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Congo Copper Mine Deals Questioned

August 2, 2012 Leave a comment

CorpWatch

By Patrap Chatterjee

August 2nd, 2012

Eurasian Natural Resources Corporation (ENRC), a global mining company that got its start in Kazakhstan, has won a new $101.5 million license to dig for copper at the Frontier mine in the Democratic Republic of Congo. The company has been criticized by Global Witness for its purchases of rights from offshore companies connected to Dan Gertler, a controversial Israeli diamond merchant.

“The Congolese state has foregone billions of dollars in revenues by secretly selling off its assets on the cheap to offshore companies,” Daniel Balint-Kurti, campaigner for the Democratic Republic of Congo at Global Witness said in a press release issued last month. “With so much at stake in one of the poorest countries on the planet, ENRC must do the right thing and shed full light on its dealings.”

Per-capita income in the Congo is under $300 a year and experts at the Carter Centre, which was founded by former US president Jimmy Carter, say there is a reason. “In a mining sector defined by irregularities and mismanagement, large industrial mining projects can earn huge profits for investors and government officials,” Sam Jones, associate director of the centre’s human rights program, told the Guardian. “(L)ittle revenue finds its way back into desperately impoverished Congolese communities for schools, healthcare, or other social services.”

The Frontier copper mine is located near the town of Sakania in the Congo, about a mile from the Zambian border. It is located in the copper belt that straddles the border of the two countries that has been exploited commercially from the days of Belgian colonization to this day. Indeed the profits from the Union Minière du Haut Katanga, the original mining company in the region, was a major source of wealth for Belgium at the beginning of the 20th century.

First Quantum, a Canadian company, acquired the rights to mine for copper at Frontier in 2001 but was forced to turn it over to Sodimco, a state owned company in 2010 by the Congolese government. The licences were then sold to Fortune Ahead, a Hong Kong shell company. Meanwhile First Quantum filed multiple legal claims demanding $4 billion in compensation for Frontier and other assets nationalized by the Congolese government.

In January this year First Quantum agreed to turn over all its prior mineral rights to ENRC for $1.25 billion. ENRC had already bought rights to the giant Kolwezi tailings project for $175 million and purchased CAMEC, yet another Congolese company that owned a half share in the SMKK copper and cobalt mine.

But exactly who paid whom how much for mining rights in the Congo is up for debate. “ENRC’s purchase of its stake in Kolwezi was structured through a deal between itself and at least seven companies registered in the British Virgin Islands, all connected to Dan Gertler,” states a Global Witness fact sheet. “When ENRC bought the remaining 50 per cent stake in SMKK, it purchased it from another British Virgin Islands company linked to Mr Gertler. Even ENRC’s acquisition of CAMEC involved sale purchase agreements with several offshore companies linked to Dan Gertler which held shares in CAMEC.”

Gertler, an Israeli diamond merchant, has been doing business in Congo for over a decade, working first with Laurent-Désiré Kabila, the former president of the Congo, and now with his son, Joseph Kabila, the current president.

“The nature of these deals raises serious questions about whether corrupt Congolese officials could be benefitting from Congo’s considerable mineral wealth at the expense of the Congolese people,” says Balint-Kurti. “Global Witness has been calling for ENRC to publish the full results of an external audit into its dealings in Congo, conducted by the law firm Dechert.”

It is certainly not the first time Gertler and the Kabila clan have been linked. A lawsuit filed in Israel by Yossi Kamisa, a former Israeli fighter who worked for Gertler, says that the diamond tycoon had offered the elder Kabila military aid to the Congolese army in 2000.

“At the time, the Second Congo War (1998-2003) was raging – one of the most brutal conflicts in the history of the African continent, involving eight countries, dozens of guerrilla organizations and a horrific human toll that included large-scale rape and even cannibalism,” write Gidi Weitz, Uri Blau and Yotam Feldman in Haaretz newspaper. “This did not deter Gertler from realizing his plan to penetrate the lucrative diamond market in the DRC.”

Kamisa’s lawsuit charges that he “witnessed Gertler’s method of operation, involving paying considerable sums of money as bribery to different individuals in the Congo government … all in order to pave the way to a meeting with the president of Congo and to improve the terms of the future agreement that was to be struck between him and the state.”

Gertler denied these allegations, calling them vengeful and baseless, says the newspaper.

Nigeria : The great $6.8bn oil scandal

July 30, 2012 Leave a comment

The revelation of gargantuan levels of corruption in the government’s fuel subsidy programme is sparking a groundswell of activity among the opposition and civil society groups.
Opposition politicians, civic activists and trade unionists are joining forces this month to demand action against grand corruption at the heart of government. They promise it will be their biggest show of strength on Nigeria’s streets since protests in January that forced the government to back down on its plans to abolish the fuel subsidy scheme.
At the core of the opposition protests in June will be the findings of a parliamentary report released on 23 April that reveals the government presided over the loss of $6.8bn from its fuel subsidy programme from 2009-2011 through theft and mismanagement.
The government misread public feeling on the fuel subsidy,” says Tunji Lardner, executive director of Lagos-based information platform WANGONeT. “Hundreds of  thousands of small businesses and millions of jobs were set up the basis of the subsidy – protecting that and prosecuting corruptionis a popular cause,” he explains.
Adding to the opposition’s anger are allegations that more than N4.5bn ($28m) has been stolen from pension funds administered by the office of the head of the civil service. State investigators suspect the extent of pension fraud in the country is far larger.
This, together with the government’s announcement expected on 1 June that it will increase electricity tariffs by 50%, will ignite a new round of popular outrage, say activists. A government commissioned report on corruption in the oil export sector, coordinated by former anti-corruption czar Nuhu Ribadu, is also due out in the coming weeks. Insiders say it will make more explosive revelations. National secretary of the Conference of Nigerian Political Parties Osita Okechukwu says: “It’s a perfect storm for the government.Weare taking them to the High Court for breaching the constitution, but you will also see protests backed by opposition parties and the trade unions.” Read more.

