With President Bola Tinubu’s declaration of a state of emergency in Rivers State on Tuesday, March 18, the Renaissance consortium—a gaggle of native traders that just lately acquired Shell’s onshore oil and fuel belongings in Nigeria for a staggering $2.4 billion—now finds itself in turbulent waters.
In hindsight, Shell, Mobil, TotalEnergies, Agip, and different main oil corporations that divested from onshore belongings in Nigeria and moved their operations offshore had been remarkably foresighted.
Just like the legendary Nostradamus, they appeared to have foreseen the longer term and exited simply in time to keep away from the very dangers that Renaissance now faces—dangers of escalation into one other wave of militancy and insecurity within the Niger Delta if not correctly managed.
If chaos takes maintain within the Niger Delta, the Renaissance consortium, which invested closely in Shell’s belongings, together with Seplat Vitality, which additionally just lately acquired ExxonMobil’s onshore oil belongings for $1.28 billion, will likely be among the many hardest hit.
That’s underscored by the truth that the broader oil and fuel sector now faces heightened uncertainty, as what was as soon as a comparatively secure enterprise setting dangers returning to a militarised zone that it as soon as was earlier than president Musa Yar’adua of blessed reminiscence quelled the hearth by modern insurance policies and programmes for the restive youths throughout his tenure 2007-2010.
As we all know, companies thrive on stability, and insecurity breeds uncertainty. The fallout from this improvement might reverse Nigeria’s latest financial good points—inflicting inflation, which had been trending downward, to spike once more.
The naira, which had been stabilising in opposition to foreign currency, might as soon as extra come below strain as a result of turmoil in Rivers State.
Different latest entrants into Nigeria’s oil and fuel sector, akin to Tony Elumelu’s Heirs Vitality—which bought Shell’s OML 17 for roughly $1.1 billion a couple of years in the past—may discover themselves in a precarious state of affairs. Equally, Aliko Dangote, whose $20 billion, 650,000 barrels-per-day capability refinery is probably not positioned within the Niger Delta, might nonetheless face vital challenges in securing crude oil feedstock if the disaster disrupts manufacturing within the oil/fuel wealthy Niger delta area.
This improvement is especially regarding given the in depth efforts President Tinubu’s administration has put into restoring safety within the Niger Delta. His insurance policies, particularly the Nigeria Upstream Perroleum Regulatory Fee, (NUPRC) led by Gbenga Komolafe’s initiative to ramp up manufacturing by one (1) million barrels inside 24 months which had efficiently elevated oil manufacturing from roughly 1.3 million barrels per day earlier than Tinubu took workplace to almost 1.8 million barrels per day in february. The declaration of a state of emergency within the area now threatens to undermine this vital achievement.
The Niger delta disaster: A risk to financial stabilityIt is value recalling that Nigeria’s beforehand disappointing oil output was not simply on account of low funding—exacerbated by the extended delay in passing the Petroleum Trade Invoice (PIB), which took about 20 years to grow to be legislation—but additionally as a result of actions of refined worldwide oil theft syndicates working within the Niger Delta.
To the Tinubu administration’s credit score, a coordinated effort by Nigeria’s safety companies, led by the Workplace of the Nationwide Safety Adviser (NSA) in collaboration with the navy and the Nigerian Nationwide Petroleum Firm Restricted (NNPC Ltd), efficiently dismantled these prison networks. This crackdown performed a vital function in ramping up manufacturing, enabling Nigeria to fulfill its OPEC manufacturing quota and enhance overseas change earnings.
The fact is straightforward: the extra crude oil Nigeria produces, the stronger the nation’s overseas change reserves grow to be, which in flip stabilises the financial system, reduces inflation, and strengthens the naira in opposition to foreign currency.
Given these hard-earned financial good points, the declaration of a state of emergency within the Niger Delta is a serious setback. It threatens to undo a lot of the progress made, which is deeply unlucky.
A political conflict turned socioeconomic disasterWhat is especially baffling is how a mere political dispute—primarily a battle for supremacy between a godfather and his godson—was allowed to escalate right into a disaster with such grave socioeconomic penalties for all the nation.
One is fearful that regardless of his well-known political acumen, President Tinubu has permitted what ought to have been a minor native political squabble—an ego-driven contest between politicians—to snowball right into a state of affairs that might destabilise Nigeria’s financial and safety panorama.
The problem of godfatherism isn’t new to Nigerian politics. Because the return to democracy in 1999, such conflicts have repeatedly surfaced.
As an example, in Oyo State, former Governor Rasheed Ladoja was allegedly impeached in 2006 on the behest of his godfather, Alhaji Lamidi Adedibu, who reportedly orchestrated his removing after Ladoja refused to grant him unfettered entry to a good portion of the state’s safety vote. Even after the Court docket of Attraction reinstated him in 2007, Adedibu ensured Ladoja by no means received re-election.
Equally, in Anambra State in 2003, then-Governor Chris Ngige confronted a brutal political battle together with his godfather, Chief Chris Uba, who allegedly had him kidnapped and compelled to signal a resignation letter below duress for refusing to repay the billions of naira Uba claimed to have spent securing his election.
Whereas these incidents are among the many most well-known, many different states—together with Lagos, Kano, lmo, Bauchi, and Sokoto—have had their fair proportion of godfatherism and the conflicts it breeds.
Nevertheless, none of those earlier disputes was allowed to spiral right into a full-blown disaster of the magnitude at present unfolding in Rivers State.
A name for strategic interventionAt a time when Nigeria is striving to stabilise its financial system, strengthen its forex, and entice funding, the very last thing the nation wants is an escalation of political conflicts that might disrupt oil manufacturing and erode financial good points.
To be continued tomorrow.
Onyibe is an entrepreneur, public coverage analyst, creator, democracy advocate and improvement strategist. He may be reached through: go to www.magnum.ng.
