In Nigeria, Plans for the World’s Largest Refinery

On any given weekday, commuters in Lagos, Nigeria’s commercial capital, are snarled in traffic for hours.

Container trucks and tankers take up several lanes of traffic on the major thoroughfares close to the city’s ports. Often these trucks have been parked on the highways overnight.

Cars and minivans snake along the remaining single lane, sharing it with pedestrians fighting off early-morning road rage as they slowly make their way from one end of the city to another. There is a palpable fear of accidents, or a spill. Much of Lagos is an environmental disaster waiting to happen.

It is here in this vibrant metropolis of 21 million people that Africa’s richest person, Aliko Dangote, is undertaking his most audacious gamble yet. Mr. Dangote is building a $12 billion oil refinery on 6,180 acres of swampland that, if successful,— could transform Nigeria’s corrupt and underperforming petroleum industry. It is an entrenched system that some say has contributed to millions languishing in poverty and bled the “giant of Africa’’ for decades.

Planned as the world’s largest refinery, Mr. Dangote’s project is set in a free-trade zone between the Atlantic Ocean and the Lekki Lagoon, an hour outside the city center. The site employs thousands, and upon completion — Mr. Dangote says in 2020; some analysts suggest more likely in 2022 — should process 650,000 barrels of crude oil daily.

That’s enough oil to supply gasoline and kerosene to all 190 million Nigerians and still have plenty to export. By the end of this year, the facility is expected to churn out three million tons of fertilizer. The production of diesel, aviation fuel and plastics will then follow.

“The construction site is already a huge beehive of activities, with workers, local and foreign, hard at work. It is going to be the largest manufacturing plant of any sort in Lagos,” said Kayode Ogunbunmi, the publisher of City Voice, a Lagos daily newspaper and lifelong Lagos resident.

Indeed, some 7,000 employees are working around the clock on the site, many arriving by private ferry from the city center. Another 900 Nigerian engineers and technicians are being trained abroad for jobs at the refinery. Mr. Dangote, whose net worth is estimated at $11.2 billion, has had to build a port, jetty and roads to accommodate this project, along with new energy plants to power it all.

Nigeria’s government, despite being a longtime crude oil exporter, has four underperforming and frequently broken down refineries with a combined capacity of 445,000 barrels daily. Those refineries — two in the oil hub of Port Harcourt, one in Warri in the Niger Delta, and the other in the northern city of Kaduna — are all operating at less than 50 percent of capacity.

Which means that even though Nigeria is Africa’s largest oil producer, petroleum for everyday use must be imported. This has spawned fuel importers and diesel traders who have grown extremely wealthy. Nigeria’s government subsidizes fuel imports to keep pump prices low, and this has contributed to Nigeria’s well-documented culture of petroleum industry corruption.

When Mr. Dangote initially unveiled his refinery plans in 2016, he said its aim was to challenge the status quo, which had seen the government spend about $5.8 billion to import petroleum products over the past year.

“The failure to produce refined products over the last 25 years has created a huge architecture of graft and corruption around everything,” said Antony Goldman, the co-founder of the London-based Nigeria specialists ProMedia Consulting.

Mr. Goldman does political risk analysis in West Africa and has been working in and out of Nigeria for two decades. Corruption, he explained, stems from illegal refineries and the local criminal network that helps transport illegal crude out of the country. Both elements, he said, have not been sufficiently challenged by the government or law enforcement agencies, which has further contributed to Nigeria’s entrenched oil industry corruption.

“A refinery that actually works and can meet Nigeria’s refined product requirement? It’s a game changer,” Mr. Goldman added. But change, no matter how positive, is potentially destabilizing. “These are not people who relinquish things without a fight,” Mr. Goldman said of Nigeria’s fuel import merchants.

When Mr. Dangote initially unveiled his refinery plans in 2016, he said its aim was to challenge the status quo, which had seen the government spend about $5.8 billion to import petroleum products over the past year.

“This refinery is attacking the entire system,” he said. “You export jobs and create poverty here, so that’s what we are stopping,” he told reporters at the time.

Despite creating thousands of jobs, Mr. Dangote’s refinery hasn’t been universally applauded in Nigeria. The biggest issue is its Lagos location: The refinery is being built hundreds of miles from the impoverished Niger Delta, where the bulk of Nigeria’s oil is extracted.

