ABSTRACT
The research is anchored on the prevailing politics in the Nigerian Petroleum sector, the inherent corruption and the attendant poverty in the country, with Bayelsa State as the case study. The Marxian Political Economy approach was adopted as the theoretical foundation of the study. The method and instruments of data collection was the primary and secondary sources. We therefore relied on field research and documented facts from existing literatures. Data was gathered from textbooks, journals, Newspapers, official gazettes, the internet and un-published materials relevant to the study. In the primary data collection method adopted, we used the instrumentality on closed-ended Questionnaires to elicit responses from respondents on questions posed to them.
The study tested the following hypotheses:
The study is divided into five chapters. Chapter one dealt with an introduction to the problem, chapter two dealt with a review of existing literature on the variables of the study. Chapter three delved into Bayelsa State as the setting of the study and chapters four and five dealt with the presentation and analysis of data and summary, conclusion and recommendations respectively.
The study revealed the following findings: that corruption is endemic in the Nigerian oil industry; therefore the collective wealth of the Nation is corruptly diverted by a powerful few to the detriment of the mass. The prevalence of corruption in the oil industry has scuttled development, increased poverty and engendered
vi underdevelopment. Furthermore, the findings revealed that the increase in oil revenues have not translated into poverty reduction and promote development due largely to corruption and poor leadership. The laws governing the oil industry in Nigeria are oppressive and have been used to effectively de-empower the people and deny them access to their resources. Economic issues are highly politicised, thereby leading to high poverty rates in the country. Finally, the leadership of Bayelsa State over the years have not prudently managed the resources of the state for the benefit of the people, rather, they have used the resources to corruptly enrich themselves, a syndrome that is glaring at all levels of governance throughout Nigeria.
The study among others recommends that the anti-corruption laws in Nigeria should be strengthened and made more severe. As a country, we need to adopt the Chinese model in the fight against corruption. We therefore recommend that the death penalty or life in prison sentence be handed down to anyone who is found guilty of corrupt activities that run into millions of naira. The laws governing the oil industry in Nigeria are oppressive, and have dis-empowered the people economically. The laws have also denied the people access to their own resources. We recommend that the Land Use Act of 1978, The Oil Pipelines Act of 1966 and the Petroleum Act of 1969 be amended to give greater access or share of the resources to the owners.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1. Background of the study……………………………………………….1-7
1.2. Statement of the problem……………………………… - - - - 7-14
1.3. Objective of the study………………………………………………….14
1.4. Scope and limitation of the study……………………… - - - - 14-15
1.5. Theoretical framework…………………………………………………15-17
1.6. Hypotheses and assumptions…………………………………………..17
1.7. Research Questions…………………………………………………….17
1.8. Research Methodology………………………………………… - - 18-19
1.9. Significance of the study……………………………………………… 19-20
References……………………………………………………… - - ..20-22
CHAPTER TWO- Literature Review
2.1 The concept of petro-politics…………………………………………..23-26
2.2 Understanding corruption………………………………………………27-30
2.3 Understanding poverty in Nigeria…………………………………… - 30-37
2.4 The politics of oil block allocation in Nigeria……………………… - .37-42
2.5 The politics of legislation in the Nigerian oil industry……………… - 42-45
2.6 The paradox of oil, corruption and poverty in Nigeria……………… - 45-52
2.7 Examining corruption in the oil industry: The fuel subsidy Report - .52-55
2.8 List of indicted oil marketers…………………………………………..55-62
Summary and conclusion………………………………………………52-63
References ……………………………………………………………..63-66
CHAPTER THREE
Research setting
3.1 Geographical profile of Bayelsa State………………………………….67-69
3.2 Historical profile Bayelsa State……………………………………… - 69-71
3.3 Socio-economic profile of Bayelsa State………………………………71-74
3.4 The poverty rate in Bayelsa state…………………………………… - .74-76
3.5 Corruption and the political economy of plunder in Bayelsa State - ..76-80
3.6 Summary and Conclusion…………………………………………… - 80-81
References…………………………………………………………… - 81-82
CHAPTER FOUR
Data presentation and analysis
4.1 Introduction…………………………………………………………….83-87
4.2 The relationship between corruption and poverty……..………………87-88
4.3 High Petro-dollars and the rate of poverty in Nigeria…………………88-94
4.4 Laws of the oil industry, poverty and underdevelopment in Nigeria….94-96
4.5 Summary of findings……………………………………………… - 96
References……………………………………………………………..97
CHAPTER FIVE
Summary, Conclusion and Recommendations
5.1 Summary of the study………………………………………………..98-100
5.2 Conclusion………………………………………………………… - 100-106
5.3 Recommendations………………………………………………… - 106-107
References………………………………………………………… - 107
Appendix……………………………………………………………..108-111
Bibliography………………………………………………………….112-128
No. Title Page
1:1 - National and zonal trends in poverty levels (%), 1980-2004 9
($1 per day poverty line)
2:1 . A table showing the refineries in Nigeria, their installed capacities 47
and their current production levels.
