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People who have
suffered the impact of unjust practices and those who have been victims
of abuse from corporate impunity will heave a sigh of relief the day
directors of such companies are brought to court from behind their
corporate shields. The spins and the twists in legal tangos that play
out so impassively will become a thing of the past.

Whereas
corporations do not sweat in the dock, their directors, who are human
like the rest of us, may. It is also possible that pleas from the dock
would be couched in humane terms and that actions and reactions would
become more or less equal as they usually are in physical matters.

In sum, people would sense that justice is reachable in many cases of confrontation between them and corporate entities.

These are some of
the hopes being raised by the possibility of top guns at BP being
charged for manslaughter over the Gulf of Mexico oil spill of April
2010. If this happens, it will send a strong signal to leaders of
companies that expose their workers to extreme personal risks.

It will also send
signals to companies engaged in reckless activities that severely
impact people and degrade their environment. In addition, it will offer
a glimpse to what may become the norm if an international environment
or climate crimes tribunal is set up for cases of ecocide.

It has been
reported that investigators are pawing over documents and emails that
may indicate whether Tony Hayward, former BP chief executive, and other
top management officers made decisions or played key roles in what led
to arguably the most horrendous environmental disaster in US history.
That incident killed 11 workers and spewed yet unknown barrels of crude
oil into the Gulf of Mexico.

The internal
investigation carried out by BP immediately after the disaster showed
that their managers misread pressure data and authorised workers of the
Deep Water Horizon rig to replace drilling fluid in the well with
seawater – one of the moves in cost cutting suspected to have triggered
the disaster.

BP has admitted to having made some mistakes but sticks to the claim that they were not ‘grossly’ negligent.

There is something
quite gross about that word ‘gross’ before the word ‘negligence’. If it
sticks, the possible fines to be slapped on BP may rise from about $5
billion to $21 billion. It will also complicate things for BP in their
dealings with the partners on the rig, as they seek to share the costs
of the clean up expected to reach about $42 billion.

The significance of
this case would also be found in the fact that the directors of BP
would be unable to hide behind the corporate shield, as is often the
case with corporate entities who are persons before the law only for as
much as capacity to earn income is concerned; and are phantoms when it
comes to responsibility for acts of impunity.

Think how
instructive it would have been to line up the directors of Chevron for
the environmental crimes in the Ecuadorian Amazonia or those of Shell,
Exxon, Chevron, Agip and the rest for their human rights and ecocide in
the Niger Delta. If manslaughter charges are pressed against officials
of BP, then the days of companies only being fined and the directors
avoiding the dock will soon become history.

Obviously, BP and
other corporations will not take kindly to this move. Their arsenal is
loaded with tools with which to frustrate legal procedures. Some of
them have batteries of lawyers with whom they harass hapless victims
and keep the wheels of legal suits spinning.

There is no need to
wonder how come corporations have got away with murder all the time.
One fact is that governments have over the years become largely
privatised in the sense that they depend on corporations for revenue
and for monetised solutions to virtually every problem.

While suing
directors of companies may be a daunting prospect, considering their
propensity to keep cases dragging endlessly, it is nevertheless a
necessary step towards giving companies a truly human face and maybe a
human heart.

We cannot avoid
reaching the conclusion that companies behave in a heartless manner
because they are fashioned to be unaccountable and can carry out
inhuman acts without blinking an eyelid.

Are you not struck
by the fact that oil company leaders are ordinarily nice and personable
persons, but that this genial nature changes once they put on their
corporate toga?

Nigeria is still
lagging in its use of information and communication technology,
according to an annual study released by World Economic Forum recently.

Nigeria finished
104 in the study’s comparison of 138 countries that make up 99 per cent
of the World’s total gross domestic product.

Mauritius and
South Africa led in the Sub-Saharan Africa region, having placed 47th
and 61st respectively in the global ranking.

The report,
entitled ‘The Global Information Technology Report 2010-2011’, placed
Sweden first followed by Singapore, Finland, and Switzerland.

Worried by the
enormous financial pressure they are likely to be saddled with
following the recently approved National Minimum Wage for workers,
states and local governments in the country have renewed their demand
for the immediate review of the revenue allocation formula by the
National Assembly.

Chairman,
Commissioners of Finance Forum, Rebo Usman, said in Abuja that the
approval of a new revenue sharing formula for the country is long
overdue in the face of current socio-economic realities.

He said that the
speed with which the Federal Government and the National Assembly
adopted in passing the National Minimum Wage Bill should also be used
in handling the amendment to the vertical revenue sharing formula.

