High crude price tragedy for Nigeria — NESG

Nigeria is not benefitting from the high global prices of oil, the Nigeria Economic Summit Group (NESG) and Oando Plc have said, citing oil production rate, theft and pipeline vandalism as the main factors denying the country the benefits.

 

As a result, fiscal pressure is imploding because of declining revenues and soaring public debt.

 

The NESG, in a communiqué issued at the end of a meeting of its Board of Directors in Abuja yesterday and signed by the Board Chairman, Asue Ighodalo, said declining investment and divestment, high cost of production and a harsh operating environment contributed to denying the country of the benefits that would have accrued to the country.

 

Oando shareholders, at the end of the Annual General Meeting in Lagos, urged the government to take more decisive actions to tackle the problem of oil theft.

 

They bemoaned the negative impact of oil theft and insecurity and called for cohesive actions to tackle the menace.

 

The shareholders lamented that acts of vandalism, banditry, terrorism and other crimes have adversely affected the economy.

 

They implored the government to partner with various stakeholders both in the public and private sectors to resolve the issue which they described as crippling the economy.

 

The NESG said: “Nigeria is not appropriating the benefits of high global prices. As a result, fiscal pressure is imploding because of declining revenues and soaring public debt.”

 

Ighodalo drew attention to the recent outcry of the Minister of Finance that the cost of debt servicing has surpassed the Federal Government’s retained revenue as total public debt continues to rise.

 

The NESG chief said the growing deficit meant that Nigeria would rely on borrowing to finance the 2022 budget, noting that despite increased budgetary allocation to defence and national security, insecurity has not abated.

 

“Despite some changes in the leadership of the national security apparatus, conditions have not improved.

 

“There is hardly any need to itemise the adverse impact of insecurity on food prices, productivity, ease and cost of doing business, investor confidence and national pride,’’ Ighodalo said.

 

He added that as a policy think tank, the NESG would continue to offer policy advice to any government in power, in the national interest.

 

He called for steps by the government to tackle revenue challenges that created room for the rising national debt, pointing out that the “government must take decisive action to tackle its revenue challenges which cannot be divorced from leakages through oil theft, difficult operating environment for businesses, and lack of innovation in tax collection.”

 

He added: “The challenges have resulted in low accretion to the nation’s revenue base.

 

“We strongly believe these leakages have continued unabated because of the absence of sanctions and ineffective tax systems.

 

“We must return to the path of debt sustainability in the face of dwindling revenues, not to create a debt burden for future governments and, indeed, future generations.

 

“We must prioritise our expenditure, limit our spending to items we can sustain, and eliminate wastage and graft in government.’’

 

Ighodalo also urged all tiers of government to lead by example through a drastic reduction in governance costs to reflect the austere times.

 

“We strongly advise greater transparency and simplicity in the management and communication of various subsidies, like in petroleum products and electricity, to establish their true costs that benefit the people,’’ he said.

 

He said urgent action is required to ensure food self-sufficiency by prioritising critical value chains and supporting private sector-led interventions.

 

Also, a shareholders’ leader, Mr. Patrick Ajudua, said the issue of oil theft was worrisome as it implies that the company is losing so much money to oil theft.

 

“This also makes it difficult for the country to meet the OPEC quota and negatively impacts our GDP.

 

“I applaud the approach by NIMASA in using their aircraft to track vandalism. I believe that when various stakeholders join forces, we’ll have a resolution to this issue,” Ajudua said.

 

He further reaffirmed his support for Oando management.

 

“I want to assure you of our support to Oando and once we can solve these lingering issues of oil theft, we will be able to enjoy the fruit of our labour,” Ajudua said.

 

Group Chief Executive, Oando, Mr Adewale Tinubu reaffirmed management’s commitment to continually do what’s in the best interest of shareholders.

 

In line with COVID safety protocols, shareholders were represented by proxies of their various associations at the meeting.

 

All resolutions proposed at the meeting were approved, including the election of Mrs. Nana Fatima Mede and Mrs. Ronke Shokefun as non-executive directors, the election of Adeola Ogunsemi as an executive director, the re-election of Ike Osakwe, Ademola Akinrele and Dr. Ainojie Irune as directors, the election of audit committee members, and the approval of the remuneration of non-executive directors.

 

The shareholders commended Oando’s management for appointing two women to the board of directors. Ajudua said: “I want to commend the management for the appointment of Mrs. Ronke Shokefun and Mrs. Nana Mede as directors, and we hope that they will bring value to us.”

 

President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr. Faruk Umar said: “I thank you for bringing two women to the board. This is a happy development, I hope that when we have a casual vacancy, we should fill it with a woman.”

 

Leaders of the various shareholders and proxies encouraged Oando’s management to focus on corporate actions that would be beneficial to all.

 

Shareholders applauded the company’s recent partnership with Lagos State for the launch of electric mass transit buses. They also encouraged the management team to maintain its tenacity in striving for company growth.

 

In addition, the motion to re-elect Ernst and Young (EY) as auditors of the company wasn’t proposed following confirmation by Mrs. Ester Ajibola, the representative of Ernst and Young at the meeting, that EY had resigned as auditors of the company following years of successful service.

 

She confirmed that the resignation had nothing to do with Oando or its management.

 

She said: “There are no circumstances connected with the resignation that should be brought to the notice of the members or creditors of the Company.’’

 

In view of this, Oando has confirmed the appointment of BDO Professional Services as its auditors.

(Nation)