Nigeria in oil revenue dilemma

[Richard Akindele]

Residents of Nigeria`s oil-rich Ni­ger Delta -- where attacks on oil companies have hampered production -- deserve a greater share of the region`s wealth, according to a recent U.N. report.

The U.N. Development Fund said widespread poverty in the troubled region called for immediate intervention.

'The region presents a paradox of perverse poverty in the midst of plenty,' UNDP Program Director Alfred Fawundu earlier this week when presenting the 67-page report.

Nigeria has taken in an estimated $300 billion in oil revenue since the 1970s and is among the top 10 oil producers.

'So much water and yet little to drink,' Fawundu said. 'The region that contributes significantly to global energy has significant energy problems.'

According to the United Nations, Nigeria`s producing states receive just 13 percent of the revenue from the sale of oil. In a country where the vast majority of the 130 million people live in poverty, the relatively small share of oil profits for the producing regions has left a bitter taste and prompted the rise of a militant movement.

Instead of 13 percent, militants are demanding at least 50 percent of the revenue go toward social, health and infrastructure spending in the region.

'The vast resources generated from oil barely impact on local poverty,' Fawundu said. 'The region faces formidable challenges in terms of severe environmental degradation, limited access to safe drinking water, electricity and roads.'

He said that in order to alleviate suffering and bring stability, there must be more equitable profit-sharing in Nigeria.

'First recommendation is that there must be a credible and equitable revenue allocation formula to lessen tension in the region and reduce the perception of unfairness,' he said. 'Communities and states should be given, as recommended in other parts of the world, a stake-holding in oil exploration, such as it has happened elsewhere in Alaska or Canada and even in Kuwait.'

Two-term President Olusegun Obasanjo said Tuesday that the country needed to take measures to quell the violence by addressing poverty so that Nigeria might reach its full oil-producing potential.

'We know that Niger Delta is an opportunity, Niger Delta is a possibility, Niger Delta is a reality,' he said during a discussion on the country`s recent rise in violence. Several foreign oil companies, both on and offshore, have been the victims of increasingly sophisticated attacks on their installations. In recent months, oil workers have been kidnapped and even killed by militants hoping to force the president`s hand.

Obasanjo appeared Tuesday to acknowledge the need for change in Nigeria, though did not specifically mention altering revenue-sharing.

'That is what we are saying. But if we do not do at the individual level, at the family level, at the community level, at the local government level, at the state level, at the federal government level, at the oil company level, of course what is an opportunity can turn into something else,' he said.

Some say Obasanjo is trying to make amends for Nigeria`s past where religious and ethnic tensions added to the mix of widespread poverty. He has already impressed many by pushing for greater transparency in his country`s dealings with foreign energy companies.

Although still not ratified by the Nigerian government, Obasanjo is implementing large portions of the Nigeria Extractive Industry Transparency Initiative, part of a global effort to better track payments by foreign energy firms to resource-rich nations.

Audits of last year`s budget in Nigeria show that despite some discrepancies, revenue from foreign energy companies is for the most part making it into state coffers. And, in turn, the money is being earmarked for much-needed health, education and infrastructure projects.

'The only concern that we have is in their capacity,' Galina Sotirova, the country program coordinator for Nigeria at the World Bank, told United Press International in a recent interview. 'That`s the big obstacle.'

Limitations at the state and local level and a lack of qualified personnel still hamper Nigeria`s efforts to break ground on some projects like roads or hospitals though rising oil prices make the idea of social spending more tangible than ever.

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