Understanding Resource Control

Presented this paper in Kaduna at lecture organised by the Northern Youths Consultative Forum.
 
I wish to thank the leaders and the members of the Northern Youth Consultative Forum for organising this event. Let me confess that I am profoundly delighted to be found worthy to be the first ever to be honoured with the Northern Youth Solidarity Award. I accept it with all humility, with a deep sense of appreciation and much happiness.
I am also quite delighted to be invited to give a lecture on an issue, which you have quite aptly described as a misunderstood phenomenon. That this is happening in Kaduna is for me, quite emotional. As you know, this city is home to me and indeed very dear to my heart. I lived here for sixteen years, and it was here that I made my mark in my professional practice. Besides, Kaduna still remains the political epicenter of Arewa.

Let me state, right from the outset that the fact of our gathering here reflects one of the very crucial leadership values of the most popular Sardauna of Sokoto and pioneer Premier of the defunct Northern Region, the late Sir Ahmadu Bello. He believed that we should unite, in spite of our differences. His philosophy was that a greater understanding of, and respect for, those differences would promote greater unity and bring about progress. If at the end of this lecture I would have succeeded in creating a better understanding of the issues surrounding Resource Control, I would feel like a favoured son of the Sardauna.

Sometimes, I wonder if the misunderstanding about Resource Control is genuine or if it is deliberate and therefore contrived. History tells us that, in 1954 during the discussion for regional self-government, the North placed as a condition for agreement, that each Region must control its resources and contribute towards the maintenance of common services by the central government. Because the West held the same position, the East had to accept the arrangement in the spirit of compromise in the interest of the unity and stability of the country. That position held until the military ventured into politics and oil became the major foreign exchange earner for Nigeria. Then the Regions abandoned all the other resources, which they had so efficiently controlled, and the military unitarised oil, which then became the essential, and almost the only, resource. If we therefore go back in history, we can find the real meaning of Resource Control.

What therefore is Resource Control? Resource Control can only be fully appreciated and understood under Federalism. According to Venkatarangaiya "Federalism is a constitutional system under which the people of any particular territory are politically united in subjection to the control, not of one government supreme over them in all matters and for all purposes, but a number of governments each supreme in a definite sphere of its own, free completely from the possibilities of encroachment from the rest". This is cardinal and gives rise to the assertion that, in a true federal arrangement, no level of government is subordinate one to another, but rather all tiers of government are co-ordinate, one with another. Financial subordination, which can only exist in the absence of Resource Control, makes a mockery of Federalism no matter how carefully the legal forms may be preserved. It stands to reason therefore that each unit must have the power to harness its resources for its own developmental purposes.

Just as K.C. Wheare, one of the most eminent theorists of Federalism, posited that democracy is a necessary condition for Federalism, it is also my firm conviction, and indeed that of other true Nigerian patriots, that Resource Control is a compelling necessity for the practice of true Federalism.

Resource Control is therefore rooted in the desire by some Nigerian patriots to promote the practice of True Federalism as the most efficient means of unbinding all sections of Nigeria from the shackles that have weighted them down since the first military misrule, thus making it possible for us to harness our vast economic potentials towards rapid development and progress of our nation. There can therefore be nothing as potent as resource Control for the economic growth of this nation.

The history of extractive mineral production, which today is limited to oil and gas, presents a study on the one hand, in extreme frustration on the part of those in whose land and territorial waters such minerals are found; and on the other hand, aggravation on the part of legitimate exploiters. I say legitimate because there has been a lot of illegal mining and large-scale theft of our oil and solid minerals. It occurred to me that there could be an acceptable solution.

Within six months of assuming office as the Governor of Akwa Ibom State, for the first time in 1999, I came up with the idea that if we could find a way to meaningfully involve the locals in the exploitation of these minerals friction could be substantially reduced.

My first suggestion was that the Nigerian National Petroleum Corporation, NNPC, should substantially divest its interest in the oil majors and allow the States in which these minerals are found to become the majors stakeholders. NNPC would thus play the role of an impartial regulator while efforts would at the same time be concentrated to transform Nigeria Petroleum Development Corporation (NPDC) into an oil major. This idea seemed much too radical and too extreme for those who are afraid of change.

It was at that point that I engaged an expert in the field, Engr. Godwin Omene, who eventually became the first Managing Director of Niger Delta Development Commission, NDDC, to do me a study on marginal fields. He produced a very scholarly and yet implementable paper on the subject. I want to thank the President, Chief Olusegun Obasanjo, for accepting that paper and ordering that it be studied and implemented, even while still making jokes about the idea of Resource Control. What then became obvious to me was that Resource control meant very many different things to different people. That is why this lecture today is critically important to clear the air.

