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Babatunde Adenodi
Pharmacist
East Orange,
New Jersey
 USA

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Let us use this windfall wisely this time. Let us invest in infrastructure. Let there be electricity that does not fail. Let us rebuild our four refineries and stop importing gasoline. Let us invest in Petrochemicals in an attempt to begin to industrialize. Let us build roads and open up the rural areas.

 

The Oil Windfall this time Around
 by Tunde Adenodi.
 

The Bush family has done some good for Nigeria in the last 20-odd years. Not because they wanted to; but because they had to, if they must do some good for themselves. Father and son are into oil and Dick Cheney, their surrogate. Of course, Nigeria swims in oil; probably even chokes with oil! And Nigeria has the best oil, sulfur free and more amenable to the basic procedure of separating the different components called fractional distillation.

In 1991, Saddam Hussein invaded Kuwait against the objection of the whole world. He refused to withdraw his troops from Kuwaiti soil. Even when Saudi Arabia, the custodian of the holy Kaaba allowed coalition troops to establish a base in that country and most Arab countries urged him to withdraw, Hussein still did not get it. He swore to fight the “mother of all wars” and win against the awesome military powers of the United States. By the time the smoke cleared and the dust settled, Saddam was found in a rat hole in the out-skirts of Baghdad, dishevel and haggard. Consequent upon Saddam’s invasion, Nigeria’s petroleum, the best in the market, gave her a 12 billion dollar windfall that General Babangida lavished on his pet project of perpetuating himself in office for ever. He did not even admit there was a windfall until the Oputa panel sat and indicted his government for the loss of that money.

Before 1991, we had had a windfall presided over by General Gowon. The Saudi government decided to politicize their oil after Israel defeated the Arabs in the 6 day-war of 1967. He declared that money was not the problem for Nigeria, but how to spend it. He spent on FESTAC, cement that caked at the wharf, on demurrage on ships that could hardly float and yes, he spent on the Udoji Awards that served as the catalyst for unprecedented inflation in the history of Nigeria.

Gowon, unlike Babangida, believed in spreading wealth. So he gave money to everyone and offered arrears that was as much as a year. Suddenly, civil servants had a lot of money to play with. They went shopping and purchased all manner of electronics, cars, motor cycles. There was so much money chasing very few goods. The sudden “wealth” or illusion of wealth was not as a result of improvement in Gross Domestic Product. Nor was it reflective of dynamic economic activities. It was simply the result of putting excess money into the market. No investment in the Petrochemical industry that is almost always the catalyst for industrial development. The consequence was that people in the rural areas all over the country abandoned their villages and flooded the towns and cities across the country. The farms were deserted and food was imported. Lagos exploded. Infrastructures became inadequate particularly NEPA. Lagos traffic came to a halt. What a way to spend the windfall?

In the last 5 years since President Bush’s Iraqi misadventure, the price of crude oil has exploded beyond the wildest imagination of all oil pundits. Today, the price of oil is USD 126.00 per barrel. Oil watchers believe that the lowest it can be by year’s end is between $95 and 100.00 per barrel. And the price has been over 70.00 per barrel for over two years running. It has been established that Nigeria produces 2 million barrels of crude petroleum every day. At $126.00 per barrel, we accrue a cool sum of $252 million every single day 24/7 and for 365 days.

For the purpose of this essay, let us assume that we have sold crude oil at $70.00 (an arbitrarily chosen figure) for the last 2 years only. Theoretically, we rake in a sum of $ 140 million daily and approximately $51 billion annually or $104 billion in the last 2 years. Is spite of the effort to discredit former President Obasanjo on many grounds some of which he richly deserves, he must be credited with putting our fiscal house in order for the government of President Yar’Adua. He paid our debts to the International Monetary Fund and all the other debts accumulated from Shagari to Abdusalami Abubakar. He cleared the debts and left in the treasury a healthy foreign reserve bequeathed to Yar’Adua. And for the first time in the last 20 years, we are currently having a growth in our economy of 8 per cent and inflation is in the single digit category.

At this time, it is necessary to remind President Yar’Adua about what happened to the oil windfalls under Gowon and Babangida. It is also hoped that the he will strive to be on the right side of history by being frugal in his spending of our collective holdings. But Yar’Adua has not quite started well. He seems to shy away from taking a bold and decisive move to permanently check inflation. One major move Ghana made to check inflation was to simply shift the decimal point to the left by two. The sum of N1000.00 simply becomes N100.00 with all goods and services rationalized in that manner. Soludo had primed the economy for this eventuality. But the President had a second thought which was not borne out of economic necessity. It was as a result of tremendous pressure put on him by the illegal traders in foreign currency who are strictly his kinsmen north of the Niger! He balked under pressure and almost got Soludo fired for his audacity in making an announcement about the policy prematurely. This policy is working in Ghana. It is hoped that love for Nigeria rather than love for criminals who undermine the nation’s economy at our airports all over the country will motivate him to inaugurate this policy soonest.

Meanwhile, Iraq is still burning. Iran is building nuclear weapons and thumbing its nose on the whole world. Israel is watching with keen interest as the United States is sending air craft carriers to the Gulf in a demonstration of force to the bellicose Iranians. Oil speculators are still at work in London, New York and Paris. India and China are buying up oil from all sources. Indications are that this trend will continue and prices of crude oil will continue to rise. Nigeria will continue to accrue millions of dollars from the sale of petroleum for the foreseeable future.

Let us use this windfall wisely this time. Let us invest in infrastructure. Let there be electricity that does not fail. Let us rebuild our four refineries and stop importing gasoline. Let us invest in Petrochemicals in an attempt to begin to industrialize. Let us build roads and open up the rural areas.
 

 

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