Africa –

notably in Ghana. There are also

good prospects offshore South

Africa and Gabon and potential

in Equatorial Guinea. And there

is huge shale gas potential in

South Africa.

This is only a snapshot of Africa

– all these and many other global

o p p o r t u n i t i e s i m p a c t

competitiveness and the window

of opportunity to monetise

Nigeria’s resources.

Frankly, Nigeria cannot afford

to miss the boat. There is a finite

amount of money to be invested

by oil and gas majors in the short

to medium term, and Nigeria

needs a slice of that cake.

“AA b ablaalnacnecde dP IBP IB is what is required – one that will provide o p t i m a l r e v e n u e t o t h e government whilst providing sufficient incentives for new inAve sbtmaleanntc teod f uPelI Bgr oiws thw. h “at is

required – one that will provide

o p t i m a l r e v e n u e t o t h e

government whilst providing

sufficient incentives for new

investment to fuel growth. And it

is important to take local

business challenges in Nigeria

into consideration as well as the

impact on existing investments

made in good faith at current

legal and fiscal terms. The PIB

should create a level playing

field – one that is fair to all

investors – big, small, new or old.

What we have seen of the draft

PIB to date does not indicate a

bill that fits these criteria. And

this is the opinion not only of the

major players in Nigeria’s oil and

gas industry, but, as I mentioned

earlier, industry analysts as well.

What we have seen and what

we know of the current draft PIB

r e q u i r e s s i g n i f i c a n t

improvement to secure Nigeria’s

competitiveness, and attract the

required level of investment to

enable exploration to increase

Nigeria’s reserves and then

foster development of the

projects to monetise them.

An unbalanced bill will hinder

this investment for growth rather

than unlock it, adding new

challenges to existing ones in the

areas of investment (obviously)

but also, for example, license

renewals, the industry-wide PSC

disputes and lack of gas terms for

PSCs.

OA nb atlhaen ocethde Pr IhBa 2nd, a balanced

PIB will be an enabler for

government’s

transformatio

n agenda of

g r o w t h a n d

e m p l o y m e n t

creation. With

potentially many tens

of billions of dollars of

investment awaiting the

bill, it is not just jobs in the oil

and gas industry, but the many

thousands in suppor t ing

industries and their satellites

that will be created. A balanced

PIB would help build Nigerian

Content Development faster,

promoting local manufacturing

a n d e n t r e p r e n e u r i a l

development and in-country

capacity and capability.

Imagine, for example, the

development of industry around

the building of the infrastructure

for major offshore deepwater

projects in Nigeria. Imagine too

developments that might spin off

this industry. If it is possible to

develop an industry building

FPSOs and topsides here, what

else might be possible, and what

other industry might develop

around it?

As it stands right now the PIB

will render all deepwater

projects and all dry gas projects –

whether for domestic or export

markets – non-viable. The

opportunities I have just

outlined will be lost. And the

opportunity to monetise some of

the world’s best gas reserves will

be lost. The opportunity to kick

start the power sector – the key to

economic growth – using easily

accessible gas will also be lost.

Besides these areas related

directly to fiscal terms, the PIB

needs to address long term

industry issues, for example

funding issues for JV’s, where

funding requirements have

constrained production growth.

Nigeria needs a strong national

oil company, but any national oil

company has to par tner

positively and, again, has to

compete with those elsewhere

that are also seeking external

investment. NNPC has got to be

able to fund its share of JV costs

if it is going to attract such

ex ter na l inves tment and

partnership.

While the economy in general

is on the path of diversification it

should not be denied that the oil

and gas sector remains the

driver of this process providing

not only the funds to enable the

diversification but also the gas

that could and should be being

used to regenerate the power

sector to provide reliable

electricity which is the backbone

of industrial growth. If the PIB

d o e s n o t e n c o u r a g e t h e

development of the domestic gas

market none

of this wil l

happen and the

consequences

a r e a l m o s t

unthinkable.

“As it stands right now the PIB will render

all deepwater projects and all dry gas projects – whether for domestic or export markets – non-viable. The opportunities I have just outlined will be lost. And the opportunity to monetise some of the world’s best gas reserves will be lost.”

The more general Nigerian

developmental agenda is also

huge. The country needs

massive investment in basic

infrastructure and in education,

healthcare, and so on. This all

needs to be funded in the short to

medium term, and in that time

period the realistic primary

source of revenue remains the

oil and gas industry. A bad PIB

will deter investment and

strangle that revenue flow

creating more and broader

social issues rather than solving

them.

The Global Competitive Landscape

The window of opportunity is

narrow. As Woodmac’s report

clearly illustrates, the world is

watching. Potential investors

will look for better opportunities

if a competitive PIB isn’t

finalised soon. Nigeria needs to

use its resources to achieve what

it wants and it needs a good PIB

to get there. Investments need to

continue and the oil and gas

sector needs to continue to grow.

Australia is an example of what

can be done.

Nigeria has 187tcf of proven

gas reserves of which less than

50% is dedicated to target

markets and projects, AND we

have some 600tcf of unproven

reserves. In comparison,

Australia, a country with only

110tcf of proven reserves is

moving forward with ten

projects to deliver 81mtpa of

LNG export capability. And

global developments suggest an

e v e n m o r e c o m p e t i t i v e

landscape in the near future.

Qatar recently added 77mtpa

to the global LNG supply.

Aus t ra l i a , a s p rev ious ly

mentioned, plans to deliver

81mtpa by 2017, Russia is

aggressively building more

pipelines to Europe to deliver

more natural gas and there have

been shale gas discoveries in

Poland, China, and, more

significantly, in the US (where

there is thought to be more than

100 years supply of natural gas).

This has led not only to a fall in

energy imports to the US, but the

probability that the US will

shortly become a net exporter of

gas. It has also led to a significant

reduction in the Henry Hub

marker price, which has fallen by

some 30% in the last year alone.

A l t h o u g h t h e g l o b a l

hydrocarbon demand horizon

looks strong, the competitive

threat remains, and Nigeria is

not isolated from it. As a nation

our only weapon is to ensure

investment continues so as to

grow capacity across the board to

make the most of Nigeria’s

abundant resources. It is against

this background that Nigeria

needs to compete – and the PIB

will either enable or strangle that

competitiveness.

FInovr esotourrs Rpeasrpt,o nosiilb ilaitnyd gas

companies have to be clear on

what they need for continued

investment in Nigeria. Just

saying that the current PIB will

not work is not helpful; investors

need to get into the solution

space. And I think we are getting

closer through continued

dialogue.

We also need to accept that

change is inevitable. I said

before that we welcome the PIB

for a number of reasons – the pill

that might be hardest to swallow

is that we will have to accept

tougher terms in some areas.

Nigeria has matured, the

competitive landscape has

changed and we all have to

accept that ‘balance’ means pros

and cons.

Finally, all of us in the industry

need to become more enduring

partners of the nation. Nigeria’s

fortunes are inextricably linked

with the oil and gas industry.

Though government has the

sovereign right to make laws and

industry is accountable to their

shareholders, a win-win solution

i s poss ib le and, indeed,

necessary.

Nigeria cannot survive and

grow without a healthy oil and

gas industry and a healthy oil

a n d g a s i n d u s t r y n e e d s

conducive legal and fiscal

environment that will allow it to

grow too. Change is inevitable,

but I am confident that we can

solve this problem and look

forward to at least another 50

years of partnership and, if we

really get this right, the

transformation of Nigeria into

the economic powerhouse she

has potential to be.

Thank you.

CONTINUES ON PAGE 18

This has led Not only to a fall

in energy imports to the

US, but the probability that

the US will shortly become a net exporter of gas. It has also

led to a significant

reduction in the Henry Hub

marker price, which has

Fallen by some 30% in the last

year alone

20Gas

Shale gas demand may stall LNG projects in Nigeria-Experts

KUNLE KALEJAYE

Experts in the oil a n d g a s industry are of the view that Niger ia may

lose her place in the international scene if drastic measures are not put in place to utilise the country’s gas resources, in view of the growing demand of shale gas in the international markets.

The development of shale gas in different parts of the world has become a game changer in the global energy mix.

The situation is likely to stall new Liquefied Natural Gas, LNG projects with implication for Nigeria’s gas resources.

With the above worrisome situation, the Nigerian Association of Petroleum Explorat ionis ts , NAPE deemed it fit to tag its 2012 Pre-Conference Workshop, “The Economic Imperative for the Local Utilisation of Nigeria’s Gas Resources.”

Speaking with newsmen in Lagos, President of NAPE, Mr. Mayowa Afe said the pre-Conference Workshop will deliberate on the specific challenges in the gas value chain, “If the commodity is to play any significant role in the nat ion’s drive for development”.

The Workshop ushers in N A P E ’ s A n n u a l International Conference and Exhibition which is undoubtedly, one of the

largest gatherings of oil and gas professionals in sub-Saharan Africa.

“The conference comes up between the 11th and 15th of November, 2012 at the Eko Hotel and Suites in Victoria Island, Lagos,” he said.

Afe, who was represented by

the President -elect, Mr. George Osahon, noted that t h e P r e - C o n f e r e n c e Workshop wi l l fea ture d i s c u s s i o n o n t h e international development in the shale gas arena; domestic gas utilization: the journey t h u s f a r ; a n d G a s t o

Petrochemicals.Special guest of honour at

the workshop include Engr. Andy Yakubu, the Group Managing Direc tor o f Nigeria National Petroleum Corporation, NNPC.

A c c o r d i n g t o N A P E President, three lead papers will be presented which inc lude : In te r na t iona l Development in the Gas Arena: Implication for the c o m m e r c i a l i z a t i o n o f Nigeria’s Gas Resources, which will be delivered by Engr. Chima Ibeneche, President, Nigeria Gas Association;

Utilization of Nigeria’s Gas Resources: Perspective of the journey so far”, will be delivered by Mr. Ubaka Emelumadu, Vice President; S h e l l P e t r o l e u m Development Company of Nigeria, while the last lead paper, Defining an Effective Gas Commercialisation Policy for Nigeria” ,will be presented by Mr. Osten Olorunshola, the Director of the Department of Petroleum Resources, DPR.

In providing insightful comment and presentation into the subject matter, NAPE president said there will also be a three member panel of discussants.

Members of the panel are; Mr. Bolaj i Osunsanya, Managing Director, Oando Gas and Power, Mr. Babatope Olaleye, General Manager, Geosciences, Nigerian Agip Oil Company and Prof. C.M Ekweozor, CEO of Getamme Group of Companies would specifically handle the issue of shale gas.

Currently, natural gas is the fastest growing energy resource in most regions of the world, owing to its abundance and relatively low carbon content that m a k e s i t m o r e environmentally acceptable compared to coal or crude oil.