Today, the government of Akwa Ibom State, Bayelsa, Delta, Ondo and Rivers, have formed state-owned oil prospecting companies, and these companies along with other indigenous companies have been favoured with Marginal Oil Fields to explore and exploit. That is Resource Control.

Let me quote extensively from the Editor of the Daily Independent who, writing at page C4 on Friday, January 2, 2004 said:

Non-adherence to universally approved safety and environmental standards has left the Niger Delta Basin, where over 96 per cent of oil-related operations take place, extensively devastated.

Massive land and atmospheric pollution aside, local input in production operations has remained abysmal as the multinationals source over 90 per cent of their requirements, ranging from furniture and chemicals to machines, pumps, platforms and personnel, from their respective home base in Europe and the United States (US). This has hurt the Nigerian economy greatly, the same way as it stymied the drive for backward integration and technology transfer.

Now is the time for the successful 31 indigenous farmees to reverse the negative trend and avail the nation of the full benefits of oil exploration.

Nigerians are dreaming of an era in which relevant regulations on petroleum (as well as bitumen) exploration and production (E&P) are observed to the letter, an era in which social responsibility is accorded prominence in Management decision and activities, where vital needs of host communities receive due attention of prospecting companies. In their own little way, the indigenous firms must show how much of local content could reasonably be injected into oil production operations, in fact, how much Nigeria could save if the multinationals adopted the appropriate attitude to sourcing of inputs...

Hopefully, the development should nurture a stakeholder feeling in the communities of the Niger Delta and assuage concerns of marginalisation. It's far from the ideal, but it's a step forward.

That could only have been written by someone who understands Resource Control, and I could not have put it better.

Local skills and abilities will be developed; local content will be substantially increased; local entrepreneuship will be encouraged; the environment will be better protected; the rage of the local communities will be assured; peace will return and progress will be ensured. Who could ask for more!

This is what the new Group Managing Director of NNPC had to say on the day of the first signing of the Farm Out Agreement by Akwa Ibom State government; that by a conservative estimate, 12,000 new jobs will be created and an addition of between 100,000 to 150,000 barrels of oil will be made daily, to the national production. Those are the tangible benefits of Resource Control, the intangibles are inmeasurable.

Wouldn't it be great if similarly Kaduna State, Niger, Nassarawa, Bauchi and all other states will rich mineral deposits could now embrace Resources Control; form their own State and Indigenous companies, obtain Federal licences to explore and exploit these mineral deposits that at the moment lie waste in the ground. That would be the glorious manifestation of Resources Control and the elixir that this country needs for growth and development.

The idea is so simple and the prospects so exciting that you wonder how anybody could possibly misunderstand it except as a deliberate act of obfuscation. I have striven throughout to present this lecture as a statement of principles without venturing into legalities but I find the judgement delivered by Hon. Justice T. A Odunowo on 16th February, 2000 in suit number FHC/L/CS/689/95 involving Elegushi and others vs. the Attorney-General of the Federation and others most pertinent to the issue of Resources Control. He had this to say:

"It must be emphasised that as of now, land is to Lagos State what oil and gas represent to the oil producing States".

His conclusion therefore was that this essential resources of Lagos State must continue to be controlled by that State. It cannot be different for other natural resources. All states of the federation must resume control of their natural resources.

Germane to the issue of Resource Control is Derivation. It is regrettable that those who wanted to cause confusion sometimes used Resource Control and Derivation interchangeably. The distinction between Resource Control and Derivation is very important to our understanding of the issues.

Derivation simply posits that if any mineral in any state is exploited and it yields revenue, then a certain percentage of that revenue shall be retained (given back) to that State on the principle of derivation while the rest will accrue to the Federation Account to be enjoyed by all the federating units.

Today, our constitution provides that 13 per cent of such revenue will go to the derived source while the balance of 87 per cent will accrue to the Federation Account. This is regardless of how, or by whom the mineral is mined. It was therefore a wicked campaign of misinformation to suggest that by Resource Control, the Niger Delta States wanted to keep back 100 per cent of the revenue derivable from their mineral deposits of oil and gas.

I would like also to touch very briefly on the issue of ownership. Obnoxious as some of the laws are that govern the ownership of natural resources, the fact remains that today, all minerals in, upon or under all of Nigeria's soil and waters, belong to the Federal Government. It is the Federal Government therefore that issues licences for their exploitation. Resource Control has never challenged or conflicted with this law. All that Resource Control seeks to do is more and more, and to the extent that is possible, to vest the exploitation of these minerals in capable indigenous companies.

As has been demonstrated, this will create local jobs bring about the much needed transfer to technology and the development of local skills; promote local entrepreneurship; accelerate the pace of development and engender a sense of belonging and involvement in the control of one's destiny. This is bound to bring about peace and harmony and there can be nothing more precious than that.

I thank you for listening and for having acquired a better understanding of the Resource Control phenomenon.