Two undersea pipelines are under construction in the Delta and will carry petroleum about 340 miles to the refinery in Lagos.

The pipelines will be costly; but also far harder to sabotage than conventional aboveground systems. And security is key in the Delta region, where local rebel groups like the Delta Avengers have kidnapped foreign oil workers and blown up pipelines to protest regional pollution and poverty.

Amid Nigeria’s complex regional tensions, Mr. Dangote — a northerner by birth and Lagosian by decades of residence — is the one person, industry experts say, who could achieve a measure of détente in the region.

Yet critics — and Mr. Dangote has many — worry that his new refinery will allow him to essentially take over the Nigeria’s oil and gas industry. Why would a nation leave an entire industry in the hands of one company? they ask.

The “monopoly” question has swirled around Mr. Dangote for decades. Twice divorced and currently (and vocally) looking for a third wife, Mr. Dangote made his initial fortune operating near-monopolies in cement, flour and commodities across Nigeria, where regulatory oversight is relatively lax. Mr. Dangote’s companies, including pasta producers and property management, are found across Africa.

A decade ago, Mr. Dangote and other private investors tried and failed to buy the government-owned refineries. He was unavailable for comment, but previously told Reuters he does not apologize for his expansionist desires. “If you don’t have ambition,” he said, “you shouldn’t be alive.”

And for some in a tough business environment like Nigeria, a well-run monopoly is better than the current situation, where getting fuel remains an uncertainty. Indeed, despite oligarchy concerns, Mr. Goldman says he believes that Mr. Dangote’s past success actually bodes well for the refinery and Nigeria. “He has a record of success and delivery, and he doesn’t make mistakes on things like this,” Mr. Goldman said.

And Nigerians are tired of power cuts and overpriced gasoline.

“Most Nigerians see Aliko as a doer,” Mr. Ogunbunmi, the publisher, said. “Many quietly hope the refinery will help reduce uncertainties. Gasoline will be available, and possibly power.”

Beyond solidifying his own legacy, Mr. Dangote hopes his refinery will help diversify Nigeria’s economy while reducing its dependence on imported oil.

“We have other opportunities,” he said at the plant’s unveiling. “Agriculture is there. Petrochemicals are there, Nigeria has more arable land than China. If we finish our gas pipeline, it can generate 12,000 megahertz of power. That’s huge. That’s more than what we are looking for in Nigeria and we can supply the rest of West Africa.”

As his refinery nears completion, Mr. Dangote says he will soon focus on his next dream, owning Britain’s Arsenal football team. “Once I have finished with that headache, I will take on football,” he said. “I love Arsenal, and I will definitely go for it.”

______________________

Culled from the New York Times.

Edozien is the author of the book “Lives of Great Men,” a 2018 Lambda Literary Award winner and is director of the Reporting Africa program at New York University’s Arthur L. Carter Journalism Institute.

Nigerian militant group welcomes Trump election

President-elect of the United States Donald Trump called on by Nigerian militant group to move against what it considers a government in Abuja controlled by Islamic fundamentalists.
President-elect of the United States Donald Trump called on by Nigerian militant group to move against what it considers a government in Abuja controlled by Islamic fundamentalists.

Trump’s foreign policy agenda unclear apart from fluid campaign rhetoric.

By Daniel J. Graeber (UPI).

A militant group waging war on Nigeria’s oil sector said U.S. President-elect Donald Trump can help eradicate what it sees as Islamic fundamentalists in power.

Trump was confirmed to have passed the threshold in the Electoral College early Wednesday to clear his path to the White House, succeeding President Barack Obama. The real estate mogul’s path to power came in part through pro-oil and nationalist rhetoric, which included a tough line on Muslims.

The Niger Delta Avengers, a group that surfaced in early 2016 to wage war on the Nigerian oil sector, said a President Trump offered hope for distribution of Nigerian oil wealth.

“Your hard fought victory against world establishments is hope for we the over thirty million oppressed minorities of the Niger Delta, that have being continuously raped and economically colonized because of our God-given resources over last six decades, by the Nigerian state and Islamic fundamentalists in power,” spokesman Mudoch Agbinibo said in a statement.