Mozambique: World Bank admits blame for Beira railway

July 30, 2012 Leave a comment

BY PAUL FAUVET,

July 27th, 2012

Maputo — The World Bank has admitted that it is largely to blame for the failure of the project to rehabilitate the Beira railway system.

The project dates back to 2003, and was intended to completely rehabilitate both the Sena line, running from Beira to the Moatize coal basin in Tete province, and the Machipanda line, from Beira to Zimbabwe.

This involved farming out management of the two lines to the Beira Railroad Company (CCFB), in which 51 per cent of the shares were held by the Indian consortium RICON (Rites and Icon International), and 49 per cent by the Mozambican port and rail company, CFM.

RICON was the dominant partner and was supposed to be in charge of the complete reconstruction of the Sena Line (which had ceased running in 1983, thanks to comprehensive sabotage by the apartheid-back Renamo rebels), and of bringing the Machipanda line up to scratch.

The World Bank was initially enthusiastic about the project, and backed it up with a loan of 104 million US dollars. The tender won by RICON was supervised by the World Bank and the award to RICON was approved by the bank. The concession contract between the government and Ricon/CCFB stated that the entire system should be rehabilitated by January 2009, and that RICON would not only manage CCFB, but would be the main contractor on rebuilding the Sena line and its bridges.

The Mozambican authorities, and CFM, soon began to sound the alarm. Ricon kept missing deadlines, and its work failed to observe technical standards. CFM and the Independent Engineer hired to assess progress both warned about these matters, but the World Bank was conspicuously silent – the Bank’s unit supervising the project took no notice of the warnings.

Ricon argued that it could not meet the January 2009 deadline for completing reconstruction of the Sena line because of the floods in the Zambezi valley in 2007 and 2008. So the government gave Ricon a further six months.

That deadline ran out, and the Sena line was still nowhere near complete. The government tried to switch the management of CCFB to CFM, but RICON used its majority on the CCFB board to block this.

When President Armando Guebuza made a state visit to India in 2010, he discussed the transfer of management power from RICON to CFM. The Indian government agreed, according to Transport Minister Paulo Zucula, but RICON still resisted. Finally, in December 2010 the Mozambican government decided to rescind the contract with RICON.

The World Bank has now issued an Implementation Completion and Results Report (ICR), dated 27 June, which is a damning indictment of the World Bank staff involved in the project. It describes the outcome of the project as “unsatisfactory”, the risk to development outcome as “substantial”, and the bank performance as “unsatisfactory”. The performance of the borrower (the Mozambican government) is described as “moderately unsatisfactory”.

The main project objectives were not remotely achieved. Thus the original goal was to have the Sena line able to carry one million tonnes of cargo a year by the end of 2009. In fact, the line was only opened to coal traffic on 8 August 2011, with freight running at 266,000 tonnes a year – just 27 per cent of the initial target 20 months late.

International traffic on the Machipanda line was supposed to rise from 480,000 tonnes a year in 2004 to 650,000 tonnes in 2009. In fact, if fell, by 2011, to 387,700 tonnes. “The potential for traffic on this line is good (and evidence by the increase in road traffic), but poor infrastructure prevents the railway from getting its share”, commented the ICR report.

All 317 kilometres of the Machipanda line were supposed to be rehabilitated. But in fact not a single kilometre was upgraded. “No rehabilitation and very little (if any) maintenance during the concession period”, remarked the report. “The Machipanda line has deteriorated further and is in fact in worse condition that at the start of the project”.

The overall reliability of the Beira rail system was supposed to improve substantially. The target was that the percentage of track under temporary restrictions should fall from 10 per cent in 2004 to two per cent in 2009. In fact, the figure rose to 16.6 per cent in 2011.

As the conflict between Ricon and the Mozambican authorities deepened, the World Bank’s Project Implementation Unit (PIU) ended up taking Ricon’s side, despite the clear evidence that it was in violation of its contractual obligations. The report admits that “The PIU eventually acted on behalf of the contractor. Despite all the documented delays, the contractor was never penalized”.

That was not the fault of the Mozambicans – the report adds that “all requests by CFM for the PIU to take action against the Contractor for poor execution of the works were ignored”.

One shocking example was that RICON was allowed to relax specifications for ballast to be used on the Sena line despite protests by both CFM and the Independent Engineer.

Furthermore, “the best skilled engineers were prematurely sent back home by the Concessionaire (CCFB), and subsequently replaced by incompetent staff, with the approval of the PIU. Despite repeated objections by the CFM and the Mozambican government, no action was taken to reverse these decisions”.

World Bank staff on the ground just covered up the problems. The report comes close to accusing them of lying to the Bank’s head office. It says “Remarkably, all of the Bank’s supervision reports during the critical stages (2005-2010) gave the project an overall rating of ‘satisfactory’ or ‘moderately satisfactory’. Despite the virulent correspondence between the parties to the contract and the persistent negative reports by the Independent Engineer, the project ratings were never revised and as a result corrective action was never taken”.

The report concludes that the Bank staff had no idea what they were doing – though it puts this in somewhat more diplomatic terms: “The Bank supervision team did not have the requisite engineering skills and competencies to make sense of the implications of the issues raised by the Independent Engineer”.

