A Week in Nigeria: 9 November
Highlights from Reuters coverage of Nigeria over the last seven days
In this week’s round-up: Buhari signs law changing fiscal terms for offshore oil fields, police free 259 people from Islamic institution, Coca-Cola CEO picks plastic over aluminium to cut carbon footprint, and renowned artist Shonibare launches Lagos residency scheme.
- It was a busy week full of oil stories that began with President Muhammadu Buhari signing into law amendments to fiscal terms for deep offshore oil fields. The bill changes the 1993 Deep Offshore and Inland Basin Production Sharing Contract to add two new revenue streams. One is a flat 10% royalty on all projects over 200 meters deep and the other is a 7.5% royalty on frontier and inland basins. While offshore oil projects are among the most challenging for companies to develop, they have helped boost oil output in the last few years from Nigeria, Africa’s top crude producer. The measures are designed to add about $1.5 billion to government coffers in just two years but an oil industry group has warned they would render billions in planned offshore oil investments unprofitable and cut nearly 30% from the potential offshore output. We previously reported that the government’s revenue quest could crush the country’s offshore oil golden egg.
- The changes to the country’s oil revenue laws as well as an unexpected tax levy over the past year have made investments in offshore projects less attractive for some. Total is seeking to sell its 12.5% stake in a major deepwater oilfield off the coast of Nigeria, industry and banking sources said, in an effort to adjust the energy company’s Africa portfolio amid a broad expansion. We reported the move days after oil trader Vitol quit a consortium that was set to buy a stake in two Nigerian oil fields from Brazil’s Petrobras. Total’s stake in Oil Mining Lease (OML) 118, which is located some 120 kilometres (75 miles) off the Niger Delta, is valued at up to $750 million, according to two of the sources. Investment bank Rothschild is running the sale process for Total, the sources said. A spokeswoman for Total declined to comment. Rothschild declined to comment. OML 118 is operated by Royal Dutch Shell, which holds a 55% interest. Exxon Mobil holds a 20% stake in the block, while Italy’s Eni and Total each hold 12.5%. The sale process is part of Total’s plan to sell $5 billion of assets around the world by 2020, the sources said. The block includes the Bonga field, Nigeria’s first deepwater project which started in 2005 and produced around 225,000 barrels of oil and 150 million standard cubic feet of gas per day at its peak.
- Police in the southwestern city of Ibadan freed 259 people from an Islamic rehabilitation centre, taking the number rescued from abusive institutions since September to nearly 1,500. Images from local TV station TVC taken after the captives were released showed a group of mostly young men and teenage boys. Many were emaciated. An infant was also among the group. “We eat one meal a day,” freed captive Olalekan Ayoola, told TVC, saying the food wasn’t fit for a dog to eat. Ibadan is in the southwestern state of Oyo, which is predominantly Christian. Nigeria launched a crackdown on informal Islamic schools and rehabilitation centres in late September after a man was refused permission to see his nephews at one institution and complained to police. Many captives have said they were physically and sexually abused and chained up to prevent them escaping. Other sites raided in major police operations have been in the mostly Muslim north of the country. Following this week’s raid in Ibadan, we published a timeline detailing the events so far in this abuse scandal and a longer story about the way in which many northern Nigerians blame the government rather than local religious community leaders who run the institutions.
- Nigeria will keep its land borders closed to trade until at least January 31, 2020, we were told by the customs spokesman. Nigeria launched a partial border closure in August to tackle smuggling of rice and other goods. Last month the head of customs confirmed that all trade via land borders was halted indefinitely. Joseph Attah, spokesman for the Nigerian customs service, said the “present phase” of the closure would end on January 31, 2020, and that would not be the end of the closure. “The operation is in phases, it will continue until the set objective is attained,” Attah told Reuters by phone. A private memo sent by the customs service comptroller for enforcement, Victor Dimka, to colleagues called the closure operation an “overwhelming success”, but said there were some strategic objectives yet to be achieved.