The NDA accuses the government of Nigerian President Muhammadu Buhari of favoring oil and gas interests over the interests of the people in the Niger Delta and its campaign has been blamed for pushing total Nigerian crude oil production to a 30-year low this year.

Agbinibo said Trump could usher in a “new perfect economic order” as it relates to Nigeria, erasing support from Washington the NDA said was manipulating Buhari, who the group said was a “clueless puppet.”

Meeting with the Nigerian president in early 2016, U.S. Secretary of State John Kerry called on Buhari to work to improve government transparency and accountability. Transparency International last year ranked Nigeria as one of the more corrupt powers in the world.

Slipping into a formal recession in late August, the Nigerian government said the contribution of oil to economic growth slipped slightly more than 2 percent.

The government’s Bureau of Statistics said the economy, measured by gross domestic product, declined 2.06 percent year-on-year.

Never serving in government, Trump’s foreign policy agenda is unclear, though he has offered more inward-looking proposals from the campaign trail

ExxonMobil Strikes 1-Billion-Barrel Well off Nigerian Shores

ExxonMobil says it has discovered up to 1 billion barrels of oil off Nigeria’s shores.

A statement Thursday says the “significant discovery” at Owowo-3 well extends an existing field worked by the U.S. multinational. ExxonMobil is the operator and owns 27 percent of Owowo. Nigeria’s state oil company holds majority shares. Other partners include Chevron, France’s Total and Chinese-Canadian Nexen.

The news comes the day before ExxonMobil announces third-quarter results.

Oil multinationals in Nigeria are suffering attacks by militants who have slashed production, driving this West African oil giant into recession.

Lagos-based SBM Intelligence risk analysts estimate that ExxonMobil, Dutch-British Shell and Chevron lost $7.1 billion in the first half of this year — some 70 percent of earnings — through militant attacks, low oil prices and weak refinery margins.

Nigerian oil export pipeline attacked – crude oil production already near a 30-year low

A militant group in Nigeria said it attacked one of the country's main oil export arteries at a time when output is already near a 30-year low. File Photo by tcly/Shutterstock
A militant group in Nigeria said it attacked one of the country’s main oil export arteries at a time when output is already near a 30-year low. File Photo by tcly/Shutterstock

ABUJA, Nigeria, Sept. 26 (UPI) — A militant group in the oil-rich Niger Delta region of Nigeria said it was answering statements from Abuja on mediation by bombing a main oil export pipeline.

A group calling itself the Niger Delta Avengers said it hit an oil export pipeline carrying Nigeria’s benchmark grade Bonny Light. The group said the action, ending a brief summer truce, is in response to what it said was the “over-dramatization” of the issue by the Nigerian government.

“The world is watching, time is running against the Nigerian state; while we were promised that the concerns of Niger Delta will be addresses once a truce is declared, the activities of the government and her agents are not assuring enough, there has been no progress and no breakthrough,” the group said in a statement.

The group emerged earlier this year and was one of the more active militant groups waging war on energy interests in the oil-rich Niger Delta region. The NDA accuses the government of Nigerian President Muhammadu Buhari of favoring oil and gas interests over the interests of the people in the Niger Delta and its campaign has been blamed for pushing total Nigerian crude oil production to a 30-year low this year.

The International Monetary Fund said the downturn in the Nigerian economy was a primary contributor to contraction in Sub-Saharan Africa, adding the situation in Nigeria, the region’s largest economy, was particularly difficult.

One key reason for the Nigerian woes, IMF economists said, was the disruption to oil operations in the Niger Delta.

Slipping into a formal recession in late August, the Nigerian government said the contribution of oil to economic growth slipped slightly more than 2 percent.

The government’s Bureau of Statistics said the economy, measured by gross domestic product, declined 2.06 percent year-on-year, lower by 1.7 percentage points from the previous quarter and 4.4 percent lower from the same time in 2015.

The militant group said it was still in favor of dialogue.

