Vice-President Yemi Osinbajo said the FG may reopen land borders soon. Osinbajo made the statement in response to a question on the continued closure of land borders, during a webinar organised by The Africa Report magazine. Osinbajo said that the government was working with neighbouring countries on the terms of reopening the border. “We are working with our neighbours to see on what terms we would reopen those borders. At the moment, we are undertaking joint border patrols to control smuggling along the borders and we think it is working and I’m sure that soon enough we should have the borders opened. President Buhari ordered the borders closed in October 2019 to ostensibly check rising levels of smuggling and protect local businesses. “We are committed to the AfCFTA but we are concerned about threats to security and the economy and we had to take certain actions that would satisfy the immediate needs of our country,” Osinbajo added. In another policy reversal, the FG and labour unions on Monday agreed to suspend an unpopular electricity tariff increase for two weeks. This was part of the agreement reached by both parties aimed at averting a nationwide strike that would have grounded an economy already on its heels. While the strike was called over two major issues, an increase in electricity charges and fuel price respectively, the immediate decision to call off the strike was based on the suspension of the electricity bills. The government had announced the commencement of a new tariff regime which it said is more cost and service reflective. The new tariff, which was introduced on 1 September saw energy costs rise sharply for the first time since 2015. It was criticised by organised labour and the political opposition as insensitive and ill-timed.  The government has constituted a technical sub-committee to examine the justification for the new policy on cost-reflective tariff adjustment as well as other regulatory and operational issues and submit its report within two weeks.

The Petroleum Industry Bill has scaled the first reading in the Senate, barely 48 hours after it was transmitted to lawmakers by President Muhammadu Buhari. The bill, presented by Senate Leader Abdullahi Yahaya, was one of the six bills introduced to the upper chamber on Wednesday. In the bill, the government proposes to scrap the Nigerian National Petroleum Corporation (NNPC) and the Petroleum Product Pricing Regulatory Agency (PPPRA) and replace them with a new company, the Nigerian National Petroleum Company Limited that will inherit the assets and liabilities of the NNPC according to a formula to be agreed on by the petroleum and finance ministries. The bill will also establish the Nigerian Upstream Regulatory Commission and the Nigerian Midstream and Downstream Petroleum Regulatory Authority. The Nigerian Upstream Regulatory Commission will be responsible for the technical and commercial regulation of upstream petroleum operations while the Nigerian Midstream and Downstream Petroleum Regulatory Authority will regulate the technical and commercial operations of midstream and downstream petroleum players. After the bill was read, Ahmad Lawan, the Senate President, directed that full copies of the bill be distributed to all the lawmakers ahead of the second reading where details of the bill will be discussed. The PIB which is an oil reform bill has been in the works for almost two decades; initial efforts to reform the industry date to the Obasanjo administration.

Borno State Governor, Babagana Zulum has said the situation facing the state is a tough one and that Boko Haram terrorists had an “ultimate wish to take over the state and bring it under a sovereign brutal administration.” For a second time, Zulum’s convoy came under attack from Boko Haram in the Baga area last Thursday and he only escaped because he travelled in a military aircraft. The death toll has now risen to 30 persons from an initial 15 reported, including 12 policemen, five soldiers, four members of a government-backed militia and nine civilians. Since an attack by Boko Haram in July, it is now a custom for Zulum to travel to northern Borno by air. The Arewa Consultative Forum, speaking through its National Publicity Secretary, Emmanuel Yawe, reacted furiously to news of the attack, saying that the Federal Government and the military have “a lot of questions to answer.”

Chad has asked to suspend an application for world heritage site status for Lake Chad to explore oil and mining opportunities in the region, the UK Guardian reports. In a leaked letter, the country’s tourism and culture minister wrote to UNESCO, the body which awards the world heritage designation, asking to “postpone the process of registering Lake Chad on the world heritage list”. The letter says the government “has signed production-sharing agreements with certain oil companies whose allocated blocks affect the area of the nominated property”. The nature of the agreements and the identity of the companies have not been made public. The letter asks UNESCO to “postpone the process” in order to “allow [us] to redefine and redesign the map to avoid any interference in the future”. The request follows a multiyear process involving the governments of Cameroon, Chad, Niger and Nigeria to jointly nominate the Lake Chad cultural landscape to the UNESCO world heritage list. It has been nominated as both a natural and a cultural site. It comes as a blow to the other countries’ delegations, who had not been informed of Chad’s oil ambitions in the Lake Chad Basin. If Chad decides to go ahead with oil exploitation, the process would have to be cancelled altogether, UNESCO said.

