A Week in Nigeria: 4 October

Highlights from Reuters coverage of Nigeria over the last seven days

Nigeria first sought to reduce gas flaring in the late 1970s and, through various schemes and regulations, has more than halved it since 2001

In this week’s round-up: parliament confirms it received landmark oil reform bill, Nigeria’s faltering drive to cut gas flaring, cabinet agrees on 2021 budget proposal, and blasphemy convictions spark sharia debate.

• Nigeria’s long-awaited oil reform bill would take steps to privatise the Nigerian National Petroleum Company (NNPC), amend changes to deepwater royalties made late last year and create new regulatory bodies, a copy of the bill seen by Reuters showed. President Muhammadu Buhari has sent the bill to the Senate, Senate President Ahmad Lawan confirmed late on Monday. It, along with the House of Representatives, must sign off on the bill before it can become law. Nigeria is Africa’s largest crude exporter. Lawan said lawmakers would aim to pass the bill “as quickly as possible.” The legislation has been in the works for 20 years and looks to revise laws governing Nigeria’s oil and gas exploration not fully updated since the 1960s because of the contentious nature of any change to oil taxes, terms and revenue-sharing. Experts and international companies say it is crucial to Nigeria’s aim of attracting investment in an era of abundant oil and a shift toward greener fuels. We reported on the key provisions in the bill, which proposes creating a limited liability corporation into which the ministers of finance and petroleum would transfer NNPC assets. The government would then pay cash for shares of the company and it would operate as a commercial entity without access to state funds. The changes could make it easier for the struggling company to raise funds. However the bill does not require government to sell shares in the company and, unlike previous reform proposals, does not set a deadline for privatisation to be completed. The legislation would also amend controversial changes to deep offshore royalties made late last year by cutting the royalty that companies pay the government for offshore fields producing less than 15,000 barrels per day to 7.5% from 10%. It would change a price-based royalty too, so that it kicked in when oil prices climbed above $50 per barrel, rather than $35. It would also codify in law that companies cannot deduct gas flaring penalties from taxes, a practice that was the subject of a court case. The measure would also scrap the Petroleum Equalisation Fund, which used to distribute cash to keep nationwide petrol prices uniform, and create new regulatory bodies, scrapping the Petroleum Products Pricing Regulatory Agency (PPPRA) and transferring to a new commission many of the tasks currently handled by the Department of Petroleum Resources (DPR).

• We reported on faltering efforts to reduce gas flaring in the Niger Delta. Experts say the gas that Nigeria flares nationwide could be worth billions of dollars if captured and transported to be used as liquefied natural gas or for plastics or fertilizers. But a 2016 programme by the Nigerian government to address this by auctioning rights to capture and sell flared gas is struggling, six sources close to the process told Reuters. The coronavirus crisis has compounded delays to a project which the World Bank hoped could serve as an example in its bid to cut global warming through zero flaring globally by 2030. Oil-producing nations all flare some gas, particularly at remote fields or where there is ageing infrastructure. Nigeria first targeted gas flaring in the late 1970s and, through various schemes and regulations, has more than halved it since 2001. Chevron, Shell and Eni, which operate in Nigeria, say they have cut flaring by some 90% and are working to cut it further. ExxonMobil and Total declined comment. But as the largest sites were harnessed, progress stagnated and flaring rose last year, a government-run satellite tracker shows. Although Nigeria’s Department of Petroleum Resources (DPR) approved 200 bidders in February, it said in June, when the sites should have been awarded, that the process was delayed by six weeks due to coronavirus-related restrictions. “If this bidding round doesn’t succeed, that’s the end of it,” said Gbite Adeniji, a lawyer who helped design the programme as a technical advisor at Nigeria’s Ministry of Petroleum, adding that roughly $3 billion is needed to commercialize the remaining flares, with site costs ranging from $20 million to $100 million. The sources, who did not want to be named due to the sensitivity of the matter, said many bidders have already pulled out as many were unlikely to recoup their costs. Only 48 of the nearly 180 sites still flaring in Nigeria are on the DPR list, many of them are not commercially viable and some of the best are missing, they added. “The pool was three times smaller than they thought,” one source said of the sites. Gas output at some, where oilfields are in decline, is likely to end within 5–10 years and others are offshore, making the required infrastructure more costly, the sources added. DPR did not respond to a request for comment on how it selected the flare sites, when it will announce winners or whether it was committed to the auction process. Two bidders told Reuters they dropped out early this year as delays made them question Nigeria’s commitment.

