OIL WEALTH AND THE NIGERIAN CONSTITUTION
Conflict in the Niger Delta is directly related to the debates, ongoing since before independence, about the structure of the Nigerian polity. It can be assumed that there would have been disputes as to the relationship between center and periphery in Nigeria in any economic circumstances, given the complexity of the country and the lack of established nationwide democratic institutions at independence. Yet the addition of oil production and oil wealth to the difficulties already posed by the problem of ruling a country of at least 250 ethnic groups, each with its separate traditions of government, has greatly increased the potential for conflict and the stakes at play in that conflict. The following section attempts to give some idea of the way in which the Nigerian federal system has developed and how it has been shaped by the influx of oil wealth. At the heart of discontent among the oil producing communities is an acute sense that the wealth derived from their land is siphoned off by the federal government and never returned: the seemingly dry debates on revenue allocation formulae are central to the cycle of protest and repression.
State Creation and Revenue Allocation
The history of Nigeria since independence has been dominated by attempts to restructure the federation into a form acceptable to all the various peoples it houses. The trend has been towards increasing fragmentation of state structures, as the federal government has sought to appease the demands of the different minority groups by the creation of new states and local government areas. This fragmentation of government has been, paradoxically, paralleled by increasing centralization in practice, as individual states have become less and less viable without federal financial support and oil revenues have supplanted all others as the foundation of the Nigerian economy.
The boundaries of the territory now known as Nigeria were first defined in 1907. Nigeria itself was brought for the first time under one government in 1914 by the amalgamation of two British colonial protectorates. Although the country was in theory ruled as a single unit, in practice the northern and southern parts of the country were administered by the British as distinct entities with little attempt at coordination. The policy of “indirect rule” strengthened, centralized, and reduced the flexibility of existing structures of authority, especially in the north, where powerful emirates formed the basis of local government. In 1939 the colonial government divided the Southern Protectorate into the Eastern and Western Protectorates, but the three units were still administered without any central political focus or representative institution. Only in 1954 did Nigeria became a true federation with a central government, including a Federal House ofRepresentatives (responsible for foreign relations, defense, the police, overall aspects of trade and finance policy, and major transport and communications issues), and three constituent components with a large degree of autonomy in all other matters: the Northern, Western, and Eastern Regions. At the same time, elected regional houses of assembly were created for the Eastern and Western Regions with independent legislative powers, the British governor retaining only limited responsibilities; the North, however, at the request of its own house of assembly, only gained self-rule in 1959, one year before independence.55
At independence, the Western Region was the richest, as a result of the presence of the capital and port of Lagos, cocoa production, and much of the industrial development in Nigeria, as well as early access to education. The Eastern Region, economically dependent on palm oil production, already suffered substantial population pressure on the available land and depended on food imports. The Northern Region was larger in population and area than the other regions combined, but was also the poorest and least educated.56 In each of these three regions, a majority ethnic group constituted about two-thirds of the population, the Hausa-Fulani in the north, the Yoruba in the west, and the Igbo in the east; the remaining third being made up of various minority groups. In the absence of an indigenous or even colonial tradition of political unity, ethnic loyalties became the dominant force in political organization; as a consequence, the minority groups, of which there may be 250 or more in Nigeria, were in practice politically subordinated to their larger neighbors.
During the debates in the constitutional conference that was established in 1953 to decide the form of the future independent state, these minority groups expressed fears as to their domination by the majority Hausa-Fulani, Yoruba, and Igbo in each region. The British government appointed a commission of inquiry to investigate these fears and advise on safeguards to be included in the constitution to address them. This commission, known as the Willink Commission, after its chair, Henry Willink, reported in 1958. The Willink Commission considered and rejected demands for the creation of new states, but recommended certain other administrative arrangements to allay the fears of minorities, in the form of constitutional guarantees of certain rights, regional advisory councils for “minority areas,” and a federal board to consider the specific problems of the riverine areas of the Niger Delta.57
The tripartite structure of colonial rule was thus inherited by the new government at independence in 1960, reflecting and reinforcing the political dominance of Nigeria’s three major ethnic groups. Although the Willink Commission had rejected the option, minority groups remained convinced that the creation of new states in which they would be majorities would improve their political and economic status. These demands became impossible to resist by those playing ethnic politics at federal level. As early as 1963 a new constitution was adopted and the Western Region was divided into two, with the creation of the Mid-West Region, giving autonomous status to the two administrative districts where Yorubas were not in a majority.
