Understanding Resource Control
By
Victor Attah
Executive Governor, Akwam Ibom State of
Nigeria
Presented this
paper in Kaduna at lecture organised by the Northern Youths
Consultative Forum.
I wish to thank the leaders and the members of
the Northern Youth Consultative Forum for organising this event.
Let me confess that I am profoundly delighted to be found worthy
to be the first ever to be honoured with the Northern Youth
Solidarity Award. I accept it with all humility, with a deep
sense of appreciation and much happiness.
I am also quite delighted to be invited to give a lecture on an
issue, which you have quite aptly described as a misunderstood
phenomenon. That this is happening in Kaduna is for me, quite
emotional. As you know, this city is home to me and indeed very
dear to my heart. I lived here for sixteen years, and it was
here that I made my mark in my professional practice. Besides,
Kaduna still remains the political epicenter of Arewa.
Let me state, right from the outset that the fact of our
gathering here reflects one of the very crucial leadership
values of the most popular Sardauna of Sokoto and pioneer
Premier of the defunct Northern Region, the late Sir Ahmadu
Bello. He believed that we should unite, in spite of our
differences. His philosophy was that a greater understanding of,
and respect for, those differences would promote greater unity
and bring about progress. If at the end of this lecture I would
have succeeded in creating a better understanding of the issues
surrounding Resource Control, I would feel like a favoured son
of the Sardauna.
Sometimes, I wonder if the misunderstanding about Resource
Control is genuine or if it is deliberate and therefore
contrived. History tells us that, in 1954 during the discussion
for regional self-government, the North placed as a condition
for agreement, that each Region must control its resources and
contribute towards the maintenance of common services by the
central government. Because the West held the same position, the
East had to accept the arrangement in the spirit of compromise
in the interest of the unity and stability of the country. That
position held until the military ventured into politics and oil
became the major foreign exchange earner for Nigeria. Then the
Regions abandoned all the other resources, which they had so
efficiently controlled, and the military unitarised oil, which
then became the essential, and almost the only, resource. If we
therefore go back in history, we can find the real meaning of
Resource Control.
What therefore is Resource Control? Resource Control can only be
fully appreciated and understood under Federalism. According to
Venkatarangaiya "Federalism is a constitutional system under
which the people of any particular territory are politically
united in subjection to the control, not of one government
supreme over them in all matters and for all purposes, but a
number of governments each supreme in a definite sphere of its
own, free completely from the possibilities of encroachment from
the rest". This is cardinal and gives rise to the assertion
that, in a true federal arrangement, no level of government is
subordinate one to another, but rather all tiers of government
are co-ordinate, one with another. Financial subordination,
which can only exist in the absence of Resource Control, makes a
mockery of Federalism no matter how carefully the legal forms
may be preserved. It stands to reason therefore that each unit
must have the power to harness its resources for its own
developmental purposes.
Just as K.C. Wheare, one of the most eminent theorists of
Federalism, posited that democracy is a necessary condition for
Federalism, it is also my firm conviction, and indeed that of
other true Nigerian patriots, that Resource Control is a
compelling necessity for the practice of true Federalism.
Resource Control is therefore rooted in the desire by some
Nigerian patriots to promote the practice of True Federalism as
the most efficient means of unbinding all sections of Nigeria
from the shackles that have weighted them down since the first
military misrule, thus making it possible for us to harness our
vast economic potentials towards rapid development and progress
of our nation. There can therefore be nothing as potent as
resource Control for the economic growth of this nation.
The history of extractive mineral production, which today is
limited to oil and gas, presents a study on the one hand, in
extreme frustration on the part of those in whose land and
territorial waters such minerals are found; and on the other
hand, aggravation on the part of legitimate exploiters. I say
legitimate because there has been a lot of illegal mining and
large-scale theft of our oil and solid minerals. It occurred to
me that there could be an acceptable solution.
Within six months of assuming office as the Governor of Akwa
Ibom State, for the first time in 1999, I came up with the idea
that if we could find a way to meaningfully involve the locals
in the exploitation of these minerals friction could be
substantially reduced.
My first suggestion was that the Nigerian National Petroleum
Corporation, NNPC, should substantially divest its interest in
the oil majors and allow the States in which these minerals are
found to become the majors stakeholders. NNPC would thus play
the role of an impartial regulator while efforts would at the
same time be concentrated to transform Nigeria Petroleum
Development Corporation (NPDC) into an oil major. This idea
seemed much too radical and too extreme for those who are afraid
of change.
It was at that point that I engaged an expert in the field, Engr.
Godwin Omene, who eventually became the first Managing Director
of Niger Delta Development Commission, NDDC, to do me a study on
marginal fields. He produced a very scholarly and yet
implementable paper on the subject. I want to thank the
President, Chief Olusegun Obasanjo, for accepting that paper and
ordering that it be studied and implemented, even while still
making jokes about the idea of Resource Control. What then
became obvious to me was that Resource control meant very many
different things to different people. That is why this lecture
today is critically important to clear the air.