There were “significant discrepancies” between the Implementation Status Reports produced by the Bank staff and the reports from the Independent Engineer. Thus the Bank staff, in late 2007, were cheerfully forecasting that the Sena line’s first phase would open in early 2008, while at much the same time the Independent Engineer was warning that there was no chance to meet the completion deadlines.

Only when there was a change in the Bank’s supervision and management staff (in 2010) did the World Bank wake up to the seriousness of the situation. It was too late – the loan had already been disbursed.

There had been a chance to change course with the mid-term review in June 2008. By then the project had an alarming cost overrun of 50 million dollars, and construction work was around eight months behind schedule. But the Bank team excused the increase costs as “understandable”.

The ICR report notes “Rather than addressing the incompetence of the Concessionaire as a major bottleneck, the mid-term review pointed to the failure in negotiations over the coal tariff (which was a fairly recent development) and the threat of termination by he government as the main risk to Project progress. This was a missed opportunity to consider Project changes and re-direction”.

The overall message of the report is very clear – after a two year delay and cost overrun of over 50 million dollars, the key goals of the project were not met. The Sena line is not handling the expected level of traffic, and the condition of the Machipanda line is worse than before the project began.

The ICR report expresses a worry that the collapse of the CCFB concession “might trigger a negative perception of public-private partnerships in Mozambique that could reverberate to other sectors or even other countries in the region”.

The Bank is ideologically committed to public-private partnerships – but outsiders might note that the Beira Railway Project is just an extreme example of the recurrent theme in such partnerships that the public sector takes the risk while the private partner walks away with the profit.

SENEGAL: Overfishing – culprits and consequences

July 29, 2012 Leave a comment

 

IRIN

DAKAR, 18 July 2012 (IRIN) – Senegal stopped renewing agreements allowing European fishing vessels in its waters in 2006, but now an expanding artisanal fleet and local industrial boats enjoying exclusivity under lax regulations are being blamed for malpractice and degrading the country’s main economic and food resource.

“In terms of environmental degradation, the responsibility is shared. Artisanal fishermen are responsible for habitat destruction. Although industrial vessels and foreign ships are often blamed, artisanal fishermen contribute hugely to the disappearance of species,” said Moustapha Thiam, the director of Senegal’s Maritime Fishing Authority, a Fisheries Ministry department.

Foreign industrial trawlers are often criticized for overfishing off the West African coast, where some governments are also accused of issuing unregulated licences that overlook the consequences to local economies and livelihoods.

Industrial fishing has really reduced. Small-scale fishing is quite dynamic,” Thiam told IRIN. Of the 409,429 metric tonnes of fish caught in 2010, artisanal fishermen contributed 370,448 tonnes, according to the Maritime Fishing Authority.

Fishing is Senegal’s foremost economic activity, employing around 15 percent of the workforce – about 600,000 people – and is the main foreign currency earner. Local consumption is 28kg per person per year, twice the world average, and 75 percent of protein in the diet comes from fish.

The UN Food and Agriculture Organization (FAO) estimates that there were around 16,000 small fishing boats in Senegal in 2011, compared to about 5,000 in 1982. [Situation de l’immatriculation des embarcations de type artisanal]

“It is the sector with the biggest socio-economic impact locally,” said Ahmed Diamé, a Greenpeace Africa oceans campaigner. “Among the problems are the use of the wrong net size and dynamite… With free access to the resource, [artisanal] fishing has significantly increased. We have noted a reduction in catches since 2000. There is also a decline in the quality of fish caught – they are smaller,” he noted.

To boost the sector, the government subsidizes fuel and equipment for the local fishermen. “What needs to be revised is the quest for short-term profit. This is what drives the sector and what kills it. There is free access to the resource because fishing is not regulated,” said Papa Gora Ndiaye, secretary general of West Africa Fishing Policy Network (REPAO), a regional NGO.

“When we were kids, we could see big fish caught. But nowadays, we need to go very far to catch anything,” said Yakhya, a fisherman in Soumbédioune, one of the fishing ports along the shores of Senegal’s seaside capital, Dakar.

In the days when local boatmen navigated by instinct, returning to a rich spot happened by chance. “There is no more mystery. When I was young, if you found a good spot, it could take a few days to find it again,” said retired fisherman Papa Nguer. “Now all the boats have GPS [global positioning system].”

The government is trying to regulate the sector, registering and controlling the licences issued to local fishermen, but critics argue that these measures are not enough in a country where fishing is the main source of income for millions.

“The state has to decide to reduce the fishing capacity. It is useless to have fishing permits if the fishing fleet is untouched,” said Gaoussou Guèye, the head of a local association for responsible artisanal fishing.

“There are subsistence and economic issues at stake. The problem is to control without generating social catastrophes,” said Captain Djibril Diawara, the head of operations at the Fishing Monitoring and Protection Authority (DSPM).

Few industrial vessels have ventured into territorial waters since Dakar stopped renewing Fishing Partnership Agreements with the European Union. Now, the industrial fishing fleet is mainly local, others in joint venture with Europeans and there have been accusations of corruption and favouritism.

Authorities say the fleet is mostly old, poses environmental risks and often fishes in protected areas. The DSPM has six boats, none of which can reach the high seas, a plane that has been under repair for two years, and a staff of 150.

“It is an aging fleet. Most boats are more than 30 years old, which means they have more destructive fishing practices,” said the Maritime Fishing Department’s Thiam.

