Obasanjo vs Clark: Taking a dive into the rabbit hole of resource control
By Dr Nasir Aminu In contemporary Nigeria, resource control is a topic that generates opinions. It is grossly misunderstood by many and can be very divisive. It is a discussion that creeps up whenever there is a discussion about Nigeria’s problems and solutions. So, it was unsurprising to see former President Obasanjo’s reply to Chief […]
By Dr Nasir Aminu
In contemporary Nigeria, resource control is a topic that generates opinions. It is grossly misunderstood by many and can be very divisive. It is a discussion that creeps up whenever there is a discussion about Nigeria’s problems and solutions. So, it was unsurprising to see former President Obasanjo’s reply to Chief Edwin Clark making headlines as the conversation has been kept aside for some time.
Obasanjo’s responses came after Clark challenged him to show respect to the people of the region who are currently facing terrible environmental, social, and economic devastations. Anyone with ethical consideration should empathise with the environmental challenges facing the region. Mr Clark then proclaimed that the 36 states’ monthly allocation comes from oil revenue. And that the country depends solely on the minerals produced by the Niger Delta. Additionally, Clark rehashed another incorrect statement about Zamfara state owning its resources. The assumption behind this statement is misguided and worrying. It is worrying that such a comment is coming from an elder statesman.
Before plunging into the uncharted waters of resource control, first, let’s debunk the myth that the oil-producing states have ownership of resources. On numerous occasions, the federal government and the Zamfara State government have come out to say the state does not own any goldfield. The assertion started over a year ago when the state governor visited Buhari with bars of gold. The state commissioner for solid minerals, Dr Nuruddeen Isa, explicitly noted that the Zamfara was never involved in mining gold as rumour has it. Obasanjo referred Clark to the current constitution instead of an outdated one to score a point. When speaking truth to power, it is essential to respect the law and stick to the facts.
Under Nigerian law, the ownership of natural resources is vested in the federal government. Section 162(2) of the 1999 Constitution provides a revenue formula for states with natural resources being exploited within their territory. They are entitled to a certain percentage of the revenue accruing directly to the federation account from such exploitation. The allocation principles in the constitution require the government to consider population, equality of States, internal revenue generation, landmass, terrain, and population density.
It should also be clarified that the territorial control of offshore resources is under the federal government, not the state government on the coast. The issue was settled in 2002 by the Supreme Court in the case of the Attorney General of the Federation versus the Attorney General of Abia State & 35 Others. The court reaffirmed the federal government’s sovereignty and jurisdictional control over the vast resources located in the states’ offshore and adjacent continental shelf on Nigeria’s coast. I will not judge whether this is fair or not. That is a discussion that will lead us to restructuring Nigeria.
Based on the data in the 1990s, offshore oil extraction accounts for 74 per cent of the country’s total. That is the information used to decide the revenue allocation formula. Under the current law, the oil-producing states get 13 per cent of the federation’s oil revenue, half of the onshore oil revenue. Out of 36 states, 10 are listed as the oil-producing states – Akwa Ibom, Rivers, Delta, Bayelsa, Ondo, Edo, Imo, Abia, Anambra, and Lagos. The first four currently produce 80 per cent of the onshore output. Still, not all these states are in the Niger Delta, and not all the States from the region are listed as oil-producing states.
We can all agree that the government should not grow by breaking the backs of those supporting it, including other states that generate non-oil revenues. Mr Clark suggested the derivation should be increased to 25 per cent. I feel the government should grant all 100 per cent onshore revenue to the region with some modification to the allocation. There is currently a Bill seeking the derivation fund to be directly paid to oil-producing communities instead of the state Governors, which looks like a decent idea.
Before we digress, we will end this point by noting that the country does not depend on only one region for its finances. It is also essential to know that Nigeria’s expenses are above its total revenue, which means the country has to borrow to keep its day-to-day activities. Rightly so, the oil revenue is a significant portion of the federation account. Like other economies, Nigeria also engages in non-oil activities, generating decent revenue. So, it will be disingenuous to assert that the country depends on one region. Nigeria has been borrowing to finance its expenditure from external and domestic sources. For example, 38 per cent of the 2022 budget will be funded through loans, while oil revenues will pay about 35 per cent of the country’s expenses. The Central Bank Governor clarified how they print money to lend to the government. The International Monetary Fund has provided loans to the country to sail through the pandemic.
