UNEP Report: Financial insight and other matters in the Ogoni Clean-up exercise

Introduction:

The easiest scandal or crisis in the Niger Delta seems to always come from Ogoni clean-up project, an issue that was at one point trivialised and dramatised, and other times hyped, internationalised or politicised. Layers of activists, environmentalists and community leadership mongers seem to fine the clean up as a fertile ground for growth and rise, each seemingly fighting for the cleanup and implementation of the United Nations Environment (UNEP) Report of 2011. And so, the only reality most Ogoni people of Rivers State and most other Nigerians seem to know too well as the crux of the Report is the award of $1billion (N362billion by August 2017 rates). This narrow understanding seems to be the cause of many troubles and misconceptions about the implementation process of the UN’s mandate.

To some Ogoni people, the N362billion should be brought in bullion vans to Bori, the traditional headquarters of Ogoni and shared out according to agreed formula, a formula that could even end in fracas and inter-communal violence before any sharing could commence. To most people, with the money shared, the indigenes could clean up their land ‘traditionally’, as some chiefs once requested. This demand is said to be known to the oil majors. Anything shut of this seems to add to endless conflicts and distractions on the clean up exercise.

Now, when politicians join the fray, it becomes a matter of which political party or regime should take the credit for bringing the clean-up or which party would control the money, as if it would be handed to a state government. This may be a sign that most persons do not even understand what the UN prescribed in the first place. Even most of those angling to share the money may not know that they too have been tasked with obligations in the same Report that awarded the $1billion to Ogoni clean up. The communities were given the mandate to granting access to Shell Petroleum Development Company (SPDC) to carry out some surveys and tests ahead of the clean up, something the Ogoni people hardly want to do without proper ‘consultation’. Else, the natives could dub it ‘tricks of re-entry’ and rise against it. The UNEP Report also demanded a commitment by the communities not to allow re-pollution, something that is going on almost on a daily basis and something that may even be beyond the ability of the communities to enforce.

 Financials and the budgeting process: Where to find the money

Most persons know only about $1billion awarded to the Ogoni as cleanup fund to be paid by Shell. The company has always said the money is ready, and this seems to whet appetites of those looking out for it. When they do not find it in the Rivers State budgets, in the FG budgets or even the local council budgets, they seem to flare up. Below is how to track and understand the financials;

 $1billion or N362billion:

This is what the UNEP recommended could in about 20 years time help in cleaning up the hundreds of sites that they identified.

 $900m or N325.8bn:

This is the amount Shell is to contribute to the $1billion. This means that it’s not Shell alone that would contribute up the $1billion.

$495m or N179.19billion:

This is what the FG through the NNPC is to contribute to make up Shell JV share. This is because the Ogoni oil wells are owned 55 per cent by the NNPC/FG in the Joint Venture where Shell is the operator. So, when Shell says the money is ready, they could mean that the portion they control is ready. It could also mean that the NNPC/FG is ready, too. Note that it is also the same FG that ensures that partners paid up.

$270m or N97.74bn:

This is actually the total that SPDC as a company is to pay in five years as 30 percent of the Ogoni oil fields in the JV project. Those expecting SPDC to cough out the entire $1Bn may be getting it wrong.

$135m or N48.87bn:

This is the amount Total and Agip are to contribute as owners of the 15 per cent of the Shell JV. When these groups contribute these amounts, they give it to Shell as JV operator to hand over to the Ogoni Restoration Board or whatever board so mandated according to the UNEP Report for spending. It therefore means it is not Shell that would do the spending, though their eyes are there (like mother hen).

$200m or N72.4bn:

This is the total sum the UN wants to be released every year for five consecutive years to make up the $1bn. Shell JV (SPDC, NNPC, Total, Agip) and the others including refineries.

$180m or N65.16bn:

This is the amount to be budgeted and released yearly by Shell and the JV partners to make the $900m (N325.8bn) at the end of five years, out of the stipulated $200m.

$100m or N36.2bn;

This is the amount other stakeholders such as refineries are mandated to contribute to make up the $1bn because Shell was found not to be the only institutional polluters in the Ogoni mess. If these groups cough out this, the $1bn would be complete.

$99m or N35.84bn;

What the NNPC/FG may pay every year for five years for Ogoni clean up as their 55 percent equity in the Shell JV.

$10m or N3.63bn:

This is what Shell put down to start action since 2016. This is said to be part of the first batch of $180m for the first year; 2016/17.