1: 3. Population of Bayelsa State by Local Government Areas. 69-70
2.3 Table showing sectoral allocations in the 2004 and 2005 Bayelsa 80-81
State Budgets.
1.4 Percentage Distributions of Respondents by Sex 85
2.4 Percentage Distribution of Respondents by Age 86
3.4 Percentage Distribution of Respondents by Marital Status 86-87
4.4 Percentage Distribution of Respondents by Religion 87
5.4 Percentage Distribution of Respondents by Education 88
6.4 Percentage Distribution of Respondents by Occupation 88
7:4 A table to test the relationship between corruption and poverty
in Nigeria.
8:4 A table showing the response scale to test the hypothesis that the 93
increase in oil revenues has not translated into poverty reduction.
9:4 A table indicating the extent to which the laws of the oil industry 97
has affected development and increased poverty in Nigeria.
1:5- A table showing the population size and land area size of 105
Bayelsa State
CHAPTER ONE
1.1. BACKGROUND OF THE STUDY
Marx and Engels contend that the character and dynamics of state operations are reflective of the prevailing mode of production as well as the dominant political class in control of state power. As an instrument of class domination and control of property accumulation, the state in a capitalist society functions to protect the interest of those who own the means of production (Marx and Engels, 1977).
Ake (1981) has severally demonstrated the manner in which control rather than ownership has become a significant variable in a peripheral capitalist states such as Nigeria.
Following the above analysis by Ake which is also corroborated by other Marxist scholars, and following a critical evaluation of the Nigerian state, particularly after the inflow of petro-dollar since the 1970s, several scholars have described the Nigerian state a exploitative, cruel and irresponsive (Ake 1981, Okowa, 2005, Okaba 2003), illegitimate, oppressive and repressive (Okowa, 2005, Okaba, 2003), weak, captured, dependent (Orugbani, 2005, Ibaba, 2004), ethnically factionalized and privatized by a class of kleptocratic elites to protect and promote their tenuous relationship to the productive forces (Efemini, 2002).
The fore-going depicts the character of the Nigerian state and the character of the ruling class. The state in Nigeria has been immersed and dragged into the class struggle by the ruling class and has therefore been manipulated by the latter for the furtherance and consolidation of its inordinate interest.
The state is at the centre of Political activity in the society. It is within the state that the centrifugal and centripetal forces operate. Thus, the resource (s) in the state becomes the centre of attraction which generates friction between and among the Bourgeois and proletarian classes.
The Nigeria edifice has been sustained by crude oil and gas for several years. Nigeria is the highest exporter of oil in Sub-Saharan Africa, with a production capacity of over 2.3 million bpd, a population of about 150 million people and Human Development Index of 148 out of 173. Nigeria\'s revenue earning is legendary, ranked only behind the world\'s oil giants like Saudi Arabia, Venezuela, Iran, and the United Arab Emirates.
Petro-dollar averagely accounts for over 85 percent of federal Government revenue, more than 95 percent of export earnings and approximately 40 percent of GDP. However, as a classical example of the paradox of plenty, Nigeria in the midst of this wealth records an over-whelming level of poverty (with 70 percent living on less than a dollar per day), 40 percent lack sanitation and safe drinking water, 82 percent lacking access to regular power supply and 46 percent infant mortality rate (Okaba, 2005).
Petro-politics in the Nigerian oil industry manifest in the form of the existence of mega corporate monopolies such as:
These corporate giants have a monopoly of technology and finance capital for the exploration and exploitation of crude oil and gas.
More so, the Nigerian national Petroleum Corporation (NNPC) has also become part of the mega corporate monopolistic player and has therefore not done any significant thing to improve the living standard of the people. Because of the inherent corruption in the NNPC, the four refineries they operate are either shut-down for one reason or the other, or they are producing way below their installed capacities, thereby making importation the only way to cushion the local need of refined products in the country.
