Onshore-offshore dichotomy: Abrogation of the Abrogation, By Ibrahim Sanyi-Sanyi


On August 6th, 2012, Kano State Governor Rabiu Musa Kwankwaso in an interview with Daily Trust, called for the amendment of the onshore-offshore dichotomy abrogation law that was passed by the National Assembly in 2004.  The Governor did not stop at the declaration that the North would push for the return to status ante which existed before the passage of the abrogation of the dichotomy law. He went further to rap on the House of Representatives members from Kano State who were led by the former Speaker Ghali Umar Na’abba and who seemed to have acted contrary to his orders, and went the way of their colleagues from Southern Nigeria and ensured the smooth sail-through of the contentious law.

Four days after, on Friday the 10th, Malam Adamu Adamu joined the latent fray against the law that abrogated the dichotomy law and bought into (or so it seems) the subtle blame-them campaign hatched to hit hard at Ghali Na’abba and all those NASS members from the North who voted for the abrogation law.

Now, with baton passed on to the second athlete in the quintessential sprint relay, I felt very constrained to issue a rejoinder before the last lap of the race. And here we go.

The onshore-offshore dichotomy row began when the Obasanjo-led Federal Government of Nigeria (FGN) went to the Supreme Court and sought to “restrict coastal states (9 littoral states) to onshore oil revenue and establish exclusive control over offshore income from oil and other natural resources.” (Kromah, 2003)

The Court held that “the seaward boundary of a littoral State within the Federal republic of Nigeria, for the purpose of calculating the amount of revenue accruing to the Federation Account directly from any natural resources derived from that State pursuant to section 162(2) of the Constitution of the Federal Republic of Nigeria 1999, is the low water mark of the land surface thereof or (if the case so requires as in the Cross River State with an archipelago of islands) the seaward limits of inland waters within the State.”

The Court’s decision of April 5th 2002 which was decided in favor of the plaintiff (FGN) was drived “from ancient common law, international law, landmark cases in the United States, and even indigenous claims in Canada.”

“The overriding legal precept gleaned from the exercise is that that the national government has greater authority as the sovereign does over offshore land and natural resources. This has been established through the evolution of national admiralty and marines laws, progressively enshrined in the controlling international rules and guidelines called the UN Convention on the Law of the Sea.”

“The Law of the Sea has fundamentally established the powers of the coastal nation over three key levels of offshore land and resources: Territorial Sea, Exclusive Economic Zone, and Continental Shelf.”

“The Law recognizes the sovereignty of the coastal nation over the water, subsoil and airspace of the immediate outlying portion of the ocean called the territorial sea. This area, which may not exceed 12 nautical miles offshore, begins with a baseline that must be clearly identified, starting with the low-water mark of the land territory.”

“The Exclusive Economic Zone begins with the territorial sea baseline, but goes beyond to 200 nautical miles. It is called economic zone because it is internationally agreed that the coastal nation regulate, in its interest with due regards to other nations, mineral resource, fishing and scientific activities, among others, within that stretch of water.”

“The Continental Shelf is described as the submerged prolongation of the landmass of the coastal nation, including the seabed and subsoil of the shelf, as well as the slope and rise.(note) But it does not extend to the subsoil of the deep ocean floor. Sixty miles from the slope of the shelf is the mark the deep ocean floor begins.”

(Kromah, 2003)

The Supreme Court decision which abrogated the claims of the littoral states to revenues generated from offshore petroleum operations flung open doors of serious political conflicts and intense agitation from the states affected by the landmark ruling.

“Violent demonstrations had already begun against his administration even in states where his fellow partisans were serving as Governors. The trouble was particularly evident in Akwa Ibom State, which stood to lose nearly all of its oil revenue as a result of having no onshore production. Youths in the state capital staged massive street protests, denouncing President Obasanjo. The Governor Victor Attah, a top personality in Obasanjo’s People’s Democratic Party, had earlier convened a meeting of local legislators and accused the President of personally introducing the onshore/offshore dichotomy.”

“Elsewhere in the Niger Delta, violent protests were threatening major American oil companies like ChevronTexaco. Foreign and local workers of the company were held as hostage, bringing about an interruption of the company’s production. The youth militant violence, which seemed to have subsided a few months earlier, was again on the rise after the April 5th Supreme Court ruling.” (Kromah, 2003)

 To address the challenges raised by Supreme Court judgement, Obasanjo went for political solution.

“Nigerian Senate passed a bill, reportedly supported by President Obasanjo, which in effect gave up some of the offshore areas to the littoral states. “The Senate passed the bill last year (2002), abolishing in effect the dichotomy between onshore and offshore oil revenues, a step that gave the impression of reversing the Court’s decision. But the Senate enacted the bill in accordance with Court’s urge that the legislature follow the constitutional provision to work out a formula for the implementation of the 13 percent natural resource revenue allocation to the states. (Kromah, 2003)

The legislative bill passed by the Senate went to the extreme and provided that “the continental shelf and the exclusive economic zone contiguous to a state of the federation shall be deemed to be a part of that state for the purposes of computing the revenue..”