Budgeting process: Where to look for the money

Many critics yearly look for the $1Bn in the public sector budgets such as the four Ogoni local councils, Rivers State budget or that of the FG. BDSUNDAY findings however reveal that the money can be located in the annual budgets of each JV partner. Thus, Shell for instance, would put down $54m or N19.55bn in its 2017 budget or every year for five years, being 30 per cent of $180m. Total and Agip would also provide their $27m being 15 per cent. The NNPC would provide $99m or N35.84bn yearly for five years to make up the annual $180m; all in their various budgets. This may be because ‘he who eats more excretes more’. The UNEP adopted the principle of ‘the polluter pays’ and therefore, the NNPC is deemed to have polluted Ogoni to the tune of 55 per cent where Shell did same for 30 per cent; Total and Agip are deemed to have polluted the area to the combined tune of 15 per cent. This is why most industry experts say the NNPG/FG should take full responsibility in making the communities happy an in being target of protests, except they catch the real culprit. Some others however argue since Shell is the face of the joint polluters, they too should face the protests and scandals on behalf of everyone else, including the bigger polluter (NNPC/FG) in the Ogoni JV.

When ready, these amounts are provided for as operational costs in the individual budgets of the JV partners and each is submitted to the NNPC (NAPPIMS) who in turn submit to the National Assembly as NNPC budget. In other countries, the representatives of the people would be the right sources of disclosure of these amounts to let the masses know whether or not the UNEP-recommended funds were there truly or not, to confirm what Shell has been claiming. Were this done, the controversy would have been laid to rest long ago, but in an opaque system such as Nigeria’s where the representatives seem to represent no one; this sensitive matter has been left to public conjecture and story by moonlight by those who have biased motives. It is not clear if the failure of the lawmakers to reveal these things was due to ignorance, lack of capacity, or personal interest; otherwise, one may ask, what have they been telling the Ogoni people during constituency briefings?

Other matters:

Oil spill and the battle for attention, and clean up is a running episode for decades. Playwright, Ken Saro Wiwa, fought and died with eight Ogoni kinsmen for this clean up. His lawyer, Ledum Mitee, took over and fought for about two decades and retired. Legborsi Pyagbara took over as MOSOP boss (though Goodluck Diigbo led a faction) and continued the fight. Clean up is yet to start.

Olusegun Obasanjo showed interest to solve the Ogoni crisis (once and for all) and thus brought in the UN on popular demand to handle the mediation and the scientific study to ascertain true level of pollution, the causes and liability to each polluter. The Ogoni kicked against it, saying it was a re-entry plan by Shell and Obasanjo. Then Secretary to State Government (SSG), now senator, Magnus Abe, and then governor, Chibuike Amaechi, stepped in and got the Ogoni people to calm down and show support. Work done, the UNEP Report was submitted in 2011 to then president, Goodluck Jonathan, who seemed to study it till 2015 when he left office. Muhammadu Buhari came with zeal to clean Ogoni but fell ill. His minister of Environment, Amina Mohammed, worked hard to make history but seemed to become history herself by being appointed to the UN secretariat. The process continues.

Now, the Movement for the Survival of the Ogoni People (MOSOP) which made name with this same matter of clean up, stirred the waters last week by declaring the clean up exercise as ‘an image-laundering tool’. This provoked a flurry of reactions as it seemed to create doubt on the sincerity of the clean up scheme that was flamboyantly flagged off in June 2016. They seem to ask, if Jonathan failed to clean up Ogoni, is Buhari cleaning it? The question was taken to SPDC and HYPREP.

Last week, the authorities doing things about it began to speak out. The Hydrocarbon Pollution Remediation Project (HYPREP) pleaded for time to determine the remediation strategies to be adopted.

Shell, the JV operator and key industry partner in the Ogoni oil fields also stepped out to help explain the windy processes involved. The GM, External Relations, Igo Weli, supported by briefing notes from the manager of Ogoni Restoration Project (ORP) of SPDC, Vincent Nwabueze, said the majority of the UNEP Report recommendations required multi-stakeholder efforts coordinated by the Federal Government agencies and that over the last six years, SPDC had taken action on all recommendations directed to it by the UNEP Report and has completed a majority of these recommendations with examples.

He said 15 SPDC JV sites specifically mentioned in the UNEP Report have been re-assessed and where further remediation was required, those sites have been remediated and certified by government regulators. Also, SPDC has completed a comprehensive review of its oil spill response and remediation techniques, and made a number of improvements in line with industry best practices.

According to the GM, SPDC JV welcomes FG efforts in progressing the implementation of the UNEP Report including the creation of the Governing Council and Board of Trustees of the Ogoni Restoration Fund in August 2016 to oversee and fund the cleanup process, and SPDC JV is represented on both the Governing Council and the BoT and will continue to actively support the cleanup process along with other stakeholders within a transparent governance framework.