The logical outcome of this is the massive reliance on importation of finished petroleum products and the corresponding hike in the prices of the products, which also culminates in massive corruption as exposed by the findings of the Ad Hoc Committee of the House of Representatives on Subsidy Regime Probe in 2012. This has occasioned a high cost of living and poverty in the country that is seemingly blessed with abundant natural and mineral resources.
Another dimension of petro-politics manifests in the manipulations of the derivation principle of revenue allocation. From 1960-1970, the derivation principle was 50 per cent. However, this was reduced to 45 per cent (1970-1975), 20 percent (1975-1980), 2 per cent (1980-1983), 1.5 per cent (1984-1992), and then increased to 3 per cent in 1992 and 13 per cent in 2000 (Mbanefoh and Egwaikhide 1998, Ibaba 2005, Jega 2007).
The increase from 1.5 per cent to 3 per cent and later 13 per cent followed agitation and protests from the people. Paradoxically, this has become an incentive for violence, as it is expected that it will lead to further increase in the derivation component.
The consequence of the personalisation of the state is the use of the state as instrument for primitive accumulation of wealth (Ekekwe 1986), leading to corruption. Between 1960 and 2006, the country received US$509.56 billion in oil revenues (Nafziger 2008), the trend of which can be seen in Figure 2. Similarly, the Niger Delta States have received huge sums of money since the year 2000, when the 13 per cent oil derivation fund was implemented. For example, in 2007 alone the six Niger Delta States received US$4 billion out of the total of US$11 billion that was allocated to the 36 states of the federation (SPDC 2008). However, these huge oil revenues have not benefited the people adequately; because of corruption, budgetary appropriations are often structured to enrich those who control state power (Enweremadu 2008, p. 450).
‘White elephant\' projects such as airports and new government lodges are given more importance than the social and economic infrastructure. Expenditures for travel and entertainment benefiting government functionaries receive huge allocations. For example, in 2006 the Rivers State Government budgeted US$21.6 million on transport and travel allocation to the office of the governor and US$5.4 million for travel expenses of the legislature. Similarly, the legislature received US$2.8 million as sitting allowances, excluding salaries (Enweremadu 2008, p. 453).
From 2010 after the recovery of the world economy from the global economic melt-down, the price of oil has risen significantly. Consequently, in Nigeria, a lot of revenue has accrued to the Federal Government from crude oil and gas. This same period has also witnessed about the highest volume of production of over 2.3 million barrels per day and an international price of between 85- 120 dollars per barrel. However, the paradox is that there is a corresponding decline in the quality of life of the people who live in abject poverty that is aggravating on daily basis. According to Amnesty International, 70 percent of the over six million people in the Niger Delta live off of less than $1 per day (Amnesty International, 2006, Nigeria: Oil, Poverty and Violence).
Much of the labour in the oil industry in the past had been imported. To a growing degree now, the labour force for the oil companies is coming from Nigeria, but discrimination is still rampant and for the most part, locals are discriminated against.
The adverse effects of the corruption in the oil industry results in the following:
i. As the government officials siphon off all the money generated from oil sales, infrastructure suffers;
ii. Most of the villages do not have electricity or even running water;
iii. They do not have good access to schools or medical clinics.
iv. The poverty level is increasing amidst a reported growth of the economy
of about 6.2 percent annually (Junger S. 2007).
The fore-going is captured in Thomas Friedmann\'s First Law of Petro-politics which states that ‘the idea that political freedoms diminishes in oil producing states as oil prices increases.\' ‘The Paradox of Plenty,\' ‘the Resource Curse,\' ‘Resource Wars,\' Dutch Disease\' and so on. In states where oil is a national resource (established through statutory monopolies), the combination of its geography (where it is located) coupled with the centralization of oil revenues through the state venture creates new sorts of governable spaces characterized by a ferocious struggle for access to and control over oil rents (or oil wealth in a variety of forms, from monies allocated to government, to community development funds of the companies and to the contracts and tenders that oil revenues fund). The challenge is to make sure that we do not slip into a sort resource determinism- oil or diamond causes X, Y and Z, and in so doing, vests a resource, even a global and strategic resource like oil and gas, with Olympian powers that it does not possess. Does oil in otherwords cause poverty or violence? Or does it compound or exacerbate pre-existing social and economic forces that make violence and poverty more likely or more debilitating? (Michael Watts; In a Conference entitled- The Nigerian State, Oil Industry and the Niger Delta, 2008).
Oil politics works through complex forms of dispossession. The decentralization of corruption, the rise of powerful cabals and machine politicians, generates and produce hyper-corruption and mass poverty in the country. This also results in horizontal and vertical inequalities and the rise of powerful armed militias and powerful criminal gangs.