The first military coup of January 1966, in which northern Prime Minister Sir Abubakar Tafawa Balewa was killed and which brought Maj.-Gen. Johnson Aguiyi-Ironsi, an Igbo, to power saw a brief and disastrous attempt to create a unified state, with the abolition of the federal system. The immediate reaction fromthe north, threatened by the southern dominance that would result from centralized government on a unified basis, resulted in a July counter-coup staged by junior northern army officers, which brought Lt.-Col. (later Gen.) Yakubu Gowon to power at federal level. In May 1967, Gowon announced that the four regions would be abolished and replaced by a new federal system based on twelve states, which sought to address the concerns of minority groups and thus increase their support for the federation, while at the same time breaking down the powers of the regions. The Igbos’ loss of central political power was thus exacerbated by the creation in the Niger Delta of Rivers State, which cut off the Igbo heartland from direct access to the sea and gave control of Port Harcourt, an important port at the beginning of its oil boom where there were substantial Igbo commercial interests, to a new state government. Shortly after the announcement of the new state system, in May 1967, the secession of Biafra was declared by the military governor of the former Eastern Region, Lt.-Col. Odumegwu Ojukwu. The civil war of 1967 to 1970, lost by the secessionists, increased the strength of federal government and the centralization of power.
The creation of the twelve state system, which came into effect in April 1968, began an (as yet) endless process of alteration to the system of revenue allocation in the federation between central and state governments and among the states. Increasingly, states contributed their revenues to a Distributable Pool Account (DPA) at federal level, shared out on the basis of population, need and other criteria, while the “derivation principle,” by which revenues were spent in the geographical area from which they were derived, was downgraded. Federal expenditure came to dominate state expenditure: whereas during the First Republic federal and regional expenditure were about equal, by 1975/76 the federal share of expenditure was approximately 70 percent and the states came increasingly to depend on transfers from the center for their revenue.58 During this same period, revenues from the oil industry, derived largely from the south eastern states, surged: many of the adjustments to revenue allocation were attempts to counteract the unbalanced situation the oil wealth created.
In 1967, when the new states were created, mining rents and royalties were split 15 percent to the federal government, 35 percent to the DPA, and 50 percent on a derivation basis. Obvious imbalances between states led to the review of the system, and in 1970 (backdated to 1969) the shares of mining rents and royalties became 5 percent to the federal government, 50 percent to the DPA, and 45 percent to the state of derivation. From 1971, the federal government introduced a distinction between onshore and offshore rents and royalties, taking 100 percent ofoffshore revenue itself. In 1975, with the arrival of massively increased oil revenues following the OPEC price rise of 1973, the share of onshore revenue paid to the state of origin was reduced to 20 percent, while the federal government was to pay its entire share of on and offshore revenue into the DPA. In 1979, the derivation principle was dropped altogether in favor of a Special Account for mineral producing areas.59
The influx of cash placed strong pressures on the government to increase public expenditure in line with increased revenue: total federal expenditure increased by a massive 100 percent in 1974, and doubled again the next year.60 In contrast to expenditure from taxation receipts, this bonanza from “rental” income brought no political pressures for accountability in the use of public funds; rather, it brought greater demands for money to be spent on patronage without thought as to its best allocation. Following a pattern common to many states dependent on extractive industries for their revenue, the non-oil sector of the economy in Nigeria, including agriculture, was neglected and steadily declined: Nigeria shifted from being an exporter of agricultural products to being a major importer of food. States became increasingly dependent on federal allocations, financial discipline and accounting deteriorated rapidly, and levels of imports and expenditure reached unsustainable levels. In the context of the weak political institutions of a newly independent and deeply divided state, there was little chance that any economiccontrol could be exercised.61 Politics instead revolved around the “distributive” concerns generated by expenditure of the oil wealth.