The Revenue
Mobilisation, Allocation and Fiscal Commission (RMAFC) recently said it
was planning a review of the revenue sharing formula indices,
considering that the basis for the one currently in use has already
been overtaken by reality, since it has been in operation from the
military regime.

Dividends of democracy

However, Mr. Usman,
who is also the Taraba State commissioner for finance, said the huge
responsibility the states and local governments are saddled with in
catering for the people at the grassroots has made it crucial that
something be done urgently to help them deliver democracy dividends to
their people.

“We have a
situation in this country where the federal government takes more than
50 per cent of the total revenue available for distribution to the
three tiers of government every month. Yet, the states and local
governments are under an obligation to still pay the recently approved
minimum wage to workers, because it has now become a law that is
binding on all stakeholders.

“It is common sense
that states and local governments put together spend more, because they
are closest to the grassroots where the bulk of the country’s
population reside. So, one cannot understand what justification the
Federal Government has in taking 50 per cent of the revenue every
month,” Mr. Usman said.

He said the
leadership at all levels of government has a huge responsibility to
resolve this issue, pointing out that though the states and local
governments have agreed to pay the new minimum wage, it would be
difficult to do so under the current revenue allocation, as they cannot
give what they do not have.

“These are issues
the states and local governments expect the NLC to bring to the fore
and demand for a redress. Since we have a source from where everyone
can draw to ensure that all workers in the country can be treated
fairly and equally, the appeal we will like to make to Nigerians,
particularly the leadership of this country, is to look into the source
of funding of these two tiers of government, which also have a
responsibility to deliver democracy dividends to their people,” he said.

On allegations that
states do not generate enough internal revenue, Mr. Usman said that
Internally Generated Revenue (IGR) is a function of economic activity,
which in turn is determined by the existence of infrastructure, like
power, which is supposed to be supplied by the Federal Government,
wondering how many states today have a robust economic activities that
could sustain revenue generation.

The first attempt
at reviewing the nation’s revenue sharing formula was initiated by the
commission in August 2001, when it proposed a formula that gave the
Federal Government 41.3 per cent, states (31 per cent), local
governments (16 per cent) and a total of 11.7 per cent for special
funds, consisting 1.2 per cent allocation to the FCT; one per cent each
to ecology and national reserve fund, agriculture/solid mineral fund,
and 1.5 per cent and Basic Education and Skill Acquisition (BESA), 7
per cent.

In January 2003, a
new draft formula gave the Federal Government 46.63 per cent share;
states, 33 per cent, and local governments, 20.37 per cent.

However, the
Obasanjo administration, in November 2003, unilaterally asked the
National Assembly to withdraw the proposed formula by the commission,
necessitating reliance on the old formula till the end of his
administration.

Higher oil prices
are the main risk to South Africa’s inflation outlook but the Central
Bank will deal with this threat adequately, a senior Reserve Bank
official said on Wednesday.

“We are not pleased
with the current international environment where the oil price has gone
through the roof again,” Johan van den Heever, deputy chief economist
in the research department of the South African Reserve Bank, told
parliament.

“And that is
unfortunately in aAn environment where our institution fights against
inflation, a most unhappy outcome. So that is one of the negative
factors feeding into the inflation process,” Mr. Van den Heever added.

Partly due to
higher prices, the Central Bank raised its inflation forecasts at its
last policy meeting in March to an average 4.7 per cent for this year,
and 5.7 per cent in 2012, but said most risks to inflation are mainly
cost push in nature.

The bank left its
repo rate unchanged at 5.5 per cent in March, for the second time this
year, after reducing it by 650 basis points between December 2008 and
December 2010.

Industries under performing

The bank’s monetary
policy committee statement was cautious, though. It said the key
manufacturing sector was still underperfoming and said although
consumer consumption was recovering, it was unlikely to accelerate in
the near term.

Last week, deputy
governor, Daniel Mminele, said the bank will base its next policy
action on an assessment of second-round effects of oil and food prices
on inflation.

Inflation has been
inside the bank’s target of between 3 and 6 per cent since February
2010, and stood at 3.7 per cent year-on-year in February. The bank said
in its quarterly bulletin in March a sustained rise of $10 per barrel
in the price of oil added about 0.3 percentage points to inflation.

On Wednesday, Van den Heever said the bank would deal with the effect of the higher oil price.

“It is not the end
of the world. We come from a background where other factors have made
inflation slow down quite nicely and we are quite confident this
negative impact from the oil price will be dealt with adequately as
time goes on,” he said.