Commentary

  • This new cautionary tone being sounded by the Vice President stands in marked contrast to the bullish optimism of his boss in mid-September.  Mr Osinbajo’s remarks might represent the first effort by the Buhari Administration to find some soft landing that allows it to end a debilitating border closure which has seen food prices soar, inflicted needless pain on exporters, helped weaken the national currency and spook everyone in the country’s near abroad. In the immediate aftermath of the closure, Nigeria recorded its first quarterly trade deficit for more than three years as the value of exports fell by 9.79%. Dangote Cement announced plans in February 2020 to start exporting from its Congo plants to neighbouring states after its Nigerian exports crashed 41% in 2019. Rice prices jumped up as much as 40% in some markets, turkey by as much as 20% and chicken by 30% in some places according to the SBM Jollof Index. Not much has changed since, and as the pain has deepened, the chorus of criticism has gotten louder. How the government wriggles out of this without losing face is anyone’s guess. It will not stop it from trying. It must also be observed that this is not the first time that the Vice President has espoused a position that is different from the stated intention of the President. While we support the Vice President’s position on opening the border, we wonder what this dissonance is indicative of more systemic dynamics within the Buhari administration.
  • The headline provisions of the PIB, including the elevation of “unrestricted free-market pricing” of petroleum products are what many industry watchers have clamoured for over the years. It is therefore a very welcome development. A move such as the scrapping of the hobbled and inefficient PPPRA sends a strong signal that the government is determined to institutionalise the removal of expensive petrol subsidies – which have consumed an annual 744 billion ($1.96 billion at the official exchange rate) on average for the last decade and a half – and let pump prices be market-determined. What remains to be seen are further details of the powers of the new regulators, whether new checks and balance mechanisms guarantee investor certainty, and the amount of discretion that regulators can deploy in carrying out their oversight functions. It also remains to be seen if the political will exists for the Presidency and the NASS to pass this bill and break the jinx that has prevented its passing for more than a decade. President Buhari, unlike in his first term, has the numbers and the support of the NASS leadership to get this passed. The speed with which lawmakers have fast-tracked consideration of the bill is a welcome change from the legislative deadlock which has made this important piece of industry reform a poisoned chalice, and so we are cautiously optimistic.  If a bill to the satisfaction of the oil and gas sector and the Nigerian people is passed and signed into law, it will be one of the better legacies of the Buhari administration.
  • Governor Zulum is the highest-ranking government official that speaks about the Boko Haram insurgency. The Federal Government and the military high command have basically opted for a curious silence. Although the government continues to claim victory over the terrorist organisation whenever it is bothered to speak about it, it is evident that in many parts of Borno State, Boko Haram and its factions hold sway over plum territory or pose a significant risk by launching attacks on the military and civilians, especially on highways in the state. After the first attack on Zulum, he stirred up controversy by accusing the military of being behind the attack, insisting that the area was already rid of terrorist activity. There has been no official response from the military but it has not stopped the rumour mill from going into overdrive about the military orchestrating the attack in order to retain control over the lucrative fish trade from Baga. Baga sits on the shores of Lake Chad, from where about a third of Nigeria’s homegrown fish is caught. One thing is evident – uncertain political will from the government and the military in fighting the terrorists. There appears to be a certain comfort with the current state of stasis, with the terrorists still active but not outrightly holding territories and the military semi-permanently deployed to Borno. The current state-of-play has afforded numerous commercial opportunities for the high command (through control of its budgetary allocations and spendings) and the rest of the force (through extortion and tenuous logistics control). The circus must come to an end.
  • Lake Chad has had an interesting and tumultuous history. A severe drought in the Sahel in the 1970s saw the lake shrink from about 26,000 square kilometres at its height to roughly 2,000 sq km, a 95% decline. A report by the environmental think tank, Adelphi, suggests that the lake has grown to 14,000 sq km in the past two decades. However, climate change, overpopulation, uncontrolled immigration and the intensifying evaporation of its feeder rivers continue to degrade the basin’s ecosystem, negatively impacting the 45 million people across four countries who live off its resources. The dwindling of the lake is seen by many as a harbinger of the Boko Haram insurgency. The listing of Lake Chad as a World Heritage Site goes beyond the symbolic afterglow of being an internationally recognised natural treasure, it intended to safeguard the lake for future generations by mobilising resources to continue the work of preserving this precious ecosystem. Chad’s request also highlights a mismatch in economic priorities among the countries in the Lake Chad region. Nigeria has been prospecting for oil on its side of the basin for years with little success. Chad is hoping its own bet does not go south and prospecting on its side appears to have reached an advanced stage. Cameroon and Niger appear intent on securing Unesco’s top designation in the hope that it revitalises deprived communities in this region. It will be the best course of action for those countries, along with Nigeria, to initiate engagements with Chad to withdraw its request.