In July 1975, Gowon was overthrown by a fresh and bloodless coup, which installed the six-month administration of Gen. Murtala Mohammed, before he was killed in an abortive coup attempt and succeeded by his deputy, Lt.-Gen. Olusegun Obasanjo. In February 1976, the Murtala Mohammed government increased the number of states to nineteen, adding four in the north, two in the south west, and one in the south east. In 1979, the Obasanjo regime handed over power to the civilian government of Alhaji Shehu Shagari, following a lengthy process of constitutional debate, first in a constitution drafting committee established in 1977 and subsequently in a constituent assembly which took over the process in 1978. The 1979 constitution provided for an executive president, on the U.S. model (by comparison with the parliamentary system of the First Republic), and introduced, for the first time in an explicit way, the concept of the “federal character” of the government, by which was meant the requirement that “there shall be no predominance of persons from a few States or from a few ethnic or other sectional groups in [the federal] government or in any of its agencies.”62 The president was required to appoint at least one minister from each state, and this effectively ethnically-based principle of office-sharing was duplicated at other levels of government.
The period of civilian rule saw a loss of power from the federal government to the states. In particular, states demanded and eventually received a greater share in allocation of revenues. The formula in operation in 1979, giving the federalgovernment 76 percent of shared revenues, the states 21 percent, and elected local governments (a new uniform tier of government) 3 percent, was rejected. After much political debate and conflict, a new formula finally came into effect in 1982, giving the federal government 55 percent, states 30.5 percent, local governments 10 percent, and—in a concession to the demands of the oil rich states since the derivation principle had been abolished in 1979—4.5 percent to be split three ways for the benefit of the oil producing communities (1 percent to respond to the ecological problems caused by oil production, 2 percent to go into the accounts of the mineral-producing states on a derivation principle, and 1.5 percent directly for the development of mineral-producing areas).63 All revenue from offshore production went to the federal government. The debate around revenue allocation from the center itself generated campaigns for the creation of new states (and new local government areas), as local politicians sought to benefit from the patronage that resulted from distributing revenue at state level.
At the same time, financial controls on government spending declined yet further. The government took no steps to guard against future revenue falls by investing abroad or creating an oil stabilization fund. Currency appreciation and domestic inflation made local industries uncompetitive internationally and boosted imports, leading to balance of payments difficulties during oil-induced recessions in 1978-79 and from 1981 until the early 1990s. Expenditure rapidly outpaced income, and, with oil price slumps in the early 1980s, external debt more than doubled from 1980 to 1985. The oil price fell from around U.S.$32 per barrel in 1981 to approximately U.S.$13 per barrel in 1986, and Nigeria’s gross national product (GNP) fell from a high of U.S.$99,539 million in 1980 to a low of U.S.$24,341 million in 1987. In the same year, the ratio of debt to GNP reached 112.8 percent.64
This boom and bust cycle contributed to political instability: in January 1984, military officers again put an end to civilian rule, and installed a fresh military regime under Maj.-Gen. Mohammadu Buhari, which immediately launched a “war against indiscipline,” cracking down on dissent, and, supposedly, corruption, with a barrage of decrees. Buhari in turn was overthrown by Gen. Ibrahim Babangida in August 1985, who early on promised a return to civilian rule. As the transition program was repeatedly extended, and with it the competition for future revenue share and agitation for more states, Babangida raised the number of states by two,to twenty-one, in 1989 and by another nine, to thirty, in 1991. Local governments were also strengthened, and their share of revenue allocation increased from 10 to 15 and then 20 percent, with payments to be made directly from the federal government, and not via states.
In 1992, in the context of Babangida’s transition program, the government established the Oil Mineral Producing Areas Development Commission (OMPADEC) “to address the difficulties and sufferings of inhabitants of the Oil Producing Areas of Nigeria,” and the share of federal revenue allocated specifically to oil and mineral producing communities was doubled from 1.5 to 3 percent.65 In February 1996, the senior management of OMPADEC was fired, amid allegations of corruption and mismanagement, and a sole administrator appointed. The commission was still allocated _2.042 billion (U.S.$22.68 million) in 1996 (according to General Abacha’s 1997 budget speech), but at the time of Abacha’s death in June 1998 was moribund and threatened with closure.66 In addition, the government inaugurated the board of a new Petroleum Special Trust Fund (PSTF) in March 1995, established by decree the previous November, with a mandate to use revenue from increases in the prices of petroleum products to “identify key projects in all parts of the federation so as to bring about equitable development to all our communities.”67 The PSTF, which did not begin full-scale operations until1997, was seen by members of the southern minorities as an effort to undermine OMPADEC’s allocation of oil wealth to the oil producing communities.
