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Nigeria's Oil Mafia

Semiu Salami, The News (Lagos)
Africa News
SECTION: NEWS, DOCUMENTS & COMMENTARY
January 4, 1999

Lagos - A mafia is fingered as being behind the persistent fuel scarcity in Nigeria. Can General Abdulsalami Abubakar brave the odds and smash this syndicate?
Correspondents assigned to the nation's seat of power in Aso Rock, Abuja usually mill around, sometimes eavesdropping for what may be the scoop of the day. Thus, when news went round Monday, 21 December, 1998 that a high-powered meeting involving officials of the military government, petroleum ministry and operators of the oil sector, was underway, the journalists naturally kept their ears to the ground, waiting for the final word from government on the appropriate price for fuel. The Chief of General Staff, Vice-Admiral Okhai Akhigbe chaired the meeting, which also had Mr..
Aret Adams, special adviser to the Head of State on petroleum matters, Dr. Abokhi Zhawa, permanent secretary, petroleum resources ministry, Alhaji Dalhatu Bayero, NNPC group managing director and chief executives of the eight major marketers and Independent Petroleum Marketers Association of Nigeria (IPMAN), in attendance. Naturally a high profile meeting must have a final decision regarding the speculated fuel price hike. But like he had repeatedly done since he became the CGS, Akhigbe flew a kite at the end of the meeting. He debunked the claim of a possible upward review in prices of petroleum product.
"I do not think in our drive at deregulated economy, government will come up and fix prices for anybody now. Why should government want to go and raise the prices of petroleum products?" he queried. However, if many had been swayed by Akhigbe's rhetorics, the fact that emerged, barely 72 hours after the statemen t only put into proper perspective, the point the nation's number one sailor was trying to put across. Energy experts and public policy analysts who spoke with The News last week took Akhigbe's statement to imply throwing the oil sector, particularly as it affects the importation and distribution of petroleum products, open.
To them, Akhigbe actually flew a kite, which became a reality. The 127.2 per cent hike which the meeting he presided over approved became almost immediately operational.
The price of petrol jumped from N11 to N25 per litre, diesel and kerosene from N9 to N23 per litre. But following the public condemnation, government once again, is being forced, or so it seems, to eat its words.
At a protracted meeting between government officials and the Nigeria Labour Congress (NLC) government was said to have consented to a reduction, in exchange for the suspension of an earlier 12-day ultimatum from the labour union. The new thinking in official circle, it was gathered, was to find a middle-of-the- road approach that would not make the government lose its face, while the labour union would feel a sense of appreciation.
If the reading of the official mindset is as accurate as our sources would want to argue, the new price range government is being compelled to announce may fall between N11 and N15 per litre for PMS, diesel and kerosene. However, the issue which continues to bother the minds of many Nigerians last week was how the government intends to rationalise its double-speak, especially, when the issues in question bother on national security? Why would a responsible government not deeply reflect on a policy issue before making it public, only for it to retract what it had publicly pronounced.
If government goes ahead to reduce the new fuel price, it will be a repeat of the minimum wage saga, which government against all expectations slashed to N3,000 from N5,200. The Military Administrator of Oyo State, Police Commissioner Amen Oyakhire announced the policy somersault in Ibadan.
What is Abubakar up to? For now, the forces that control the nation's black gold have continued to have an upper hand on the Abubakar regime. But like Professor Tam David-West, former petroleum minister said, Gen. Abubakar is "entangled with a lot of interests, so he cannot move." According to the learned professor of Virology, Gen. Abubakar has to balance a lot of things including "these jerry-can, mobile petrol stations owned by people in and out of uniform, big people." With a deregulated oil prices, the group reasoned, hoarding and black marketeering may no longer be the booming business it used to be.
Also, the group was said to have reasoned that smuggling would no longer be lucrative as under the new arrangement, anybody could just have the opportunity to export to any other part of the West African sub-region. More importantly, the group is said to be canvassing for the retaining of the old price or at worst a slight upward review.
Their mindset, it was gathered, is to ensure that what the government would make out of the game would not be enough to carry out the expected repairs of Nigeria's refineries. "In that case, importation would continue and they could always create the usual artificial scarcity," a source said.
Already, all the nation's four petroleum refineries are said to be completely out of order. Both Warri and Port Harcourt new refineries are said to be in a devastating shape.
So bad were they that some oil-prospecting companies approached earlier to acquire them declined the offer. The repair of the old Port Harcourt refinery, with an initial installed capacity of 60,000 bpd but later increased to 80, 000 bpd, expected to have been completed at the end of December is yet to witness significant change.
Worse still, the Kaduna Petrol- Chemical Refining Plant (KPRC) which was shut down for a Turn Around Maintenance has remained in the doldrums for months. Part of the game plan, The News learnt was to ensure that rather than put the refineries back to live, deliberate attempt would be made to stifle them such that the need for sustained importation of refined petroleum products would remain a natural option.
Total International, a French company which the Abacha regime awarded the contract for the repair of KPRC to does not have the patented right of some of the major components of the refinery. Aside, the Total group are not known to have their business line along the required engineering platform that would ensure a satisfactory work.
But Total clinched the job. Ironically, Schroeder, an engineering firm reputed to have helped developed and repaired several oil installations across the globe that initially bidded but was not given the contract is now being wooed to undertake the technical aspect of the contract.
