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Columnists

Oil companies and oil spills in Nigeria’s Niger-Delta

Oil spills have continued to constitute a source of environmental degradation in the NigerDelta over the years.

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Earlier this week, an appeal court in the Hague ruled that Shell Nigeria (A subsidiary of the Royal Dutch Shell) is liable for oil spills in Oruma and Goi’s Niger-Delta regions.

This decision is coming after thirteen long years of legal battle instituted by the plaintiffs (Four Nigerian Farmers and Milieudefensie – Friends of the Earth Netherlands) against the Royal Dutch Shell. The decision (If not taken to the supreme court) could set legal precedence.

Unabated spilling is still rife within the Niger Delta region. Since its beginnings in 1930, Shell has repeatedly been under the radar for many environmental degrading activities.

READ: Shell worried about its Nigerian onshore operations amid continued theft and sabotage

The case was prolonged mainly due to the continued insistence of the defendant (Royal Dutch Shell) that it could not take responsibility for its foreign subsidiaries’ actions. The firm has also often tied the spillages to saboteurs’ efforts within the Niger-Delta region of the country rather than its technical glitches. These positions have been used to argue against claims for settlement in Ikot Ada Udo’s case in 2006 and 2007.

Oil spills have continued to constitute a source of environmental degradation in the NigerDelta over the years. The situation has been more devastating for the indigenes, majority of whom take on aquaculture as a means of livelihood.

Cases are rife of water pollution, air pollution among a long list of environmental degrading acts of crude-oil exploration companies. This has led to a series of agitations over the years, notable among them being the case of Ken Saro-Wiwa and the Ogoni 8.

READ: Shell warns investors it may write down up to $22 billion due to oil crash

In our view, we expect more local efforts on the part of the Federal Government and the oil majors to ensure there are no spillages, or at least it is reduced to the barest minimum as continued spilling and compensation does not help the development of the region.

Many of these environmental damages are irreversible and cause untold hardships for the indigenes. Also, we welcome the judgment on the basis of the moral duty it will place on holding companies to monitor beyond their subsidiaries’ core operating activities, issues such as the impact on such activities on the environment.


CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.

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Columnists

One year after Nigeria’s index case, what has her energy sector learned?

A critical question is, has the Nigerian energy sector learned anything from the oil shock?

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On February 27, Nigeria confirmed its first case of COVID-19 which at the time had infected just about 80, 000 people with a little below 3, 000 dead as a result. Exactly one year later today, with over 113, 000, 000 people infected and over 2, 500, 000 dead globally, the pandemic has radically transformed the way of life of the world. There has been learning across various sectors and a re-imagination of how things are done. A critical question is, has the Nigerian energy sector learned anything?

In early March, only about a week after Nigeria’s index case, the world was greeted by oil shocks resulting from the oil price war between Russia and Saudi Arabia, further aggravated by falling demands resulting from lockdowns, flight restrictions and the general apprehension about movement and the pandemic. Countries dependent on oil exports, like Nigeria, were concerned about the toll it would take on their economy.

Oil went to an all-time low, the lowest it has ever been in 18 years and many economies went into panic mode. It was not long before the Nigerian government removed petroleum subsidies at the tail end of Q1 as it was costing the country up to $2 billion a year. The end to subsidies -or what we assumed was the end, led to market-led pricing for petroleum.

READ: Shell Foundation and DFC mobilize $145 million for renewable energy in Africa, Asia

Around the same time, the marginal field bid rounds were launched, with the various fees to be paid by prospective investors rising exponentially from what they were under the last bid rounds, and required to be paid up front. The country also witnessed increased divestment in oil and gas assets by major oil and gas companies. At the start of Q4, the government introduced what it called service-reflective tariffs which were about twice the initial costs previously paid by customers.

There was equally a significant peak in renewable energy projects as many were turning to it for succor due to increased petroleum prices and utility power tariffs. The Federal government also launched its solar power strategy to electrify 5 million homes with solar power. We saw a heightened commitment to gas utilization, with the Central Bank introducing the N250bn intervention facility to stimulate investment in the local gas value chain.

The Minister of Petroleum for State, Chief Timipre Sylva had also promised that gas-powered cars would begin operating in October 2020. In his words “The alternative we are now introducing is gas, which is definitely going to be cheaper than the subsidised rate of PMS”.

READ: Could lack of power supply be hindering Nigeria’s COVID-19 recovery?

He went on to say that Nigerians were urged to convert their cars to dual fuel. Four months later, we are yet to see any auto gas cars ply our roads. There were also very swift moves to pass the Petroleum Industry Bill (PIB) last year, and indeed many stakeholders waited expectantly for it, but the legislature failed to deliver.

