Fire alarm from finance minister - Vanguard

By Dele Sobowale

?When the housewife announces that ?the soup in the pot is totally burnt?, she is telling the family that there will be no dinner?, Old Uncle in Lagos.

?We are losing revenue; 400,000 barrels of crude oil are lost on a daily basis due to illegal bunkering, vandalism and production shut in?. Dr Ngozi Okonjo-Iweala, Federal Minister of Finance.

Madam Ngozi, who is in charge of our kitchen, has in a manner of speaking, told us that the ?pot of soup? is on fire. She has done her work, as expected; what we do with the information is our affair. But, it will be in our interest if we listen carefully to what she says. The fate of the Federal Republic of Nigeria might depend on it. A sharp and sudden downturn in crude oil revenues next year will induce deep budget cuts, increase unemployment and provoke mass anger given nothing positive in the polity to reduce the impact. Governors now parading jets might find their people are no longer amused.

Perhaps because she knew that she was addressing a nation of almost deaf people, including their political leaders, the Minister added that ?the Federal government may not be able to implement the budget?. Economists and financial experts, as well as, keen observers of the global oil market were aware of the dangers all along and the consequences for the 2013 Budget as well as the Nigerian economy.

Certainly, Gross Domestic Productivity, GDP, will drop; so will allocations to states and local governments. States, which had embarked on ambitious projects, without taking a glance at the future, will have a great deal of trouble continuing with some of those projects. The era of ?abandoned projects? might be with us again. If 2013 is bad, and it is, 2014 could be worse ? for a lot of reasons that we already know but which the President, the Governors, the Minister and Commissioners of Finance choose to ignore.

For once, we have a potential national calamity, almost inevitable, which should engage our collective attention in a non-partisan manner. We all stand to lose ? PDP, APC, oil-producing and non-oil producing states. We are all in the same leaking boat. And right now, I want to join the Honourable Minister of Finance in raising the alarm. This is because, the President and the National Assembly, NASS, are currently engaged in a contest of wills which will lead us straight into economic catastrophe and the poor woman is becoming the sacrificial lamb for the collective absence of leadership on this matter.

Although she also said, ?I have to clarify that it is not the entire 400,000 barrels that is stolen, no. What happens is that whenever the pipelines are attacked and oil is taken, there is a total shutdown. All the quantity of oil produced that day will be lost because it means government cannot sell it and it means a drop in revenue?, she actually exposed the impotence and incompetence of the Federal Government, the Armed Forces of Nigeria, especially, the Nigerian Navy and the Security agencies (SSS and NIA) when it comes to protecting the national interest against saboteurs.

It is simply impossible for sabotage of this magnitude ? 400,000 barrels a day at $100 per barrel comes to $40 million per day and N2.4 trillion per annum. Can any responsible government on earth find time for anything else other than finding a solution to the loss of almost 40% of its annual budget? If we cannot find the answer ourselves, why not engage international organizations which can help us find the answers?

However, before we invite foreigners into the affair, there is a need for the Federal government to level with the people of Nigeria. It is impossible for a group of foreigners who had never been to Nigeria, or a Nigerian group not conversant with the Niger Delta and the routes of the pipelines to bring a boat into Nigeria and smuggle our crude. So, the criminals are our own people or foreigners working with oil companies or oil supply companies in Nigeria.

Some of them might even be people working with owners of marginal fields stealing oil from the pipelines of Shell, Chevron. Mobil etc. Furthermore, it is virtually impossible for sabotage of this magnitude to continue for so long without the active connivance of corrupt Navy officers and the same security agents assigned to guard our national interests.

For some reasons still difficult to understand, the loss of crude keeps increasing periodically. In 2011, the announcement was 160,000 barrels per day of crude oil stolen or lost; last year the figure climbed to 200,000 and now we are being told it has jumped to 400,000 barrels a day. The obvious question is: what is the Joint Task Force in the Niger Delta doing while all these thefts and vandalisation is going on? What is the Navy doing while stolen crude is increasingly exported? Why has the President not sacked the military officers and the security agents in the region as a warning to other that he wants to get results?

However, there is more to the Minister?s inadvertent disclosure than she realizes. When oil pipelines and gas pipelines jointly owned by government and foreign firms are wantonly vandalized now, which foreigner will be foolish enough to invest in any project in the region on his own? As it is, none of the majour investors in Nigeria depends on public power supply because they are forced to generate the power they need for operations.

Mobil, literally, had to build Eket and Q.I.T in Akwa Ibom to be able to drill oil. Companies operating in this country are forced to undertake for themselves what other nations provide for them at lower cost. They endured the insult because the returns were favourable. But, as more countries are discovering oil and shipping it, it will soon become a buyers? market and Nigeria will have to go begging for investors to come and for buyers as well. Next year might be the beginning of a long and tedious journey for this country down the road to oil glut and economic disaster.

The Minister did not say this; and she cannot really. But, there is no doubt in my mind that she is aware of the dangers ahead.

The obvious question is: what needs to be done? The short answer is: Jonathan should spend more time on economic policy than he spends on politics. The critical Ministries are: National Planning, International Trade and Investment, Agriculture, Power and Works ? in addition to Finance. The reason is simple. If we are ever going to avert the disaster that will result from sharp drop in oil revenue from now on, these are the people who will provide the soft landing. Politics, for Jonathan, is already poisonous ? if the economy gets worse.

If budgets are slashed by governments this year or next year; and if salaries are delayed or unpaid in many states; and if ASUU again proceeds on another indefinite strike, nothing and nobody can save the President. If anything, he needs to find his way back to peace with most of the people who provided the coalition which brought him to office.

Difficult, as it is for him to accept, now more than ever, he needs the governors; and they need him. When federally allocated revenue dwindles, every elected official faces monumental problems at his own level. The President nationally and the governors in their states will find the voters totally united against them. Irrespective of political party or affiliation, any possible upheaval will affect all because most politics is really local.

What then should be the first order of priority for the President and the governors? That is simple. They should start with themselves to cut down on the cost of running their offices and significantly downsize their cabinets. The President should set the example by scaling down to no more than twenty four Ministers and no state governor should engage more than fifteen.

Similarly, the number of Special Advisers should be reduced by at least sixty percent. Most of them are assigned responsibilities which should be handled by career civil servants anyway. They only help to get the payroll bloated for political reasons. Now, and in the near future we cannot afford them ? unless our leaders really want the economy to crash. Madam had raised the fire alarm, I support her. We must act now.

Source: http://www.vanguardngr.com/2013/07/fire-alarm-from-finance-minister/

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