With the support of a programme funded by the World Bank, the government plans to reduce the number of artisanal boats by 25 percent and ground the old industrial fishing fleet, Thiam said.

Implementing the plan will be arduous. “Suggesting that the state should stop subsidizing fishermen to reduce fishing capacity raises questions about the risk of fish becoming more expensive for the Senegalese people,” said Greenpeace’s Diamé.

”Experts call for sustainable fishing and environmental protection. “The industry should be bolstered, providing it with means to use the resources in a sustainable and profitable manner.” He called for the creation of marine reserves in the high seas where fishing is banned.

“Fishing and the number of fishermen should be reduced,” Guèye said. “Not everyone can be a fisherman or a fishmonger. There should be a fisheries management plan – we cannot have congestion,” he suggested.
“It is up to the government to set up these plans. It has the responsibility to manage the resources for the future generation.”

 

Swaziland: Nurses join public sector strike

July 29, 2012 1 comment

Swaziland Media

By Richard Rodney

July 17th, 2012

Nurses are to join teachers and civil servants in the growing public sector strike in Swaziland.
They will strike from tomorrow (18 July 2012) in pursuit of a 4.5 percent salary increase.
Teachers have been on indefinite strike for nearly a month and civil servants joined them last week.
Members of the Swaziland Democratic Nurses Union (SWADNU) are expected to strike for two days and then review the situation.
Swaziland has been in turmoil in recent weeks as police on several occasions attacked peacefully protesting strikers, using rubber bullets, teargas and batons. The rough handling by the police has been condemned by trade unionists across the world.
Nurses said they would to join the strike, but they are undecided about whether to hold a public protest. Some said they feared attacks from police if they did so.

S Africa: renewables interest dampened by legal hurdles

July 27, 2012 Leave a comment

Beyondrics, Financial Times

By by Ruona Agbroko

July 26, 2012

South Africa’s latest round of renewable energy contracts has attracted interest from European developers after home subsidies have dried up, but legal uncertainty and rules over local ownership may cut the temper their enthusiasm.

So far the third round of bids for solar and wind projects has seen some developers stop short of a full committment, which is hardly helped by government holdups.

The deadline for bids to supply another chunk of the 3,725MW of renewable energy that South Africa wants to cut its reliance on coal is October 1. From previous rounds, foreign direct investment in renewables is at $12bn in the year to May. There are two further bid rounds slated for April 2013 and July 2014.

DLA Piper Australia and its South African partner DLA Cliffe Dekker Hofmeyr have advised more than 50 per cent of the successful bidders in the first two rounds of contracts and are working with companies in their current bids. “The majority of the developers are European based, particularly Italian and Spanish, and there is an increase in interest from German, French, Chinese and US-based developers,” Damian McNair, head of finance and projects for Asia Pacific at DLA Piper told beyondbrics… Read more.

Ghana Struggles to Cash in ‘Black Gold’ Dreams of Oil Riches

July 23, 2012 2 comments

Die Welt

July 12th, 2012

By Christian Putsch with K. Owusu Peprah
DIE WELT/Worldcrunch

SEKONDI-TAKORADI – The route to the training center is a crumbling asphalt road losing its battle with encroaching vegetation. The guards sitting in a wooden hut to our right barely look up as we drive past. Ebow Haizel-Ferguson is the director of the training center where we are heading; officially called “Sigma Base Technical Services,” it is Ghana’s largest “oil school.”

Steering the car to the left and through the thicket, a view suddenly opens up on to a railway graveyard. Haizel-Ferguson says proudly: “You’d be surprised what we’ve achieved out of nothing.”

Rust is eating its way through scrapped cars surrounding a large hangar. Through the dusty windows of the building, alignments of long work-tables can be seen. This is where in recent months Haizel-Ferguson and his team have taught 2,000 young people welding, pipefitting and other skills — but not for the rail sector: they’re only renting the premises in the Ghanaian coastal city Sekondi-Takoradi from the train company.

Since the 2007 discovery of the Jubilee offshore oilfield — one of the largest oil deposits ever found in Africa — only one thing has mattered in Ghana: black gold. For the country’s people it means the hope of better economic times. Investments in oil-drilling infrastructure have boosted growth by over 13%. And the rapidly expanding city of Sekondi-Takoradi is at the center of it all.

So is Haizel-Ferguson, who worked at Nigeria’s oil metropolis Port Harcourt for 22 years. The tall Ghanaian entrepreneur says he knows everything there is to know about oil: “I’ve breathed it, drunk it, and puked it.”

But Nigeria’s path is unfortunately one that Ghana is in danger of following. After decades of pollution by oil companies, oil thieves, and rebels, the Niger Delta is one of those places on the planet that look as if it’s straight from of an apocalyptic science fiction set. And while western oil companies lure employees to Nigeria with the highest bonuses in the world — a senior manager can earn 320,000 euros a year — Nigerian government figures say local firms account for only 18% of the value-creation process.

Very few Nigerians benefit from the commodity, and the oil boom has cost countless fishermen and farmers their livelihood. It is only in the last few years that laws relevant to granting supplier contracts have been tightened with the intent that two-thirds of them will go to Nigerian companies.

Cautionary tale

What happened in a country only some 100 km away is a cautionary tale — and Haizel-Ferguson wants to make sure the story doesn’t repeat itself in Ghana.

Expectations here are high indeed. Although so far the oilfields have produced less than expected, the Ghana Oil and Gas Service Providers Association (GOGSPA) says that the industry could create 100,000 jobs for Ghanaians. Two years ago, the Ministry of Energy promised a more cautious 10,000new jobs – and in early June 2012 announced that only 813 jobs have opened up so far. Meanwhile, as oil infrastructure is being built up, Ghanaian companies complain about how few of the contracts they obtain.