Nigeria sues over $12B in ‘illegal’ oil exports

FILE- In this Saturday, Oct. 28, 2006 file photo, Former security guard Esakpo Henry visits the oil flow station where he worked before in Eriemu, Nigeria. Officials say Nigeria is suing several oil majors for $12.7 billion of oil allegedly exported illegally to the United States between 2011 and 2014. The Federal High Court in Lagos begins the first hearing next week in cases filed against Nigerian subsidiaries of U.S. multinational Chevron, British-Dutch Shell, Italian ENI’s Agip, France’s Total and Brasoil of Brazilian Petrobas (George Osodi, File/Associated Press)
FILE- In this Saturday, Oct. 28, 2006 file photo, Former security guard Esakpo Henry visits the oil flow station where he worked before in Eriemu, Nigeria. Officials say Nigeria is suing several oil majors for $12.7 billion of oil allegedly exported illegally to the United States between 2011 and 2014. The Federal High Court in Lagos begins the first hearing next week in cases filed against Nigerian subsidiaries of U.S. multinational Chevron, British-Dutch Shell, Italian ENI’s Agip, France’s Total and Brasoil of Brazilian Petrobas (George Osodi, File/Associated Press)

LAGOS, Nigeria — Nigeria is suing several leading oil companies for $12.7 billion of crude oil that allegedly was exported illegally to the United States between 2011 and 2014, officials said Tuesday.

The Federal High Court in Lagos begins hearings next week in cases filed against Nigerian subsidiaries of U.S. multinational Chevron, British-Dutch Shell, Italian ENI’s Agip, France’s Total and Brasoil of Brazilian Petrobas, according to the court register.

Chevron would not comment since the issue “is the subject of ongoing litigation,” said a spokeswoman at the company’s Houston headquarters, Isabel Ordonez. Other companies did not immediately respond to requests for comment.

Nigeria was Africa’s largest oil producer until militant attacks cut production and Angola overtook it in March.

The cases could provoke new anger against oil companies already accused of polluting farmland and fishing grounds. Local frustration has contributed to an armed movement in the oil-producing Niger Delta, where militants are demanding the multinationals pull out.

Officials familiar with the cases said Nigeria’s government alleges that the companies did not declare more than 57 million barrels of crude oil shipments. That was deduced from audits of declared exports and what was unloaded in the United States.

Some shiploads registered less when they left Nigeria and more on reaching the United States, while some entire shiploads were undeclared in Nigeria, said the officials, who spoke on condition of anonymity because the cases still are in court.

The United States was the biggest importer of Nigerian oil until it began exploiting its own shale oil reserves, though Nigerian exports to the U.S. have increased six-fold this year, according to OPEC.

Michael Kanko confirmed that his U.S.-based ImportGenius database was used by attorneys to confirm declarations made to U.S. customs by shippers and importers.

Law professor Fabian Ajogwu is representing the Nigerian government in the case against Chevron, which comes up first on Sept. 30.

2 Nigeria pipelines attacked as new activist group emerges

Warri (Nigeria) (AFP) – Two Nigerian state-owned oil pipelines were blown up in the delta region Friday in attacks blamed on the Niger Delta Avengers (NDA) militant group, a local security official said Saturday.

“The attacks targeted two pipelines located in the same zone,” an official for the Department of State Security (DSS) told AFP.

“Both belonged to the NPDC (Nigerian Petroleum Development Company) and we believe this attack to be due to militants.”

Also on Friday, a newly emerged armed group calling itself the Niger Delta Greenland Justice Mandate (NDGJM) claimed responsibility for an attack the same day in Udu State.

It was the second claim of responsibility by the group, which earlier this month claimed to have blown up a major pipeline and warned of more attacks to come.

The creation of the group was announced scarcely two days earlier by its spokesman, self-proclaimed “general” Aldo Agbalaja, who warned that the NDGJM would strike at oil installations within 48 hours.

Since the start of the year, the Avengers have carried out a string of devastating attacks on Nigeria’s oil pipelines and facilities.

The oil rebels have also said the Niger Delta, home to the country’s multi-billion-dollar oil and gas resources, might declare independence on October 1.

Nigeria marks October 1 as the anniversary of its political independence from colonial power Britain in 1960.

Oil majors including Shell, Exxon, Chevron, Eni and the state-run oil group NNPC have all been targeted in the attacks this year.

The attacks have reduced Nigeria’s output by a third, hammering government revenue at a time of low global oil prices.

The oil sector accounts for 90 percent of the nation’s foreign exchange earnings and 70 percent of government revenue.