In June 1993, the presidential elections which were to be the culmination of the transition program were annulled, when it became clear that Moshood. K.O. Abiola, a Yoruba from the southwest, was going to win. An interim government was put in place, itself overthrown by yet another coup in November 1993, which installed General Sani Abacha in power. Babangida’s transition program was aborted, to be virtually duplicated by a fresh program, announced in October 1995, to terminate on October 1, 1998.68 The Abacha administration engaged in yet another round of inconclusive—because undemocratic and military-controlled—debates over the structure of the federation. In May 1994, elections were held for a national constitutional conference, although of 369 members, ninety-six were nominated by the head of state, and other candidates were carefully screened. The conference produced a report and draft constitution, which was presented to General Abacha in June 1995. The draft constitution was not published before the death of Abacha in June 1998, though elements of the constitutional provisions had become known; for example, that there should be a rotational presidency, so that each region of the country would be represented in turn, and that other offices should similarly represent the “federal character” of Nigeria.
The Abacha government’s transition program also brought a multiplication of administrative units. A State Creation and Local Government Boundary Adjustment Committee considered requests from those groups as yet unrecognized within the federal system for their own government structures, and made recommendations to the federal government. In October 1996, General Abacha increased the number of states yet again, to thirty-six, at the same time increasing the number of local government areas by 183 to 776 (including those in Abuja, the Federal Capital Territory).
In July 1998, following the death of Abacha, the new head of state Gen. Abdulsalami Abubakar announced that the Abacha transition program would be scrapped, and a new program instituted, under more open conditions, to terminate in May 1999; however, the constitution presented to Abacha in 1995 would be retained (despite the defects in the drafting process). Abubakar promised to “publish and widely circulate the draft constitution presented by the National Constitutional Conference prior to consideration and approval by the Provisional Ruling Council,” and the 1995 draft constitution was finally published in September 1998.69 A committee was appointed to receive public comments and make recommendations as to the draft constitution and report back by December 31. In its report, the committee recommended instead the adoption of the 1979 constitution, with some amendments, including adopting the provisions of the 1995 draft constitution for an increase in the revenue allocation to the oil producing regions.
The 1995 draft constitution reflects the fact that the constitutional conference could not reach a consensus on the question of future revenue allocation, although it recognized the need for greater revenue to go to the oil producing areas. It provides that:
The President, upon the receipt of the advice from the National Revenue Mobilisation, Allocation and Fiscal Commission, shall table before the National Assembly proposals for Revenue Allocation from the Federation Account. In determining the formula, the National Assembly shall take into account allocation principles especially those of Population, Equality of States, Internal Revenue Generation, Land Mass, Terrain, as well as Population Density, provided that the principle of derivation shall be constantly reflected in any approved formula as being not less than 13 percent of the revenue accruing to the Federation Account directly from any natural resources, so however, that the figure of the allocation for derivation shall be deemed to include any amount that may be set aside for funding any special authority or agency for the development of the State or States of derivation.70
Although the allocation of 13 percent of oil revenue to the states from which it is derived would represent a marked return to earlier patterns of revenue allocation,it is not clear that the allocation would directly benefit the communities in which the oil is produced, rather than the state governments in the oil producing areas, where the money would likely be used for patronage rather than development. For the time being, however, the revenue allocation to the oil producing communities remains at 3 percent.