Soon, the Federal Government launched the Nigerian Gas Expansion Program at the tail end of Q4, a month after the news of the country officially entering recession broke. The aim of the Program was to increase gas development from three streams- Liquefied Natural gas (LNG,) Liquefied Petroleum Gas (LPG) and Compressed Natural Gas (CNG).

With initial reports of a vaccine rollout, the oil price that had crashed to lower than $30 per barrel last year began a steady and somewhat magical rise and currently has gone as high as $67, with predictions that it could rise to as much as $100, particularly with the release of more vaccines and easing of lockdown.

READ: Dangote Group kicks off $150 million solar project

With things looking good for the country again, we see a return of the petroleum subsidy in the locked pricing of petrol. A return of fuel subsidy means heavily increased subsidy payments for the country and similarly an increased propensity for corruption and misuse of funds which has characterized Nigeria’s subsidy regime for long. We cannot claim to have learned much as a country if we think all is well, and we are out of the woods.

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It would be counterintuitive to wait on another oil shock to begin to quickly diversify our portfolio and heavily invest in gas and renewables. Like the Biblical story of Joseph and Pharaoh, we should save during our “seven fat years” for the “seven lean years”.

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This is not the time for Nigeria to sit back and gloat in its rising oil fortunes, but a time to invest in improving energy access for its citizens by funding renewable energy research, aggressively supporting a solar drive, entering into public-private partnerships for gas development and providing incentives for businesses working in the energy transition space. Perhaps climate change and the decisions made around it will be the next price cruncher for oil. Whichever way, we cannot afford not to be battle-ready.

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Columnists

5 successful ways to increase profits in your business

Constantly working on these areas of your business, you are more likely to have raised profits.

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Development Bank of Nigeria , Companies Allied Matters Act (CAMA)

Most business owners are required to make certain changes to their business operations to achieve more profits. It is a fact that it is not possible to raise the profits directly, therefore, you need to increase them indirectly. It is not going to be possible without having a specific strategy in place. The only thing that is possible is improving the variables of your business and this can lead to an increase in profits and a higher bottom line.

Lead generation and conversion

A process that is used for attracting interested prospects to the business is lead generation. Suppose five people out of the ten coming to your business place end up purchasing the product or services from your business, you can try to raise the number of people coming to the business to fifteen. This allows you to make more money by increasing the profits by 50%. Lead conversion is a process used for converting the leads into paying customers. It is a measure of the effectiveness of your sales efforts. If it is possible to raise the conversion rate from 1 out of 10 to 2 out of 10 it is likely to double the sales figures and get you raised profits. There is no replacement for continuous sales training sessions. It applies to the owner and everyone that speaks to the clients.

READ: How scammers use SIM cards to rob your bank accounts

 Transactions

The number of independent sales you make to the customers you have acquired can be increased by raising the frequency of the purchases by say ten percent. You will thereby increase the number of sales and also rise profits by the same amount. Think about the things you could do for getting your existing customers to purchase more from your business and also make these purchases frequently. The size of the transaction and the profit you make from every one of them matters as well. You need to be on the lookout for ways of up-selling all the customers so that this person will buy more every time.

Profit margins

Profit margins could be the gross profits you make from all the sales of products or services. By finding out the ways of raising the price or lowering the cost of making the product and services without reducing the quality you will be able to raise the profits per every sale. All the money you save while holding the costing constant flows straight to the business bottom line as profit. Every time you decrease the expenses and at the same time, if you can hold the sales and revenues constant, money is going straight to your pocket as net profit.

Reach a global audience

In the modern scheme of things, all cities are turning into global economies. Therefore language translation services can be used for increasing the profits of any business big or small. It might be a good idea to translate the content on your website to reach a global audience. The global language services industry is rising quickly and can touch a figure of $50 billion by the end of the year. Most of these services these days are used by both private and government sectors alike. With rising globalization, the demand for translation is also increasing.

Customer acquisition costs

Consider the amount of money you have to spend to acquire every paying customer. You need to continuously be on the lookout for creative ways of improving your promotion and advertising so that there is a reduction in the money you have to spend to get a new customer. This will have a positive effect on the profits of your business. You can also try to increase the number of customers that come to you as a result of referrals from your existing satisfied customers. Developing single or multiple referral systems can impact the business positively and in turn, can help in making more money for your business.

Conclusion

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When you are constantly working on these areas of your business seeking improvement in all of them, you are more likely to have raised profits. You will make more money and it will contribute to the success of your future financial endeavours.

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