The Week Ahead: Fighting the Godfathers

11th October 2024

Rivers State devolved into violence on Monday, resulting in the deaths of the brother of Governor Siminialayi Fubara’s Chief of Staff, Edison Ehie, a newly elected councillor’s father, and three others. Thugs torched three Local Government Area (LGA) secretariats after Inspector-General of Police Kayode Egbetokun withdrew the police guarding them. The disruption affected the planned resumption of 23 newly elected LGA chairmen and the swearing-in of 314 councillors. The Peoples Democratic Party officials opposing Saturday’s poll reportedly seized the Emohua LGA council. The PDP and All Progressives Congress rejected the election’s outcome, claiming no election occurred in Rivers.

The run-up to the LGA poll was fraught with seemingly acrimonious court judgements both for and against the election, which caused chaos in the political community. On 30 September, the Action Peoples Party (APP) condemned a Federal High Court order in Abuja that barred the Independent National Electoral Commission from releasing the voters’ register for local government elections in the state. It was reported that the same judge, ten days earlier, had ruled in a case filed by the APP against INEC, the pro-Wike lawmakers, and the PDP that the PDP National Legal Adviser could not appoint legal representation for the PDP against the state chapter of the party. These discrepancies in judgements have also drawn criticism from former President Goodluck Jonathan, who is seen as a political influence on Wike. Failure to comply with the subsequent court order has led to the crisis following the election, which is the latest manifestation of the rivalry between the incumbent governor and his predecessor and former boss. When political leaders choose the path of godfatherism to emerge, as has been the case in Rivers, it is inevitable that the godfather will demand obedience, which will ultimately lead to confrontation. The federal government’s refusal to provide security through the police can be seen as a demonstration of its position, which aligns with Nyesom Wike, who is now the federal minister of the FCT.  For the uninitiated, the importance of the LGA election contrasts sharply with what an ideal LGA election should represent. Under normal circumstances, local governments are supposed to provide basic functions such as sanitation, licensing, community health, and education at the grassroots level. However, the failures of the 1976 constitution and its successor, the 1999 constitution, to ensure the complete independence of the third tier of government mean that LGAs, in practical terms, serve as mobilisation tools for state governments, down to the extent of controlling their operating budgets. In the Nigerian political scene, they are used as party machinery and enforcement tools for elections. The clash between Wike and Fubara stems from the control of these structures, and the manifestation of this rivalry suggests that no one observing this spectacle would conclude that the conflict is advantageous for improving the state’s economic fortunes.

Premium Times has reported that the NNPC is ending its exclusive purchase agreement with Dangote Refinery. It will no longer be the sole off-taker, aligning with the current practices for fully deregulated products. This means independent marketers can now negotiate prices directly with Dangote Refinery, adding their differential, which may lead to a hike in the product’s price. With NNPC no longer covering the differential between Dangote’s selling price and the price to marketers, subsidies will cease to exist. This came after the Nigerian government said it had officially commenced the sale of crude oil and refined petroleum products in naira. 

Initially, the NNPC seemed sceptical about the Dangote Refinery’s capabilities and appeared adamant about continuing its petrol imports regardless, but public outcry must have forced the FG to call the NNPC leadership to order. The NNPC then announced its exclusive purchase agreement with Dangote Refinery that would allow it to apply a level of subsidy to the product to bring it to par with imported products. However, that arrangement quickly fell apart so Dangote Refinery can now sell directly to independent marketers, who had been clamouring for complete deregulation of the space. Many Nigerians believe that the NNPC is the stumbling block preventing them from obtaining cheap and readily accessible petrol. This belief has also been fuelled by the opacity of NNPC’s operations and its constant refusal to communicate openly with Nigerians. The redundant state of the country’s refineries has worsened matters as many think that if NNPC explored crude oil and refined it in state-owned refineries, fuel prices would drop to around ₦200 per litre. This belief has extended to discussions around the Dangote refinery, where people assume that if crude oil is drilled and refined locally, the final price of petrol would be insulated from foreign exchange volatility. However, the eventual pricing of products from the Dangote Refinery has clarified that the freight component is minimal and does not significantly impact the pump price of petrol. Removing itself from the Dangote equation means that NNPC will no longer be seen as the face of petrol prices in Nigeria. This shift could enhance NNPC’s credibility in the downstream segment of the oil and gas sector and reshape its image as a helpless participant in retail petrol sales. However, this is not the case. NNPC’s retail segment is alive and well, and its partnership with OVH Energy remains strong. It remains unclear whether NNPCL will use scarce foreign exchange to import petrol from its European clients or rush to start refining (or blending) at its Port Harcourt Refinery. Will NNPC go head-to-head with Dangote for patronage from Nigerians, or will it position its retail arm as another distributor for the Dangote Refinery? Perhaps it may even consider divesting completely from its retail arm. 