Others are benefitting instead. China, for example, which gave Ghana a 2.4 billion euro loan to construct oil infrastructure, is being paid back with 13,000 barrels per day. That’s a cheap price for the Asians who have also stipulated that a significant number of contracts be awarded to Chinese companies.

What clearly has little bearing is that five years ago the Ghanaian government drafted laws stipulating that companies like Tullow Oil (USA) and Kosmos Energy (Great Britain) had to award 90% of contracts to local firms. In any case, these laws have yet to come into force.

But all of this has not dimmed the hopes of many Ghanaians for well-paid jobs. And it’s why Haizel-Ferguson is schooling young men and women in oil industry skills at the old railway training center. “They are now qualified to apply for jobs. Bear in mind that the construction of oil industry infrastructure will be going on for another 20 years at least,” he says. “But so far they’ve not been giving the work to Ghanaians.”

If it is the largest, Haizel-Ferguson’s “Oil and Gas Skills Training Workshop” is by no means the only oil industry training center in Ghana. On the streets of Sekondi-Takoradi you see hundreds of posters advertising such institutes. All of them promise that a certificate from their school guarantees a job in the industry.

The offer is seductive to many. It didn’t take long to persuade Emmanuel Opoku-Agyeman, for example, who quit his job in the marketing department of a newspaper to pursue training. “It isn’t just Ghana that’s got oil, they’re discovering new fields all over Africa,” says the 31-year-old. “With a certificate, you can apply for jobs anywhere.”

Opoku-Agyeman earned 500 Ghana Cedi — about 200 euros — a month at his old job. In Takoradi, the “oil schools” hand out documents stating that the minimum monthly salary for a job on an oil rig is the equivalent of 2,800 euros – 14 times what Opoku-Agyeman was making. With prospects like that, it didn’t seem to him that what the Harvard Marine Petroleum Training Institute (HMPTI) was asking for a three-month course — $3000 (2,394 euros) — was excessive.

On the job market

The HMPTI’s Australian investors have made over an old office building where experienced oil industry engineers give the courses. Proudly, Opoku-Agyeman takes me on a tour of the premises and tells me about the packed days of learning, the great equipment the facility offers, the competent teachers. As one of the first 200 graduates, he’s now on the job market. He says he’s only going to start getting nervous if he hasn’t found something within the next few months — and he shouldn’t even be thinking that way, he says, there are no grounds for it, he has received excellent training “as you would expect from a Harvard school.”

No, there is no connection to Harvard University in the United States, school director Ron McGrath concedes. “The important thing is that we are qualifying young Ghanaians to work in the oil sector,” he says. The focus is not on the jobs requiring very high-level qualifications, but on occupations on the supplier side: “Future international regulations will require workers in the sector to have attended courses such as ours.”

McGrath doesn’t believe Ghanaian black gold expectations are too high, nor is the price charged by his institution. “Training in this field just is expensive, you need a lot of equipment and the teachers have to have top qualifications.”

Along with the government, schools like the HMPTI urge people to be patient. Coming up for reelection in December, President John Atta Mills has promised that oil revenues will be used to build up the infrastructure of the entire nation. And all you need to do is travel through Ghana for a few days to see the huge expectations such promises unleash in a country that is still one of the world’s poorest.

Five hours away from Sekondi-Takoradi is the village of Awukuguanyensi. Most of its population of 130 work as farmers. As you enter the village you pass a wooden sign that reads: “No electricity, no votes.” It’s a pretty empty threat, born of desperation — one way or the other, the village is likely to have to wait a long time for power lines to be put in.

On the day of my visit, the children of Awukuguanyensi are being vaccinated against Pneumococci and rotavirus for free. In Ghana, these two fatal diseases account for 20% of child mortality. Thanks to the GAVI Alliance’s mission to provide free vaccines to children in developing countries, 87% of the children in this area have been vaccinated — although overall the situation in the country is far away indeed from one of the major UN Millennium Development Goals, which is to reduce, by 2015, child mortality by two-thirds from what it was in 1990.

In this village, many families have lost a child to illness brought on by the miserable living conditions. And those who do make it past childhood face bleak perspectives. Isaac Kwasi, 25, says all he ever wanted was to be a farmer, but you can’t make a living from it. So many of his friends have moved to Sekondi-Takoradi. He sometimes gets text messages from them saying they still don’t have full-time jobs. But that’s not holding him back. Next year, he says, he’s moving too — to Takoradi, and its promise of black gold.

Read the original article in German.

Nigeria: Subsidy Fraud Incorporated – Fresh Scandal Surrounds FG’s Committee

July 23, 2012 Leave a comment

AllAfrica

Parliamentarians involved in subsidy scam.

By Jide Ajani

July 22, 2012

ANALYSIS

This will shock you. It is the report of Sunday Vanguard’s painstaking investigation with sources inside Aso Rock Presidential Villa, the Nigeria National Petroleum Corporation, NNPC, the Petroleum Products Pricing and Regulatory Agency, PPPRA, the Petroleum Equalization Fund, PSF, and the Petroleum Support Fund, PSF, just to mention a few.

It is about the serial complicity of some operators in the oil industry, government agencies and high ranking government officials in a mélange of corrupt practices occasioned by cover ups, deception and deliberate misinformation to unsuspecting members of the Nigerian public. It is a story of conflict of interest regarding those investigating and verifying the claims of marketers, a story of filth and willful negligence fueled by insatiable greed.