The Avengers claim to seek a fairer share of Nigeria’s oil wealth for residents of the region as well as self-determination and political autonomy.

They have rejected a government truce to end the violence.

President Buhari orders NNPC to intensify oil exploration in Northern Nigeria – Vanguard

By Michael Eboh

Muhammadu Buhari has ordered the Nigerian National Petroleum Corporation, NNPC, to increase the tempo on crude oil exploration activities in the northern part of the country.

Buhari Group Managing Director of the NNPC, Mr. Maikanti Baru, who disclosed this, yesterday, when governor of Bauchi State, Mr. Mohammed Abubakar, paid him a courtesy visit in Abuja, also lamented that Nigeria was currently facing difficult times. Baru said the NNPC currently had exploration activities going on in the frontier basin in Chad and also in some areas close to the Kolmani River, located in Bauchi State, where Shell had made some indicative discovery of hydrocarbons.

According to him, the President has directed the NNPC to go into that area to improve and further explore the magnitude and prospect of those finds. In response to the directive of the President, Baru disclosed that the NNPC was currently taking steps to re-strategise and get into those regions to step up crude oil exploration activities. “We will re-invigorate the Frontier Exploration Services and see how they collaborate with the Northern Nigeria Development Company, NNDC. ‘’NNDC is holding bloc 809 where we have some of the finds and also the Department for Petroleum Resources, DPR, for the other blocs that have not been assigned,” Baru added.

On the tough economic situation, Baru lamented that the various attacks on oil and gas assets across the country was making it difficult for the corporation to meet its financial obligations to the country. He said: “It is a very difficult time for us with all the leakages that we suffer, especially infractions on our infrastructure, in terms of pipeline vandalism and theft to be able to meet our obligations to the Federation Account Allocation Committee, FAAC.

Delta Crisis: Nigeria Talks to MEND as Avengers Strike Gas Pipeline

The Movement for the Emancipation of the Niger Delta started talks with Nigeria’s government, even as another militant group claimed to have blown up a pipeline in the oil-rich region.

The negotiations “will seek to find solutions to the short, medium and long-term future of the Niger Delta region,” MEND spokesman Jomo Gbomo said Sunday in an e-mailed statement. While Nigeria’s presidency said on July 21 it’s talking to militants, that doesn’t appear to include the Niger Delta Avengers, the rebels claiming responsibility for the attacks on oil infrastructure this year.

♦ MEND talks may be strategy to bring in other groups: Vetiva

♦ Niger Delta Avengers claim to have blown up pipeline on Sunday

 

The Avengers, who in February shattered a seven-year peace with a campaign of sabotage that’s cut crude output and starved the government of revenue, late Sunday said they blew up a gas pipeline belonging to the Nigerian National Petroleum Corp. The statement on the group’s website couldn’t be verified. The Avengers say they want a greater share of the wealth that oil companies extract from their native lands to be spent on local schools, hospitals and other essential services.

“The Avengers have proved difficult to engage,” Pabina Yinkere, head of research at Vetiva Capital Management Ltd., said by phone from Lagos. “The government has made several attempts to dialogue with the Avengers but we are yet to hear of any successful discussions. The move to dialogue with MEND could be a strategy to bring in the Avengers and other fringe groups.”

The Avengers said it hit a gas pipeline owned by the state-oil company in the Nsit-Ibom area. That follows NNPC’s appeal on July 21 to the Nigerian military to improve security in the delta region.

Nigeria Finds a National Crisis in Every Direction It Turns

UGBORODO, Nigeria — Militants are roaming oil-soaked creeks in the south, blowing up pipelines and decimating the nation’s oil production. Islamist extremists have killed thousands in the north. Deadly land battles are shaking the nation’s center. And a decades-old separatist movement at the heart of a devastating civil war is brewing again.

On their own, any one of these would be a national emergency. But here in Nigeria, they are all happening at the same time, tearing at the country from almost every angle.

“Nigeria is the only country we have,” President Muhammadu Buhari implored in a recent speech. “We have to stay here and salvage it together.”

Mr. Buhari took office a year ago, promising to stamp out terrorism in the north and to rebuild the nation’s economy. But he has been knocked off course by a series of crises across the country, forcing him to toggle between emergencies.

