The economy? Don’t go there. We have ended up in another oil-led recession. An already struggling economy was hit on all fronts by the pandemic. Oil prices quickly went to the ground. Oil production followed suit. Forex inflow naturally went in tow. The inevitable result of forex scarcity in an import-dependent country such as ours is currency devaluation. Public finance is the biggest victim: we are now borrowing almost every kobo we spend. The little revenue we earn is going almost entirely into debt service. The world’s biggest economies are also in pandemic-induced recession and facing huge public debts, but they are strong enough to withstand the storm. We are not.
In this dry season for good news, though, there are still things to cheer. I am delighted at the take-off of the Lagos-Ibadan rail service. In years to come, we will look back and say “thank God we built this rail”. When the Kaduna-Abuja rail — conceived by President Olusegun Obasanjo, started by President Goodluck Jonathan and completed by President Muhammadu Buhari — started operations in 2016, little did we know how important it would become. I am also glad that the Second Niger Bridge project has not been truncated, unlike the Third Mainland Bridge that was abandoned in the Second Republic for political reasons before Gen. Ibrahim Babangida decided to complete it.
There is also some cheerful news on the economic front: the acquisition of the 45 percent interest of Shell, Total and ENI in OML 17 by Heirs Holdings and Transcorp through their associated company, TNOG Oil and Gas Limited, which was announced on Friday. It is good news for several reasons. First of all, I thought the deal was not going to be concluded because of the prevailing global economic situation. Where would the finance — about $1.1 billion — come from in this dry season? That was remarkable. As difficult as things are, there are still big players and big financiers who are ready to take a bet on the Nigerian economy as well as the global oil market which has been quite unsteady.
It is also a thing of pride that another Nigerian company has taken control of the operatorship of yet another major oil asset. Those who have followed my writings in the last 15 years know that it is something I have been passionate about. We keep talking about “resource control” when, in real life, it is foreign companies that are in control of exploring and drilling the oil. We are only thinking about revenue sharing when we are actually outsiders in the upstream sector. The 45 percent stake acquired by Heirs Holding, chaired by Mr Tony Elumelu, is the joint highest held by a Nigerian company in a JV partnership. This is a good piece of news to celebrate in this dry season.
OML 17, located in Rivers state, is a prolific lease with six producing fields. Current production is about 27,000 barrels per day, according to the press statement announcing the deal. There are estimated 2P (proven and probable) reserves of 1.2 billion barrels and an additional one billion barrels (possible). The biggest Nigerian company upstream, as things stand, is Seplat, chaired by Dr ABC Orjiako, which does around 50,000 b/d. Seplat holds 45 per cent stake in the three leases they bought from Shell and 40 per cent in the one they acquired from Chevron. They have a fifth one after swallowing Eland Oil and Gas Ltd. Nigerian companies are benefitting big from divestments.
However, it is not enough for TNOG Oil and Gas Ltd to take advantage of the divestment by Shell and its JV partners. The real challenge is to make a success story of it — to prove that Nigerian companies can run things well. Under Mr Austin Avuru, Seplat moved from 20,000 b/d to 50,000 b/d. While I was very sad and embarrassed at the untidy strategic alliance agreement (SAA) between the Nigerian Petroleum Development Company (NPDC) Ltd and Atlantic Energy Drilling Concepts (AEDC) Ltd — run by Jide Omokore and Kola Aluko — which allegedly ripped Nigeria off by billions of dollars, I am proud Seplat has made a success of its own operations. Let’s say the cup is half full.
The challenge for Elumelu and his team, therefore, is to make an outstanding success of this golden opportunity. Shell and its partners are exiting onshore production as part of their long-term strategic plan to focus on offshore, but while some will take a dim view of that, I would say I am glad it is a Nigerian company that took over the asset. Shell could put its interest for sale and another foreign company, with all the leverage to attract the necessary finance, would come and take it. But increasingly, Nigerian companies are playing in this field and that has always been my wish. As icing on the cake, TNOG Oil and Gas Ltd must now go and succeed. That will be the biggest statement.