A relatively strong
rand currency has mainly cushioned South Africa from the impact of high
oil and food prices. The rand hit 3-month highs at 6.6310 last week and
was last trading at 6.75 to the dollar. Reuters

Nigeria will draw
up a shortlist of bidders over the next three weeks for power stations
and electricity distribution firms that the government is offering as
part of a multi-billion dollar privatisation plan.

Bolanle Onagoruwa,
director general of the Bureau for Public Enterprises (BPE), said
companies would be chosen for the six power stations and 11
distribution firms on their ability to reduce transmission losses in
the network.

“Over the next
three weeks, we should have the results of who the short-listed bidders
are before we then go to the actual submission of technical and
financial proposals,” Mrs. Onagoruwa told a news conference in the
commercial capital, Lagos.

President Goodluck
Jonathan, who faces an election on Saturday, has made ending chronic
power shortages in Africa’s most populous nation one of the
cornerstones of his campaign, and his administration is keen to show
progress with the plans.

Blackouts are a
major brake on growth in sub-Saharan Africa’s second-biggest economy,
and the potential returns for investors in the country of 150 million
people are huge.

Utilities and
engineering firms from Europe, North America, India, and China are
among those that attended road shows in Dubai, London, New York, and
Johannesburg this year.

The BPE received
174 expressions of interest for the four thermal and two hydro power
stations, and 157 for the 11 distribution firms, in which investors
will be allowed to take stakes of up to 70 per cent.

Some industry
executives have said they are reluctant to make final commitments until
the outcome of the elections is clear and until they see that Nigeria
is able to implement a solid regulatory framework to govern the sector.

“We basically said
to them that the process has been designed in such a way that they
don’t have to pay their money until they have a clear idea of what the
next government will do,” Mrs. Onagoruwa said.

“So that gives them some confidence … They can start due diligence,” she told the news conference.

The ruling party
candidate has won every election in Africa’s most populous nation since
the end of military rule in 1999, and Jonathan is considered the
front-runner. But the opposition is hoping it can force a run-off.

Under the blueprint
for reform, power generation and distribution will be privatised.
Government will continue to own the national grid but its management
will be privatised.Reuters

The International
Monetary Fund has said the persistent increase in oil prices over the
past decade suggests that global oil markets have entered a period of
increased scarcity.

In its April
edition of World Economic Outlook, the Fund says given the expected
rapid growth in oil demand in emerging market economies and a downshift
in the trend growth of oil supply, a return to abundance is unlikely in
the near term.

According to the
reports, “Adverse effects could be much larger, depending on the extent
and evolution of oil scarcity and the ability of the world economy to
cope with increased scarcity. Sudden surges in oil prices could trigger
large global output losses, redistribution, and sectoral shifts.”

After about two
years of gradual global recovery, natural resources are again in the
headlines. Consumption levels of many natural resources, including
crude oil, have already risen above pre crisis peaks, largely
reflecting robust demand in emerging and developing economies.

The price of a
barrel of Brent crude oil crossed the US$100 portal in January 2011.
The prices of many other commodities have also risen to either meet or
surpass their pre crisis peaks, and commodity futures markets point to
further price increases in the next year or two, according to experts.

Oil is said to be
scarce when its supply falls short of a particular level of demand. If
supply cannot meet demand at the prevailing price, prices must rise to
persuade more supply and to ration demand. In this instance, IMF says
oil scarcity is reflected in the market price.

Recommended policy action

The Fund says there
are two broad areas for policy action that economies must consider for
the looming oil scarcity to be tackled.

According to the
report, “At current high levels, commodity price developments and
prospects can have important global economic repercussions. The
increases in the trend component of oil prices suggest that the global
oil market has entered a period of increased scarcity.”

“First, given the
potential for unexpected increases in the scarcity of oil and other
resources, policy makers should review whether the current policy
frameworks facilitate adjustment to unexpected changes in oil scarcity.

“Second,
consideration should be given to policies aimed at lowering the risk of
oil scarcity. If the tension intensifies, whether from stronger demand,
traditional supply disruptions, or setbacks to capacity growth, market
clearing could force price spikes, as in 2007-08,” the report further
said.

It urged policy
makers to strengthen measures to reduce the risks from oil scarcity as
a precautionary step and to facilitate adjustment, if such shifts are
larger than expected.

A persistent
decline in oil supply levels could have sizable negative effects on
output, even if there is greater substitutability between oil and other
primary energy sources.

At the same time,
in the medium term, the oil-induced wealth transfer from oil importers
to exporters can increase capital flows, reduce the real interest rate,
and widen current account imbalances.

The IMF in its
report added that oil scarcity will not inevitably be a strong
constraint on the global economy. However, the risks it poses should
not be underestimated either, as the implications could be important
and far-reaching.