Beyond low prices for the nation’s oil, the source of more than 70 percent of the government’s revenue, Nigerian officials have been tormented by a new band of militants claiming to be on a quest to free the oil-producing south from oppression. They call themselves the Niger Delta Avengers.

Despite their name, which sounds as if it might be out of a comic book, the militants have roamed the waters of the south for six months, blowing up crude oil and gas pipelines and shattering years of relative peace in the region.

As a result, Nigeria’s oil production in the second quarter this year dropped 25 percent from the same period a year earlier — enough to contribute to a slight increase in global oil prices, according to an analysis by Facts Global Energy, a consulting firm in London.

Partly because of the Avengers and their sabotage, Nigeria has fallen behind Angola as Africa’s top oil producer.

The attacks have been so costly that Mr. Buhari sent troops that had been fighting in the north against Boko Haram — the extremist group that has killed thousands and forced more than two million people to flee their homes — to battle the Avengers in the south instead

Mr. Buhari then reconfigured those efforts after complaints that marauding soldiers had roughed up people and property while looking for militants in the south, creating even more resentment among the impoverished people who live there.

Militants have struck in the south in the past, kidnapping or killing oil workers and police officers to demand a greater share of the nation’s oil wealth. But the Avengers seem bent on crippling Nigeria’s economy while it is particularly fragile, striking at the core of Mr. Buhari’s plans for the nation.

The Avengers have sent oil, power and gas workers fleeing, torturing the multinational companies that burrow for oil underneath the waters. Fuel deliveries around the country have stalled because almost everything that has to do with oil in Nigeria right now has been tangled up by the militants.

On the main highway in the southern port city of Warri recently, a long row of fuel tankers sat on the side of the road, idle. A bent-back windshield wiper served as a makeshift clothesline. A mini tube of toothpaste rested on the dashboard of one truck. The truckers were stranded, waiting to fill up.

They had been there a month.

“We are not asking for much, but to free the people of the Niger Delta from environmental pollution, slavery and oppression,” the Avengers wrote on their website, explaining their attacks. “We want a country that will turn the creeks of the Niger Delta to a tourism heaven, a country that will achieve its full potentials, a country that will make health care system accessible by everyone. With Niger Delta still under the country Nigeria we can’t make it possible.”

A man walked along the former jetty of Ugborodo, Nigeria. The water in the area is heavily polluted by oil.
A man walked along the former jetty of Ugborodo, Nigeria. The water in the area is heavily polluted by oil.

Mr. Buhari’s government has said it is open to negotiating with the group. But it is already stretched thin.

On the opposite side of the country, Boko Haram is still raging. Mr. Buhari has started a major offensive against the group that has made progress, but it has yet to stamp out the violence.

Another longtime battle is flaring in the middle of the country, between farmers and nomadic Fulani herdsmen looking for grazing pastures. Hundreds have been killed in battles as herdsmen roam into new territory to look for vegetation for their cattle. Officials have blamed climate change and the nation’s rapidly growing population for the scarcity of pastureland.

And with their demands for economic equality for the south, the Avengers have been trying to stoke the aspirations of separatists elsewhere in the nation.

More than four decades ago, at least one million people were killed during the Nigerian civil war, when separatists led an uprising that created an independent republic of Biafra in the southeast. It lasted three years, until 1970.

Now, a Biafran separatist movement is simmering again, with the police and protesters clashing regularly since October, when a prominent activist was arrested and jailed. Some have accused the Nigerian security forces of seeking out and killing protesters.

The Avengers are fanning the separatist sentiments, invoking the Biafran movement and calling for a “Brexit”-style referendum to split the nation along several fault lines.

Ugborodo, Nigeria, houses a Chevron terminal, but the town’s residents say they have seen little benefit.
Ugborodo, Nigeria, houses a Chevron terminal, but the town’s residents say they have seen little benefit.

The south has long been a reservoir of anger and resistance, a place where countless billions in oil revenue are extracted for the benefit of distant politicians and companies abroad. Yet drinking water and electricity can be scarce, and the swamps people live around are regularly polluted with Exxon Valdez-size spills, casting an oily sheen on the creeks and coating the roots of dense mangroves in black goo.