Schroeder, sources disclosed, has rejected the offer insisting that since the government failed to award the contract to it in the first instance, it was not ready to play a second class game. Till date, the refinery has been in a state of inertia while the December 1998 date which the Total Group had said the project would be completed ended without any positive signal.
Unfortunately, however, experts have reasoned that with the completely knocked-out Warri and new Port Harcourt refineries, the Kaduna KPRC should naturally play the bridging role. Although, so much has been said about the devastating condition of the nation's oil sector, the now famous Arewa talk show in 1997 when the former finance minister, Chief Anthony Ani blew the lid over the deliberate attempt to kill the refineries more than anything else, opened the eyes of many Nigerians.
Ani had insisted that the over $2 billion which his ministry released for the repair of the refineries were diverted to other uses. Although, Etete spiritedly rose in defence of the accusation, the fact of the matter was not lost to Nigerians.
But what Ani did not tell Nigerians was what happened to the $700 million contract which was said to have been awarded to Mohammed Abacha, son of the late head of state for the repair of the same refinery. Sources informed this magazine that although all the contract sum were fully paid, the project was left unexecuted and has even not been accounted for.
Sadly enough, the cult which has today held Abubakar hostage, has been a factor of years of unbridled kleptomaniac by successive military regimes. Sometime in November, 1994, senior management of the NNPC and a high-powered delegation from Switzerland-based multi-billion dollar commodity company Glencore owned by Marc Rich struck an oil deal which subsequently placed the country's crude at the mercy of Marc's family.
The deal which was struck under the regime of Chief Don Etiebet, now a presidential aspirant on the platform of the Peoples' Democratic Party (PDP) had to do with the $260 million Bonny Export Terminal contract. Rich, a friend of Abacha's friend, backer and business associate, Gilbert Chagouri had struck the deal on a barter arrangement that would see them lift 50,000 tonnes of crude oil a month (half of Nigeria's total output then), along with an understanding that it would be allowed to lift all excess products not consumed locally like Bitumen and Naphtha.
However, what many observers have argued to be the real problem behind the woes of the refineries was the NNPC-Glencore deal. Some analysts even feel that there may have been a sort of collusion between the officials of the NNPC and Glencore.
What strengthens this line of argument was the fact that shortly after the deal was struck, all the four refineries in Port Harcourt, Warri and Kaduna broke down. While the refineries could no longer process crude, Glencore was busy lifting 50 per cent of the country crude production per day.
The Chagouri clan itself which during Abacha's tenure controlled over 70 per cent of refined crude import, even till date, also remain a formidable force which Abubakar has to contend with. Reputed to always have its ways in Nigeria, the family was responsible for the foul-smelling fuel imported in 1998.
In fact, the Gilbert Chagouri-Marc Rich alliance remains a formidable foe. Incidentally, while the country's rulership through their dictatorial tendencies and knack for unbridled profligacy have sold the nation's oil sector to their foreign collaborators, certain group of powerful Nigerians especially in the military top-shots and civil populace have formed themselves into a thriving cultic empire.
While the fuel crisis persisted and the nation sunk billions of naira, enough to build some four new refineries, many new filling stations by independent oil marketers continue to spring up. High-ranking military officials along with their civilian collaborators form the pivot for the diversion of petroleum products that found its ways into black markets.
Wives of some military officers, especially those of the various task forces on petroleum distribution have suddenly become petroleum merchants. Former Military Administrator of Borno State, Colonel Victor Ozodinobi was said to have been sacked for personally escorting some tanker loads of petrol across the border.
But Ozodinobi was just a victim of the complex northern power-ply, since he was not alone in the league of top military echelon, said to be neck-deep in fuel diversion and hoarding. While the top military hierarchy was "settled" with the various task forces on petroleum distribution, the lower ranking officers were given unofficial licence to be fuel dispensers.
Virtually all military barracks and police formations across the country have turned into beehive of activities of fuel sales. In Lagos, members of the anti- crime squad, Operation Sweep are more culpable.
They buy fuel at filling stations in jerry-can at daylight and dispose them off at black market rate. In most cases, military personnel assigned to escort tankers from depot to filling stations connived with some marketers to effect diversion.
It is estimated that close to $6 million is made daily by black marketers. Although, the unholy attitude of most of the special task forces in aiding and abetting hoarding and smuggling are of public knowledge, government has repeatedly avoided an open acceptance of the culpability.
The closest any government official has gone in admitting the military guilt was the admission of Oyo State Military Administrator, Police Commissioner, Amen Oyakhire. At a meeting with major and independent oil marketers in Ibadan in November, Oyakhire admitted that the state task force on petroleum distribution is yet to visibly justify its existence.
Again its impact in bringing an enduring sanity to the distribution and sale of fuel has not been considerably feLt. Oyakhire, like his other colleagues insisted that the brain behind the diversion and artificial scarcity are the dealers. He warned that government would invoke the "riot act in her renewed drive to" aggressively deal with illicit activities of all enemies of progress." But even if oil marketers have penchant for fuel diversion, what stops the military operatives assigned to them to halt such an illicit act? Can a "bloody civilian fuel marketer damn the presence of gun-totting, battle-ready soldiers? The truth of the story has not been told.
Incidentally, government itself would not genuinely claim not to be aware of the various atrocities and the people behind them. But beyond select oil dealers who are apprehended and paraded before the newshounds, to what extent has government itself gone to truly arrest the situation? Additional reports by Ademola Adegbamigbe, Charles Oke, Innocent Atabo, Sunday Orinya and Frank Ineneji.
Publication Date: January 11, 1999