General Abubakar also promised that the PSTF would apply the bulk of its resources to the roads, education and water supply sectors, and that “a fully reconstituted OMPADEC will be provided with the wherewithal as provided in the Revenue Allocation Formula to enable it to discharge its obligations to the oil producing areas.”71 A panel to probe the financial transactions of OMPADEC over the past few years was established, including the role of sole administrator, Eric Opiah, and other officers.72 General Abubakar also announced that NNPC would enjoy greater independence and authority; after dismissing General Abacha’s cabinet, he failed to appoint a new minister of petroleum, instead appointing only a special adviser within the president’s office, Aret Adams, a former head of NNPC. In November 1998, a new board for OMPADEC was established, headed by former chief of naval staff Air Vice Marshall Dan Princeton Omotsola.73 General Abubakar visited the delta region November 18 to 20, 1998, and promised increased investment to improve the standard of living of the oil producing communities.74
The Nigerian economy currently faces further shocks as a result of the falling price of oil on the international market, reducing the pot that can be distributed among those who demand a share. The 1998 budget was based on an estimated average oil price of U.S.$17 per barrel; in February 1998, it had fallen to U.S.$13 per barrel, and remained at depressed levels for the following months, dipping below U.S.$10 per barrel at the end of the year. In his independence day speech on October 1, 1998, General Abubakar estimated the impact of the fall in the oil price to be a decrease of 20 to 25 percent in foreign exchange earnings;75 in his January 1, 1999 budget speech, Abubakar announced that actual receipts from crude oil in 1998 had amounted to only 62 percent of budgeted revenue.76Moreover, the government has few reserves, having failed to use the windfall additional profits brought by the rise in oil prices during the 1990-91 Gulf crisis wisely.77 Even during the period when oil export revenues were increasing, gross domestic product per capita decreased;78 per capita GNP declined from around U.S.$1,100 per year in 1980 to an estimated U.S.$260 in 1995.79 External debt was estimated by the Nigerian government to stand at U.S.$27.08 billion at the end of 1997, down from U.S.$32.58 billion at the end of 1995, though the official statistics are greeted with some skepticism in financial circles.80 According to one analyst of the Nigerian economy: “It is clear that the resource mismanagement in Nigeria over the last thirty years has left the economy in dire financial straits and has put at risk the very industry on which it depends.”81
The revenue allocation formulae do not tell the whole story of the distribution of the oil money. The Nigerian political economy has come to depend on a spectacular system of corruption, involving systematic kickbacks for the award of contracts, special bank accounts in the control of the presidency, allocation of oil or refined products to the politically loyal to sell for personal profit, and sweeteners for a whole range of political favors. In effect across all sectors of the economy, this system of corruption is particularly entrenched in the oil sector, its natural home. It is this corruption that ensures that the oil money is sent to private bank accounts in Zurich or the Cayman Islands rather than spent on primary health careand education in Nigeria.82 Technical requirements of legislation theoretically regulating the oil industry are often overlooked in the case of those who toe the right political line: the “presidential allocation” was said to amount to up to 200,000 bpd, one tenth of Nigeria’s production, under General Abacha, and to have been distributed for political support, including to politicians participating in Abacha’s transition program. Decisions relating to oil contracts were hyper-centralized in the president’s office to ensure that the benefits involved went only to political supporters.
The oil trading companies—Swiss-based Addax and Glencore, and London-based Arcadia had the largest share of the Nigerian trade under General Abacha’s government—which purchase Nigerian oil for onward sale on the spot or term markets, have close links with individual political figures in the military or civilian hierarchy. Getting a share of the trade is dependent on political patronage, and substantial commissions are paid for that patronage. The death of Abacha, the consequent falling from favor of the Lebanese-born Chagoury brothers (who had influenced decisions as to the allocation of political benefits in relation to the oil industry during his period as head of state), the dismissal of oil minister Daniel Etete, and the reforms announced by Abubakar temporarily damaged the positions of some of the traders, especially Glencore. However, their fortunes appear to be recovering as previous ways of doing business, including generous commissions, have reasserted themselves.83
Nigeria’s oil resources have also been used to buy favor in the region. In September 1997, General Abacha awarded six crude term contracts to member states of the Economic Community of West African States (ECOWAS), allowing them to sell the oil or use it, as they pleased, bringing to nine the number ofneighboring governments benefitting from Nigerian largesse.84 These contracts were terminated in September 1998 by the government of General Abubakar.85
Millions of dollars appropriated by
Abacha and his close associates are currently being recovered by the
of General Abubakar, and many contracts awarded by Abacha have been
Such efforts are traditional on change of regime, but have yet to lead
to cleaner government in the long term: a commission of inquiry headed
by economist Pius Okigbo, appointed by General Abacha himself shortly
taking power in 1993, estimated that U.S.$12.2 billion in oil earnings
had disappeared between 1990 and 1994, but nobody was brought to
for this theft.86 Nigeria’s politics revolve
about the distribution of the oil money, whether officially (in the
of debates over revenue allocation) or unofficially (as military and
politicians seek favor with those in a position to reward them with
to “chop” money from contracts), and as long as the oil flows it will
difficult to overcome this legacy.