Many people in the predominantly Christian south say they believe that Mr. Buhari, a Muslim from the north, is neglecting them for political or sectarian reasons, even though conditions were also grim under his predecessor, Goodluck Jonathan, a Christian southerner.

“You always say you fought for the unity of this country during the civil war,” the Avengers taunted Mr. Buhari on their website. “You haven’t been to the Niger Delta, how can you know what the people are facing.”

In his recent speech, Mr. Buhari recalled the horrors of the civil war, when he served in the military fighting Biafrans. “The president has a vision of one united Nigeria and is prepared to do everything to keep it as one,” he said.

This spring, Mr. Buhari announced that he would personally introduce a $1 billion cleanup program of the oil-polluted Niger Delta area. It was to be Mr. Buhari’s first visit to the region since taking office, but with the Avengers’ movement raging, the president abruptly canceled his trip. Residents of Delta State felt slighted.

“Years have passed with neglect, deprivation, environmental deprivation, poverty, no electricity, no roads, no hospital, no schools, but we are living in the country of Nigeria,” said Blessing Gbalibi, a fuel-truck driver raised in the creek communities. “Over there in Abuja,” he added, referring to the capital, “they are taking our resources.”

Yet many Niger Delta residents like Mr. Gbalibi oppose the Avengers because their acts of sabotage have degraded the already-poor quality of life in the region. Spills from explosions have further polluted farmland and fishing holes. Mr. Gbalibi and his fuel truck were among those stuck on the side of the highway for a month because the Avengers had disrupted fuel distribution.

A store in Ugborodo. Residents of the Niger River Delta feel neglected by the government in Abuja.
A store in Ugborodo. Residents of the Niger River Delta feel neglected by the government in Abuja.

About a decade ago, another band of militants, the Movement for the Emancipation of the Niger Delta, prowled the creeks, blowing up pipelines. The federal government reined it in by setting up an amnesty program that offers cash and job training, some of it overseas, for more than 30,000 militants and residents, according to Paul Boroh, a retired brigadier general and the special adviser to Mr. Buhari for the program.

But oil revenue finances the program, and the fall in oil prices prompted the president to consider ending the amnesty program at the end of last year. Mr. Boroh said he had lobbied to keep the plan for now, but to phase it out over the next two years.

The Avengers movement sprang up around the time the president was considering an end to the program, prompting many Niger Delta residents to wonder if the shadowy group is made of former militants hoping to keep up amnesty payments.

This spring, Mr. Buhari announced that he would personally introduce a $1 billion cleanup program of the oil-polluted Niger Delta area. It was to be Mr. Buhari’s first visit to the region since taking office, but with the Avengers’ movement raging, the president abruptly canceled his trip. Residents of Delta State felt slighted.
This spring, Mr. Buhari announced that he would personally introduce a $1 billion cleanup program of the oil-polluted Niger Delta area. It was to be Mr. Buhari’s first visit to the region since taking office, but with the Avengers’ movement raging, the president abruptly canceled his trip. Residents of Delta State felt slighted.

The amnesty program is far from universally loved in the creeks. Many residents say payments are routinely siphoned by corrupt community leaders. Others say the job training they received was virtually useless. Oil companies prefer to hire foreigners, they complain, or they hire locals only on a short-term basis — and then nothing.

The program sent Mike Gomero, a former militant, to learn the teachings of Mohandas K. Gandhi and the Rev. Martin Luther King Jr. at a two-week session in South Africa. He is no longer blowing up pipelines. But he still does not have a job.

“The amnesty program is not a solution,” said Williams Welemu, a former member of the Movement for the Emancipation of the Niger Delta. “It’s palliative.”

Communities like Ugborodo, so deep in the winding creeks that it is at least two hours from the mainland by speedboat, are dotted with homes that are little more than tiny zinc huts on islands that are sinking into the sea. They are filled with unemployed residents trained as geologists, pipe fitters and marine engineers.

One of them, Collins Bemigho, stood along a dirty swamp, orange flares from a giant Chevron terminal glowing in the distance behind him. He complained about a lack of indoor plumbing, of good health care or a secondary school, and then pointed to a thick pipe jutting from the water.

“If I wanted to bust a pipeline, I could do that right here,” Mr. Bemigho said. “We’re not rewarded for being well behaved.”

