Nigeria: Coping Without Oil in Delta

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Original Post Date: 2009-05-19 Time: 04:00:02  Posted By: Jan

By Emmanuel Eweta Uduaghan

NINE months ago, the world changed. In terms of catastrophic proportion few events in human history have rivalled the collapse of the global economy; may be the Second World War or the bubonic plague (the pandemic spread by fleas and rats was thought to have reduced the global population from 450 million to 375 million in 1400; spreading from Western Europe to North Africa).

I know this is an exaggeration; the economic crash has not reduced world population in such staggering proportions, but it has done incalculable damage to material prosperity of vast number of the world’s population.

As is now commonly known, the global economic crisis began in July 2007 with the loss of confidence in the securitised mortgages in the United States leading to high liquidity and injection of funds into the system by major Central Banks in US and Europe.

By September 14, 2008 the collapse of the Lehman Brothers in the US signposted the beginning of the global meltdown not seen on such a scale, except, perhaps, in comparison to the great depression of the ’20s and ’30s. The stock market crashes across the world thereafter was unprecedented. Nigeria’s stock market was ranked one of the world’s worst affected losing N8 trillion or 70 per cent in value. Recovery from the shattering effects of the crash is not in sight.

Foreshadowing the global financial crisis was the world food crisis that began in 2006. It may have begun to ease up in 2009, but there is no agreement on whether there is a de-escalation of rising food cost. Is food cheaper and more affordable today than it was when its rising costs forced political instability and social upheaval in many developing and developed countries?

I am sure the tale of the average house wife and the household expenditure in Nigeria on food will be that of pain. The steep rise of food prices in Nigeria was not helped by the crash in the Naira exchange rate (25 per cent) from late last year to early this year, though the relationship between the two remain unclear. How do you explain the high cost of garri because the Dollar was rising against the Naira? An explanation could be the fact that we are in a global village with effects and consequences generally shared. The other is that many components of garri production (fertilizer, fuel, machinery) are sourced with foreign exchange. More importantly, the farmer’s earnings are expended in buying his other needs at higher prices which the weak Naira occasions.

The case I am making is that in the last three years cataclysmic events not seen earlier have occurred and have had great impact in the performances and policies of government. Before I am misunderstood, leadership must tackle challenges and where governments fail to address those problems, such governments should be held responsible for their failure. We are voted into office to get the job done. If we cannot get things done, we should leave. I am not one for excuses and have never offered one since assuming office two years ago.

When we were seeking office, we told Deltans we have a road map to make the State better. We told the people we have a three-point programme of Peace and Security, Human Capital and Infrastructure Development. Encapsulated in the three-point agenda were all the issues we thought the people would be more than interested to see us address. In addition, I need to explain that this message got through and the people accepted us and voted us into office. Moreover, what a period it was when we took office.

The Niger Delta crisis was raging-hostage taking, kidnapping and pipeline vandalism were the order of the day. One of the first actions on my part on assuming office was to negotiate the release of four American hostages (Larry Plake, Mike Rousel, Chris Gay and Kevin Faller). It pleases me to no end that in the 24 months there has not been one unresolved kidnapping in Delta waterways.

A good example is the ease with which the $5.9billion Chevron Escravos Gas To Liquid Plant (EGTL) project is being successfully executed. This is a flagship example of the success of our peace and security strategy. Then the other success story is the re-entry of the international oil companies, especially Shell and Chevron. At the beginning of our tenure, Shell had almost completely shut down its oil wells lowering the production quota from Delta State precipitously. We used to be the number one oil producing State in the country; we found ourselves languishing precariously at number four, far behind number one.

It was our duty to do all within our power to alter this disheartening fall. It took a lot of astute and resolute management of the peace and security process to ensure we did not derail. Today, the State is back as number two in the country. We are still not relenting as we should be number one. Considering where we are today, it seemed like light years ago when kidnapping and pipeline vandalisation were the order of the day.