Secondly, the environmental damage in the Niger Delta requires emergency attention, and it will be inhumane not to empathise. One cannot deny the impact of global warming, but the human contribution to this damage is evident. Millions of barrels have been spilt since oil was first discovered in 1956. The burning of natural gas associated with oil extraction – gas flaring – is also a considerable problem. Like oil spillage, gas flaring kills crops, pollute water and damages human health.
An investigation by Amnesty International reveals the reasons behind oil spillage and gas flaring include poor maintenance and negligence. In contrast, Shell has attributed spillage causes to accidents and organised criminal interference. For gas flaring, various reports point to economic and market constraints. Shell oil company has been the largest onshore producer for more than five decades in Nigeria and was responsible for spilling 560,000 barrels in Bodo between 2008 and 2009. Payments have been agreed upon, and more litigations will continue in European courts. The 2011 report by the United Nations Environmental Programme (UNEP) on Ogoniland was said to be one of the most complex investigations of the agency. The UNEP report recommended a clean-up project to President Goodluck Jonathan. They also suggested that the government jointly conduct a campaign in Ogoniland to end illegal oil-related activities, oil companies and local authorities. But that did not happen under his watch.
President Buhari launched the clean-up exercise in June 2016 by commissioning the Hydrocarbon Pollution Remediation Project (HYPREP), which will take four phases to complete. The global community celebrated with Nigeria when they heard the announcement. But it is five and a half years now, and the first phase of the clean-up is yet to be completed. In July 2021, the Minister of Environment announced that only 10 out of the 17 lots of the first phase were thoroughly restored. Last week, a non-governmental organisation, Ogoni Liberation Initiative, has appealed to President Buhari to halt further payment to HYPREP. They allege that the agency has always misused the fund released for the clean-up.
Instead of blaming those responsible, Mr Clark’s statement digressed from addressing the environmental issues to blaming the wrong group of individuals like Obasanjo. As we did with Obasanjo, the whole country would have agreed with Clark if he had asked for reasons why the government was not keeping its promise. After all, nothing you can say about the government will make them look more incompetent than they already made themselves look. It would also be beneficial if he had pushed for litigation with the oil companies to compensate the communities at the international courts.
The third, and last point, brings us to the social and economic issues in the Niger Delta. These are problems that affect the communities, but they are not unique to the Niger Delta region. The country is facing social and economic issues because of the recurring under-performance of the government for a long time. However, the causes of these problems may be specific to a region. Studies have shown that the environmental damage caused by oil spillage and gas flaring in the Niger Delta has contributed to the region’s social and economic issues. These include pipeline sabotage, social unrest, militant violence, water contamination and low food production.
The environmental degradation that has left people unemployed in the Niger Delta needs to be addressed to keep the country’s unemployment level from rising. History has proven over and over again that anytime you have a concentration of young people without work, the probability of revolt and unrest will increase. Latest figures from the Nigerian Upstream Regulatory Petroleum Commission show oil production have dipped by a third and only 12 oil rigs out of the country’s 53 are operating. The outcome is attributed to several forms of criminal activities in the region.
Let’s recall that the Niger Delta is the first region to have a dedicated commission to cater for its socio-economic needs by the federal government. The Niger Delta Development Commission (NDDC) was initiated in 2000 under the Obasanjo regime. The mission statement of the commission on its website reads: To offer a lasting solution to the socio-economic difficulties of the Niger Delta Region and facilitate the rapid and sustainable development of the Niger Delta into a region that is economically prosperous, socially stable, ecologically regenerative, and politically peaceful.
Achieving the above mission would lift the people’s spirits in the Niger Delta and the global community. Any crisis there tends to affect world oil prices. Instead, several corruption allegations mar the commission, and competence from the government seems to be an issue. It would benefit the global community if Mr Clark channelled his energy to NDDC to demand efficiency instead of blaming the wrong individuals.
In my opinion, it is worth reflecting that speaking with facts and pointing fingers at the right group will put more pressure on the government to respond appropriately.
Dr Aminu is a Senior Lecturer in Economics at Cardiff Metropolitan University.