It was an innocent memo; but panic oozed from it.

The genesis of what has today become the fraud in the management of subsidy funds all started with a directive from the Federal Government of Nigeria. Although the House of Representatives Committee which investigated the management of subsidy on petrol presented its report which has become mired in scandalous controversy, occasioned by a bribery saga, the several committees set up by the federal government may not be about to get to the root of the matter by calling a spade a spade – there is the Nuhu Ribadu committee set up by the Nigeria National Petroleum Corporation, NNPC; there was the Aigboje Aig-Imoukhuede committee; and now there is another committee which just submitted its report penultimate weekend, headed again by Aigboje Aig-Imoukhuede.

Switching into a panic mode, the Peoples Democratic Party, PDP-led government of late President Umaru Musa Yar’Adua, sensing that long queues at the petrol stations across the country represents a clear and present national security challenge, sent a memo to the Petroleum Products Pricing and Regulatory Agency, PPRA. This was in October, 2008.

Dated October 20, 2008, the memo, signed on behalf of the then Secretary to the Government of the Federation, from the Presidency came through the SGF’s (PARASTATALS DEPARTMENT, GENERAL SERVICES).

The reference: SGF. 19/S.53/II/

The title of the memo: “RE: OUTCOME OF THE STAKEHOLDERS MEETING ON IMPORT PLAN FOR 4TH QUARTER, 2008/REVIEW OF PSF IMPLEMENTATION”.

“I am directed to refer to your letter Ref. No. A.1/1/228/C.7/III/468 of 16th October, 2008″, the content of the letter reads, “on the outcome of the stakeholders meeting of 14th October, 2008 to harmonize import plan for November and December, 2008 and to convey the approval of the Secretary to the Government of the Federation for:

“1) The import plan for November – December, 2008 as harmonized with the marketers during the stakeholders meeting and as recommended; and

“2) The participation of the recommended companies with storage facilities or valid throughout agreement that have completed the necessary due diligence processes to import the products in order to sustain adequate supply in the system.

“I am to further inform you that you are required to submit a report on the performance of the participating companies to this Office at the completion of the import exercise.

“Please accept the warm regards of the Secretary to the Government of the Federation”.

What had happened just before that memo was that the PPPRA had recommended that there was need for an expansion of the frontiers of fuel importation into the country and had, therefore, requested an approval from the Presidency.

Whereas possession of storage facilities was an earlier condition precedent, the need to include importers who had valid throughout agreement, with a view to making the product more available became inevitable.

In fact, some of the marketers who preferred to speak on conditions of anonymity made it clear that most of the “so called major marketers were actually in agreement with other lesser known importers who took the risk of financing and importation of petroleum products”. But this was to open the floodgate.

HOW SUBSIDY FRAUD IS COMMITTED

One of the major points where the fraud is committed is the Atlas Cove Jetty, Apapa, Lagos, which is Nigeria’s major delivery and re-distribution point for refined petroleum products. The second, strategic, point is represented by the plethora of depots in Lagos.

Atlas Cove, first built in 1979, and rebuilt by Julius Berger in 2000, is owned and managed by the Pipelines and Products Marketing Company, PPMC, on behalf of Nigerian National Petroleum Corporation, NNPC, as a storage farm/facility that channels refined products through System 2B pipelines that runs through Ejigbo (a suburb in Lagos). These pipelines supply petroleum products to the entire Western region of Nigeria, Kwara and Edo States. Depots served by the Atlas Cove Jetty include Mosimi, Ore, Ibadan and Shagamu. The Atlas Cove Jetty is also used to off-load coastal vessels as well as pump petroleum products to the Atlas Cove Depot for storage.

This command center for refined petroleum products is administered from Abuja by the PPMC, a subsidiary of the government owned NNPC.

A very dependable source at Atlas Cove told Sunday Vanguard that the country had always been held hostage by the petrol import cabal in connivance with the government that claims to be serving and protecting Nigerians.

A source said what has been in place at Atlas Cove can best be described as “round-tripping, as some of the marketers with allocation for importation are involved in the scheme.

According to the source, “they bring in a particular amount of refined product, declare the product on arrival to the relevant government agencies’ staff (DPR, PPPRA, Petroleum Equalisation Fund, PEF) and after these officials have okayed the product quantity in preparation for subsidy application, about half of the product originally meant for domestic consumption would then be diverted to other neighbouring West African states”.

In the case of private depot owners, “some of them doctor the figures they submit with a view to making undeserving claims. The quantity of products discharged some times does not tally with the inflated figures that are recorded.

It is one big, very big conspiracy. The importers are involved; the depot owners are involved; the people who are supposed to verify the claims are also involved. People collect subsidy for what they did not import. That is why the figures and claims keep going up. Those involved know themselves; and those to whom they make returns also know themselves. It is for government to dig deep and find these people out”, the source concluded.

Had it been limited to these categories of people alone, the corruption associated with the subsidy funds may not have assumed the humongous nature it assumed. But there were all manner of petty crooks in the toga of government officials and importers as well as depot owners who doctored records.

For instance, those with “valid throughout agreement that have completed the necessary due diligence processes to import the products” also connive with depot owners to make illegitimate claims.

CAUSE OF PANIC BY FG

Back to the FG’s memo of 2008! Before the memo, there was beginning to appear at gas stations across the country long vehicular queues. The PPPRA, Sunday Vanguard has been made to understand, designed a seemingly “more flexible import plan” which accommodated a few more companies.