H o w e v e r , g a s t r a n s p o r t a t i o n f r o m production locations to areas of consumption is capital intensive which probably accounts for large the volume of stranded gas in the country which encourages flaring whi le constraining i ts widespread utilization in various industries including the power sector.

According to the NAPE p r e s i d e n t , t h e P r e -Conference Workshop will address the situation.

Currently, natural gas is the fastest growing energy resource in most regions of the world, owing to its

abundance and relatively low carbon content that makes it more environmentally acceptable

compared to coal or crude oil

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28PowerELECTRICITY DISTRIBUTION: ELECTRICITY DISTRIBUTION:

Assessing investors’ competence

Notwithstanding

the rigorous

p r o c e s s f o r

prequalificatio

n, the Bureau

of Public Entreprises, BPE,

needs to ensure that not only do

the prospective bidders have the

financial muscles to take over the

firms, they must also be

equipped with the relevant

experience, and sustainable

business model that will make

for successful and efficient

transition.

To avoid the mistakes of past

p r i va t i sa t i on , where the

performance agreements were

flagrantly abused, the investors’

c o m p e t e n c e m u s t b e

established. In view of the

importance of power in nation

building, competence driven by

knowledge more than political

sen t iment s shou ld d r i ve

reinvigoration of Nigeria’s

comatose electricity sector.

The NCP approved the

technical bid evaluation of 31

firms prospecting for the 11

d i s t r i b u t i o n c o m p a n i e s ,

DISCOs, put up on offer by the

BPE for private ownership, but

the challenge before it is in

finding those that understand

the complexities of the sub-sect

to do the job.

Technical cpmpetence

Industry experts argue that

there is a vi tal need to

appropriately choose companies

with the technical capacities to

add value to the sector in line

with current reforms aimed at

delivering quality services to

consumers. Such companies

with hands- on experience can

the focus appropriately on

integrating the various aspects

of the electricity distribution in

an efficient manner through

network expansion, proper

metering, revenue management

and asset optimisation.

Although the investment

outlay to achieve these is huge,

but Federal Government has

agreed to open the commercial

space for quality private sector-

led intervention. This, it plans to

do by giving up 60 percent

controlling shares to private

investors, while keeping the

remaining 40 percent shares.

With the new investments, it is

anticipated that protracted

problems such as high technical

voltage losses, line breaks,

obsolete substations and other

aging key assets will be replaced

to reduce maintenance costs and

improve supply reliability.

It is equally imperative that the

local authorities are fully

involved especially with regard

to distribution companies

located in controversial areas

such as the Niger Delta region,

Lagos, Kaduna and Kano, Port

Harcourt and Benin. The

Eight days the National Council on Privatisation, NCP, will again superintend the opening of the financial bids for distribution companies unbundled from the Power Holding Company of Nigeria, PHCN, like it did week

ago with the generation companies. Clara Nwachukwu wonders if the capacities of the investors can be vouched for.

support of state is vital for

seamless synergistic if expansion

projects are to be executed

successfully, and especially with

regard to the right of way issues.

While there should also be

legislations against electricity

theft and equipment/facilities

vandalism to protect private

investments.

urthermore, it is important Ffor the authorities to

examine the implementation

plans by the technical partners

in terms of the size of companies

they have operated in the past as

against their five year loss

reduction ratios. This is to

ascertain that optimisation of

losses, as technical losses in

electricity transmission and

distribution is an engineering

issue which requires huge

capital outlay, and logistics in

terms of proper tooling of power

systems planning and modeling.

Analysts maintain that it is

pertinent for the industry

regulators to monitor the ratio of

technical losses against the loss

proposals by prospective bid

winners nor do they know the

current state of the losses, and

o p e n u p t h e i s s u e f o r

negotiations and frequent

adjustments.

There are global examples of

bad choices that have truncated

programmes for the electricity

sector. India is currently battling

to stave off crisis in the sector

despite investment made over

CONTINUES ON PAGE 29

Electricity Pylon

With the new investments, it is anticipated that protracted

problems such as high technical voltage losses, line breaks,

obsolete substations and other aging key assets will be replaced to reduce maintenance costs and

improve supply reliability

29Power

Assessing investors’ competence the last two decades. Recent

power outages underscore the

fact that the country may be

heading to crisis situation if this

issue is not properly addressed.

Similarly, Nigeria’s rural

electricity distribution network

ranks as the most neglected

infrastructure in Sub-Saharan

Africa, as well as one with the

highest inefficiencies, where the

World Bank estimated that the

PHCN can only capture about 25

percent of revenues owed.

Given the lack of equipment

maintenance, the new owners

are acquiring high risk assets. As

such there is the need to expand

the country ’s distribution

infrastructure as well as install

new distribution infrastructure

to meet the population and

demand growth, which also

require continued investments.

Specifically, there has to be

continued investments in

voltage distribution networks,

particularly in theft-prone areas

as well as in the replacement of

old meters with accurate

electronic meters.

he same also goes for Tsubstations and lines

conf igurat ion to improve

reliability and narrow the

i n c r e a s i n g c u s t o m e r

expectations as well as narrow

the gap between urban and rural

expectations. There has to be

investment also in newer and

better technology to facilitate

e f f i c i e n c y a n d d e m a n d

management.

Also, the new owners will need

to invest in personnel and

change management, while also

setting up direct and open

contact with communities and

their leaders, and the authorities

involved. This will create

awareness about the commercial

nature of electricity as a ‘good’

with a price as well as well as

educate consumers on the

culture of regular payment of

electricity bills and preservation

of electricity infrastructure.

As the companies investment

in new infrastructure, they will

focus on new technologies,

a d v a n c e d m e t e r i n g

infrastructure, AMI; automatic

m e t e r r e a d i n g , A M R ;

communications networks and

database systems that will

modernise the grids.

Analysts estimated that the

new companies will need to

spend in excess of N200billion to

re -bu i ld and s t reng then

distribution systems over the

next five years, in order to

maintain reliable supply.

Against this backdrop, only

financially and technically viable

c o m p a n i e s w i t h r e l e v a n t

experience can address this huge

investment expectation to meet at

least 50 percent electrification

target within the same period.

As it were, the Ministry of Power

is saddled with dealing with over

$32billion debt owed by some of

the DISCOs who can’t pay

generat ion companies for

electricity supplied to them for

t h e i r c o n s u m e r s . T h e

development is rubbing-off

negatively on the GENCOs with

negative consequence also on the

financial sector.

The Central Bank of Nigeria,

CBN’s directive last week on

credit freeze to some debtor

companies underscores the need

for careful scrutiny of the

financial sustainability of the

companies shortlisted for the

upcoming financial bid opening.

In all, the CBN barred banks in

the country from extending

loans to 113 companies and 419

directors and shareholders of the

companies listed.

I r o n i c a l l y, f i v e p o w e r

companies were included in the

list as shown below, while some

directors and shareholders also

listed have substantial interests

in some of the shortlisted

distribution companies as well.

H o w e v e r , t h e A s s e t

Management Corporation of

Nigeria, AMCON, has clarified

that some like Sir Johnson

Arumemi-Ikhide and Prof. Bart

Nnaji, were not supposed to be

on the list.

CONTINUED FROM PAGE 28

As it were, the Ministry of Power is

saddled with dealing with

over $32billion

debt owed by some of the

DISCOs who can’t pay

generation companies

for electricity supplied to

them for their

consumers

Vigeo Power strategises to acquire assets

Bureau of Public E n t r e p r i s e s , B P E ’ s postponement of the opening of

the bids for electricity distr ibution companies unbundled from the Power H o l d i n g C o m p a n y o f Nigeria, PHCN, offer more opportunities for prospective investors like Vigeo Power, which was shortlisted for the next round, to re-strategise to a c q u i r e s o m e o f t h e unbundled assets.

Vigeo, which submitted bids to acquire the 11 e lect r ic i ty d is t r ibut ion companies (discos), also participated in the PHCN bid for metering and billing management. The company emerged tops among the bidders in the evaluation of the combined technical and financial proposals.

It would be recalled that the c o m p a n y w a s t h e

management operator for the N a t i o n a l Pr e - Pa y m e n t M e t e r i n g Pr o g r a m m e , NPPMP, in the Benin Electricity Distribution Company, BEDC, covering Edo, Delta, Ondo and Ekiti States.

The company explained that “The programme was p r i m a r i l y t a r g e t e d a t reducing non-technical l o s s e s a n d i m p r o v i n g customer satisfaction via improved customer service delivery. This entails the procurement, installation and management of prepaid meters in BEDC. The contract provides for the installation of 161,000 Pre-Paid Meters (PPMs) within 2 years and management of the vending operations until the operator ’s investment in metering and vending in f ras t r uc ture i s fu l ly repaid.”

“Again GUMCO emerged

top with no less impact, instal l ing over 150,000 Prepaid Meters within two years, when the total Pre-paid metering installation in the w h o l e 1 1 D i s t r i b u t i o n companies under the NPPMP

was less than 500,000, that is 485,000 at the stoppage of investment deployment under the NPPMP. This is a feat unequalled in the annals of PHCN,” the statement added.

In addition, the company said it has continued to render technical support services to BEDC, Ikeja Electrici ty Distr ibution Company (IEDC) and other DISCOs especially in areas of Meter ing , B i l l ing and Collection infrastructure d e v e l o p m e n t a n d management.

Established in 1999, Vigeo Po w e r h a s e x t e n s i v e experience in the Nigerian electric distribution and downstream sector. It is managed by a team of indigenous and expatriate professionals with over 60 years cumulative experience in power and utilities project management.

Again GUMCO emerged top with no less impact, installing over 150,000 Prepaid Meters within two years, when the total Pre-

paid metering installation in the whole 11 Distribution companies under the NPPMP was less than 500,000, that is 485,000 at the

stoppage of investment deployment under the NPPMP. This is a feat unequalled in the annals of PHCN,” the statement

added.

30Solid Mineral

Indication that most

parastatals of the

Federal Ministry of

Mines and Steel

Development would

gain autonomy has emerged

with the matching order on

Nat ional Metal lurgical

Development Centre to go

commercial. How prepared is

the agency for this task?

E s t a b l i s h e d i n 1 9 7 3 primari ly as a test ing laboratory of the defunct Nigeria Steel Development A u t h o r i t y, N S D A , t o specifically handle the analysis of raw materials for the proposed steel plant, the National Metal lurgical Development Centre latter changed into Metallurgical Research and Test Division of the National Steel Council, after the abrogation of the Decree establishing the NSDA.

The abrogation was meant to give it a broader scope to carry out research and development activities in all metallurgical processes for the benefit of solid minerals and metallurgical industries.

T h e n a m e , N a t i o n a l Metallurgical Development Centre was adopted in 1987, after the centre was given legal backing by the Act No 50 of 1992.