• A sharia court in the northern Nigerian state of Kano handed a death sentence to 22-year-old Yahaya Aminu Sharif in August for allegedly sharing a blasphemous message on WhatsApp. On the same day, the court sentenced a 13-year-old boy, Omar Farouq, to 10 years in prison, also for blasphemy. The sentences caused an international outcry and sparked a broader debate in Nigeria about the role of Islamic law in a country roughly evenly split between a predominantly Muslim north and mainly Christian south. “They should review the judgment … and reduce the punishment,” said an imam in the capital Abuja. Sharia, or Islamic religious law, is applied in 12 of Nigeria’s 36 states, raising questions about the compatibility of two legal systems where sharia courts operate alongside secular ones. Kola Alapinni, a lawyer representing both Sharif and Farouq, told Reuters that appeals against the convictions had been lodged at the Kano state high court, although no dates for the hearings had yet been set. He said the move was made on the grounds that sharia courts of appeal do not have criminal jurisdiction. Any further appeals should, he added, be held in secular courts up to the Supreme Court, the country’s highest legal authority. “We are a secular country,” said Alapinni, one of a team of lawyers working on behalf of the Lagos-based Foundation for Religious Freedom rights group, referring to the country’s secular constitution. “Nigeria is a multi-ethnic, multi-religious nation where everybody is welcome.” The convictions were condemned by some rights groups, the United Nations and the head of Poland’s Auschwitz Memorial. In Nigeria, they divided opinion on social media and in the street. “How does Sharia law even exist alongside Nigeria’s Constitution?” posted a Twitter user called Obi. In Abuja, Nigeria’s capital city built in the middle of the country to promote unity, insurance executive Hamid Abubakar took a different view. One of dozens of Muslim men who gathered beside a busy road to perform prayers outdoors, Abubakar said he believed the punishments were “in order”, and sharia’s role in Nigeria should be respected. He also warned against Western interference.
• Nigeria’s cabinet proposed a 3% economic growth target and an 11.95% inflation target for its 2021 budget. The cabinet also plans to target a $40 per barrel oil benchmark and 1.86 million barrels per day of crude production in the budget. Badly hit by the coronavirus pandemic, Nigeria’s economy contracted 6.1% in the second quarter of 2020 and now faces possible recession in the third, with the government expecting the economy to shrink by as much as 8.9% this year. Low oil prices have also taken their toll on the African continent’s top producer, which relies on crude sales for 90% of foreign exchange earnings. The Nigerian cabinet signed off on planned expenditure in 2021 of 13.08 trillion naira ($34.37 billion) with a deficit of 4.48 trillion naira, and set its expected exchange rate for the naira currency at 379 to the U.S. dollar, according to a presidential aide. The budget requires legislative and presidential approval before coming into effect, a process that can take months.
• The Nigerian unit of oil major Chevron plans to cut its local workforce by 25% to reduce costs. It said the move was due to weak demand for oil in the wake of the coronavirus pandemic. The company, which operates a joint venture with Nigeria’s state-owned NNPC, said it needed to make the adjustments to remain competitive in light of the prevailing business climate. It did not say how many jobs would be affected but said the cuts would affect workers across its operations. It added in a statement there were no plans to move jobs abroad and it was engaging with its workforce on the plan. Employees will retain their jobs until the reorganisation is completed. Prices of oil, Nigeria’s main export, fell sharply early this year and in April global benchmark Brent hit a 21-year low below $16 as the coronavirus outbreak hit demand, though oil markets have recovered since then. The International Energy Agency (IEA) trimmed its 2020 oil demand forecast in September, citing caution about the pace of economic recovery from the pandemic.
• As the world marked 1 million COVID-19 deaths, Reuters reported on the theories behind the way in which Africa is doing much better than expected, with a lower percentage of deaths than other continents. The continent’s case fatality count stands at 2.4%, with roughly 35,000 deaths among the more than 1.4 million people reported infected with COVID-19, according to Reuters data as at late Monday. In North America, it is 2.9% and in Europe 4.5%. Hard-hit countries such as Italy and Britain have recorded fatality counts of 11.6% and 9.0% respectively, compared to 1.6% for Ethiopia, 1.9% for Nigeria and 2.4% for South Africa, the continent’s worst affected country. Hospitals in many African countries say COVID-19 admission rates are falling. “Based on what we have seen so far it is unlikely that we are going to see anything at the scale that we are seeing in Europe — both in terms of and mortality,” said Rashida Ferrand, a London School of Hygiene and Tropical Medicine professor working at the Parirenyatwa Group of Hospitals in the Zimbabwean capital Harare. Experts say that some COVID-19 deaths in Africa probably are being missed. Testing rates in the continent of about 1.3 billion people are among the lowest in the world, and many deaths of all types go unrecorded. South Africa saw some 17,000 extra deaths from natural causes between early May and mid-July, 59% more than would normally be expected, according to a July report from the South African Medical Research Council. That suggests the death toll from COVID-19 could be significantly higher than the official figure, currently over 16,000, researchers say. Even so, there is wide agreement that COVID-19 fatality rates have not so far been as bad as predicted. Why? Scientists and public health experts cite a number of possible factors, including the continent’s youthful population and lessons learned from previous disease outbreaks. African governments also had precious time to prepare due to the relative isolation of many of their citizens from airports and other places where they could come into contact with global travellers. Some scientists also are exploring the possibility that a tuberculosis vaccine routinely given to children in many African countries might be helping reduce deaths from COVID-19. Another theory being considered is whether prior exposure to other coronaviruses including those that cause the common cold has provided a degree of resistance in some of the very communities once thought to be most vulnerable. “There is a lot of circumstantial evidence,” Salim Abdool Karim, a South African infectious disease specialist who has advised the government on COVID-19, told Reuters, “but there is no smoking gun.”