Bismarck Rewane,
managing director, Financial Derivatives Company, a finance research
and analysis firm, said average oil price has increased by 11.6 per
cent to $117.8 per barrel in March.

“The spread between
spot and budgeted oil price has increased by 9 per cent to $44.8 per
barrel. It is expected to trade at an average above $100 per barrel in
April. Oil production remains above two million barrel per day but
declined by 4.2 per cent to 2.08.

“Fear remains about
the sustainability of oil production at over two million barrel per day
due to elections, which might provoke unrest. The turmoil in North
Africa and Middle East is sending oil markets into a frenzy,” Mr.
Rewane said.

“High oil prices
could pose the most significant threat to demand in 2011. Global oil
demand is estimated at 87.7 million barrels per day (mbpd). Growth in
demand is forecast at 1.4 mbpd in 2011. Global oil supply in March is
approximately 88.1 mbpd,” he added.

The Organisation of
Petroleum Exporting Countries (OPEC) has said crude oil output fell by
363,000 barrels per day in March to 29.02 (mbpd), representing a 33 per
cent of global oil supply.

According to him,
increased output of 300, 000 (bpd) from Saudi Arabia is inadequate to
plug the gap, as Libyan oil production dropped by 995, 000 (bpd) in
March.

The uncertainties
surrounding the Libyan situation and political turmoil in the Middle
East has pushed oil prices significantly higher since January.

The Bonny light
increased by 3.4 per cent in March to close at $119.77 per barrel while
the Year to Date (YTD) gain of 23 per cent Nigeria’s oil output
averaged 2.13 mbpd in January and February 2011.

As
the Central Bank of Nigeria (CBN) struggles to defend the naira, the
currency is gradually shedding weight at the currency market.

The
naira, which opened 2011 at N149.50 to the dollar, closed yesterday at
the bi-weekly Wholesale Dutch Auction System (WDAS) at N152.58, a
decline of 2.1 per cent.

The CBN has always maintained that the naira would be kept within the +/-3 per cent band.

CBN
governor, Lamido Sanusi, at the last Monetary Policy Committee (MPC)
meeting held in Abuja emphasised stable foreign exchange to curtailing
inflation.

“The
committee urged the CBN to continue to pursue the strategy of
maintaining exchange rate stability to contain inflation,” Mr. Sanusi
said in his statement at the end of the bi-monthly meeting.

Not meeting demand

At
the previous auction on Monday, the CBN was only able to meet about 71
per cent of demand, supplying $250 million out of the $351.12 million
demanded.

At
yesterday’s auction, the CBN sold $300 million, just 67.6 per cent of
actual demand. Dollar demand at the WDAS declined by 9.3 per cent last
week compared to an increase of 11.3 per cent the previous week,
fuelling concerns that apprehension over the general elections
triggered speculative demand for the green back. At yesterday’s
auction, the CBN sold $300 million.

The
naira closed last week at N151.91, its lowest level this year before
firming up at Monday’s auction, due to complementary supplies from
major oil marketers. The value remained unchanged yesterday. The CBN
has sold $1.25 billion in the two weeks in April, compared to $750
million sold in the comparable period of last year.

“It is the elections,” said Suleyman Ghali, a currency dealer in Lagos.

He said the demand for dollar has dropped this week compared to the period before the elections.

“The
politicians are concentrating on the elections now, so demand has
reduced. We do not know what will happen after the election but we are
watching. The naira is a bit stable,” Mr. Ghali said.

He said the naira is fluctuating between N156 and N157 at the parallel market.

Analysts
at Afrinvest West Africa Limited, a Lagos based investment banking
firm, had forecast that the demand will fizzle out this week.

“As
the liquidity continues to tighten in the money market, we do not
expect strong demand for the dollar in the coming week,” it reported in
its weekly report.

Tightening liquidity

The CBN based its decision to tighten liquidity on the need to rein in the expected huge election spending.

“The
members specifically pointed out the rising international food and
energy prices, the impact of import costs on domestic prices, the
challenges that fiscal stance posed to the external value of the naira,
and the likely front-loading of public expenditure in the election
period,” Mr. Sanusi said.

Analysts
at Sterling Capital Market Limited, an investment banking firm,
however, said the ability to continue to defend the naira would depend
on build-up in the foreign reserves.

“Increase
in foreign reserves will further help CBN to defend the naira, while
the sale of $200 million by NNPC will boost supply in the inter-bank
market during the week,” it stated.

Nigeria’s foreign reserves dropped to $34.5 billion on Tuesday from $34.9 billion last week.