Fuelling the Niger Delta Crisis

Fuelling the Niger Delta Crisis Africa Report N°118 28 September 2006 EXECUTIVE SUMMARY AND RECOMMENDATIONS Less than a year before Nigeria holds its third national elections since the end of military rule in 1999, tensions are running high in the southern Niger Delta. A number of militant groups have begun allying themselves to local politicians with electoral aspirations. These groups and others continue to use legitimate grievances, such as poverty, environmental destruction and government corruption, to justify increasingly damaging attacks against government and oil industry targets. Removing the incentives for violence will require granting a degree of resource control to local communities. Engaging Delta groups in sustained, transparent dialogue also remains critical to finding a solution to the militant puzzle. Equally important, credible development efforts must be supported and stiff penalties for corruption imposed upon those who embezzle and squander funds. Crisis Group’s first report on the Niger Delta[1] examined the historical and societal underpinnings of the growing insurgency. This report focuses on more recent developments. It examines the often hazy overlap between the militant Niger Delta cause and criminal and political motives, and identifies the steps required to defuse the conflict. Demands from militants have included the creation of additional states for Ijaws, amenities and jobs for rural communities, contracts and oil concessions for faction leaders and even calls for independence. The spokesman for the Movement for the Emancipation of the Niger Delta (MEND), the most vocal and best organised of the militant organisations to emerge in 2006, says his group’s goal is to achieve resource control concessions or wreak “anarchy”. Attacks since December 2005, including a spate of oil worker kidnappings, have at times forced oil production shutdowns of up to 800,000 barrels per day, threatening Nigerian government plans to nearly double production to four million barrels a day by 2010. Only some of those production losses have been offset by recent offshore developments. Two companies with foreign shareholders signalled in August 2006 that they would be withdrawing from the Niger Delta due to security concerns. The most potent weapon in the militants’ arsenal is the growing anger among the region’s twenty million inhabitants. In more than seven years of civilian rule, functionaries at the local, state and federal levels are perceived to have failed to deliver tangible economic benefits for impoverished residents. Militant groups have largely ignored the incremental administrative reforms begun since 2003 and are succeeding in drawing upon anger against a pervasively corrupt system of governance inherited from the military era. Militant groups have managed to win sufficiently broad popular support to operate openly in many communities and have not been weakened by the imprisonment since September 2005 of publicity-seeking warlord Alhaji Dokubo-Asari. To date, militants have not been sufficiently organised or united to mount a viable separatist insurgency. Most fighters would concede that winning independence for the Niger Delta remains highly unlikely, although support for such a movement is growing. Community groups in the Niger Delta complain they have few incentives to protect oil infrastructure from militant and criminal groups. For impoverished locals, government officials and even oil company staff, oil theft offers significant rewards. Since a government crackdown on oil theft began in mid-2005, piracy and kidnappings have been on the rise. Oil facilities and workers are difficult to defend, nowhere more so than in the Niger Delta’s tangle of swamps and rivers. Environmental claims are increasingly incorporated into the rhetoric of insurgency and need to be independently addressed. Locals have long complained that spilled oil from deteriorating decades-old pipelines has devastated fishing, although overfishing is also to blame. Oil companies insist that the vast majority of spills that have occurred in recent years are the result of sabotage by oil thieves and other groups trying to extort compensation payments. National elections scheduled for 21 April 2007 are causing major concern, especially in the Niger Delta. A repetition of the widespread ballot fraud of 2003 risks aggravating an already tense political climate. Many Nigerians fear President Olusegun Obasanjo’s anti-corruption campaign launched in 2003 may be too little, too late. Others have dismissed reforms as a weapon wielded against political enemies of the country’s ruling elite. Although some Western analysts have touted the merits of a recent package of promised infrastructure development in the Niger Delta under the umbrella of a centrally-controlled Consolidated Council on Social and Economic Development, few people in the Delta have faith that this will be any more effective than the failed, federally-controlled development mechanisms of the past. Resolving the Niger Delta crisis will require far greater commitment on the part of the federal government and corporate stakeholders in ensuring the oil industry operates fairly and transparently in the region, with visible benefits to the local population. Without serious and sustainable reforms, all parties stand to lose. RECOMMENDATIONS To the Nigerian Federal Government: 1. Engage in negotiations with a broad-based delegation of Niger Deltans from the region’s ethnic councils, religious groups and other civil society organisations. The terms of reference for the talks should focus on expanded local resource control as called for by the Special Committee on Oil Producing Areas in 2002; further, the venue for negotiations should be a location within the Niger Delta to allow for greater transparency and local participation, and if talks need to break off into smaller groups to address problems of individual communities, efforts should be taken to keep the process transparent. 