I hope you will forgive me for quibbling – which oil are we here to discuss ? It could well be palm oil which was for centuries the principal driver and lubricant (excuse the pun !!) in our trade with Europe – starting with Portugal and subsequently with England under the aegis of the Royal Niger Company (founded by Sir George Tabman Goldie) which midwifed United Africa Company (UAC Plc) and Lever Brothers Limited (Unilever Plc).
It would be worth our while to remind ourselves that it was the Royal Niger Company Limited which sold what we now call Nigeria to the British Empire (Britain under Queen Victoria) in 1900 for £stg 865,000).
For those who are keen students of history, I suggest you avail yourselves of what is on offer on YouTube under the caption:
“HOW THIS COMPANY SOLD NIGERIA TO
BRITAIN FOR £stg.865,000 ONLY”
Following the intervention of the convener of this august occasion, Ms. Ayobami Animashaun I stand corrected. I am required to focus on oil which is of a totally different genre. The oil in question has its technical definition as:
It is Crude Oil and petroleum fossil fuels because they are mixtures of hydrocarbons that formed from the remains of animals and plants (diatoms) that lived millions of years ago in a marine environment before dinosaurs existed.
For laymen, the oil we are interrogating is crude oil which belongs to the category of fossil fuel.
Hence, I am obliged to apologise profusely for answering the wrong question – which of course would be fatal in any examination unless I am able to benefit from the kind of glitch which recently afflicted the conduct of the examination by JAMB (Joint Admission Matriculation Board). We all witnessed on television the profuse and tearful apologies of its longtime Registrar Professor Ishaq Oloyede who admitted that it was a monumental fiasco – wrong answers to the right questions or in some cases no questions at all and no answers.
At this juncture, please permit me to avert a similar disaster by averting my mind to the subject matter : A FUTURE WITHOUT OIL.
However, before I do so, kindly permit me to thank Miss Ayobami Animashaun for inviting me to deliver this address to such an august audience – a constellation of Royalty, Ministers, Diplomatic community, captains of Industry and Commerce etc.
I believe that the convener’s vision and motivation are to encourage us to learn from each other. I shall be eighty-two years old on my next birthday and I suspect that the reason I have been tasked with the joyful duty of answering the question posed is derived from the rage and resentment of the current generation that we failed them; and what we are handing over to them is a nation in crisis. Every week is a harbinger of a fresh crisis – financial; economic; political and most profoundly security. Rather than subscribe to the gloomy picture and doomsday scenario, I would argue that there is another side to the coin. From the sidelines, some of us (my humble self included) did try to persuade the government to plan for a future without oil and re-imagine a tapestry dominated by non-oil superlative financial and economic performance.
Our vigorous exertions, passionate pleadings and repeated appeals were rewarded with inertia, indifference, non-chalance, suspicion skepticism and sometimes outright contempt. We literally ran into a brick wall which had been sculptured and re-inforced by complacency and self-indulgence under the matrix: “Let us make hay while the sun shines. The future will take care of itself.”
Added to this was the conviction that we have educated and indulged the next generation sufficiently. It is now their turn to take care of themselves and take care of us too into the bargain. Alas, the future will not take care of itself. Also, by the look of things it would be foolhardy to expect the current generation (Gen-Z) to ignore their own formidable challenges and spoil us rotten with an abundance of luxury and care-free leisure In our twilight years.
Before, we address the critical issue of:
HOW DID WE GET HERE ? please let me speak for myself.
About forty years ago, as the then Chairman of Eko Hotels Limited (Victoria Island) and a partner in the firm of KPMG, Chartered Accountants, I organized what was tagged as : “Exhibition And Lecture On Nigeria’s Non-Oil Revenue. A Future Without Oil.”
On the matter of security which is arguably our nation’s number one problem – kidnapping, banditry, arson, assassinations, insurgency etc. in 2011, (as the Chairman and Chief Executive of J.K. Randle International) I organized what was tagged as: “SECURITY SUMMIT (SAFETY ON LAND, AIR AND SEA) at the same Eko Hotel, Victoria Island, Lagos” The then National Security Adviser, late General Patrick Aziza attended the opening day of the three-day conference. What followed was “NFA” (No Further Action). Tragically, before the year was over the United Nations office in Abuja was bombed with grave and deadly consequences. Also, dare-devil assassins attempted to kill the then Inspector-General of Police Hafiz Abubakar Ringim by following his convoy of cars right into the precincts of the police headquarters – Louis Edet House, Abuja.
As matters stand, we are like a boxer on the ropes. The legendary Muhammed Alli taught us a great lesson – namely when you are on the ropes that is precisely the time to conserve energy, adopt it episodic and re-strategise against a formidable opponent/dangerous foe.
Hence, we cannot thank the convener enough for giving us the opportunity to pause and savour the signs of hope as we endeavour to chart a fresh path and adopt bold strategies that would provide salvation. It is a huge challenge and the time is now. We must commit to a future without oil. However, we may choose to reframe matters as :
“A FUTURE WITH OR WITHOUT OIL”.