There was need for the federal government to approve the arrangement made by PPPRA. That was the message conveyed by the letter from the Office of the SGF.

But it was not a magna charta for PPPRA to enthrone a regime of recklessness.

However, what was to follow was to create its own muddle.

On January 21, 2009, the federal government decided to reduce the pump head price of petrol.

The consequence of that was the creation of even longer queues.

Importers and marketers began to complain and there was need for the federal government to address their concerns.

Therefore, through the PPPRA, the FG summoned a ‘Technical Committee’ meeting of stakeholders. The meeting was held on Thursday, January 29, 2009.

A source in the Office of the SGF made Sunday Vanguard understand that the meeting needed to be called because “the government of the day was beginning to feel that there might be sabotage because of the growing shortage of petroleum products”.

At the meeting that day, there were representatives of NUPENG, PPMC, MOMAN, DPR, PENGASSAN, Ministry of Petroleum, IPMAN, TUC, CBN, DAPPMA, and a host of other stakeholders. It was at that meeting that marketers complained of the removal of standard deviation from the PPPRA Template.

After the meeting which lasted hours, resolutions were reached.

A copy of the resolution obtained by Sunday Vanguard reads: “On the issue of exchange rate, it was agreed that the CBN Marginal Rate plus 1% CBN commission and 1% bank charges should be added in the Template.

“Members agreed that the Freight Rate based on the 2009 World Scale will be considered

“For the financing cost element, it was agreed that the PPPRA should confirm bank interest rates and other charges that make up the cost and come up with a submission.

“Members agreed that the PPPRA should adopt the weighted average of Port Charges (NPA), on the Pricing template.

“Members agreed that the PPPRA should update the Pricing template with the reviewed parameters, and present same to the next meeting for consideration.

“The meeting advised that recommendation should be made on the need to dialogue with the NPA with a view to reducing their charges.

“In addition, the PPPRA may also seek intervention in the FOREX by exploring the possibility of a special window for an exchange rate for the wet products that capture a reasonable rate that guarantees predictable products importation”.

The resolutions of this meeting were conveyed to the federal government in a letter with reference number A3/9/118/C.7/T/84, on February 5, 2009.

However, typical of government activities in Nigeria, there was no immediate response.

This was at a time when the federal government brought down the price of petrol from N70 to N65. This led to serious shortages and queues were once again back at the filling stations.

Sunday Vanguard was informed by an industry source that the PPPRA “was instructed by the Office of the Honourable Minister of Petroleum Resources to immediately address the Marketers complaints with a view to eliminating long queues at the filling stations”.

It was in addressing that challenge that some smart Nigerians, made up of bankers and government officials, along with importers began to make the kill, as disclosed above.

COMMITTEES APLENTY AND CONFLICT OF INTEREST

The probe into the shady deals was first instituted by the Senate under the chairmanship of Senator Magnus Abe. Then came the drama of the House of Representatives’ Committee on Subsidy Management, with Hon. Lawan Farouk as chairman. The Senate Committee is yet to conclude its work. But the Farouk Committee which concluded its work has been entrapped by s bribery scandal involving a member of President Jonathan’s Economic Management Team, EMT, Femi Otedola of Zenon Oil and Gas,

Sunday Vanguard was informed last week in Abuja that the banks were also part of the problem, including the Central Bank of Nigeria, CBN.

Of particular interest is one of the banks whose Chief Executive is involved in some form of remedial activities being engaged by the FG.

Pouring through tones of documentary evidence, Sunday Vanguard was exposed to a verity of LETTERS OF CREDIT ostensibly opened for the transaction of fuel importation.

And whereas it could not be established during this investigation that the banks were directly involved in any form of “sharp practices”, according to a source, “the status of the committees chaired by Aigboje Aig-Imoukhuede of Access Bank can not escape the tar of conflict of interest”.

Whereas there was documentary evidence to prove that, like most other banks, Access Bank was involved in the financing of businesses conducted pursuant to importing petrol, the choice of Aig- Imoukhuede as the chairman of two committees involved in the verification of claims regarding subsidy does not in any way present the FG as conducting its investigations in an unbiased manner.

Firstly, some marketers and industry sources disclosed to Sunday Vanguard that “conducting a verification exercise the way the first committee set up by Ngozi Okonjo-Iweala, Finance Minister and co-ordinating minister for the administration’s EMT did, revealing that over N400billion should be refunded to the government, a sum which the committee said constituted wrongful payments, how would anyone explain the fact that the chairman of the committee also runs a bank that was involved in the business of financing importation of petrol?

“It was because some importers raised an alarm about the unfairness of the first committee by not allowing them to come forward and defend themselves that made Mr. President to set up another committee but again with the same individual as its chairman. This is not about the person of Aig- Imoukhuede but, in coming to equity, there is need to come with clean hands. It does more harm than good to the FG to appoint the chief executive of a participating bank to verify subsidy claims. Some of us know what Aig-Imoukhuede represents but it is not even in his interest to chair such a committee. Nigerians are watching and the insinuation is already there that all these is about man-know-man”, the source said.

Reminded that some of those who benefited from the subsidy wrongly are being prepared for prosecution, the source, who is one of the major importers, maintained, “Who does not know what will happen at the end of the day? Some of those that would be arraigned would be the ones who are not connected. Yes, some people would be prosecuted but the real issue here is the role of conflict of interest.”

When you add up the Senator Abe Committee, the Farouk Committee, the Ribadu Committee, the first Imoukhuede Committee and the second Imoukhuede Committee, the question to ask is, where would all these lead?