“The euphoria surrounding the Senate bill has since died as President Obasanjo eventually refused to sign the legislation because it included the continental shelf as part of the concession to the states. The Senate evidently went too far for the President. Prominent Nigerians from the non-oil producing but powerful northern states raised concerns that the Federal government’s sharing revenue with the states from the continental shelf would reduce the money left for the rest of the country. The northern group, which calls itself as Kano Elders’ Forum.. urged the legislators in a communiqué to rewrite the bill as it was “spirit and letter” of the Nigerian Constitution. Obasanjo officially laid the reason for his reluctance on foreign affairs implications. He said states of the Nigeria federation involvement in offshore activity would means “doomsday regional conflict,” apparently referring to the proximity of adjacent countries.” (Kromah, 2003)

In the light of the foregoing, it is therefore incorrect to assume, as my brother Adamu Adamu did, that the “Federal Government, the littoral states and Northern representatives got enmeshed in a conspiracy against Northern interest, and by implication, the long-term interest, balance and survival of the country. (And) the Federal Government sent the issue to the National Assembly ostensibly looking for a political solution, when there was in fact no major political problem to solve.”

In fact, unlike Malam Adamu’s insinuation that the Northern representatives took contracts, and Governor Kwankwaso that felt they sold out; I for one saw what they did in the passage of onshore-offshore dichotomy abrogation law as noble, selfless, pragmatic and in the spirit of national stability. They were being practical and sensible too! ‘cause it will be easier for the flim-flam to sell snake oil than for one to make any sense to the people of Qua Iboe community in Akwa Ibom State as he tells them that their oil-producing state shall receive zero allocation from the enormous oil revenues generated from the visible platforms which are located some meters away from the shores upon which their properties were standing.

Let some of us from the North/South West/East put ourselves in the position of the Niger Delta peoples and communities. And let’s be honest to our conscience. Are we gonna just stomach it where oil is being exploited from the waters contagious to our backyards with nothing given to us as derivation revenues? Are we gonna allow non-oil producing states like Kano and Lagos get more share from the mainly-oil-revenue based Federation Account over and above our small state on the subjective basis of population and number of local governments they have?

Let’s be real please.

Well, I don’t want to speculate on what transpired in the National Assembly during the debate on the dichotomy abrogation bill and how some NASS members were lobbied by the governors of the 9 littoral states to “extend the 24 nautical miles requested in President Olusegun Obasanjo’s bill to 200 nautical miles” and what made them obliged.” But the account of Alhaji Kromah which I quoted above clearly indicated that the Senate was the first to pass the Bill. And unlike their Reps counterpart, the Senators went beyond the 200 nautical miles and conceded the whole of Nigeria’s continental shelf to the littoral states. And as Malam Adamu Adamu said, and rightly so, the bill was passed into law when Aminu Masari was the Speaker of the House of Representatives.

Thus, where then is the fault of the “Speaker Ghali Na’abba-led House of Representatives”?

Why the haste in passing half-full-glass judgment on the former Speaker by Malam Adamu here: “but the person who played the most crucial and most dishonourable role in the whole affair was perhaps former Speaker Ghali Na’abba”? And then, why this quick attempt to ask questions after the judgment as done here: “isn’t it time he spoke and told us what role he played and why?” Why this overkill question: “was he also waiting for Northern governors to lobby him, or did a South-Southern governor prove quicker on the draw?”

Now, if I may ask, is Malam Adamu up to some games here? Is he in the bandwagon of Kwankwaso’s first public shot in the verbal war with some politicians he shares the local political space in Kano State?

And where was my Governor when the extant law that abrogate onshore-offshore dichotomy was passed in 2004? Was he not a minister in Obasanjo’s government? What did he do to stop its implementation? Why wait for 8 solid years to make a case against it?

By the way, these charges against Na’abba by Malam Adamu were unnecessary as the former Speaker was not given fair hearing and opportunity to state his own side of the story – a trite of rule of law – before they were made.

 Moving on..

 Let revisit the history of revenue allocation in Nigeria.

The onshore-offshore dichotomy wasn’t in existence in the early history of Nigeria’s revenue allocation.

“The 1979 constitution crafted during the military administration of current civilian President Olusegun Obasanjo established a dichotomy between onshore and offshore oil and gas revenue in favor of the federal government, but was abolished later in another military administration under Ibrahim Babangida. Legal commentators and Niger Delta activists say that though the 1999 constitution provided for 13 percent of revenue of natural resources, it is President Obasanjo who has again introduced a dichotomy between onshore and offshore. This, they say deprive states which previously depended wholly on offshore revenue, and encourages companies to move forward onshore and continue neglecting their onshore responsibilities.”