Commenting on the acquisition on Friday, Elumelu spoke glowingly of his “very clear vision” of “creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs”. He said the acquisition of such “a high-quality asset” with significant potential for further growth “is a strong statement of our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely high-quality management team that we have assembled”. As an indigene of the Niger Delta region, he added, “I understand well our responsibilities that come with stewardship of the asset [and] our engagement with communities”.
I must say that Elumelu is one Nigerian entrepreneur I admire a lot and I have never hidden it. Why? He is not pursuing his own success alone but also wants to make a success of others. This is not something you can easily say of most Nigerian or African billionaires. His initiative, the Tony Elumelu Foundation Entrepreneurship Programme, is reputed as the largest African philanthropic initiative committed to empowering African entrepreneurs and entrepreneurship on the continent. In 2015, he ushered in the “Decade of the African Entrepreneur” by committing $100 million to the entrepreneurship programme “to empower 10,000 entrepreneurs across the continent”.
The goal is that the 10,000 entrepreneurs will collectively create one million jobs and generate $10 billion during the 10-year period. So far, the foundation says it has trained, mentored and funded over 9,000 young African entrepreneurs across 54 African countries through its entrepreneurship programmes. It provides capacity-building support, advisory and market linkages to over one million Africans through its digital networking platform, TEFConnect. This is very much in line with Elumelu’s “Africapitalism” philosophy — the idea of positioning the African private sector as the engine for growth and empowerment as well as prioritising social and economic wealth creation.
I conclude. Yes, the acquisition of 45 percent stake in OML 17 by Heirs Holdings and Transcorp is a major addition to indigenous operatorship in Nigeria’s upstream oil sector. This is some good news in these harsh times, more like riding against the tide. Yes, Elumelu has continued to show ambition as he expands his interests in the economy. I am happy for him. Yes, this is some cheery news at a time we are battling with recession and insecurity in Nigeria. However, my parting shot would be a warning: there is still a lot of work to do. The ultimate is for Elumelu and his team to make a major statement with a world-class performance with this new asset. Fly the Nigerian flag higher!
AND FOUR OTHER THINGS…
There has been an alarming spike in COVID-19 cases and deaths in Nigeria since the turn of the year. The timing of the upsurge cannot but be linked to the festive season when Nigerians threw caution to the ocean and went on a partying spree. I understand there was a “big boys” party at a popular members-only club in Lagos and quite a number of those who attended are now COVID-positive, many high-profile casualties. We all need to be reminded that COVID remains on the rampage. Nigerians are not immune — contrary what we think about ourselves. And I will keep saying this: observing safety measures is not just about you; it is also about protecting others. Judgment.
The rate at which Amotekun — the fledgling outfit set up to tackle insecurity in south-western Nigeria — has been committing brutality and carrying out extra-judicial killings is becoming very worrisome. It seems there is something oppressive about the average Nigerian who holds a gun or wields some authority to use force. The notion that creating an armed security outfit at state level is the ultimate solution to insecurity is something that needs more rigour. As long as it is Nigerians that will populate and operate these outfits, there are no assurances that anything significant will change beyond the nomenclature. I hope we won’t have #EndAmotekun protests soon. Ominous.
BIRDS OF A FEATHER
Have you been following the story of how two businessmen, Mr Tunde Ayeni and Capt Idahosa Okunbo, are fighting each other over share ownership in Ocean Marines Solutions Ltd (OMS), a company they co-founded years ago? It seems to me that they outfoxed each other. I know it’s not funny but I just can’t help laughing at the self-incriminating disclosures by both sides. It got more amusing with another interesting story that happened during the week. Mohammed Ahmadu, a suspected kidnapper, was kidnapped by his rivals! He had to pay a ransom of N1.5 million to the rival group, allegedly led by one Buba Babu, before he was released. Birds of a feather. Nigeria!
TRUMPED AND THRASHED
A week after inciting his political thugs to invade the Capitol and stop the congressional certification of Vice-President Joe Biden’s victory, President Donald Trump was impeached for a record second time by the House of Representatives. Although it is now left for the Senate to convict and remove him from office — and this is unlikely because of time constraint and priorities — it is comforting that the lawmakers have set a precedent all the same. Trump, a far-right president, has written himself into the annals of American democracy. His story will be taught in American history classes in the next 200 years and beyond. He did not come quietly — neither did he leave quietly. Eccentric.