If we are to make impact, our first task is to resolve the precarious ambiguities in our ecosystem – especially in the prudent management of our financial resources and economic choices in a renewed commitment to the elimination of waste and corruption. Singapore is a great and worthy example of a nation that has no oil at all. Yet it is thriving.
The Scandinavian countries, especially Norway have oil but they have vaccinated themselves against the “oil curse”. They prefer to channel their earnings from oil into Sovereign Wealth Fund For Future Generations. It is their solid insurance against being accused of squandering their riches (derived from oil) by future generations.
Currently, Norway has stashed away.
Others in the league of Sovereign Wealth Funds are as follows:
US $
Sovereign Funds of China 1.3 trillion
Pakistan Sovereign Wealth Fund 8.06 billion
Turkey Wealth Fund 318 billion
Maharlika Wealth Fund 2.26 billion
Sovereign Fund of Brazil 14.2 billion
National Wealth Fund United Kingdom 36.9 billion
Russian National Wealth Fund 39 billion
Nigeria’s Sovereign Wealth Fund is a paltry N4.42 trillion (roughly US.$2.95 billion).
The convener has cajoled us into believing that the Gods are smiling on us but harsh reality suggests that neither the old nor the young can rely on their sense of entitlement as the vaccine against the next variant of COVID-19 or whatever pandemic erupts.
Today’s event regardless of the overwhelming glamour and glitter should not only rekindle our hope, it should serve as a catalyst. The last time I checked our leading intellectuals, the indomitable technocrats and rugged professionals (save for a few) have given up. That is lethal. It is indeed a sure recipe for disaster and ultimate extinguishment/extinction.
We no longer have the luxury of a waiting period or room for vacillation. The challenge before us is the conquest of debilitating fear, festering anger and traumatic frustration bordering on PTSD (Post Traumatic Stress Disorder).
For several decades our nation has been on a roller-coaster ride of unrealistic expectations. Now, we have no seat belts. To quote the late American Lawyer, Ralph Nader: We are “UNSAFE AT ANY SPEED”.
Perhaps we need to back track to how our oil journey commenced with the discovery of oil at Oloibiri (now Bayelsa State) in commercial quantities by Shell D’Arcy in 1956. But the real journey commenced almost twenty years before. Shell drilled many holes that turned out to be dry before striking it rich. Since then Nigeria slowly developed a problem with its oil. At first, the impact of oil was not profoundly manifest. The economy was fundamentally anchored on agriculture – groundnuts and cotton from the Northern Region, palm oil from the Eastern Region; and Cocoa from the Western Region (plus rubber from the Midwestern Region). I would even argue that even now, the oil sector has not ever been properly integrated with the Nigerian economy. It just grew and prospered (or declined) at a tangent – instead of being the catalyst for self-evident economic development as has been the case with what was previously dessert in UAE. (United Arab Republic); Saudi Arabia; Qatar; Bahrain etc.
1966 Coup:
“On 15 January 1966, rebellious soldiers led by Kaduna Nzeogwu and 4 others carried out a military putsch, killing 22 people, including the Prime Minister of Nigeria, many senior politicians, senior Army Officers and their wives, and sentinels on protective duty. The coup plotters attacked the cities of Kaduna, Ibadan, and Lagos while also blockading the Niger and Benue River within a two-day timespan, before being overcome by loyalist forces.
Although the coup was considered a failure, it still resulted in a change from an elected government to a military government, albeit led by a different set of senior officers. It also marked the start of a succession of military coups in Nigeria.”
If we want to change our future without oil, we are entitled to draw a lesson from Don Zimmer who delivered a nugget:
“What you lack in talent can be made up with desire, hustle and giving 110 per cent all the time.”
Besides, we have to recognize and acknowledge the new hierarchy of needs and paradigm shift. Nigeria is actually a GAS country rather than an epileptic oil producing country. In oil our ranking is 10th globally, and in gas we are ranked number 9th.
The Nigerian Liquefied Natural Gas Limited [NLNG] has proved to be a resilient flagship and robust business model.
Our next destination is the confessional box where we have to admit our long list of missed opportunities and wrong choices galore.
Thankfully, this time around we would be willing to subscribe to rigorous risk assessment and meticulous risk management.
We cannot but recollect that back in 1980 when we were in distress, the United States of America wanted Nigeria to boycott the Moscow Olympic Games. The President of America also wanted to pacify American oil companies which had won the trans-Siberian pipeline contracts. They were barred by Presidential order. However, the US President wanted to compensate them by bankrolling four new oil refineries in Nigeria which they would run for twenty-five years and thereafter hand them over to Nigeria. They were going to be BOT’s [Build; Operate; and Transfer]. I believe that the American companies were Chevron, Mobil and two others. In any case, Nigeria preferred not to boycott the Olympics much to the delight of the Russians. On a personal note, I attended the Olympic Games and I must confess that the Russians delivered a truly magnificent and memorable Olympic Games. There were other lessons too – which time and space would not permit me to share with you on this auspicious occasion. It is a story for another day.
Also, let me add that the oldest refinery in Nigeria was located in Port Harcourt and it was jointly owned by Shell and BP.