“The issue of derivation began when there was no oil resources. In the 1950’s, export earnings from the agricultural produce of various regions of the soon-to-be independent nation were pooled in a single account. A prominent political leader, Obafemi Awolowo, is said to have initiated the distribution of the reserves, which had reached £100 million in 1953. His counterparts from the North and East, Ahmadu Bello and Nmandi Azikiwe agreed. The amount was allocated with the cocoa producing Western region carrying £53m; the cotton area of Northern Nigeria, £23 million; while the palm producing Eastern Region carried £16 million.”

“A table of Federal-State percentage share in petroleum proceeds shows there was little controversy even after independence, where up to 1967, the producing states carried 50 percent of the petroleum proceeds while the Federal government carried 20 percent, and the rest allocated in a general pool. The next few years saw a fifty-fifty split until 1975, when the state proceeds dropped to 20 percent minus off-shore proceeds, with the federation taking 80 percent plus off-shore proceeds. The federal government simply took 100 percent of the money from 1979 to 1981. It yielded a little to the states (1 ½ to 3 percent) in the following years until the 1999 Constitution provided in principle that the amount would have to be at least 13 percent.”

(Kromah, 2003)

With the historical account above, it is evident that the three regions of Nigeria had benefit immensely from derivation principle before the successive governments at the center tipped the scales in favor of the federal government. The anomalies in the skewered revenue allocation were substantially addressed by the 1999 Constitution when 13 percent derivation was constitutionally sanctioned. Even at that, it took the combined effects of court pronouncement, agitation and protests before the onshore-offshore dichotomy hurdle stuck on the way of 13 percent derivation was vacated.

And now, 8 years after, some politicians and public commentators have gone into the legal and political cemetery with the intent to exhume and resurrect a “dementor” of a controversy when the nation is already overwhelmed by political tension and security issues. Where were the proponents of this “abrogation of abrogation” in the past 8 years of the existence of the law? Do they think this kite can fly? What happened to fiscal federalism and resource control? How about looking inward into the local economy of the North? How about the need for the Northern states to pool resources together (the 19 of them; or grouped as 3 economic zones of North East, North West and North Central; or as a group of 2 or more states) to resuscitate power/energy, agriculture, industry, commerce & trade, tourism and provide multi-state level infrastructure? How about putting pressure on the Federal Government to complete dredging of River Niger so that medium-sized vessels can navigate the delta right through to the port in Lokoja, and modernize inland water transportation along the river, from Kebbi and Niger, down to the deltas? How about oil exploration in the frontier areas of Northern Nigeria? How about computerization of jobs in the civil service and running smaller governments?

 The how’s are many and the North can never get it if its current crop of leaders, peoples and elites continue to fix their eyes on the oil revenues derived from the kingdom of far far away  Niger Delta.

Meanwhile, it is open-secret that Nigeria’s oil reserve of less than 40 billion bopd will dry up in 35 years (according to President Jonathan) unless new oil is hit which would jack up the fast depleting reserves. The down side of this is the bitter truth that new discoveries are hardly to come by, while the insecurity and the endemic oil theft has forced the oil companies to explore in deep offshore. Shell is divesting its onshore assets as investor attention is gradually focused on Angola, Gabon and other countries of West African were new discoveries are made.

So, it is high time we diversify the states, regional and national economies.

 I digressed.

 In conclusion, contrary to what Malam Adamu Adamu presented, the onshore-offshore abrogation law passed in 2004 is legal, and was passed by the National Assembly in their wisdom to plug a constitutional lacuna that had the potential to ignite major political crises in Nigeria. The lawmakers extension of the littoral states boundaries to cover the exclusive economic zone of Nigeria enabled Akwa Ibom State to benefit from the derivation revenues as all oil wells in the state were located offshore. The abrogation law doused the simmering tensions and stabilized the polity.

History has shown that derivation principles were used to allocate revenue between Nigeria’s federating units, while the military regime of General Obasanjo introduced the onshore-offshore dichotomy and re-introduced it during his second coming as President.

While it is within the right of any governor of a state from the North to approach Supreme Court for a declaration to nullify the dichotomy abrogation law, it will be wiser if the Northern governors look inward to their expenditure and revenue profiles. They will do the North well if they can increase IGR, invest in infrastructure and agro-allied industrial development, consolidate their economies and collaborate at regional levels to diversify these economies, reduce cost of governance and computerize government processes. This is what we need. And not trouble courting that have the capacity to overheat the polity.

 Reference was made to this material:

Nigerian Offshore Oil: Federal v Littoral State Ownership, Kromah, Alhaji G. V., 2003 (http://www.alhajikromahpage.org/alhajinigoil.htm)

Ibrahim Sanyi-Sanyi (email: aim_sanyi@yahoo.co.uk) is Chairman of Arewa Renaissance Initiatives (an NGO).


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