The agency, as a parastatal in the Ministry of Mines and Steel Development, the National Metal lurgical D e v e l o p m e n t C e n t r e , NMDC, is charged with the responsibility for carrying o u t r e s e a r c h a n d development work for solid minerals and metallurgical development.

But the broad objectives of the NMDC is to provide the research and development input for the economic growth of Nigeria’s solid minerals and metallurgical i n d u s t r i e s t h r o u g h innovation and adaptation of minerals processing and metallurgical technologies so that an ever increasing proportion of the country’s requirements in these areas can be met through the development of local raw materials, particularly in the steel, non-ferrous metals, foundry and refractory industrial minerals sub-

Joseph ERUNKE National metallurgical development center to go commercial

sectors.The centre going by

records, have not derailed from its original mandate since inception. In response to government’s policy of diversifying the economy through solid minerals and metals sector development,

the sector s trategical ly acquired various equipment a n d f a c i l i t i e s t h r o u g h budgetary provisions and collaborations to enhance its capacity to offer effective and e f f i c i e n t r e s e a r c h a n d d e v e l o p m e n t o f t h e metallurgical, solid minerals and allied sectors of the economy.

The need to prepare the Nat iona l Meta l lu rg ica l Development Centre, as an agency not only to meet up with its full mandate but, surpass the set record, necessitated a stakeholders’ f o r u m r e c e n t l y w h e r e strategies towards effecting the set goals were put in place.

The forum which had experts drawn not only from research institutes, but the academia, harped on the way forward in the strengthening o f N M D C . T h e m o s t challenging task thrown at those in authority at the Nat iona l Meta l lu rg ica l Development Centre, was the

call by Minister of Mines and Steel Development, Alhaji Musa Mohammed Sada, that the agency should strive to be o n i t s f o o t w i t h o u t government’s sponsorship.

The minister said NMDC must commercialize its services in order to generate revenue for self sustenance in v i e w o f p r e v a i l i n g g o v e r n m e n t f i n a n c i a l situation in the country.

The forum, with the theme, “Transformation of the solid minerals, metallurgical and a l l i e d s e c t o r s o f t h e economy” was to accentuate t h e p o l i c y t h r u s t o f g o v e r n m e n t w h i l e establishing its linkages to other sectors of the economy as well as its enormous capacity to support and stimulate growth in virtually all sectors of the economy.

He said the NMDC had enormous potentials to sus ta in i t se l f l i ke i t s counterparts in Malaysia, India and other parts of the

world noting that it had made “significant contributions to the economy of Nigeria.”

“Nigeria’s solid minerals sector has become vibrant. Now, local and foreign investors as well as operators need the services of the N M D C i n a r e a s l i ke beneficiation and milling of mineral ores; extractive and p h y s i c a l m e t a l l u r g y ; chemical analysis; foundry technology; feas ibi l i ty studies for mineral projects; f a i l u r e a n a l y s i s ; development of flow-sheets among others,” the minister said.

NMDC, he insisted, had “established the process of producing tin metal of internat ional s tandard locally by fabricating and constructing a pilot scale refractory furnace and refining facility at the centre”, saying “the nation prides in the fact that the only t i n s m e l t i n g f a c i l i t y functional in the country is the one at NMSD, Jos.”

Metal melting

The need to prepare the

National Metallurgical Development Centre, as an

agency not only to meet up with its full mandate but, surpass the

set record, necessitated a stakeholders’

forum recently where strategies towards effecting the set goals were

put in Place

31Solid Mineral

T he inability of Nigeria not only to fulfil its dream of launching a full scale production of

its iron ore potential, but successfully privatize the iron ore industry, is no doubt raising concern just as there are rumours of government’s plan to initiate an out-of-court agreement in the arbitration.

ABUJA—Iron and steel industry is of strategic i m p o r t a n c e t o a n y developing economy. Its place is of great significance in any meaningful national e f f o r t t o w a r d s industrialisation. The pivot role of iron and steel products in a nation’s economy is a t t r i b u t e d t o t h e i r widespread utilization in all facets of the manufacturing industry.

Nigeria had expected s i g n i f i c a n t i r o n o r e production from the Itakpe iron ore deposits to reduce its dependence on oil and gas revenues.

S i n c e t h e c o u n t r y discovered oi l , a l l i ts attention has been on the oil, neglecting other areas. But of r e c e n t , t h e F e d e r a l Government found out that mining would be one of the key areas that the country can pick on to diversify from

Non-oil business, still threatened

Joseph ERUNKE

the oil and gas sector. Nigeria, which gets nearly

80 per cent of its revenues from oil and gas production, was to start receiving revenue from iron ore production as Itakpe iron ore deposit is said to contain three billion tonnes of iron ore reserves.

Initial production from the mine was expected to be 2 million tonnes a year, ramping up to 20 million tonnes annually in five years, a development that will help Nigeria establish a track record in the mining industry and allow it to attract more investors.

The mining of minerals in Nigeria at present, accounts for only 11 per cent of the country’s GDP, due to the influence of its vast oil

resources. The domestic mining industry is under-developed, leading to Nigeria having to import minerals that it could produce domestically, such as salt or iron ore.

This became so only when Federal Government made it possible through mining l e a s e s , t h a t r i g h t s t o o w n e r s h i p o f m i n e r a l resources in the country is held by it. The law made it that, it is only the Federal Government that grants titles to organisations to explore, mine, and sell mineral resources.

The National Iron Ore Mining Project, NIOMP, at Itakpe is earmarked to supply the total 2.155 million tons per year iron ore requirement of the Ajaokuta Steel Project. In addition, it is contemplated

that the project would also supply about 40 per cent of the requirement of the Delta Steel.

But all the efforts at realising these dreams have remained futile. The hope of making the nation’s iron ore company, located at Itakpe, Kogi State to come to full work became bleak when it was concessioned alongside the Ajaokuta Steel Industries to an Indian firm, Global Infrastructure Holding Limited, GIHL.

The agreements entered before the two companies were given out to the firm were terminated when startling revelations later emerged that there were certain irregularities as well as non-adherence to due process, a development the

Indian firm is challenging currently at the arbitration.

But with the seeming unending case at the arbitration, the Federal Government is said to be f r u s t r a t e d a n d h e n c e planning to go back to the controversial concession agreement with a view to re-i n s t a t i n g t h e G l o b a l Infrastructure Holdings Limited, GIHL, to commence production in the firms.

This development, which seems to show Federal Government’s confused state on how to resolve the lingering crisis on the revocation of the concession agreement with the Indian firm, experts in steel industry said, would be against the c o u n t r y ’ s i n t e r e s t , considering the revelation of shoddy deals that were said t o be ca r r i ed ou t by government before the official concession and the c o m p a n y w h i c h h a d removed most essential components of the firms after the concession.

S o u r c e s s a i d correspondences to the effect has gone round to concerned parties informing that the Federal Government would revisit agreements with GIHL and fine tune the contract to favour both sides.

The rumoured return of GIHL, as learnt, was part of the outcome of the out-of-court settlement adopted by the two parties owing to the huge judgement cost which w a s s t i l l h i g h a f t e r arbitration.

The Federal Government had in 2008 revoked the concession agreements with GIHL, citing asset stripping and failure of the group to comply with the major provisions of the agreement. This became a subject of litigation at the instance of the group; with a judgement debt hanging over the Federal Government which sources informed is still outstanding.

“The return of GIHL seems to be government’s way out of the logjam because government cannot pay the judgement cost which runs into millions of dollars. Government cannot also sell both Ajaokuta Steel and the I ron Ore and Mining Company in Itakpe without settling the issue of GIHL. So this is the problem”, said a source.

The government further faces a dilemma on what to do with the Ajaokuta staffers that have not been paid since the concession agreement.

Oil worker fixing the pipe

32Solid Mineral

Over the past

10 years,

Niger ia ’ s

m i n i n g

i n d u s t r y

has experienced a boom in

both mineral exploration and

mining activities. Notable

developments include the

enhancement of regulatory

standards, the proposed

development of a Road Map

for the reform of the sector,

and the commissioning of

state-of –the-art mining

laboratory in K aduna,

Kaduna State.During this period, several

m i n e r a l p r o s p e c t s f o r dimension stones, gold, bitumen and uranium have also been developed to various stages of exploration. This has resulted in an increase of the country’s annual gold production from less than one ton per annum in 1998 to about 50 tons in 2008, making Nigeria one of

Oscarline Onwuemenyi

NIMG: Bringing back the lost glory of mining in Nigeria

largest producers of metals in Africa, and increasing the potential for making the mining industry the second fastest growing sector of the economy after oil and gas.

W h i l e t h e c o u n t r y c o n t i n u e s t o r e c o r d impress ive success in attracting investments, the minerals and mining sector has continued to face challenges. The sector ’s rapid growth, particularly in small-scale and artisanal mining, swiftly overstretched t h e G o v e r n m e n t ’ s ins t i tu t i ona l capac i t y. Existing institutions lack adequate tools, expertise, and the organizational setup required to oversee and support a modern, market-driven mineral sector. Other challenges of the sector include low integration with other sectors of the economy; low contribution to the GDP compared to the sector growth; slow development of small scale mining; low capacity of the Government to administer the sector; low level of value addition of

minerals; and environmental d e g r a d a t i o n ; l a c k o f diversification of minerals from gold and gemstones into base metals and other minerals

Enter the NIMGThe Nigerian Institute of

Mining and Geosciences (NIMG) was therefore established by the Federal Government to be the centre of excellence of international standard that would attract students for training and research in Mining and Geosciences from within and outside the country.

Speaking in an interview wi th Sweetc r ude , the Provost of the Institute, Prof. I d o w u B . O d e y e m i explained that “the Institute is designed to provide an opportunity for manpower training and institutional capacity building for the mining sector, from which practically oriented and capable management cadre o f manpower w i l l be produced to plan and manage the development activities in the mining sector.”

According to him, the curriculum for achieving this level of competence and capability in mining and geosciences, is different, of a

higher standard and at a more advanced level than those currently obtained from the strict academic institutions in the country and includes practical field training in mining and geosciences.

Prof. Odeyemi, who noted that the mission of the Institute was to bring back t h e g l o r y o f m i n i n g education in Nigeria, was quick to highlight the much-needed financial shot in the arm the Institute received from the World Bank’s Sustainable Management of Mineral Resources Project (SMMRP) , which was des igned to he lp the Gover nment meet the c h a l l e n g e s a n d t a k e advantage of opportunities within the sector. Analytical work and activities under this Project have helped to attract investments for mineral exploration and mine development through a f i r s t g e n e r a t i o n o f improvements to the mineral sector framework, including improvements of institutions and agencies administering the sector.

