Prime Business Africa EditorialIn what is a new definition, oil producing states or host communities now include communities where pipelines pass through, making some northern states not only host communities, but also partakers in the 3% allocation.
The PIA makes the NNPC a profit-oriented company, free from political control.
The 3 per cent given to oil communities, which now includes pipeline bearing states, seems a grand design to shore up the share of northern states in the oil cash till.
As other commentators have said, the president and the National assembly may have missed a sorely needed opportunity to debunk, if not to address ongoing allegations of heavy north-centeredness of major beneficial policies, appointments and projects of the present federal government.
However, while the allocations are questionable, so also is the whereabouts of over N8 trillion received by the oil-producing states (Abia, Akwa Ibom, Anambra, Bayelsa, Cross River, Delta, Edo Imo, Ondo, Lagos, Rivers) in 20 years since 1999. Some of these States, as of August 2021, owe salaries of civil servants ranging from two to 27 months.
Africa sits on top of 10% of global oil reserves, with a princely production of six million barrels per day. African oil countries made over $4 trillion USD from an impressive over one billion barrels of oil between 2007 and 2021, yet electricity, transportation, water, road, food, telecommunication, housing, sanitation and general infrastructure remain grossly inadequate and overly costly.
This is evidence of unwise investment of profits. A VOA report once noted that a common issue among the biggest African oil economies such as Angola, Nigeria, Equatorial Guinea, Gabon, Sudan and Congo Brazzaville is that oil sales rarely reach people who live where the oil is produced, a phenomenon severally referred to as the oil-curse. Instead of prosperity and industrialization, they have seen corruption, violence and instability.
We join other roaring voices to ask questions about the wisdom in allotment of a mammoth 30% to frontier basins, without clear prospects of finding oil as past experience has shown. So far, the cost of the prospecting appears unsustainable, especially since the prospecting companies are mainly foreign, which will certainly cause huge cash outflows from Nigeria’s economy, further stretching the dwindling foreign exchange.
Consider that oil accounts for 70% of government revenue, 90% of foreign exchange, and less than 10% of GDP. Such allotment must have dire impacts on agriculture, local production, costs of containing the pandemic and security challenges, plus the cost of investing in more renewable energy.
The country, if anything, should invest more wisely as the world is looking towards greener, renewable sources of energy in view of the catastrophic consequences of oil and other hydrocarbon explorations.
It is from this standpoint that Nigeria, nay, Africa must ask important questions why so much fervor is still spent on oil while the world is walking away.
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