I recall that back then, when I participated in the audit of the refinery TAM (Turn Around Maintenance) was not a big deal. It was handled by a mid-level expatriate manager who would typically scribble on a blackboard: NOTICE TO ALL STAFF
TURN AROUND MAINTENANCE WILL COMMENCE ON 12TH JUNE AND BE COMPLETED ON 22ND JUNE”
Now it has become a blockbuster contract involving millions of dollars at frequent intervals.
Perhaps I should add that about forty-five years ago, the then military government decided to build new refineries in addition to the already existing one in Port Harcourt, which could handle only 60,000 barrels of crude oil per day. A Canadian firm was hired to carry out the Feasibility Report. The Consultants recommended four refineries – one in Lagos (the major market), one in Warri (close to the supply of crude) the third one would be built in Lokoja (central location between North and South); and the fourth one would be a second refinery in Port Harcourt (as an export terminal).
Apparently, when the report was tabled at the Supreme Military Council, the Chief of General Staff objected to all the refineries being located in the South. He insisted that at least one of the refineries should be located in the North. That is how Kaduna Refinery emerged regardless of the huge distance from the oil producing area. In any case it was designed to handle heavy crude oil which would have to be imported. Besides, the pipelines between Kaduna and the oil producing areas have been massively vandalized.
My recollection is that the Warri Refinery was built by an Italian company, Snamprogetti while Kaduna Refinery was built by a Japanese company, Chiyoda. What was remarkable was that the Japanese took about four years to complete the job and trained about one hundred Nigerian engineers. Twenty years later when the refinery broke down, I was part of the delegation despatched to Japan to invite the Japanese to come to our rescue.
However, there was a lesson to be learnt. The Japanese summoned the engineers who had worked on the Kaduna Refinery. Out of the twenty-six engineers, twenty-five were still in the employment of Chiyoda. One of them had died. Alas, the Japanese were shocked to learn that only one or two of the Nigerian engineers they had trained both in Nigeria and Japan were still in the employment of NNPC (Nigerian National Petroleum Corporation).
It is worth remembering that when we export crude oil, we earn maybe U.S.$80 per barrel. However, when it is refined the value added (petroleum motor spirit, jet fuel and other by-products) would fetch as U.S.$1,500. Hence, notionally we lose U.S.$1,420 on every barrel of oil which we are unable to refine.
For the benefit of the younger generation, we should share with them that for several decades the United States of America was a huge buyer of crude from Nigeria. However, when President Shehu Shagari visited the US in 1982 he dropped a bombshell while being welcomed by the American President:
“We shall use our oil as a weapon against America.”
Chief Tayo Akpata was one of those who drafted the speech. He was aghast. The threat was not in the speech he drafted !! What a gaffe. In any case the reaction by America was swift and lethal. The American President, Mr. Ronald Reagan, immediately ordered American companies to commence drilling for oil within the United States of America. They no longer wanted to buy crude oil from Nigeria.
It would not be out of place to beam the searchlight on NNPC and its successor NNPCL. We have a problem that is not going away anytime soon. The four refineries which are owned by NNPCL are old. They were built at least forty years ago. The spare parts may not even be available. Apart from the Dangote Refinery which has the capacity to refine 650,000 barrels per day, other refineries have opted for modular refineries which are modelled on the latest technology with appreciable savings in the cost of operations. It is going to be difficult for NNPCL to compete with Dangote in the market for refined products.
As we endeavour to address the future of Nigeria without oil, we must also factor into the equation a global future without oil with the prospects of a looming expiry date for what we have come to regard as “liquid gold”. As more and more countries insist that the deadline for carbon emission for cars is 2030 while electric cars (mostly driverless) become the rage, we have no choice but to craft alternative strategies for our survival as a nation.
If we are ready to admit to past failures through negligence and neglect, this is the time to proceed from critical failure factors to positive success factors.
We have vast options and fresh opportunities in:
Agriculture
Artificial Intelligence [AI] and Technology
Minerals
Gas
Tourism and Creative Industry
Infrastructure
Of course, we should include the vast potentials available in our seas and oceans – otherwise known as the “Blue Economy” which are yet to be cultivated, harnessed and harvested by the newly created Ministry of Marine and Blue Economy under the former Governor of Osun State, His Excellency Alhaji Adegboyega Oyetola.
Also, “The Saturday Sun” newspaper yesterday carried on its front page with bold headlines, the following report: “WITH GOVERNMENT SUPPORT, COTTON, TEXTILE INDUSTRY CAN RIVAL OIL IN SOCIAL IMPACT”
-Ms. Ololade Majekodunmi
(National Coordinator, Nigeria Cotton Society).
Furthermore, we are entitled to a grave sense of awe and shock over grievous waste and monumental recklessness signposted by last week’s front page headline in “Business A.M.” newspaper:
“NIGERIA REQUIRES N18 TRILLION TO RESTORE
JUNKYARD OF ABANDONED BUILDINGS”
“But ROI (Return On Investment)
could boost GDP by US $200 million annually.”
“In a sad reality, Nigeria’s cities and towns are plagued by abandoned construction sites, with different abandoned projects, including houses, schools, churches, offices, malls, among various other buildings collectively worth billiions of naira, littering various parts of the country.”
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