The concept of a Training Institute for mining in the country dates back to 1923 when the Mines Department was created with mostly e x p a t r i a t e m i n i n g p r o f e s s i o n a l s . T h e r e immediately arose a need to train local technical staff to assist the expatriates in the mines. For this purpose, the Schoo l o f Mines was established in Jos in present-day Plateau State in 1952. This was upgraded in 1958 to include mining technology in general with a Diploma C e r t i f i c a t e i s s u e d t o graduating students.

With the revised policy on mining and exploration in 1 9 7 1 , t h e F e d e r a l government, among other things, decided to establish t h e N i g e r i a n M i n i n g Institute as a distinct, independent project ubder t h e T h i r d N a t i o n a l Development Plan (1975-1980).

In 1995, a Committee of eminent persons set up by government to produce a Solid Minerals Policy for the country recommended that the Instute should engage in t r a i n i n g h i g h e r l e v e l manpower by addressing the gap left in the training of mining engineers in the u n i v e r s i t i e s a n d polytechnics, and that it should run courses not usually covered in the routine curricula of the higher institutions.

Aerial view of mining site

While the country continues to

record impressive success in attracting

investments, the minerals and

mining sector has continued to face challenges. The

sector’s rapid growth,

particularly in small-scale and

artisanal mining, swiftly

overstretched the Government’s institutional

capacity

AlducoAd

34TechnologyPhone: 08027181717, e-mail: jimlaw2004@yahoo.com

lduco Energy a l o c a l a s s e t Ai n t e g r i t y

management services company that has been making giant strides in the oil and gas industry in the Gulf of Guinea. It h a s s u c c e s s f u l l y provided and continues to provide services to the oil & gas industry in Nigeria, Republic of Benin, Congo Brazzaville and Equatorial Guinea. Alduco Energy’s core a c t i v i t i e s a r e t h e p r o v i s i o n o f N o n -Dest r uct ive Tes t ing ( N D T ) , R i s k - B a s e d I n s p e c t i o n ( R B I ) , corrosion control and Cathodic Protection (CP) services.

O i l a n d g a s infrastructure — in Nigeria, regionally and globally — has long been plagued with the issue of s e v e r e c o r r o s i o n problems, and Alduco Energy recognises that managing corrosion is one of the key challenges facing operators in their drive to maintain the integrity of their assets. Stringent regulatory and company requirements h a v e e n c o u r a g e d companies to ensure the i n t e g r i t y o f t h e i r i n f r a s t r u c t u r e b y implement ing asset integrity management solutions, to ensure that their facilities are in a safe operating condition. Failure to comply could result in facilities whose i n t e g r i t y a r e compromised, which could result in costly unplanned shut downs, a c c i d e n t s , m a j o r f i n a n c i a l l o s s , environmental damage and even potent ia l fatalities with serious legal consequences.

ALDUCO ENERGY: Active Nigeria service company in Gulf of Guinea

The challenge faced by asset owners, especially t h o s e t h a t o p e r a t e o f f s h o r e , i s t h e complexity and high cost of replacing subsea c o r r o s i o n c o n t r o l systems, particularly d e p l e t e d C a t h o d i c Protection systems, i.e., anodes. From its two bases in Nigeria and Equato r ia l Guinea , Alduco Energy has been providing the world’s most innovative and cost effective CP solutions to ass i s t opera to rs in m a i n t a i n i n g a n d extending the integrity of their assets, including p l a t f o r m s , F P S O s , pipelines and other subsea infrastructure.

Alduco Energy has successfully carried out numerous retrofits of depleted CP systems that w e r e n o l o n g e r protecting the facilities they were intended to protect, due to damage or b e c a u s e t h e y h a d reached the end of their design life. This has been done in record time, with minimum disruption to the operations of the oil and gas companies, and with cost savings in some cases as much as 80%. Alduco Energy’s valued client list is comprised of major international oil and gas companies, including ExxonMobil, Marathon Oil, Hess, SBM Offshore, EG LNG, Perenco, Noble Energy, A t l a n t i c M e t h a n o l Production Company, Globestar, Cakasa, and C o n s o l i d a t e d Contractors Company, among others.

In recognition of its work in and contribution to the growth of the oil

Co r r o s i o n

problems at pipe supports o n o n s h o r e and offshore

Oil and Gas facilities all over the world is one of the leading causes of piping failures. This paper discusses the various corrosion mechanisms that occur at pipe supports leading to these failures and a proven method of prevention to this problem.*

Causes and innovative solutions for solving them

During routine inspections of onshore & offshore oil and gas production facilities all over the world, a recurring problem has been noted, namely corrosion on piping systems which often leads to a piping failure. Why are pipe support points prone to such localized corrosion and what can be done to prevent it?

The Corrosion Mechanism

•The problem starts at the pipe supports with the following:

•Crevice forming - This is the root of the problem.

•Water is trapped - The supports allow water to be held in contact with the pipe surface.

•The paint system fails - As the paint surface is in constant contact with water, it softens,

exposing the bare steel of the pipe. This makes the pipe and support to be in direct

contact with the trapped water.

•Corrosion is initiated - The small area of steel now exposed to the water starts to

corrode and spreads. Soon

Corrosion problems at pipe supports

the whole support area is bare steel.

•Crevice corrosion starts - At this point on, the galvanic crevice corrosion is driven by

metal to metal contact.•Pipe fails - Leading in

s o m e c a s e s t o s o m e catastrophic consequences.

If we consider some of the more common types of pipe supports used in the oil & gas industry and we can see why the problems arise:

Saddle ClampsPipe corrosion at saddle

clampsSaddle clamps are a

potential corrosion hot spot. The saddle clamp often has a rubber liner designed to protect the coating on the pipe during installation. Sometimes this liner is required to provide electrical isolation between the pipe and clamp. In either case, the result is a tight crevice at the pipe surface. The crevice is so aggressive that any water falling onto the pipe in the area of the clamp may be sucked into this crevice by capillary action.

Once in there, it is difficult for the water to escape and thus the pipe surface stays wet. Pipe coatings, (paint) used on topside piping are designed to protect the pipe from atmospheric corrosion. They were never intended for immersion service. However, that is the service

Pipe corrosion at saddle clamps

they find under these clamps. The result is softening and failure of the paint and corrosion is able to proceed uninhibited. Saddle clamps offer other disadvantages: t h e y p r o v i d e f o r n o inspectability under the clamp; are expensive, and are rare ly removed dur ing maintenance painting so that the coating is never repaired.

Beam SupportsCorrosion at pipe supportsThis is a very common

method of supporting pipe runs. The pipes are usually stabilized with a U-bolt and it is not uncommon to see a neoprene pad installed under the pipe. The neoprene pad is designed to stop paint damage during installation and to reduce metal-to-metal contact. In truth, it aggravates the problem. Being soft, the material deforms under the weight of the pipe and forms a very aggressive crevice at the pipe surface. Paint failure then ensues by the same mechanisms as previously d e s c r i b e d . A g a i n , Inspectability and access to maintain with painting is poor.

Half Saddles and Cradles

Pipe corrosion at half saddles and cradles

In many cases, these types of

Corrosion at pipe supports

CONTINUES ON PAGE 35CONTINUES ON PAGE 35

since 1987. Performance has matched or exceeded all expectations of the operators specifying them, with no reported failures.

I-Rod & Nu-Bolt assembly

Corrosion at pipesupport

Problem eliminated at with

Nu-Bolt & I-Rod assembly

I-Clip

Corrosion at saddle support

Problem is eliminated with I-Clip

Corrosion at cradle support

35TechnologyPhone: 08027181717, e-mail: jimlaw2004@yahoo.com

support could be substituted for multiple U-bolt type clamps and a lot of the problems would disappear. However, the point of contact at the beam or in the bottom of the cradle will always be a concern. The same problems of moisture retention, poor i n s p e c t a b i l i t y a n d maintainability apply to these support types.

How do we stop the problem of corrosion at pipe supports?

With a design that achieves the following goals:

• Eliminate the crevice and thus the ability to hold water in contact withthe pipe

• Be simple to install either on new or existing piping systems not requiring hot work

• Be inexpensive• Provide inspectability and

maintain-ability• Eliminate metal-to-metal

contact.The SolutionsDeepwater corrosion inc,

has developed a range of patented products that eliminate crevice corrosion at pipe supports, these include the Nu-Bolt which is a standard pipe U-Bolt modified with a variety of c o r r o s i o n r e s i s t a n t treatments and the I-Rod and I-Clip which are half-round configuration rods made f r o m a h i g h - s t r e n g t h thermoplastic material. When introduced between the pipe and the support, it achieves al l the ideal solutions. The curved surface against the curved surface of the pipe minimizes contact area and water is shed from the pipe sur face. The separation created also provides good access for separation and maintenance while eliminating metal-to-metal contact.

Easily installed either in continuous lengths across the top of pipe support beams or as an integral part of a U-bolt assembly to replace saddle clamps, the rods provide a cost-effective solution to the problem. Nu-Bolt, I-Rod and I-Clip have now been in service on hundreds of oil & gas facilities all over the world

Pipe corrosion at half saddles and cradles

Problem is eliminated with I-Clip

Beware of inferior products

I-Rod Pipe Supports are specified by major operators because of their reliability and proven corrosion prevention capabilities. In 25 plus years, there has not been one reported failure of the I-Rod. The simple appearance of the Nu-Bolt assembly leads many companies to attempt to copy the trademarked design, but the I-Rod that is made of a hal f- round high- impact the r moplas t i c made i s impossible to replace. No

o the r known mate r ia l possesses its heat-resistance and compressive strength, the key factors to its success.

The above images show how inferior products quickly fail, the thermoplastic rods put under the pipe, get crushed under the weight of the pipe, water is trapped and a crevice is formed, which leads to corrosion under the pipe supports. The genuine I-Clip, I-Rod and Nu-Bolts are only available from Alduco Energy in Nigeria and the

Gulf of Guinea.

*The article was written by

Alfredo Jones, Managing

Director of Alduco Energy, an

Asset Integrity Management

Services company specializing

in providing NDT, RBI ,

Cathodic Protection and

Corrosion Control to the oil and

gas sector in Nigeria and the

Gulf of Guinea. For more

i n f o r m a t i o n o n A l d u c o

Energy’s range of services you

can visit www.Alduco.com or

contact us at info@Alduco.com

.

CONTINUED FROM PAGE 34

ALDUCO ENERGY: Active Nigeria service company in Gulf of Guinea

and gas industry in the Gulf of Guinea, in June 2012, during the 15th Gulf of Guinea Oil & Gas Conference held in Equatorial Guinea, Alduco Energy was honoured with the prestigious award of National Company of the Year 2012 by the international oil and gas publication, The Oil & Gas Year (TOGY). The award was presented to the

Managing Director of Alduco Energy, Alfredo J o n e s , b y H i s Excel lency Gabrie l Mbaga Obiang Lima, the Minister of Mines, Industry and Energy of Equatorial Guinea, who in his speech during the a w a r d s c e r e m o n y, d e s c r i b e d A l d u c o Energy as the kind of local company that he believes represents the future of the oil and gas industry based on its ability to add value to the oil companies and to the region.