The GM said SPDC applauded the ground- breaking ceremony in February 2017 of the Integrated Contaminated Soil Management Centre (ICSMC) which would help create employment opportunities in Ogoni areas and facilitate the acquisition of skills in the treatment of contaminated soils. “SPDC commits to supporting HYPREP Project Coordinator, Marvin Barinen Dekil, in the cleanup process. SPDC has made available the $10m take-off fund for HYPREP as part of its commitment towards funding its share of the Ogoni Restoration Fund,” the company said.

It further said that it remains fully committed to continued support by contributing its share to the Fund within the appropriate framework and governance structures.

According to the firm, “We encourage all relevant stakeholders to also remain committed in contributing their share to the Fund. The UNEP Report highlighted significant environmental impacts from oil pollution in parts of Ogoni areas relating to a variety causes. Their report also calls for a coordinated effort between government, oil and gas companies and communities to bring an end to all forms of oil contamination in Ogoni areas such as crude oil theft and illegal crude oil refining”.

The oil major says it continued to implement several initiatives to prevent and minimise the impact of crude oil theft and illegal refining in Ogoni and other parts of the Niger Delta where it operates. “For example; community-based pipeline surveillance, awareness campaigns, and the promotion of alternative livelihood programmes such as Shell’s entrepreneurship programme, LiveWIRE.”

By these developments and explanations, it is becoming clear that the Fund is in JV and NNPC budgets and that HYPREP drives the process, Governing Council provides the project structure, and BoT spends the money and monitors everything.

It was gathered at the briefing that clean-up delay is not because of funds as Shell says $180m is in 2017 JV budget, waiting for the governing structures to complete the spending plans and begin drawdown.

Challenges:

SPDC said there have been challenges of insecurity, access, re-pollution, lack of enabling environment.

“There is no truth in re-entry accusations: It is not true at all. Shell left Ogoni 24 years ago and still survives. The hope of the region is private sector investments and activities, not only in clean up,” the Shell’s GM noted.

The delay in the past was said to be due to lack of institutions to drive the process, thus many groups emerged to tell the stories as they deemed fit; private accounts dominated. HYPREP died then. HYPREP is now under the Ministry of Environment, and the CEO came in April 2017 and is working hard to set up a plan of action.

They said there is plan to train 2000 persons, demonstration of pilot efforts of technologies needed, assessment of water infrastructure to restore good water source to the people, to prepare a formidable plan of action, provision of $10m to start off before flag off done, managing the expectations in the face of seeming slow pace of government actions.

Shell: “Now, the stakeholders are trying to do every single thing right to avoid failure again such as setting up HYPREP in a manner that all grouped would accept, setting up structures to manage and monitor the fund.”

 Conclusion:

If the people were to understand the financials in the UNEP Report, and give maximum support to the new HYPREP, the caterpillars could soon roar in Ogoni to begin the actual cleaning, so said those working on the project. Consultation is believed to be the slowest portion of the efforts because the people seem fragmented; probably due to decades of leadership failure and deceit. Each group therefore seems to want to be consulted and nobody seems to want another person to represent him as far as the $1billion Ogoni fund is concerned. Suspicion is therefore very high and intentions are never taken on face value. The journey indeed seems long, yet, the greater risk ahead is ‘Re-pollution’.

Based on exchange rate as at Aug 6, 2017

 

$1bn           =     N362bn           (awarded by the UN in 2011)

$900m         =     N325.8bn        (what Shell JV will pay)

$495m         =     N179.19bn      (what NNPC will pay out of the $900m)

$270m         =     N97.74bn        (actual amount to be paid by SPDC)

$200m         =     N72.4bn         (to be paid yearly for 5 yrs)

$180m         =     N65.16bn        (to be found in JV budget yearly)

$100m         =     N36.2bn          (to be paid by others to make up $1bn)

$99m           =     N35.84bn        (what NNPC/FG may pay yearly for 5 yrs)

$54m           =     N19.55bn        (what SPDC may pay yearly for 5 yrs)

$10m           =     N3.62bn          (what SPDC put down in 2016)

Ogoni clean up responsibilities by the UNEP Report

 

To government

Creation of Ogoniland Restoration Authority

Creation of Environmental Restoration Fund for Ogoniland

Coordination of multi-stakeholder efforts

Institutional and regulatory reforms

 

To multiple stakeholders

Emergency measures in drinking water and health

Rehabilitation of environment

Preventative pipeline surveillance

Environmental and health monitoring

Oil spill contingency planning

 

To operators

Re-visit and where necessary remediate identified sites

Review remediation techniques

Repair, maintain and decommission non-producing facilities

 

To communities

 

Speed up access for spill response

Take proactive stance against theft and illegal refining

Ignatius Chukwu

Credit: BusinessDay

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