A word on oil prices

Our situation was heart rendering because in 2007 oil was selling for $80 per barrel and by June 2008 had risen to $147 per barrel, we missed this excellent opportunity. While I would have loved us to earn more, I was conscious that the high price of oil was illusory and unreliable and warned in two separate articles in October 2007 and November 2008 that it would be foolish to depend on this resource to fund economic development. Today it is hovering around $50 per barrel. Meaningful and long-term development cannot be sustained on oil.

Then, on the political front, we needed to resolve questions of ethnic disharmony and distrust. One of the unfortunate fallouts of the gubernatorial contests in Delta was the political debate that centred on ethnic origins. I needed on assuming office to keep my pledge to ensure that every part of the State got what it deserves. Our appointments into offices were equitable and fair. Projects were equitably and fairly sited. Our all-inclusive strategy worked. The heat abated and everyone felt they had a stake in this government.

As the popular cliché goes-it is economy stupid! Sorting out the political issues was important, but the people are going to be concerned about their stomach. They are going to judge us based on how able we were to cater to their welfare. It is true that we imposed a great deal of discipline in the management of public finances. It is true that by instituting DESOPADEC and Delta Water Ways Security Committee; we were able to address marginalisation of oil producing riverine communities and secure the creeks.

However, we knew we would not make much progress, no matter how ambitious we were, if we did not diversify our economy. We believe that the best strategy, taking advantage of our location, is to create the right infrastructure that would bring in businesses. We are undertaking the building of a new international airport in Asaba, which would be a showpiece on completion later this year. We are about constructing a longer runway (4.3km) at Osubi airport, near Warri to take bigger planes.

We have undertaken in partnership with ARCO Petrochemical for the building of an industrial park in Warri. We are fine-tuning some technical issues before site work can begin in this multi-billion Naira project. We are expanding our road network across the State. We are active in the gas master plan initiative of the Federal Government towards the monetisation of the large gas reserves in the State.

We are working at jumping starting the State IPP to see how we can attain over the next 24-36 months 300 megawatts of electricity power in the State. This initiative should complement the Federal Government NIPP, in which the Delta State Government has invested N15billion. We have succeeded in moving the Warri port from being a dormant port to the second busiest port in the country. We are working tirelessly to re-activate the Koko port and looking forward to the release of the Sapele port back to the NPA by the Navy. I hope the dredging of Escravos break waters can happen soon as promised by the NPA.

The modernisation of our urban towns of Asaba, Warri and Effurun has created a superb ambience, although I must say a lot of work is still to be done. Nevertheless, the attitude of the people to their surroundings must change; if the new look cities can be sustained in the long term.

We have trained about 450 young farmers, equipping them with modern skills in farming and management of farm as a business. We have empowered 4000 peasant farmers in the state. I mentioned food crisis earlier, I think Delta State has enormous potential. We may be oil producing, but the amount of idle fertile land for farming or aquatic agriculture grieves me. I never stop telling our people that it is only a thief or a lazy person that can go hungry in the state considering the plethora of incentives we have developed to encourage private enterprise and resourcefulness in agriculture.

In January the CBN gave the Delta State Government an award for being the best in Micro Financing of Agriculture. I believe we did well with that programme. Our general Micro-credit programme created over 26,000 micro entrepreneurs, about 16,000 being women. But considering the demand and the need for support, the amount available to government and the number of persons to be touched, it is a drop in the ocean. Nevertheless, it is a good start. This year we are doing more. I believe and the government I lead feels that no matter what we do, if the people are not economically empowered, if it does not translate to economic development, we would have failed. My hope is that our partnership with Oceanic Bank and Bank of Industry would yield more dividends as we move into the small scale industry cadre.

The other programmes in our human capital development strategies have been challenging in executing but are moving on steadily. We are currently selecting students for training in industrial welding at the new welding school in Sapele which has American certification, we are working with Chevron to select over 1,000 university students from the oil producing areas for Special Scholarship scheme; we ares almost ready for our school mentoring programme. Attention is being paid to other educational and health programmes. In the next few months, we shall commission one of the most sophisticated hospitals in Africa, started by my predecessor.

We are two years done and two left, our work is cut out for us and there is no looking back.

Dr. Uduaghan is the Governor of Delta State.

Original Source: Vanguard (Lagos)
Original date published: 18 May 2009