• Former Nigerian finance minister Ngozi Okonjo-Iweala, a key contender to head the World Trade Organization, told Reuters she thinks the body should play a role in helping poorer countries access COVID-19 drugs and vaccines, and this topic should be part of negotiations if she wins. Okonjo-Iweala, seen by delegates as a top candidate to lead the WTO, currently chairs the GAVI vaccine alliance board and stressed her credentials among five remaining candidates “at the intersection between public health and trade”. “Trade can contribute to public health — seeing that connection, invoking those (WTO) rules, actively discussing COVID-19 issues and how WTO can help,” the former finance minister and World Bank managing-director said. “For me, that would be a priority.” Okonjo-Iweala, one of two African candidates in the second of three rounds, says she is discussing with members the options for using WTO intellectual property rules to get special licences to deliver COVID-19 medicines to poorer countries. “This is wonderful because it could also contribute to more accessibility and affordability eventually for vaccines and for therapeutics,” she said, adding she hoped such discussions would be part of a planned 2021 trade negotiations package. She also said she would urge the at least 80 countries and territories which have raised barriers in response to the COVID-19 crisis, including on medical equipment, to lower them. Interest in COVAX — the joint programme between GAVI and WHO to distribute COVID-19 vaccines equitably — is growing, she said. A GAVI spokesman confirmed there were 167 now committed to the plan — 75 wealthier economies and 92 poorer economies.
• And, finally, Nigerian labour unions agreed with the government to suspend a planned strike over fuel and power price rises hours before businesses were due to grind to a halt on Monday. The Nigerian Labour Congress (NLC), which represents millions of workers across most sectors of Africa’s biggest economy, including parts of the oil industry, last week announced its plans to embark on a general strike. Nigeria cut costly subsidies in September to allow the petrol price to be determined by the market and increased the power tariff. President Muhammadu Buhari had said Nigeria could no longer afford the subsidies but the unions said a reversal of price hikes was needed to avert the strike. The strike was due to begin on Monday but Labour and Employment Minister Festus Keyamo said in a statement, posted on Twitter, that an agreement was reached between the government and unions at 2:53 a.m. (0153 GMT). “Strike suspended,” he wrote. He said the deregulation of petrol pump prices would remain in place and the government would roll out a financial support package for workers, and a joint committee comprising of government officials and labour union members would over a two-week period examine the justification for the electricity tariff policy. A communique issued by the NLC and the Trade Union Congress (TUC) stated that the strike had been suspended and outlined the details outlined by Keyamo.