- Back to oil and, specifically, Africa Oil Week which took place in Cape Town. It was notable for the absence of a focus on climate change in stark contrast to events in Europe which have been fundamentally altered by investor and government pressure to address the impact on the environment. In Cape Town, African ministers emphasised their need for fossil fuel cash and power in order to develop and diversify resource-dependent economies. “Under no circumstances are we going to be apologising,” said Gabriel Obiang Lima, energy minister of Equatorial Guinea, adding that they need to exploit those resources to create jobs and boost economic development. “Anybody out of the continent saying we should not develop those fields, that is criminal. It is very unfair.”
- The environmental impact of big business was the main focus of an interview with Coca-Cola’s CEO James Quincey in Lagos in which he said the world’s largest soft drinks maker is committed to collecting and recycling plastic bottles rather than switching to aluminium cans as it seeks to reduce its carbon footprint. “A recycled PET (polyethylene terephthalate) bottle has a much lower carbon footprint than an aluminium can or a returned glass bottle,” said Quincey, who was in Nigeria’s commercial capital for a meeting of his leadership team. He said collecting and reusing bottles was a “better long term answer” than switching to cans. Last year Coca-Cola pledged to collect and recycle a bottle or can for every one it sells globally by 2030. The company adopts different methods around the world to collect bottles. In some countries it uses a deposit return scheme that enables consumers to return bottles in exchange for incentives — such as cash, vouchers or a points-scheme. It also works with private firms that employ collection agents to retrieve used bottles. Last month environmental group Greenpeace said Coca-Cola was the world’s biggest producer of plastic waste for the second year in a row. Working with the Break Free From Plastic movement, it said 11,732 branded Coca-Cola plastics were recorded in 37 countries — more than the next three top global polluters combined. But Coke’s CEO said this was just a reflection of the drinks company being the “biggest brand”.
- The head of Coca-Cola was not the only CEO to visit Lagos this week. Twitter’s CEO, Jack Dorsey, was also in town. However, a mix-up led to local and international journalists (including the Reuters team) waiting for three hours to meet him for a question-and-answer session in tech enclave Yaba only for him to briefly appear in front of cameras for his photograph to be taken – much to the chagrin of the assembled media.
It didn’t merit a Reuters story but the moment was discussed by the BBC.
The Twitter CEO did speak to members of the Lagos tech community which, his team said, was all he had come to do.
- Another person who was in Lagos this week was internationally renowned British-born Nigerian artist Yinka Shonibare.
He announced plans for a programme to get painters, sculptors and other creatives living and working together in Lagos. Shonibare — a Turner Prize nominee whose giant ‘Nelson’s Ship in a Bottle’ work stood on a plinth in London’s Trafalgar Square — said he wanted artists from around the world to apply for the first places in the residency scheme, which is due to start in 2021. “The journey has always been Africans going to the West and I think we need to reverse that,” Shonibare said on Saturday, at the launch of his “Guest. Artists. Space. Foundation” that will run the project and help fund African participants. “It’s important that African cultures are properly understood in the context of Africa and that people actually come here to learn,” the London-based artist said. Under the scheme, four groups of three artists will spend three months every year based at sites in Lagos and on a 30-acre farm in Ijebu town 100 km (62 miles) away. Construction work had started on the sites, Shonibare said. The launch coincided with Art X, an annual art fair held in Lagos, that attracts artists from across Africa. Experts say there has been growing interest in contemporary African works. “Prices have risen by between 70 to 100% since we started auctions 10 years ago. And at the top end of the market it’s even stronger than that,” said Giles Peppiatt, director of contemporary African art at London auction house Bonhams.
- And, finally, Nigerian industrial conglomerate Dangote Group signed deals to make phosphate into fertiliser and build a cement factory in Togo, the small West African country said. Togo’s vast phosphate resources are mostly exported in their raw form, and Dangote’s project would process some of that phosphate to make fertiliser in-country, aiming to export it to the region. The cost of the project is around $2 billion, a statement from Togo’s government said, without specifying how much of that would come from Dangote. The Nigerian company also signed a deal to build a cement factory at a cost of around $60 million. Construction of the factory is set to start in the first quarter of 2020 and it will begin producing by the end of next year, the statement said.