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NIGERIA - Profile - Olusegun Obasanjo.

Last month Nigerian President Obasanjo named 12 new ministers in a reshuffle of his cabinet. He made his oil adviser Edmund Daukoru a state minister in charge of the petroleum sector. Thus after six years in office, Obasanjo ceded direct responsibility for the oil industry to a minister. Nigeria's key industry - which supplies 95% of its foreign earnings and 80% of the national budget - petroleum had been directly controlled by the presidency since Obasanjo's election marked the end of military rule in 1999.

Asked two years ago why he had not named an oil minister, Obasanjo said: "When I came to power, the people who came to me looking for jobs only asked for two ministries; oil and transport. That's why I didn't give out oil". Nigeria exports most of its 2.5m b/d oil output (see Part 3). But the oil industry has been plagued by corruption and most of the 130m-strong population remains very poor.

Other key appointees last month included the president's assistant on budgets Oby Ezekwesili - dubbed "Madam Due Process" because of her reputation as a battler against corruption - and the president of the Nigerian Bar Association, Bayo Ojo. Obasanjo is due to step down at the end of his two-term tenure in May 2007.

Nigeria, Africa's largest oil producer, is building a tracking mechanism for government spending on poverty related sectors. The government has begun an audit on the oil industry, but is still waiting for key laws to be passed relating to transparency and governance. Thanks to Obasanjo's efforts, Abuja is counting on a potential write-off of $18 bn of Nigeria's $30 bn debt to the Paris Club, the informal group of official creditors.

During a visit to Washington on May 5, Obasanjo said he wanted oil prices to stabilise at what he called a "reasonable" level, adding: "We want stability of price, and we want stability and security of supply". He made the comments outside the White House after a meeting with President George W. Bush. Asked if he discussed oil with Bush, Obasanjo laughed and said: "We cannot be here without talking about oil".

Obasanjo on July 19 promised to protect foreign oil firms from piracy and militant attacks in the Niger Delta, an oil-rich area which is also home to several heavily armed illegal militias and oil facilities are often attacked or robbed. In April two US oil workers, subcontractors for Chevron, were shot dead near the port city of Warri, where for several months last year production was halted amid ethnic violence. A presidential statement said Obasanjo's government will boost "measures to curb crude oil theft". Obasanjo then was receiving a delegation from Shell, the largest oil producer in Nigeria, at his Abuja office. According to the statement, Shell's Group Managing Director Malcolm Brinded told Obasanjo the major still intended to invest $9 bn in Nigeria before end-2007. Since last March's fighting in the delta swamp west of Warri, Obasanjo's government has sent thousands of heavily armed troops into the delta in a bid to bring the gangs under control. But the profits of siphoning crude oil out of illegally tapped pipelines have allowed local politicians and corrupt business leaders to buy weapons for the gangs, who continue to operate freely in many areas. In the swamps west of the oil city of Port Harcout a band claim to fight for the independence of the Ijaw tribe have taken control of several villages, and gunfights regularly erupt in the city.

On May 29, 2003, Obasanjo marked his inauguration for a second four-year term in office with a promise to "heal the wounds" caused by the controversial April 19 elections. A former military dictator turned elected president, Obasanjo hailed his return to power as evidence that the country had achieved its first successful transition between civilian governments since independence in 1960.

The inauguration, attended by many African leaders and senior OECD politicians, highlighted Obasanjo's high-profile efforts to establish Nigeria as one of the leading advocates of good governance in Africa. He beat Gen. Muhammadu Buhari by 62% to 32% in the polls. He said the Nigerian people had given him a mandate to continue reforms aimed at attracting foreign investment, reducing corruption and improving social services. (Gen. Buhari challenged the election results in the courts. International observers then expressed concern about Obasanjo's reluctance to criticise the ballot rigging that was widely reported in a number of southern states).

The president said Nigerians had enjoyed a "considerable improvement" in quality of life since his election in 1999. Domestic and international critics say his government has made disappointing progress on reforming an oil-dependent economy and on tackling the country's notorious culture of corruption in public life. Obasanjo, whose election ended more than 15 years of often brutal military rule, said his 2003 victory showed the country had broken with the history of coups that had caused it to suffer dictatorships for about two-thirds of its post-colonial life (see background in Vol. 61, OMT No. 8).

Obasanjo is a leading proponent of Nepad, the African development plan devised by the continent's leaders and backed by the G8 industrialised countries. He has played a key role in the African Union's (AU's) peace-keeping efforts in Liberia, Sudan's Darfur province and other parts of the continent.

In April 2000, Obasanjo signed into law a new revenue sharing formula with the nine oil-producing states by which the latter receive 13% of oil income, up from the previously allotted 3%. But it was only in February 2003 that the law was allowed to come into effect following a resolution of a dispute between the federal government and six littoral states. He had taken the unprecedented step of asking the Supreme Court to intervene in its argument with regional governments over control of the country's offshore petroleum resources. All subsequent efforts by the states to raise their share of the oil income, including a campaign last April, have been rebuffed.

Obasanjo's position is that all natural resources within the territorial waters of Nigeria are derived from the federation and not from any one state. The compromise between Obasanjo and the governors of the six southern states - Akwa Ibom, Bayelsa, Cross River, Delta, Ondo, and Rivers - removed all references to the continental shelf and the Exclusive Economic Zone (EEZ) and was replaced by a 200-metre water depth isobar limit. Most of Nigeria's producing oilfields are within water depths of 200 metres or less. Deeper-water developments will generate revenues that will be subject to direct federal government control.

Obasanjo's administration is working on a number of economic reforms, including privatisation of state-owned firms, exchange rate management, and the phasing out of subsidies. There have been several delays in the privatisation programme. NNPC's four oil refineries, petrochemicals plants, and the Pipelines and Products Marketing Company (PPMC) are due to be sold. But there has been strong opposition to the sale from the National Union of Petroleum and Natural Gas Workers (NUPENG) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), who fear of job losses.

There are controversial but powerful men behind Obasanjo and these include former military dictator Ibrahim Babangida. It was thanks to Babangida that Obasanjo was released from prison on June 15, 1998, and later became the strongest candidate to the presidency (see the political leadership & background in Downstream Trends).

Executives in charge of the petroleum sector on day-to-day basis have established a good working relationship with those foreign companies which are NNPC's partners in the main oil producing ventures. Led by Shell's local CEO, these companies' representatives form a united front when they face problems with Obasanjo's administration (see profiles of the foreign CEOs in Gas Market Trends).
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Publication:APS Review Oil Market Trends
Date:Jan 1, 2005
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