55 At the time the British first proclaimed a protectorate over northern Nigeria, the traditional rulers in the area, the emirs, were promised that there would be no interference in matters of religion. Missionary activities were therefore disallowed. As a consequence, the northern region was in the main excluded from European education, largely provided by the missionaries in southern Nigeria. Colonial administration in the north therefore came to be dominated, in the posts filled by Nigerians, by southerners. For this and related reasons, the Northern Peoples’ Congress (NPC), which held the majority of seats in the Northern Region House of Assembly, at one point wanted independence to be delayed until sufficient northerners could be trained to fill government positions previously held by expatriates or southerners. In 1957, however, the NPC decided to ask for self-government for the Northern Region in 1959 and to join with other parties in pressing for independence in 1960. Report of the Commission Appointed to Enquire into the Fears of Minorities and the Means of Allaying Them (London: HMSO, July 1958; hereafter “Willink Commission Report”), Chapter 1, paragraph 12.
56 Forrest, Politics and Economic Development in Nigeria, p.21.
57 The Willink Commission considered each region of Nigeria (Northern, Western and Eastern) and the demands for state creation from minorities. In each case, it rejected the idea of new states on the grounds that: “it is seldom possible to draw a clean boundary which does not create a fresh minority: the proposed state had in each case become very small by the time it had been pared down to an area in which it was possible to assert with confidence that it was desired.... [Furthermore] The powers left to the Regions by the decision of 1953 are considerable, and ... we do not regard it as realistic to suppose that any of the Regions will forgo the powers they now have.... [A] new state created today would have to compete with the existing Regions, and the cost in overheads, not only financial but in resources—particularly of trained minds, would be high. This consideration, when combined with the difficulty of finding a clean boundary, was in each particular case to our minds decisive.” Willink Commission Report, Chapter 14, paragraph 3.
58 Forrest, Politics and Economic Development in Nigeria, pp.50-51.
59 S. Egite Oyovbaire, “The Politics of Revenue Allocation,” in K. Panter-Brick (ed.), Soldiers and Oil (London: Frank Cass, 1978); Forrest, Politics and Economic Development in Nigeria, p.53.
60 Forrest, Politics and Economic Development in Nigeria, p.133.
61 See, for example, Terry Lynn Karl, The Paradox of Plenty: Oil Booms and Petro-States (Berkeley: University of California Press, 1997), pp.206-208. Nigeria, it is argued, had an extreme case of “Dutch disease [named by economists after Dutch elm disease], a process whereby new discoveries or favorable price changes in one sector of the economy—for example, petroleum—cause distress in other areas—for example, agriculture or manufacturing.... Persistent Dutch Disease provokes a rapid, even distorted, growth of services, transportation, and other nontradeables while simultaneously discouraging industrialization and agriculture—a process that policy makers seem incapable of counteracting.” Ibid., p.5. As Karl notes, “Oil is the most important internationally traded commodity as measured by volume and monetary value. The significance of its role leads to a relatively inelastic demand, which, when combined with the small number and large size of resource owners, the high entry costs into the industry, and the difficulties inherent in energy substitution, produces extraordinary rents with a distinctive character: they have almost nothing to do with the productive processes of the domestic economy.” Ibid., p.48.
62 Section 14(3) of the 1979 constitution.
63 Allocation of Revenue Act No. 1 of 1982; see Forrest, Politics and Economic Development in Nigeria, p.83.
64 Karl, Paradox of Plenty, Tables A-14 and A-15, based on World Bank World Debt Tables.
65 Decree 23 of 1992. Oil Mineral Producing Areas Development Commission, “Policy Briefing: The Dawn of a New Era,” (OMPADEC: Port Harcourt, 1992). The commission was to “embark on physical and human development in the Oil Producing Communities, with the objective of: (a) Compensating, materially, the Communities, Local Government Areas and States which have suffered damage (ecological, environmental etc) or deprivation as a result of mineral oil prospection in their areas; (b) Open up the affected areas and effectively link them up socially and economically with the rest of the country by producing various forms of infrastructural and physical development.” Ibid.
66 Akpandem James, “Why OMPADEC May be Scrapped,” Punch (Lagos), March 4, 1998.
67 “General Abacha Presents 1996 Budget,” Lagos NTA Television Network, February 15, 1996, as reported by BBC SWB, February 19, 1996. The price of gasoline (petrol) at the pump increased from _3.25 (U.S.4¢) to _11 (U.S.12¢) per liter in November 1994; of this, _5.30 (U.S.6¢) was allocated to the PSTF. The PSTF received _25 billion (U.S.$277 million) in 1995, _46 billion (U.S.$511 million) in 1996, and _39 billion (U.S.$433 million) in 1997 in petroleum product revenue. IMF, Nigeria: Selected Issues and Statistical Appendix, p.54. On December 21, 1998, the fuel price was increased to _25 (U.S.28¢), but the breakdown for the PSTF was not announced at the time of going to press. The Petroleum (Special) Trust Fund Decree No. 25 of 1994 states that the fund shall be paid “all the monies received from the sale price of petroleumproducts less the marketers margin,” and apply the money to projects in road and railway transportation, education, health, food supply, water supply, security services, alternative sources of energy, rural development programs and such other sectors as may be approved (Sections 1(1) and 3(1)(c)). Members of the board managing the fund hold office at the pleasure of the head of state (Sections 6(1), 7(2), and 10).