The Federal Government of Nigeria has introduced several concessions to revitalise the oil and gas industry to boost the upstream and downstream sectors. The Ministry of Finance announced new tax incentives, including the Value-Added Tax (VAT) Modification Order 2024, which exempts key energy products like diesel, liquefied petroleum gas (LPG), compressed natural gas (CNG), and clean cooking equipment from VAT. Meanwhile, oil marketers warned of possible fuel shortages due to the Nigerian National Petroleum Company’s (NNPC) decision to shut down its petrol purchasing portal, delaying the supply of over 90 million litres of petrol.

Nigeria’s oil and gas sector has suffered great losses in recent times. The oil block licensing bid rounds had to be extended, and Total Energies CEO publicly spoke against regulation in the oil and gas sector. The Petroleum Industry Act (PIA), which was finally passed after 20 years of being in the works, did little to capture the interest of the International Oil Companies (IOCs). As a result, the sector has been hit with a wave of divestments. The PIA changed the taxation landscape of the oil and gas sector including a 50% hydrocarbon tax for companies. In true Nigerian fashion, the government has now walked backwards by introducing tax incentives targeted at offshore operations where the IOCs play. By implementing tax incentives for deep offshore oil and gas production, the government aims to make the sector more competitive and attractive to investors. This is also a significant step toward encouraging investment in renewable energy infrastructure while maintaining a focus on traditional energy sources—a necessary balance for Nigeria’s energy-dependent economy. However, this progressive move coincides with disruptions in the downstream sector, as oil marketers have raised alarms about the potential for fuel scarcity. The NNPC’s decision to shut down its petrol purchasing portal has stalled the supply chain, particularly affecting dealers awaiting significant petrol deliveries. This situation reveals the vulnerabilities in Nigeria’s fuel distribution network, which could exacerbate economic challenges in the short term.  Nonetheless, the NNPC’s decision to end its exclusive purchase agreement with Dangote Refinery adds an important dimension to the government’s ongoing efforts to reform the oil and gas sector. While the government’s tax reforms offer long-term incentives for industry players, the immediate logistical issues within the fuel supply chain highlight the complex nature of managing Nigeria’s oil and gas industry. For these reforms to fully bear fruit, the government must swiftly address operational bottlenecks, maintaining supply chain integrity while fostering a conducive environment for sectoral growth. The broader challenge will be balancing these forward-thinking policies with the practical realities of Nigeria’s dependence on petrol, particularly in an environment where fuel scarcity could disrupt daily economic activities. In the best interest of Nigeria, we should all hope that the IOCs take the bait and flood Nigeria with dollar investments. The sector is in dire need of it.

Protests erupted in Accra, Ghana, as demonstrators demanded the release of 53 activists arrested during anti-illegal mining protests. The three-day “StopGalamseyNow” protests, led by Oliver Mawuse Barker Vormawor, aim to pressure the government to end illegal mining. Oliver and 11 others were remanded in custody, with reports indicating Oliver is ill. Despite President Akufo-Addo’s plea for more time, organised labour confirmed a nationwide strike planned for 10 October 2024, citing dissatisfaction with the president’s response to illegal mining despite his reaffirmed commitment to addressing the illegal mining issue. The group demanded that the president implement long-term solutions to combat the problem. 

Over the past two weeks, Ghana has witnessed a wave of demonstrations, strike actions, and mounting pressure from Organised Labour, the nation’s largest labour association, revolving around one central demand: the government’s immediate intervention to stop illegal mining, widely known as galamsey. President Akufo-Addo’s recent comments on France 24 that his government does not prevent protests surprised many Ghanaians, especially given that the Ghana Police Service had attempted to halt some demonstrations citing security concerns. As Ghana approaches its 7 December Presidential and Parliamentary elections, about two months away, the persistence of strikes, demonstrations, and the detention of protestors has added to the government’s unpopularity. A significant portion of the youth are asking the government to take decisive action against illegal mining. What complicates the issue is the opposing pressure from illegal miners themselves. In a twist, these miners have also protested in mining areas, demanding that the government halt its anti-galamsey efforts. For years, combating galamsey has been a politically sensitive issue, as illegal mining is deeply tied to electoral outcomes. President Akufo-Addo admitted that his government’s initial crackdown on illegal mining during his first term led to significant political backlash. The ruling NPP lost a number of its parliamentary seats in mining regions, making it difficult to fully commit to the fight against galamsey without considering the electoral consequences. Also, some government officials and party elites have been accused of being involved in illegal mining operations, further complicating any attempt to address the issue head-on. However, the public’s message is clear: Ghanaians want their polluted water bodies, devastated forests, and destroyed farmlands restored. Many are concerned about the loss of key cash crops like cocoa due to environmental degradation but the government’s dilemma lies in balancing these urgent demands with the political cost of fighting galamsey, leaving them in a tight corner as election day approaches.