Nothing brings home the impact of MEND militancy that the reality that Nigeria's oil revenue was cut in half within the first quarter of 2009. MEND stepped up its attacks on oil installations this year and has steadily interrupted oil production. Government officials believe that the nation losses an average of 1 million barrels per day to militant activity. As a result, Nigeria has once again lost its position as Africa's King of Crude to Angola.
As Nigeria depends on oil income, this drop in revenue directly impacts government spending at all levels. Prior to the release of this news, the Nigerian government indicated that the 2010 budget would include a deficit of N1 trillion. That oil revenue in 2009 has already dropped by half suggests that the 2010 deficit could be even larger, further cutting into proposed plans by the Yar'Adua administration to accomplish the Millennium Goals and achieve the ambitious Vision 2020 objectives. And, considering that the nation's foreign reserves continue to drop, from approximately $60 billion in November 2008 to $43 billion as of July 8th, 2009, this drop in revenue further compounds the fact that the federal government is relatively cash strapped. That will in turn have a trickle down effect on everyone from small and large business owners to the average person.
Additionally, the promise by President Yar'Adua to generate a minimum of 6000MW by December 2009, has already been reneged upon by the current Minister of Power. Similarly, the blame for this was placed on militancy. Diminished oil revenue likely means that the publicly announced plans to use investor and government funding for the development of the power sector will be stalled even further. In a country where businesses are closing as a result of insufficient power supply and those fortunate enough depend on diesel generators, such a prognosis is unsatisfactory.
MEND announced a 60-day truce after its attack on the Atlas Cove Jetty and in reaction to the release of its leader, Henry Okah. However, one can only wonder whether this truce will generate a lasting peace that can enable the stability necessary for the development that MEND claims to seek and that Nigerians need to create future of infinite possibilities for citizens. Based on the history of MEND-government relations, there is a possibility that MEND will return to violence and continue to interfere with oil revenue.
COULD THIS BE A SILVER LINING?
There is also the possibility that this drop in oil revenue could be a catalyst that forces all levels of government to effect the diversification of the nation's economy. News reports indicate that Nigeria plans to tap into gas reserves to create "aggressive GDP growth and national energy sufficiency", that coal will be mined for domestic energy and potentially export. There are also reliable reports that mining will be expanded to take further advantage of Nigeria's lucrative gemstone resources and the Yar'Adua administration has taken steps to support local farmers with new varieties of cash crops such as cassava which is a major national export. With regard to cassava, ethanol from the crop could be used to power automobiles as is the case in Brazil and some argue that cassava-based ethanol would create savings of up to $6.1 billion by 2012.
Diminishing oil reserves are a clear indication that the time has come to actually maximize the benefits available from Nigeria's many resources so as to limit the national reliance on oil and other petroleum products. The question becomes whether the administration will be able to accomplish the beginnings and entrenchment of such economic diversification within the 2 years Yar'Adua has left until the next Presidential elections in 2011., pa Nigerians must hope that despite the odds, the Yar'Adua administration manages to succeed because there is no more time for failure, particularly as the nation's oil expiration date draws near.
From the Archives:
- Nigeria's Oil Expiration Date Draws Near
- MEND Attacks In Lagos
- Nigeria's Oil War - A Distraction?
- War In the Niger Delta
- No Longer King of African Crude?
- The Global Food Crises, Nigeria & MEND
- Port Harcourt & Nigeria Under Siege
- Is Nigeria A Breeding Ground for Terrorism?