68 See Human Rights Watch/Africa, “Permanent Transition: Current Violations of Human Rights in Nigeria,” A Human Rights Watch Short Report, vol.8, no.3(A), September 1996, and “Transition or Travesty? Nigeria’s Endless Process of Return to Civilian Rule,” A Human Rights Watch Short Report, vol.9, no.6(A), October 1997.
69 Reuters, July 21, 1998.
70 Section 163(2) of the draft constitution of 1995, as finally published in September 1998.
72 “Abubakar Pledges Petroleum Ministry Reorganization,” Lagos NTA TV, September 7, 1998, as reported by FBIS, September 9, 1998; Vanguard (Lagos), August 24, 1998.
73 Reuters, November 10, 1998.
74 “Nigeria’s Abubakar Urges Patience in Oil-Producing Areas,” Lagos Radio Nigeria Network, November 18, 1998, as reported by FBIS, November 19, 1998.
75 “Abubakar on country’s domestic and foreign policies,” Voice of Nigeria External Service, October 1, 1998, as reported by BBC SWB, October 3, 1998.
76 1999 Federal Budget Address by General Abdulsalami Abubakar.
77 Rather than setting aside any of the windfall to provide against future price falls, the government increased expenditure, which then remained at elevated levels even when oil prices and revenue fell in 1991. World Bank, World Development Report 1997: The State in a Changing World (Washington DC: Oxford University Press, 1997), p.49.
78 During the period 1986 to 1992, oil export revenues increased at an average 13 percent a year, while GDP, measured in current U.S. dollars, decreased by an average 7 percent a year. Khan, Nigeria, p.183.
79 Khan, Nigeria, Table 8.3; World Bank, World Development Report 1997, Table 1, based on an estimated 1995 population of 111.3 million.
80 “President Abacha Presents 1998 Budget,” Radio Nigeria, Lagos, January 5, 1998, as reported by BBC SWB, January 13, 1998; Tony Hawkins, “Foreign Debt Burden Grows,” Financial Times (Special Survey on Nigeria), May 26, 1995. The IMF estimated that Nigeria’s external public debt at the end of 1997 was U.S.$28.7 billion, based on “an amalgam of debtor and creditor data,” equivalent to 75 percent of GDP, with debt obligations falling due in 1998 projected at 36 percent of exports. IMF, Nigeria: Selected Issues and Statistical Appendix, p.81.
81 Khan, Nigeria, p.202.
82 Corruption of this type is common to similar oil-based economies, but has reached “epidemic proportions” in Nigeria. See Karl, Paradox of Plenty, p.208.
83 Energy Compass, vol.8, no.27, July 3, 1997; Seye Kehinde, “The Big Swindle,” News (Lagos), December 26, 1994; “Over a Barrel,” Africa Confidential vol.36, no.6, March 15, 1995; Obed Awowede, “Plundering and Looting Unlimited,” Tell (Lagos), August 24, 1998; Energy Compass, vol.9, no.39, September 25, 1998; Energy Compass, vol.9, no.41, October 9, 1998. In September 1998, the Chagourys were reported to have fled the country. The oil trading companies largely use Nigerian crude, whose price is linked to Brent crude from the North Sea, to position themselves in the Brent market.
84 The six states were Benin, Burkina Faso, Côte d’Ivoire, Guinea, Mali, and Niger, who joined Gambia, Ghana and Togo in receiving allocations of between 10,000 and 30,000 bpd of Nigerian crude. The governments would benefit either by refining the oil, if they have refining capacity, or by selling it at a premium to west African crude traders. Energy Compass, vol.8, no.37, September 12, 1997.
85 Energy Compass, vol.9, no.41, October 9, 1998.
Rupert, “Nigerian Oil Corruption Began at the Top,” Washington Post,
June 10, 1998.
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