In his acceptance speech, the Managing Director of Alduco Energy, Alfredo Jones stated that for too long, m u l t i n a t i o n a l

CONTINUED FROM PAGE 34

companies have looked down on local companies, and that Alduco Energy’s vision is to change the poor p e r c e p t i o n o f l o c a l companies, by showing that local companies can be successful not only in their c o u n t r i e s , b u t a l s o r e g i o n a l l y a n d internationally, and he also stated that he accepted the award on behalf of all the i n d e p e n d e n t l o c a l companies like Alduco Energy, that are impacting

in a positive way the oil & gas industry, in their countries and beyond.

Alduco Energy takes its local content obligations very seriously, and to enable it to be at the forefront of the latest A s s e t I n t e g r i t y Management methods and technology, the company formed a joint venture ( J /V) wi th Deepwater Corrosion Inc, a world leader in the p r o v i s i o n o f l i f e extension solutions for offshore oil and gas facilities.

With Alduco Energy as the sole distributor of Deepwater products in the Gulf of Guinea, the alliance sees Deepwater engineers from Houston w o r k i n g a l o n g s i d e A l d u c o E n e r g y ’ s engineers in Nigeria, enabling technology transfer and building the capacity of its team, which in tur n has permitted the company to offer its world class services to its clientele in the Gulf of Guinea, competing with well-established international companies, and in some cases outperforming them.

Alduco Energy takes its local

content obligations very seriously, and to enable it to be at the forefront of the latest Asset

Integrity Management methods and

technology, the company formed a joint venture

(J/V) with Deepwater

Corrosion Inc.

36Insurance

The Nigerian nation is 52 y e a r s o l d , however, the n a t i o n ’ s

insurance industry is very much older than the country having been in existence since 1918 when Royal Exchange commenced operations.

Invariable, the Nigerian insurance sector have come of age, regrettably however, experts are of the opinion that the sector in its current structure is st i l l very fragmented.

Insurers’ capital utilisation still low

Rosemary ONUOHA

NIGERIA AT 52:

T h e s e c t o r m a d e significant progress with the successful recapitalisation in 2007, however, the 49 insurance companies put together, write little above N200billion as premium income in a country of 160 million people against a total industry shareholders’ funds of about N347billion.

Of the 49 companies, less than 50 percent write premium income equal to or higher than their share capital which is usually a measure of the efficiency of cap i ta l u t i l i sa t ion by insurance companies.

Looking at the technical solvency of the entire

insurance industry, experts are worried that gross under-utilisation of capital has

continued to exist.The regulatory minimum

capital requirement for compos i te insurers i s N5billion, N3billion for general and N2billion for life operators, however, experts are of the view that with such as capital requirements, there is only so little that underwriters can do.

Because globalisation has become reality, insurance operators need to invest in infrastructure, technology, people, etc. And because in a number of these things, operators have to make the investment up front before the income flow will come in, N5 billion capital base is

therefore not sufficient.According to Managing Director of Cornerstone Insurance Plc, Mr. Ganiyu Musa, if insurers are going to play in some segments of the market like in corporate business, oil and gas, as well as in the multi-national sector, there is need to embrace more capi ta l injection.

Musa said “If you have a capital of N5 billion and you want to insure a major industrial risk for instance, they are not going to take you serious. At N5billion, you have to make heavy use of Re-insurance which will reduce your retained income and the rest. So, while it is possible to operate as a niche p layer wi th min imum capital, if you want to be broad- based and essentially play in the corporate, oil and gas as well as the multi-national sectors and also to m a ke t h e i n v e s t m e n t necessary to roll out a broad based strategy, I would think you need more than N5 billion.”

Another major challenge for the insurance industry is the fact that the penetration ratio is very low, reported to be less than one per cent.According to Managing Director of Risk Guard Africa, Mr. Yemi Soladoye, less than one million adult Nigerians carry one form of insurance or the other.

Soladoye said “If you compare that with 25 per cent penetration in the banking industry, you will see that the potential you have in the insurance i n d u s t r y i s r e a l l y outstanding.”

According to Musa, one of the consequence of the fragmentation is the fact that v e r y f e w i n d i v i d u a l insurance companies have the necessary financial capaci ty to make the investment needed in human capital, technology and infrastructure to be able to really provide the type of service that will appeal to and attract the 90 million adults out of the 160 million population.

He said “Because capital is small, your access to or comfort in making those investments will be limited on one hand. On the other

CONTINUES ON PAGE 37

The Nigerian insurance sector

have come of age, regrettably

however, experts are of the opinion that the sector in

its current structure is still very fragmented

Right: Fola Daniel

37Insurance

Insurers’ capital utilisation still lowhand, your capacity to underwrite and retain risk is also dependent on the level of capital that you have. When y o u a r e s m a l l a n d fragmented, there is only very little that you can write and retain. A number of the multi-national risks tend to be de-localized or dislocated b e c a u s e t h o s e m u l t i -nationals have very strict credit requirements such that only very few insurance companies will meet their minimum credit threshold. As a result they don’t feel comfortable insuring in the local market.”

The way forward:According to experts, for the

insurance industry to move forward, there is need for a paradigm shift.

One basic factor that insurance operators must imbibe, according to Musa, is to improve on the quality of p e r s o n n e l i n t h e i r companies.

Musa said “Managements of companies need to work hard to put in place a robust strategy to re-position their companies to play a very key r o l e i n t h e e m e r g i n g i n s u r a n c e i n d u s t r y landscape in Nigeria.”

According to him, for

CONTINUED FROM PAGE 36

enewed fighting b e t w e e n Congolese rebels R

and government forces has f o r c e d U . K . - b a s e d w i l d c a t t e r S o c o International PLC to evacuate workers from its oil exploration camp in the country’s restive eastern region to a site across the border, Ugandan police and the company said Tuesday.

Soco has started moving equipment and expatriate workers from areas around the Virunga National Park in North Kivu to the Ugandan border district of Kanungu, said Western Uganda police spokesman Elly Maate.

A S o c o s p o ke s m a n c o n f i r m e d t h a t t h e company has suspended its exploration work in Congo, but said the halt was “temporary” pending a final assessment of the situation. He said its main helicopter landing site has also been re-located to Uganda, from where Soco will continue to monitor events.

“SOCO is assessing the securi ty s tatus on a continual basis. The safety of SOCO’s personnel is of paramount importance and, therefore, they’ll only proceed when it is safe to d o s o , ” s a i d S O C O Executive Vice President Roger Cagle.

The company’s decision underscores a worsening security situation in North Kivu, where Congo’s ill-e q u i p p e d a r m y i s attempting to halt a rebel advance. The most recent fighting which erupted in April , after renegade former army General Bosco Ntaganda defected with hundreds of troops has already chocked mineral exports from North Kivu.

Soco operates an 800-square kilometer oil block in Eastern Congo, within the Lake Albertine Rift basin. Oil exploration c o m p a n i e s h a v e discovered more than 2 billion barrels of crude on the Ugandan side of Lake Albert and companies like Soco are hoping to make s imilar f inds on the Congolese half of the basin.

insurers to really play a key role, there is need to have a minimum size to be relevant because there will be a lot of opportunities if there is adequate capacity.

Musa also said that with adequate capacity, there is no reason why the agency workforce in the sector should not be ten times what it is at the moment. “It takes time and resources to train and bu i ld an agency workforce to get to the level of experience that you require,” he said.

Since individual insurance companies have different

areas of strength, Musa said that there is need for companies to embrace mergers and acquisitions because coming together to form a big entity will be in the interest of stakeholders including staff, shareholders and more importantly the insuring public.

Also, underwriters should be committed to operating at a v e r y h i g h l e v e l o f professional standard and ethics.

Musa said that the key to the growth of insurance is in the retail market. “While we have to position to serve the commercial and corporate sectors, the key to the development of insurance in this country is in the retail sector, that is, the personal lines business. Really we need to make insurance attractive and affordable to as many people as possible. We need to be able to do more in terms of consumer awareness and consumer education, we need to put in place the infrastructure to enable you d o y o u r i n s u r a n c e . ””We all run after the same NNPC business; head of service account and such major accounts. So the investment in infrastructure, technology that is needed to build a sustainable business model is not focused on

because we don’t have the money to do that. So, there is the potential for business volume far beyond the level of capital that we have.”

Musa said “Having been beaten in the capital market during the 2008/2009 crash and the capital market remains challenged at the moment, there is very limited opportunities for significant investment returns which means as insurers now, we have to go back to the basics in terms of doing proper professional underwriting and charging appropriate prices.”

”Unfortunately, we are all chasing the same companies, accounts and we tend to compete only on price. Competition is stiff at times and almost very brutal in the i n d u s t r y. S o , w e s e e competitive pressure on pricing being a significant c h a l l e n g e i n c e r t a i n segments of the market,” he said.

There is a significant level of either misunderstanding or mistrust on the part of the insuring public. “We are still struggling as insurers to remove the garb of poor perception. We need to work on that, do a lot more in terms of consumer education,” Musa said.

We need to make insurance attractive and

affordable to as many people as

possible. We need to be able to do more in

terms of consumer

awareness and consumer education

Congo Violence Forces UK Oil Explorer to Halt Operations

38Labour

TRADE Union Congress o f Nigeria, TUC, has explained that Nigerians

oppose the government i n t e r p r e t a t i o n o f d e r e g u l a t i o n i n t h e downstream sector of the nation’s Petroleum industry because i t became an instrument for foisting hardship on the citizenry by the government.

TUC accused government of mis-representing the facts about de-regulation saying that is why Nigerians perceived it for what it is; a contrivance to hike the prices of petroleum products and make life more difficult for the hapless and hopeless citizens of the country.

In a paper on “Efficient management of public perception in implementing government policies-De-r e g u l a t i o n a n d l o c a l content”, President-General of TUC, Comrade Peter Esele,

“De-regulation is simply the opposite of regulation and in essence, it means the absence of regulation. In the context of the downstream sector, it is actually supposed to mean the freeing of the operations of the sector from the fetters of governmental controls and dictates and leaving it to run within the ambits of market determined choices. This therefore especially in the area of Pricing, seeks to allow the forces of the market to drive the determination of the prices of petroleum products within the market and removing the pervasive influence of governmental agencies like the PPPRA. It was therefore designed to make the market more efficient eliminating costs that are artificial in the process envisaging in the long run to make the sector m o r e r o b u s t , f u l l y domesticated as every facet of it becomes activated tapping into the freedom to eventually drive down the prices of products.”