2. Institute, while this dialogue is proceeding, a derivation formula of between 25 and 50 per cent of mineral resources, including oil and gas, to all Nigerian states, and phase this in over five years in order to avoid budgetary shock to non-oil producing states and to encourage exploration and production of other mineral resources throughout Nigeria. 3. In the short to medium term, until state and local governments are demonstrably representative of and answerable to Niger Delta communities, allocate any additional monetary resources beyond current statutory state and local government payments directly to locally-controlled foundations willing to accept the assistance and oversight of qualified, independent, international development professionals. 4. Repeal or reform legislation such as the Petroleum Act and the Land Use Act that effectively deprive local residents of an ownership stake in land and resources. 5. Consider a constitutional provision to abolish criminal immunity for the president and state governors, and encourage law enforcement bodies such as the Economic and Financial Crimes Commission (EFCC) to prosecute cases of local and state government corruption. To Nigeria’s Senate and House of Representatives: 6. Pass the proposed Nigerian Extractive Industries Transparency Initiative (NEITI) bill to entrench recent oil and other mineral industry reforms. To the State Governments of the Niger Delta: 7. Implement economic reforms and ensure that state government allocations are spent on projects that focus on health services and safe drinking water, education, job training and transportation. 8. Where state and local government development capacity is lacking, partner with reputable development professionals who have a demonstrated commitment to community participation in planning and implementation. To the UN, International Community and Donor Governments: 9. Provide resources for and support an independent environmental impact assessment (EIA) of the Niger Delta as well as a credible, independent judicial mechanism to adjudicate compensation claims, taking steps to ensure that the credibility of such an environmental assessment is not damaged by funding from or association with government and energy companies, and that compensation is distributed transparently in a manner that benefits communities rather than “benefit captors” such as politicians and militant and traditional leaders. 10. Press the Nigerian government to reform legislation such as the Petroleum Act and the Land Use Act that effectively deny local control of resources. 11. Discourage heavy-handed military operations and and encourage negotiations between the federal government and Niger Delta groups. 12. Make budget and expenditure transparency a condition for aid to federal, state and local governments and end relationships with local and state administrations that have failed to address corruption. 13. Offer the good offices of a neutral country without oil interests in Nigeria to mediate between the federal and state governments and Niger Delta parties, based on the proposal already accepted in principle by several Delta activist and militant groups. To the Energy Companies: 14. Make individual company project environmental impact assessment (EIA) studies more transparent and accessible to community groups. Obtain community assent before proceeding with infrastructure and other developments. 15. Abide by the rulings of independent arbitration and court decisions looking into environmental claims. Both the federal government and companies should ensure that they pay their share of pollution compensation awards. 16. Encourage corporate transparency by releasing detailed, public reports of expenditures, including costs of development and payments to governments, community groups and contractors. 17. End illicit and semi-illicit payments to both militants and paramilitary security forces deployed to protect oil installations. 18. Abolish the host-community system of payments to communities in favour of a system that deals with communities more holistically through ethnic and regional councils. 19. Refashion joint venture partnerships to include local participation and ownership and, to this end, enter into talks with government and local groups. To the Energy Companies’ Home Countries: 20. Legislate to require companies with overseas operations to publicly disclose all payments to foreign governments. This initiative should be synchronised through the Group of Eight to provide additional credibility to extractive transparency efforts in developing nations. Dakar/Brussels, 28 September 2006 [1] Crisis Group Africa Briefing N°115, The Swamps of Insurgency: Nigeria’s Delta Unrest, 3 August 2006.