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AP Worldstream: Nigeria must give more oil revenues to states to end conflict, think-tank says

By: KATHARINE HOURELD, AP Worldstream
Published: Aug 04, 2006

Nigeria’s government should open a dialogue with community leaders and more than double the amount of oil revenues to its 36 states to end militant attacks in the West African nation’s troubled delta region, a Brussels-based think-tank said.

Thursday’s call came as militants wearing camouflage uniforms took a German oil industry worker hostage in the oil city of Port Harcourt, spiriting him away on a boat into Nigeria’s delta region, police spokesman Ireju Barasua said.

The man worked for Bilfinger Berger AG, a construction company based in Mannheim, Germany, which had been contracted to help build facilities for an international oil company, Barasua said.

The International Crisis Group said corruption and underdevelopment were fueling a militant insurgency in Nigeria’s southeastern oil-rich delta that is costing hundreds of lives annually and has shut off 25 percent of Nigeria’s oil output this year alone.

“Nigeria had estimated oil export revenues or US$45 billion (A35.2 billion) in 2005, but the slow pace of systematic reforms and the lack of jobs, electricity, water, schools and clinics in large parts of the Delta have boosted support to insurgents,” said the nonprofit advocacy group that works to prevent conflict worldwide.

The report said placing more revenue under state control would “help defuse anti-government militancy. It would also provide valuable incentives to diversify Nigeria’s economy and develop mineral resources, agriculture and industries that have been allowed to wither since the oil industry expanded in the 1970s.”

Nigeria, which is the continent’s largest oil producer and the fifth-largest supplier of crude to the United States, has produced about 2.5 million barrels of oil daily in recent years. But a spate of militant attacks since December have resulted in more than thirty expatriate kidnappings, two car bombings and multiple pipeline attacks.

Militant leaders and most residents of oil producing areas have long complained they remain mired in poverty while others, including oil companies and government officials, benefit from oil wealth drawn from their land.

The Crisis Group report said “a credible, sustained dialogue” with community leaders, militants and activists should be combined with greater transparency on government budgets, skills training and a weapons return program to end the conflict.

The group said the government should institute “a derivation formula of between 25 and 50 percent of mineral resources, including oil and gas, to all Nigerian states, and phase this in over five years.”

A derivation formula is the system under which Nigeria’s nine oil-producing states currently receive 13 percent of all oil revenue _ six times more than other states in the country.

Any increases in state budgets would have to be accompanied by greater transparency and accountability, the report warned.

The poverty-stricken delta region, a labyrinth of creeks and mangrove swamps is littered with the shells of clinics, school and water projects that have failed when money for their maintenance was stolen. Oil companies, government and foreign donors have been criticized for not doing enough to ensure development money is well-spent.

An increasing number of Delta-based militant groups are calling for total control over their states’ resources.

The report singled out the recently founded Movement for the Emancipation of the Niger Delta that has claimed responsibility for a string of kidnappings and oil facility attacks this year as “better armed and better organized than previous groups.” Its capability to carry out well-organized attacks means “MEND increasingly serves as an umbrella organization for a loose affiliation of rebel groups in the Delta,” the report said.

Dimieari von Kemedi, a human rights lawyer and conflict mediator based in the Delta, said, “MEND have shown that they have the capacity to destroy Nigeria’s petroleum infrastructure … there can be no military solution to this crisis. It’s a political issue and it must be addressed that way.”

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