“If this is the theoretical u n d e r s t a n d i n g o f d e -regulation in the downstream petroleum sector, a rational mind would wonder why it has raised so much dust within the nation’s polity

Why Nigerians oppose downstream sector deregulation —TUC

Victor AHIUMA-YOUNG

over time and why Nigerians would have to march on the streets for almost two weeks i n r e s i s t a n c e t o t h a t supposedly laudable policy o f g o v e r n m e n t . T h e q u a g m i r e i s i n t h e interpretation of government of what constitutes de-regulation. Government a g e n t s m i s c h i e v o u s l y decided to couch the hike in prices of petroleum products under the vei l of de-regulation. Instead of de-regulation wearing its full meaning, it became an instrument for foisting hardship on the citizenry because there was no truth in what the government was trying to sell to the public.”

According to Esele, who is the immediate past President of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, “Nigerians are generally not opposed to this policy but are opposed with operational side of this policy which takes away the real meaning of de-regulation and that is why Nigerians made the demand

that if de-regulation means price hike then, it is not for us but if it is for efficient downstream operations, then, we are all for it.

We can therefore easily a c c u s e g o v e r n m e n t o f misrepresenting the facts and that was why Nigerians perceived it for what it is; a contrivance to hike the prices of petroleum products and make life more difficult for the hapless and hopeless citizens of the country.”

“On the other hand, Local content as it concerns the downstream sector is about making the oil and gas sector more domestic driven or internalising its activities by m a k i n g m o s t o f t h e components of the industry more Nigerian. It ensures that an increasing percentage of the operations of the industry are handled by Nigerian owned bus inesses and individuals and not by foreigners. This is hoped would help in making the positive multipliers in the industry more impactful on the domestic economy than

otherwise. It is envisaged that more and more of the technology and components deployed in the various production activities within the sector and the Service sector of the same industry are indigenous.”

“We have established thus f a r t h a t t h e p u b l i c ’ s i n t e r p r e t a t i o n o f g o v e r n m e n t ’ s p o l i c y especially in the downstream petroleum sector have always been in contradiction w i t h g o v e r n m e n t ’ s understanding of why they embarked on such policies in the first place. Why has government’s insistence on altruism in its efforts been met with outright rebuff by the masses or sometimes total indifference? Is it that the citizenry has decided to reject its own government or that there i s a gross misunderstanding between t h e p e o p l e a n d t h e government?

Having situated these policies within the context of our analysis, the next logical quest will be to seek an understanding of the factors that have made most of the policies of government within the downstream sector of the petroleum industry very perceptibly d isagreeable wi th the populace.”

Nigerians are generally not opposed to this policy

but are opposed with operational side of this

policy which takes away

the real meaning of

de-regulation

Deregulation protesters

39Labour

PETROLEUM and Natural G a s S e n i o r S t a f f Association of

Nigeria, PENGASSAN, has directed all its branches in Nigeria to engage their managements over the unprecedented engagement of expatriates through all manner of guises into the Nigerian oil and gas sector, in apparent move against a l a r m i n g i n f l u x o f expatriates.

Sweetcrude gathered that t h e d i r e c t i v e b e c a m e n e c e s s a r y a f t e r PENGASSAN discovered that oil companies have been undermining the Nigeria Content Act, where the number of expatriates (foreigners) working in Nigerian oil and gas sector is increasing by the day instead of decreasing.

It was gathered that, angered by the influx of the

PENGASSAN moves against expatriate quota abuse in Nigeria’s oil industry Victor AHIUMA-YOUNG expatriates, PENGASSAN

because of seriousness of the abuse of the Content Act, in the letter to its branches, copied the Ministers of Labour and Productivity, Petroleum and Interior.

Decrying the regulated influx of foreigners into the nation’s petroleum industry, National Industrial Relation of Officer of PENGASSAN, Comrade Hyginus Chika Onuegbu, said “a report issued in October 2010 has it that expatriates constitute a third of the workforce in the oil sector. One can only imagine the actual number now? When a foreigner comes to a developing country like Nigeria, he is c a l l e d a n e x p a t r i a t e i r r e s p e c t i v e o f h i s professional standing, but when a Nigerian goes to Europe and America or a more developed country, he is called an immigrant. Immigrants are poorly paid. Bu t expa t r ia tes en joy unimaginable pay and

dreamland privileges, which is very high even by the standard of their home country.”

Delivering a paper on “The Nigerian Content Act: Issues and Workers Concerns”, 2 0 1 2 P o r t H a r c o u r t International Oil and Gas Conference & Exhibition, P H I O G , b l a m e d p o o r m o n i t o r i n g a n d implementat ion o f the Nigerian Oil and Gas Content Development Act 2010 and among others for the problem.

According to him, “It is rather disheartening that two years after the passage of the Niger ian Oi l and Gas I n d u s t r y C o n t e n t Development Act, 2010, the country is yet to notice any positive impact of the Act. The N i g e r i a n C o n t e n t D e v e l o p m e n t a n d Monitoring Board, NCDMB, needs to wake up and aggressively pursue and deliver dividends to our people, communities and country. We will not be

deceived by stage- managed e v e n t s , a d v e r t s a n d proclamations. The truth is that we will continue to challenge these fictitious statistics with reality. We want to see our people being t r a i n e d a n d a s s i g n e d

accountabilities in critical disciplines of the Oil and Gas Sector, not as figureheads for purpose of statistics.”

Comrade Onuegbu said a n o t h e r i s s u e i s t h e misinterpretation of the Act leading to abuse and unrestrained use of contract staffing and casualization.

He said “This is the only visible ‘benefit’ of this act today in Nigeria. This is very pathetic and contrary to the g l o b a l t r e n d s i n t h e employment in the oil and gas industry. For instance the Oil & Gas Global Salary Guide 2012 published by the Hay Group shows that the year 2011 saw a sharp rise in p e r m a n e n t s t a f f a s a percentage of the overall workforce.”

PENGASSAN’s Industrial Relations Officer, pointed out faul ty and unpatr iot ic regulations by the NCDMB as part of the problem confronting the content act.

“It is very surprising and disheartening that the spirit and intent of the Nigerian Con ten t Ac t i s be ing seriously undermined by unpatriotic and il legal regulations made by the NCDMB. In fact at a recent workshop last week in Lagos, organised by NEITI on PIB, attended by PENGASSAN and other stakeholders in the oil and gas industry, Senator Lee Maeba, who was the sponsor of the Nigerian Content Act 2010, made it c l e a r t h a t t h e m a n y provisions of the NCDMB Guidelines are void to the extent of their conflict with the NCA provisions” he declared.

Capacity gap, Onuegbu said, “is a major challenge to having Nigerians take up the quota allocated to them in the Act. What is the NCDMB doing to enforce the law and close the gap? Remember the Act provides that “Where Nigerians are not employed because of their lack of training, the operator shall ensure, to the satisfaction of t h e B o a r d t h a t e v e r y reasonable effort is made within a reasonable time to supply such training locally or elsewhere. Such effort and the procedure or its execution shall be contained in the operator`s E & T plan (section 30)”.

A c c o r d i n g t o h i m , “PENGASSAN supports the Nigerian Content Act and any genuine effort to grow Nigerian content not just in the oil and gas industry, but in all other sectors of the Nigerian economy.

A report issued in

October 2010 has it that expatriates constitute a third of the

workforce in the oil sector. One can only imagine the

actual number now

Expatriates on oil rig

40Freight

T HE demise of Captain Romeo Itima, the late M a n a g i n g D i r e c t o r o f

Global West Specialist Vessels Limited after an attack from suspected pirates has no way effected the operations of the firm. In this interview with Sweetcrude’s Godwin Oritse, the new Managing Director Mr. Winfred Itima, the immediate elder brother of the late Romeo said that the project to save Nigeria from the hands of oil thieves is beginning to yield results.

Excerpts:

Can we meet you? My names are Winfred

Itima, the new Managing Director of Global West.

What is your background ? I am a marine Captain and I

have been working in the marine industry in the last 30 years and I just returned from t h e U n i t e d S t a t e s i n November, 2011, to work with Global West following the passage of our late Managing Director which led to my being appointed as the new Managing Director.

What is your assessment of

We have achieved zero oil theft in some areas –Captain Itimathe Maritime domain with regards to security of the nation’s coastal waters and the activities of the oil and gas exploration?

If you live outside this country, you will definitely know that there is a problem in Nigeria, if you are within the country and you have never travelled outside, you will not know that we have a big problem. But there is a big problem that need to be looked into, some of which are, sea pirates, illegal bunkering including oil theft a n d t h e s e a r e m a j o r problems that are impacting the na t ion ’s economy negatively.

What was the security situation before and after Global West took charge of security of the coastal waters?

The security situation was terrible, the level of illegal bunkering was high, every day we heard of sea pirates, but since Global came in, the situation is changing and the criminals have slowed down and we pray that with time everything will become normal again.

There was a statement credited to the Director General of the Nigerian Maritime Administration a n d S a f e t y A g e n c y (NIMASA) that oil theft has

reduced by as much as 70%, will agree to this?

To tell the truth, in some parts of Nigeria, oil theft is zero, in some parts we still have the problem of oil theft going on, and I think NIMASA and Global West and the security agencies are fighting tooth and nail to stop them.

What is your assessment of oil theft with regards to the economy?

Oil theft does not only affect the economy, oil theft also c a u s e s e n v i r o n m e n t a l problems. If you go to a place like Escravos, the oil cannot be cleaned from the waters in the next 100 years .

This is the most important problem I think we have on our hands right now because it leads to both health and economic problems.

I think if we can start to address it right now, the future of Nigeria will be better for it.

There is this insinuation that the oil thieves are the Niger Deltans, how will you react to this?

The boys in the Niger Delta are just the errand boys, they are the small boys in the business, they cannot steal oil without the full support of the big boys who bank roll these illegal businesses.

The oil that is stolen from Nigeria is taken to other countries, nobody in the Niger Delta can do that, there are big men behind these boys and it is these big men we are trying to unravel.

So we have to start from the top, they keep talking about the small boys .If you are not buying my product will I keep giving the same product?That is our major problem.

What is Global West and what is its structure?

Global West is a contractor to the Nigerian Maritime Administration and Safety Agency (NIMASA), we s u p p l y p l a t f o r m s , surveillance equipment and we give them information we gather from our operations.

If and when we board a vessel, and we find any problem on board that vessel, we relate our findings to NIMASA, who takes from there.

We do not carry arms, NIMASA has i t s own maritime guard Command that they use to effect any arrest.

Sometimes we hear people say that Global West arrest people, we do not arrest people, we are just platforms providers to NIMASA.

What kind of person would you say Captain Itima was?

I think he was my best friend and blood brother and I think he also wanted to ensure that Nigeria become one of the most reputable country in world.

