A Dutch court ordered a Nigerian subsidiary of the
oil giant, Shell, last week to compensate for the damage caused by oil spills to
local farmers on its watch in the oil-rich Niger Delta region, in 2013.
The unprecedented ruling will have server
repercussion for the international oil companies, which work in Nigeria – and
beyond its borders.
Shell had been denying the allegation that it was
responsible for the oil spills that ruined the livelihood of farmers living in
the region; instead, it had been blaming it on sabotage.
Of course, sabotage and oil theft are rampant in the
region. The Dutch court, however, made the ruling while holding the Nigerian
subsidiary responsible for the damage and ordered the compensation; in what
form it will take is to be spelt out soon.
The ruling has made the villagers affected by the
disaster happy and they will get some form of compensation, much to their
delight.
In Nigeria, the state of economy as a whole has been
in the doldrums for the past few years in light of falling oil prices. There
are no indications that it will see any green shoots in the near future across
the vast Nigerian landscape soon, if the status quo does not change in an
irreversible way.
For instance, despite being the largest oil producer
in Africa, 48% of Nigeria’s population still live in extreme poverty, whereas
the same figures for Ethiopia and Kenya are 24% and 16% respectively – without
being blessed with black gold; moreover, Nigeria has the second largest oil
reserves in Africa and is the 12th largest oil producer in the world.
Since 75% of Nigeria’s government revenue comes from
oil, the authorities have to walk a tight rope in addressing other pressing
issues like infrastructure projects, health and education.
In addition, the growing insurgency of Boko Haram and military’s inability to contain its influence hardly provide incentives to the potential investors; kidnapping and hostage-taking in remote region are endemic; a series of kidnappings involving school children in recent months elevated the worrying trend to a new level.
Nigeria’s lack of oil refinery facilities, meanwhile,
make Nigeria’s woes even more complicated; it, perhaps, stems from the investor
fatigue due to lawlessness in the oil-rich regions and of course, poor governance
in many layers of both regional administrations and that of the federal bodies:
as a result, it has to send out crude oil to foreign countries for refining and
then import back, which amounts to 70% to 80% of the national needs, from lands
as far away as the US and Switzerland!
On a positive note, private companies have begun
building their oil refinery facilities to address the critical need in recent
years. The hurdles that they have to overcome, however, are mounting, despite
the federal government’s determination to make a difference.
Although a central authority controls the oil
licences and entry of international players into the oil sector, the lack of
transparency and institutional failures have plagued the whole mechanism for
decades, with oil money amounted to billions of dollars being not accounted
for.
It will take years, if not decades, to address the challenging
issues faced by the oil and gas sector – the main lifeline of its economy. Up
until it takes meaningful measures to distribute the national oil wealth across
the regions which are entitled to lion share, the nation would never be able to
breathe a collective sigh of relief while feeling it finally reached where it
should be.