According to Wikileaks Publication titled; High Level Corruption in Nigeria Oil Industry-Role of Abubakar Yar\'adua, Turai Yar\'adua, Rilwanu Lukman and Aondoaka,\' compiled by (Pickard at Elombah.com), states: ‘On corruption…the Nigerian entities control the lifting of many oil cargoes and there are some ‘very interesting\' people lifting oil. Oil buyers would pay NNPC GMD Alhaji Abubakar Yar\'adua, Chief Economic Adviser Yakubu and the First Lady, Turai Yar\'adu
large bribes to lift oil. Pickard also reported an instance where the Attorney- General, Aondoaka allegedly solicited a $20 million bribe to sign a document (Wikileaks, 2011).
Obviously, this powerful cabal that operated during the Musa Yar\'dua administration, the ones preceding it and the ones after it as revealed by the fuel subsidy report have perpetrated various corrupt acts to enrich themselves and their families at the expense of the majority of the population. They live in luxury and affluence while the masses could hardly afford a good meal for the day.
Ibrahim Babangida was said to have looted $12.5 billion oil windfall and is yet to face trial for it just like many other leaders carted away billions of dollars from the Nigerian treasury. Over $11 billion was said to have been spent on the power sector by the Obasanjo administration from 1999-2007, but the existential reality shows that most Nigerians have no electricity and therefore resort to using generators for home and industrial use. In spite of the calls by civil society organizations to probe these patently corrupt leaders, the Federal Government has not mustered the courage to do it.
The probe into the management of the 2011 subsidy funds by the House of Representatives Ad hoc committee set up to unravel the corruption in the oil industry in Nigeria brought very shocking revelations to the lime-light. This prompted the call for the removal of the group managing director of the Nigerian National Petroleum Corporation (NNPC), Mr Austen Oniwon, the Executive Secretary of the Petroleum Products Pricing and Regulatory Agency (PPPRA), Reginald Stanley; Director of the Department of Petroleum Resources (DPR), Oluyemisi Olorunsola; and the Managing Director of Pipelines and Products Marketing Company (PPMC), Mr. Haruna Momoh, for their role in the management of fuel subsidy which was found to have been characterised by irregularities.
The minister of petroleum resources, Mrs Diezani Alison-Madueke, was also listed among those who should be removed or suspended. The decision to move against their continued stay as heads of the organisations has been prompted by their alleged complicity in the revelations of high-level fraud in the oil and gas sector of the country. During the hearing, the PPPRA alluded to the mismanagement of the nation\'s resources when Reginald Stanley (the Executive Secretary) informed the lawmakers that, contrary to the 35 million litres of fuel the Minister of Petroleum Resources, Diezani Allison-Madueke told the Committee Nigeria was consuming, Nigeria pays for 59 million litres, thereby wasting funds on 24 million litres that, most likely, would end up being smuggled to neighbouring countries. The committee also discovered companies being paid money for subsidy on products that they did not deliver and such companies even went ahead to get allocations to supply more products!" (Leadership Newspaper February 22, 2012).
With the increase in the pump price of premium motor spirit (PMS) by the Federal Government on the 1st of January, 2012, from N 65 per litre to N 145 per litre, the inflation rate has risen tremendously and the masses have become even more impoverished.
1.2. STATEMENT OF THE PROBLEM
Several societies in the world today owe their development to the wealth generated from mineral and natural resources found in their environment. Oil and gas are very strategic resources that power the economies of even the most sophisticated economies of Europe and America. Oil and gas constitute the primus inter pares of the present day industrial production, manufacturing, transportation, aviation etc. This is because petroleum accounts for over 65 percent of the energy requirement for production, manufacturing and transportation even though there are alternative sources like solar energy, wind turbines, hydro-power etc. Also, the myriads of products generated from crude oil are used for the production of many products such as vehicle tyres, magnate, asphalt, etc (Journal of Oil and Gas, 2005). Without oil and gas, the global economy may collapse.
The United Arab Emirate (UAE) for instance has utilized the wealth generated from oil and gas to substantially develop their society. Prior to the first export of oil in 1962, the UAE economy was dominated by Pearl production, fishing, agriculture and herding. Since the rise of oil production in 1973 however, the petroleum sector has dominated the economy and accounts for most of its export earnings which has also provided significant opportunities for investment. The UAE has huge proven oil reserves, estimated at 97.8 billion bpd in 2011, with gas reserves estimated at 214.2 trillion cubic feet; at present production rates. These supplies are estimated to last well over 150 years.