Today, the government of Akwa Ibom State, Bayelsa, Delta, Ondo
and Rivers, have formed state-owned oil prospecting companies,
and these companies along with other indigenous companies have
been favoured with Marginal Oil Fields to explore and exploit.
That is Resource Control.
Let me quote extensively from the Editor of the Daily
Independent who, writing at page C4 on Friday, January 2, 2004
said:
Non-adherence to universally approved safety and environmental
standards has left the Niger Delta Basin, where over 96 per cent
of oil-related operations take place, extensively devastated.
Massive land and atmospheric pollution aside, local input in
production operations has remained abysmal as the multinationals
source over 90 per cent of their requirements, ranging from
furniture and chemicals to machines, pumps, platforms and
personnel, from their respective home base in Europe and the
United States (US). This has hurt the Nigerian economy greatly,
the same way as it stymied the drive for backward integration
and technology transfer.
Now is the time for the successful 31 indigenous farmees to
reverse the negative trend and avail the nation of the full
benefits of oil exploration.
Nigerians are dreaming of an era in which relevant regulations
on petroleum (as well as bitumen) exploration and production
(E&P) are observed to the letter, an era in which social
responsibility is accorded prominence in Management decision and
activities, where vital needs of host communities receive due
attention of prospecting companies. In their own little way, the
indigenous firms must show how much of local content could
reasonably be injected into oil production operations, in fact,
how much Nigeria could save if the multinationals adopted the
appropriate attitude to sourcing of inputs...
Hopefully, the development should nurture a stakeholder feeling
in the communities of the Niger Delta and assuage concerns of
marginalisation. It's far from the ideal, but it's a step
forward.
That could only have been written by someone who understands
Resource Control, and I could not have put it better.
Local skills and abilities will be developed; local content will
be substantially increased; local entrepreneuship will be
encouraged; the environment will be better protected; the rage
of the local communities will be assured; peace will return and
progress will be ensured. Who could ask for more!
This is what the new Group Managing Director of NNPC had to say
on the day of the first signing of the Farm Out Agreement by
Akwa Ibom State government; that by a conservative estimate,
12,000 new jobs will be created and an addition of between
100,000 to 150,000 barrels of oil will be made daily, to the
national production. Those are the tangible benefits of Resource
Control, the intangibles are inmeasurable.
Wouldn't it be great if similarly Kaduna State, Niger, Nassarawa,
Bauchi and all other states will rich mineral deposits could now
embrace Resources Control; form their own State and Indigenous
companies, obtain Federal licences to explore and exploit these
mineral deposits that at the moment lie waste in the ground.
That would be the glorious manifestation of Resources Control
and the elixir that this country needs for growth and
development.
The idea is so simple and the prospects so exciting that you
wonder how anybody could possibly misunderstand it except as a
deliberate act of obfuscation. I have striven throughout to
present this lecture as a statement of principles without
venturing into legalities but I find the judgement delivered by
Hon. Justice T. A Odunowo on 16th February, 2000 in suit number
FHC/L/CS/689/95 involving Elegushi and others vs. the
Attorney-General of the Federation and others most pertinent to
the issue of Resources Control. He had this to say:
"It must be emphasised that as of now, land is to Lagos State
what oil and gas represent to the oil producing States".
His conclusion therefore was that this essential resources of
Lagos State must continue to be controlled by that State. It
cannot be different for other natural resources. All states of
the federation must resume control of their natural resources.
Germane to the issue of Resource Control is Derivation. It is
regrettable that those who wanted to cause confusion sometimes
used Resource Control and Derivation interchangeably. The
distinction between Resource Control and Derivation is very
important to our understanding of the issues.
Derivation simply posits that if any mineral in any state is
exploited and it yields revenue, then a certain percentage of
that revenue shall be retained (given back) to that State on the
principle of derivation while the rest will accrue to the
Federation Account to be enjoyed by all the federating units.
Today, our constitution provides that 13 per cent of such
revenue will go to the derived source while the balance of 87
per cent will accrue to the Federation Account. This is
regardless of how, or by whom the mineral is mined. It was
therefore a wicked campaign of misinformation to suggest that by
Resource Control, the Niger Delta States wanted to keep back 100
per cent of the revenue derivable from their mineral deposits of
oil and gas.
I would like also to touch very briefly on the issue of
ownership. Obnoxious as some of the laws are that govern the
ownership of natural resources, the fact remains that today, all
minerals in, upon or under all of Nigeria's soil and waters,
belong to the Federal Government. It is the Federal Government
therefore that issues licences for their exploitation. Resource
Control has never challenged or conflicted with this law. All
that Resource Control seeks to do is more and more, and to the
extent that is possible, to vest the exploitation of these
minerals in capable indigenous companies.
As has been demonstrated, this will create local jobs bring
about the much needed transfer to technology and the development
of local skills; promote local entrepreneurship; accelerate the
pace of development and engender a sense of belonging and
involvement in the control of one's destiny. This is bound to
bring about peace and harmony and there can be nothing more
precious than that.
I thank you for listening and for having acquired a better
understanding of the Resource Control phenomenon.