How do you intend to sustain Captain Romeo Itima’s legacies?

With the kind of people currently working with us in Global West, we will progress and I think whatever Romeo set out to do will be achieved.

Mr. Winfred Itima, Managing Director, Global West Specialist Vessels Limited

THE Nigerian Hydrographic Society (NHS), h a s r a i s e d alarm over the

s t a t e o f t h e n a t i o n ’ s waterways, even as i t expressed concern that the waterways have not been surveyed in the past 60 years.

H y d r o g r a p h y i s t h e m e a s u r e m e n t a n d description of the features of the sea and coastal areas for the primary purpose of navigation.

The Chairman, Nigerian H y d r o g r a p h i c S o c i e t y (NHS), Eastern zone, Mr Chikezie Elekwa, said in Lagos that lack of survey had rendered the waterways unsafe for navigation.

“Can you imagine that we still buy our charts from the

Nigeria needs hydrographic agency

Godwin ORITSE U.K. These charts have been in existence since the colonial era and this is not supposed to be so”, he lamented.

Elekwa recalled that in 2008, the International Hydrographic Organisation, labeled Africa as the least surveyed waters, adding that because of this, ship owners charged higher freight for goods coming to Nigeria.

According to him, this is the reason ship owners bring only their oldest ships to Nigeria.

The hydrographer also said that because there were no maps and charts of the waterways, a ship could be lost.

Elekwa called on the Federal Government to upgrade the Nigerian Navy Hydrographic office to a national office to separate hydrographic services from

the administration of the Navy.

“ O p e r a t i o n a l l y , t h e hydrographic service in other countries like South Africa, India and Australia is under the Navy, but funding of hydrographic services is p l a c e d u n d e r t h e government.

“Hydrographic services are very strategic to any country. So, in order to have cohesion among the operatives who render the service, there is always a national office.

“The national office will also ensure that the hydrographic service rendered to the nation is holistic in nature and meets international standard as laid d o w n b y t h e W o r l d Hydrographic body,” Elekwa said.

He said that the navy could not fund the activities of the hydrographic services from its allocation as it was

expensive in terms of t r a i n i n g , e q u i p m e n t , platforms (survey boats, survey ships and launches).

According to Elekwa, the Nigerian Navy hydrographic service has not done 100 per cent of what it is meant to do.

H e l a m e n t e d t h a t hydrographic services were being contracted out to foreign companies when N i g e r i a h a s i t s o w n hydrographic service.

“If we have a National Hydrographic office, it would generate its own fund and we can be a leader in our sub-region.

“It is not a money wasting venture, it is a money earner and once it takes off, it will fund itself.

“Ninety per cent of the world’s trade is carried by w a t e r . T h a t i s w h y hydrography is given a high premium in any nation except

HE Lagos Deep O f f - s h o r e L o g i s t i c s T

(LADOL) base is currently e m b r o i l e d i n g h o s t workers crisis that is rocking the entire base following the discovery of an employment fraud.

The crisis has also led to sack of two personnel of t h e b a s e j u s t a s investigations to unravel t h e l e v e l o f t h e i r involvement is also on going.

Sources close to the base told SWEETCRUDE, that over N10million was discovered to have been paid out to ghost workers over a period of about 15 months.

It was gathered that management is already putting structures in place to forestall a re-occurrence of the incident in the future.

LADOL spokesman, Mr. Alex Akao however denied the occurrence of such incident in the base adding that the operations at the base is too technical and structured to entertain the issue of ghost workers.

“The issue of ghost workers cannot happen in LADOL, our operation does not and cannot allow such things to happen at the base.

We know the number of the workers that come in there every day because the entrance and exit of people are document and besides, our operations are also technology- driven”, Akao stated.

Ghost workers crisis rocks LADOL

Godwin ORITSE

in Nigeria,” the NHS boss said.

He said that lack of a national office had made c o o r d i n a t i o n o f hydrographic ser v ices unattainable.

“ T h e e x i s t i n g hydrographic office has the mandate to co-ordinate hydrographic services, but lack of a holistic policy or law has made sanctioning of offenders difficult,” Elekwa said.

41Freight

Pix shows from (L) A chieftain of the Ohaneze Ndigbo Hon Chukwuemeka Ezeife shaking hands with the Director General of the Nigerian Maritime Administration and Safety Agency (NIMASA) Mr.. Patrick Akpobilokemi ® while Barr. Obi Nwabueze, Executive Director, Maritime Labour Services and Cabotage looks on

The President, Dr Goodluck E b e l e Jonathan, has stressed the

role of the Private Sector in the realization of Nigeria’s economic growth under the t ransformation agenda w h i c h i s f o c u s e d o n repositioning the nation among the leading twenty economies of the world by the year 2020.

This is coming just as the promoters of the Lagos Deep Offshore Logistics (LADOL), said the organization would continue to partner with government in championing the course of local content drive in the oil and gas logistics sector.

President Jonathan, who was represented by the Rivers State governor, Chibuike Rotimi Amechi, at the opening ceremony of a two-day “2012 Oil and Gas Trade and Investment Forum” in Onne, Rivers State, disclosed that, to underscore the realization of the Vision 20:20 agenda, the issue would form part of the activities lined up for the celebration of Nigeria’s independence anniversary next month.

A l s o s p e a k i n g w i t h newsmen at the event, representative of LADOL, Mr. Alex Akao, noted that e c o n o m i c g r o w t h i s synonymous with youths empowerment through jobs creation which could best be achieved by encouraging a n d p r o m o t i n g l o c a l investment, development, indigenous ownership, and management of job creating facilities by Nigerians.

He noted that to this end, LADOL has so far invested o v e r $ 1 0 0 m i l l i o n i n transforming a swamp land off Apapa port axis in Lagos into a world class one- stop shop deep offshore logistics base and free zone now known as LADOL Free Zone (LFZ).

“LADOL is the only facility of its kind in Nigeria, being t h e f i r s t G r e e n f i e l d specifically designed and built deep offshore logistics base. As a wholly indigenous Niger ian f ac i l i t y, the organization is a champion for local content and one of its greatest success stories is the provision of a hassle free on-shore and off-shore logistics supports for oil and g a s p r o d u c t i o n a n d exploration.

Jonathan stresses role of private sector in economic development…As LADOL pledges commitment to local content drive

Godwin ORITSE

“Let me inform you that activities at LADOL this year alone have domesticated USD 60 million that would otherwise have been spent abroad”, he said.

The LADOL spokesman called on government to continue to support local investors by providing a level playing field which would g u a r a n t e e e q u a l opportunities for Nigerian industry players.

In the President’s speech, Dr Jonathan noted that it is pertinent to inform investors, particularly in the Oil and G a s i n d u s t r y t h a t g o v e r n m e n t r e m a i n s

c o m m i t t e d t o t h e implementa t ion o f the economic reforms which are capable of changing the d y n a m i c s o f N i g e r i a n economy.

“As part of our efforts, government has come up with policies, plans and programs geared towards the reduction or elimination of bottlenecks and other encumbrances to business and investment through harmonization of Nigeria Trade procedures and documentations”.

Other efforts by government to provide an investment f r i e n d l y e n v i r o n m e n t , according to President

Jonathan, include the setting up of Nigeria Extractive Industry Transparency Initiative (NEITI), Public Sector Reforms through P u b i c P r i v a t e S e c t o r Pa r t n e r s h i p , a n d t h e empowerment of the Private Sector through Nigeria Investment Promotion Act of 1995.

W h i l e r e a f f i r m i n g government’s faith in the capability and commitment of free Trade Zones operators in Niger ia , Pres iden t Jonathan stressed that the strength of his economic reforms agenda lies on a “ robust private sector

suppor t ive inves tment facilitation mechanism as well as fast growing financial sector and youthful skilled and low cost labor”.

The 2012 Nigeria Oil and Gas Trade and Investment Forum with the theme, “Harnessing Investment Opportunities in the Oil and gas sector: The Role of the Oil and Gas Free Zones in the Transformation Agenda” was organized by the Federal Ministry of Trade and Investment in conjunction with Orlean Investment West Africa.

42Freight

Pix shows from (l) Mr. John Jenkins, Managing Director of the Port and Cargo Hamdling Company, Senator John Shagaya and Mallam Mohammed Bulango representing the Managing Director of the Nigerian Ports Authority Alhaji Habeeb Abdulahi at the commissioning of the newly acquired Rubber tyred Gantry crane in Lagos last week.

NIMASAAd

44

As part of the renewed effort to stem crude oil theft and illegal refining

in the mangrove swamp of Bayelsa State, the military authorities have established a new base in the creek of Igbomotoru in the Southern Ijaw council area of Bayelsa State.

Sweetcrude gathered that the decision to establish military presence in the area was the outcome of a meeting of the security chiefs to e f fec t ive ly secure the Igbomotoru axis, which is believed to be the gateway for trans-loading of stolen crude oil and illegal refined products from Cotonou boats to bigger ocean going vessels.

The area is also littered with hundreds of illegal refinery camps tucked away in the deep mangrove swamp from prying eyes.

The Presidency it was learnt was troubled that in spite of the large scale clamped down on illegal refineries and crude oil theft in the vast mangrove swamp of the state by the nation’s special security in the Niger Delta, Joint Task Force codenamed Operation Pulo Shield, crude oil theft and illegal refinery business has been on the increase.

Sweet Crude investigation revealed that both the young and old are involved in this illicit business which is an offshoot of militancy.

Most children of school age it was reliably learnt, have abandoned their education to join the old ones in refining stolen crude unaware of the inherent dangers to their health and future. However, the ease at which these oil thieves tap into the delivery lines in the creek to get raw crude for their illicit business has raised suspicion of internal collaborators within

CRUDE THEFT: JTF sets up new outpost to battle crime

… Activist condemns illegal bunkering, refinery in N’Delta

Samuel OYADONGHA

Crude Oil lifting locally

the oil industry.It was therefore resolved

that a military base be set up in the Igbomotoru enclave to dislodge the illegal refinery operators and suspected crude oil thieves from their area and ensure they do not

return.Accordingly, heavily armed

operatives of the Joint Task Force codenamed Operation Pulo Shield backed by gunboats and other smaller fast moving water crafts were d e p l o y e d t o t h e a r e a weekend.

The new outpost with two massive house boats to serve as the operational base of the troops, now sit atop the water and guarded by menacingly looking gunboats.

Immediately the troops led by Major Augustine Obochi established their presence in the area, they launched dawn raid on the illegal refinery camps.

C o n s c i o u s o f t h e narrowness of the passage to these camps, the soldiers resorted to using their smaller watercraft specially acquired for the operations, stormed the illegal refinery sites

destroying about 30 of the camps and 29 Cotonou canoes used in transferring stolen crude oil and illegally refined petroleum products to sea going vessels.