Culled from the New York Times

Nigeria: The oil crash has people worried about a new banking crisis

Nigeria just put its banking system on alert.

The Central Bank of Nigeria announced earlier this week that it’s replacing the management of the country’s eighth biggest lender by assets, Skye Bank, after it failed to meet the minimum capital ratios, according to Bloomberg’s Emele Onu, Renee Bonorchis, and Paul Wallace.

The CEO, the chairman, and 10 directors on the bank’s board resigned on Monday.

The central bank added that Skye Bank’s nonperforming loan ratio has been above the regulatory limit for some time now, according to Reuters’ Chijioke Ohuocha and Oludare Mayowa.

Speaking to reporters on Monday, the central bank’s governor, Godwin Emefiele, asserted that Skye Bank “is not in distress and remains a healthy bank in the system.” And on Wednesday, the central bank said that all its banks are safe, and that “there is, therefore, no need for panic withdrawals from any bank,” according to Bloomberg’s Wallace.

However, these comments haven’t been enough to alleviate worries about the rest of the country’s banking system.

“This development may raise fears about the health of Nigeria’s entire banking sector; especially given the weak economic growth expected in 2016 (we forecast just 0.8% GDP growth this year),” Bank of America Merrill Lynch’s Africa economist Oyin Anubi wrote in a note to clients on Wednesday.

The Central Bank of Nigeria announced earlier this week that it's replacing the management of the country's eighth biggest lender by assets, Skye Bank, after it failed to meet the minimum capital ratios,  according to Bloomberg's Emele Onu, Renee Bonorchis, and Paul Wallace.
The Central Bank of Nigeria announced earlier this week that it’s replacing the management of the country’s eighth biggest lender by assets, Skye Bank, after it failed to meet the minimum capital ratios, according to Bloomberg’s Emele Onu, Renee Bonorchis, and Paul Wallace.

Over the last few months, Nigeria has been badly bruised by various economic shocks such as lower oil prices, dollar shortages, and production outages caused by militant groups in the Niger Delta.

Data from the Nigerian Bureau of Statistics released in late May revealed that the country’s economy shrank way more than expected in the first quarter — by 0.4% year over year. Analysts promptly warned that these numbers suggested the country is headed for a “full-blown economic crisis.

Banks in particular have been feeling the pain from the oil sector slump, given that the sector gives about 26% of its loans to oil and gas companies, according to December 2015 data cited by Anubi.

Notably, in this environment, Anubi argued that nonperforming loans are “likely to continue the upward trend on weak growth.” Here’s what he wrote in his note to clients (emphasis ours):

In the course of 2016, it is likely that a significant part of the rise in NPLs will be due to problem loans in the oil sector. Some banks have been proactive in this arena. In December 2015, Moody’s claimed that 20% of oil and gas loans had already been restructured with maturity extensions and we expect that these activities have continued this year. However, there is a possibility that the downturn in the oil and gas sector (and in the overall economy) seen so far this year is worse than the banks anticipated, implying that there could be more pain ahead.

“The operating environment in Nigeria is difficult. In S&P’s most recent review of the sector the rating outlook was revised to negative for six banks, mainly due to low oil prices, weak growth, FX shortages, higher cost of risk, liquidity pressures and falling asset quality. They expect NPLs to rise to 6.0% in 2016 from 5.5% in 2015, above the prudential CBN ceiling of 5.0%. Data from Q16 results of the largest banks shows average NPLs of 7.0%. History shows that lower oil prices tend to lead to higher NPLs. However, this time, the recovery in oil prices will to some extent be offset by lower oil production.”

As for Skye Bank, its market value has plunged by more than 85% over the past five years and is down about 40% in 2016 alone, according to Bloomberg.

The central bank had deemed Skye Bank “systemically important,” but, as Anubi points out, “this bank is only 4% of total industry assets. Nigeria’s larger banks look better capitalized.”

According to local press reports cited by Anubi, most of Nigeria’s larger banks have stronger capital adequacy ratios than Skye Bank. The latter’s is reportedly below the 15% minimum requirement, while other large banks are, on average, at 19.9%.

In any case, Nigeria’s banking system might be something to keep an eye on.

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