In addition, the role of the Economic and Financial Crimes Commission, EFCC, is gradually coming to light as inside sources say the commission is about to break loose.

HOW NOT TO TRACK SUBSIDY ROUGUES

Yet, investigations have revealed that there is a very simple (even simplistic) approach to tracking the subsidy thieves.

A very dependable source inside Aso Rock Presidential Villa disclosed to Sunday Vanguard that on December 24, 2010, a near scandal almost broke out when the PPPRA issued a “Request for a notarized Letter of undertaking on accuracy of petroleum products supply and evacuation records”.

The Presidency source disclosed that the move to ensure that all petroleum products importers and depot owners sign an undertaking of performance was first rebuffed.

“It was an attempt at ensuring that depot owners and importers do not engage in what has now become the sharing of the subsidy loot. When we got hint of the move, it was seen as a welcome development by some but again, there was need to ensure that a dislocation is not created in the supply chain for the availability of products as this was coming close to an election period”, the source said.

Even at that, Sunday Vanguard was able to discover that all the importers and depot owners were made to sign the undertaking that they would be straightforward in their dealings.

In fact, the undertaking that was signed by the importers and marketers also had penalties which, apart from leading to prosecution, also has the stringency of forfeiture of depots in the event that records are not accurate. Now, the PPPRA introduced a checklist.

Nigeria: FG, Oil Firm to Establish Two Refineries Worth U.S.$4.5 Billion

July 23, 2012 Leave a comment

AllAfrica

By YEMI AKINSUYI,

July 9th, 2012

The Federal Government has signed a Memorandum of Understanding (MoU) with the Petroleum Refining and Strategic Reserve Limited (PRSR), a renowned America-Nigeria joint venture, for the construction of $4.5 billion two modular refineries in the country.

Each of the refineries, expected to be completed and launched within 12 to 13 months, would refine between 30,000 and 60,000 barrels per day (bpd) of crude oil, and produce five million litres of petrol, diesel, kerosene and LPFO per day.

Minister of Trade and Investment, Olusegun Aganga signed on behalf of the federal government while the chairman of PRSR, Chief Edozie Njoku, endorsed for the company at a brief ceremony held at the ministry’s conference room in Abuja.

In his remarks, Aganga said the new agreement was part of the government’s National Industrial Revolution Plan aimed at ending the exportation of raw materials and jobs from Nigeria to the West, while encouraging the transformation of the raw materials and exportation of finished goods, which add value to the economy.

Aganga said: “This is part of the paradigm shift we talk about. We have to stop exporting crude oil and therefore we need more refineries. With the signing of this deal, I am sure the two refineries which will cost about $4.5 billion will be launched in a year’s time”.

The minister, who reiterated the government’s determination to improve the business climate and make Nigeria the preferred investment hub in Africa and globally, informed that the firm had a history of performance and trusted track records; having delivered on bigger projects in Russia and other countries.

He assured the firm of government’s technical support needed to accomplish the task, saying that the Nigerian National Petroleum Corporation (NNPC) was actively involved in the deal.

Aganga, while justifying private sector involvement in government’s transformation agenda, informed that the Eleme Petrochemicals was now 30 times more productive than when it was in the hands of government.

Also speaking, the Chairman of PRSR said the two refineries were part of a 30-month plan to construct six modular refineries in strategic places in Nigeria, pointing out that his firm would build simple refineries, “that will help tackle the problems of Nigeria as against the existing complex refineries.”

Njoku added that the six refineries, when completed, would have a combined capacity to refine 180,000 barrels of crude oil within the country and produce up to 30 million litres per day of refined oil products within 30 months.

The chairman said: “The refineries would be operated for the benefited of Nigerians by eliminating the current subsidy regime and significantly reducing the current market prices of kerosene and diesel by as much as 50 per cent”.

“During the construction timeline, over 10, 000 Nigerians will be employed and once operational, the six refineries will create over 150,000 direct and indirect jobs”, he added.

On the possibility of completing the pilot refineries on schedule, he explained that “modular refineries are comparatively easy to assemble in a relatively short time period”, adding that the company would produce.

Speaking in the same vein, the company’s technical partner, Graham Ford, described Nigeria as investment destination and expressed their readiness to partner the country to overcome its perennial crisis in the oil sector.

Corruption Watch queries R13m tender

July 22, 2012 Leave a comment

www.oil.co.za  Business Report

By SAPA

June 21, 2012

A Corruption Watch probe has found irregularities in a R13 million tender awarded by the department of transport (DOT), the civil society organisation said on Thursday.

The department had awarded a tender to a company which had not fulfilled all the necessary requirements, and overpaid for services by R10 million, it said in a statement.

Global Interface Consultancy won a tender to manage conference and communication services for the department of transport’s international investor conference in June last year.

It had submitted a bid for R13.5 million.

Losing bidder Indigo Design and Event Marketing bid R3.837 million – about one-quarter of the winning bid.

Indigo Design, a BEE-accredited company, lodged complaints with the department, the Public Protector, and Corruption Watch (CW).

“CW’s further investigation into the DOT tender award revealed gross irregularities in the tender process,” Corruption Watch said.

Corruption Watch had handed over its findings, as well as two cases involving irregular public tenders, to the Public Protector for further investigation.

It was in the process of formalising a working relationship with the Protector.

“We will closely monitor the cases that we hand over to the Public Protector and we will assist her office with further evidence and information gathered from the public,” said executive director David Lewis.

“It should be stressed that this case and each of the serious acts of corruption that we are investigating were reported by alert members of the public.”

Comment from the department could not be immediately obtained. – Sapa

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