The Media Coordinator of the Joint Task Force, Lt. Col. O n y e m a N w a c h u k w u , confirmed the military operation in the creek which led to the destruction of 28 illegal refinery camps and 29 Cotonou boats used in conveying stolen crude oil and illegal refined products.

The JTF Spokesman also confirmed the setting up of a military outpost in the area.

He said, “Igbomotoru community is noted for its n o t o r i e t y i n i l l e g a l bunkering, because most sea going vessels have been discovered to use it as hide out where they do their trans- s h i p m e n t o f i l l e g a l l y siphoned crude oil.”

According to him, the operation would continue until the area is rid of oil thieves and illegal refinery operators who are further destroying the environment t h r o u g h t h e i r c r u d e technology of refining the stolen crude oil.

“We will not be stopped by false hue and cry,” he declared.

Also, the co-ordinator of Stakeholder Democracy Network (SDN), Inemo Samiama had repeatedly condemned illegal refinery activities in the Niger Delta, describing it as painful given t h e m a g n i t u d e o f d e s p o l i a t i o n b e i n g u n l e a s h e d o n t h e environment by the oil b a r o n s w h o a r e o n l y concerned about the quick returns they make while the vast stretch of the land is withering away.

The ease at which these oil thieves tap into

the delivery lines in the creek to

get raw crude for their illicit

business has raised suspicion

of internal collaborators

45Community

Though created in 1996, making it one of the youngest states i n t h e

federation, Bayelsa State interestingly boast of some of the oldest federal roads yet to be completed in the country.

These include the Yenagoa-Okarki-Kolo road, which passes through Rivers and Bayelsa communities to link the oil rich Ogbia Kingdom and the Ogbia-Nembe road, being bankrolled by the NDDC and SPDC said to have been conceived in the late sixties and is currently going at snail speed.

There is also the Sagbama-Ekeremor road, said to have b e e n o n t h e f e d e r a l government drawing board since the early seventies, as we l l as the Yenagoa-Oporoma road, designed to link the oil rich communities of Southern Ijaw.

Interestingly, these roads were designed by the then F e d e r a l M i l i t a r y Government to link the oil rich east, central and western parts of the geographical

Samuel OYADONGHA

No roads in Bayelsa despite oil, gas wealth

enclave which later became Bayelsa State to Yenagoa and o p e n u p t h e a r e a t o commerce with a view to accelerating development in the hinterland.

However, almost 39 years after take- off, work on the N10bn Yenagoa-Okarki-Kolo road is yet to be completed, while the tarred stretch is already riddled with several failed sections.

S a d l y, t h e Ye n a g o a -O p o r o m a r o a d a n d Sagbama-Ekeremor-Agge road, both of which are federal roads designed in the early seventies to connect the f a r - f l u n g o i l r i c h communities in the central and western part of the present Bayelsa, never took

off, in spite of their alleged repeated inclusion in the federal budget over the years.

A l t h o u g h t h e f e d e r a l government through the Niger Delta Development Commission (NDDC), later awarded contract for the construction of the Sagbama-Ekeremor-Agge road to the admiration of the indigenes of t h e a r e a , t h e p r o j e c t nonetheless suffers series of setback due to alleged poor funding on the part of the central government.

Also, the Yenagoa-Oporoma road which was taken over by the state government in the wake of the refusal of the federal government to kick- s t a r t t h e p r o j e c t , w a s a b a n d o n e d b y t h e

construction firm, Julius Berger which then pulled out of the Niger Delta at the height of youth militancy.

The lack of motorable roads to the hinterland and the alarming insecurity on the waterways Sweet Crude investigation revealed, had been a source of serious concern to the people of the area, until the Governor S e r i a k e D i c k s o n administration which is conscious of the strategic importance of the roads to the s o c i o - e c o n o m i c development of the state not only wrote the NDDC to hands off the Sagbama-Ekeremor-Agge road, but, also re-visited the long a b a n d o n e d Ye n a g o a -

Oporoma road by awarding c o n t r a c t f o r t h e i r construction to Setraco and Julius Berger respectively.

The governor, who stressed h i s a d m i n i s t r a t i o n ’ s unwavering commitment to access the Atlantic Ocean with the aim of opening up the state for increased business investments by constructing the three senatorial roads, disclosed that the construction of the Yenagoa-Oporoma road is e s t i m a t e d t o c o s t government about N45 billion.

G o v e r n o r D i c k s o n commended the companies, particularly Julius Berger for mobilizing to site, describing them as a reliable and dependable ally in the restoration project and urged the company to re-double the pace of work in the various p ro jec t s they wi l l be contracted to undertake in the state.

In the same vein, the G o v e r n o r e x p r e s s e d confidence and trust in the ability of Setraco Nigeria Limited to deliver on time, completion of the Toru-Ebeni Bridge as well as the Sagbama-Ekeremor-Agge road.

Bad Road

46Community

PO R T

H A R C O U R T: I L L E G A L bunkering has become a major

problem in the oil rich Niger Delta region. At the last count the nation reportedly loses about 150,000 barrels of crude oil per day to this illicit trade.

According to experts, illegal bunkering is supplying crude oil illegally. Within the context of the Niger Delta, it also includes the vandalism of oil pipelines and facilities for illegal crude. Besides supplying the crude to v e s s e l s f o r l o c a l a n d international market illegally, those in the illicit trade have also devised illegally, means of refining the product for local consumption.

Within the last two years in the region, no fewer than one thousand five hundred illegal refining points have been attacked and destroyed by the Joint Task Force Operation Pulo shield, JTF. Inspite of the huge financial investment of the federal government in the crusade against i l legal bunkering, nothing much seems to have been achieved. Commander Sector II of the JTF Operation Pulo shield and Brigade Commander 2 Brigade, Port Harcourt, Brigadier General Burutai Tukur, voiced the frustration of the security body in the crusade in his office in Port Harcourt recently, when he said that the international oil companies, IOCs were insincere in the anti- illegal bunkering crusade. Although h e w a s l i m i t e d w i t h information on his allegation, but, the statement speaks volumes of the near hopeless state the JTF finds itself in the crusade. In some quarters, some men of the security body have been accused of compromise.

Meantime, with the huge loss being recorded by the government to the illicit trade and the failure of the JTF to achieve meaningful impact, some ex- militants under the aegis of Niger Delta Ex- Agitators Leaders Forum, h a v e c a l l e d o n t h e government to legitimise the illicit trade. Former number two man of the Movement for the Emancipation of the Niger Delta, MEND, a disbanded frontline militant group in the region, Mr Prince Amaeibi Hornby aka Busta Rhyme said when the trade is legitimized, those involved could be made to pay tax to the federal government.

Adding that legitimising the illicit trade would create empowerment for youths of the region, he said it would

Jimitota ONOYUME

Experts seek legal backing for bunkering

also allow emergence of indigenous refineries in oil c o m m u n i t i e s . T h e s e refineries should now be made to pay tax to the government. He said there was no way the federal government could stop illegal bunkering in the r e g i o n b e c a u s e t h o s e

involved were part of those fighting it. According to him, it is a big trade involving big time investors. “Security men are part of the illicit trade. We think if government gives legal backing to illegal bunkering it would lead to establishment of indigenous refineries.” He said the indigenous refineries should be made to produce to specification. “NNPC should e n s u r e t h e y r e f i n e t o specification.”

The former MEND leader further argued that illegal refineries were all over the region and were creating huge loss to the government in the crude oil business. Adding that the only option opened to the government to have a grip of what many see as an ugly situation was for it to legislate it into existence and give room for indigenous refineries to be set up all over.

He fu r the r sa id tha t legitimising illegal bunkering w o u l d r e d u c e h a z a r d s associated wi th i l legal refining of crude. Hornby said

some contractors get their crude supplies to the big oil f i rms f rom the i l legal bunkering markets. “The local refinery products do pass specification test. Some of the big oil firms, their contractors come to buy products from the illegal market”

“ W h e n g o v e r n m e n t legalises illegal bunkering, it will reduce crime in the region and give room for oil c o m m u n i t i e s t o o w n indigenous ref ineries”. Prince further enjoined the National Assembly to come up with a law legalising the illicit trade, adding that it would save the country the money being seemingly wasted in the crusade against the trade.

T h e f o r m e r m i l i t a n t “general” also appealed to the government to revisit the c e d i n g o f B a k a s s i t o Cameroun. He said Ijaws in the area still saw themselves as Nigerians. And the government on its part recruited many of them in its

amnesty programme.He also spoke on the

deplorable East West road, urging the government to re- award the part that was given to Julius Berger to the company, saying it would help to speed up work on the project.

Meantime, some persons who also spoke to the Vanguard on legitimising i l l e g a l b u n k e r i n g cautioned the federal government against it. Mr Francis Tarry said it would increase crime in the region. But Chief Tamuno Charles differed with the forgoing. According to him, ogogoro was initially labelled an illicit gin because it was brewed locally. But today it is almost in all homes in the country and traditional e v e n t s . H e s a i d l e g i t i m i s i n g i l l e g a l bunkering would create a buoyant economy for the country and save her the loss it suffers from the illicit trade.

Illegal refiners drums

When government

legalises illegal bunkering, it will reduce crime in the region and give room

for oil communities

to own indigenous refineries

47Community

PO R T

HARCOURT: To a d d r e s s challenges of poverty in the

Niger Delta, Total E & P has said it would give more attention to human capital a n d e n t r e p r e n e u r i a l development.

S p e a k i n g w h i l e commissioning an SME development network centre at Obite, Egi arts/ cultural development centre also at Obite and Egi technical workshop at Erema, Deputy Managing Director, of the oil giant, Mr Denis Berthelot said the firm in the last few years have been emphasizing on the need for a shift from infrastructural, to human capital and entrepreneurship development.

He said communities would develop more through conscious involvement of the p e o p l e i n e c o n o m i c development projects and programmes.

Adding, Mr Berthelot said the commissioned projects would stimulate enterprise development activities in the area. He enjoined the people t o m a k e u s e o f t h e opportunities created by the

Jimitota ONOYUME

Total focuses on human development project effectively.

Earlier, President General, Egi Peoples Assembly, Chief Oris Onyiri had assured that

t h e c o m m u n i t y w o u l d continue to create the needed atmosphere for the oil giant to operate.

He further enjoined the firm to assist to grow Egi language and culture,

adding that they should be taught alongside French language in the area

Empowerment forum

Sweetcrude is a Publication of VANGUARD MEDIA LIMITED, Vanguard Avenue, Kirikiri Canal, P.M.B.1007, Apapa. Website: www.vanguardngr.com (ISSN 2251-0001) Editor: CLARA NWACHUKWU . Phone: 08098051103, All correspondence to P.M.B. 1007, Apapa Lagos.