Inside Nigeria’s bitumen irony

Nigeria is home to the second largest bitumen deposit in the world; spanning about 120km.

Nigeria is also home to some of the worst roads in the world.

IHow ironic. n July 2020, the Minister of Works and Housing, Babatunde Fashola revealed that the Federal Executive Council (FEC), with the President Muhammadu Buhari presiding, approved a new policy on the local production of bitumen. The apparent need for this new policy emerged from the review of a policy memorandum which revealed that a substantial amount of the bitumen used in road construction in Nigeria is imported; costing billions of dollars. The aim of the new policy is centred around further diversifying the economy and stimulating growth through the local production of bitumen.

Somehow caught unaware by the obvious …

In Ondo state alone, about 16 million barrels of bitumen are available for extraction. The bitumen reserves in the country are estimated at about 42.7 billion metric tonnes with the expectation that the locally produced bitumen will be sold at less than 50% of the current price of imported bitumen. This places the local industry at an advantage with an available supply at a cheaper rate to service the existing demand for bitumen of about 500,000 metric tonnes.

Billions of dollars are leaving the nation’s coffers annually to pay for value we have the resources to create ourselves.

Bitumen was first discovered in Nigeria as far back as the 1900s with the first exploration efforts made in 1905. Bitumen has always been here. We have been aware of its existence for over a century so the need for exploration should have been birthed alongside its discovery, given its importance.

There is an abundance of bitumen deposits in the country and a billion-dollar market exists for it to be traded, yet, there has been no sufficient and lasting effort to explore this resource for many decades. Leaving these reserves untapped does not limit the conversation to what we could generate if only we harnessed this growth potential – the opportunity cost- but it also creates room to shed light on the other costs of this inaction; the environmental damage. It is quite interesting to discover that the earth is practically bleeding bitumen and begging to be exploited. In bitumenrich environments, the people are faced with the challenge of a degradation of their farmlands and the quality of their arable soil. Bitumen can be found so close to the surface that it actually seeps through.

Communities in Ondo state, where the largest bitumen deposits in the country can be found, have been crying out for years for investors to flood their communities and bring about growth, development, employment and generally a better life for the citizenry by utilizing their wealth of natural resources. These communities have been trapped in a vicious cycle of unmet expectations and dashed hopes.

When we look at this plainly, we see that in the failure to offer them the chance at a better life, we are inadvertently eroding the quality of their current one.

These are not new discoveries. These are not new problems.

So, as exciting as the new directive for local exploration of bitumen is, it gives rise to question “why now?”. We have clearly waited all this time so why now?

Resource curse … who will deliver us?

There has been more chatter about bitumen exploration in recent years and steps taken geared towards this vision. In 2017, the Ondo state government was awarded an oil block license to explore bitumen to kick-start something new.

The general attitude appears to be leaning towards the idea of Nigeria having found her new “black gold”. However, I do hope with every ounce of my being that we do not handle bitumen with the same manual that we did crude oil, otherwise, we would be back here having these same conversations in a few years; we might forever be searching for something new.

It has become impossible to speak of the Nigerian economy for all that it is in its glory and its setbacks without oil strutting its way to the centre of the discussion. There is no denying that for the last 50 years, the country’s economic performance has been pegged to the performance of crude oil in the global market. This overdependence on oil over the years, has robbed us of much economic autonomy, so to speak. There has been little control over the dictates for the nation’s economic direction because the economic health is largely tethered to external influences beyond the control of internal policies. This one natural resource has made up over 90% of the nation’s export earnings and about 70% of government revenue. With every crash of global oil prices, the Naira bleeds and the country weeps.

We must avoid the same fate for bitumen at all costs.

Our abundance is the source of our insufficiency.

It is the paradox of plenty. We have plenty of natural resources available to us but we have been unable to successfully achieve that translation to wealth and economic growth. Perhaps, we can say it is a form of complacency; the presence of that urgency to succeed has been lacking. This abundance creates the illusion of wealth by default but all that we have truly had this whole time is simply the potential to create said wealth, which we have left largely unexplored.

The policy makers are aware of this. Hence, the many visions, plans, policies and initiatives over the years; the most recent one: the “Made in Nigeria” capacity. I maintain that the threat to national development so far is not at all for want of ideas, vision or resources. All of these things and more are present in this country in impressive amounts but where is the synergy? This lack of synergy is what makes for the crooked path between ideation and implementation. This is where things often go awry: that gap between what is said and what is actually done, the gap between what should be and what actually is. If Nigeria was solely a reflection of all the great ideas she has churned out, the rest of the world would be running to catch up.

It’s been said. Will it be done? …

The doors for local exploration of bitumen are open. Now what?

Investments. Jobs. Income. Growth. Development…or not?

It is imperative that this policy be utilized to achieve the maximum possible social benefit and not to further profit the rich at the expense of the poor. The wide gap between the private costs and benefits compared to the social costs and benefits is where corruption has found a home in this country. Social objectives: job creation, human development, poverty alleviation, etc. are often trampled and thrown aside to be replaced by supernormal private profitability.

The Minister of Works and Housing, Babatunde Fashola, has called for the private sector to take advantage of this new provision with the hope of creating employment for thousands.

This can work.

All parties involved have a responsibility to the country to make this work. Nigeria is a country with so much character and personality that we must always look beyond the numbers and the seemingly abstract and find the people. There are over 21 million people without jobs in this country, without a stable means to put food on their table. Real people with faces and names having a hard time trying to build a life for themselves and their families.

These are 21 million people that this country is responsible for we and accountable to. We owe it to these people to make it work.

This is a step in the right direction. This policy is something to be excited about but there no denying that it is also something to be anxious about. This is not the first time bitumen has gotten attention. This is also not the first time a policy is approved for projects which end up shelved and left to gather dust.

Not another Niger Delta please …

The hotspot for the exploration of bitumen is Ondo state. We have seen what happened to the Niger Delta as a result of the exploration of crude oil. It will not be out of place to say that it brought more problems than benefits to that region.

It would be quite embarrassing if there is a repeat of this in the bitumen-rich regions. We must protect these communities opening their homes to investors and development. Corporate costs should be reflective of the true costs of their production activities; this is inclusive of the costs of sustaining the environment. Investors must be held accountable for the resultant effects of their actions and understand that they are visitors in a place that people call home and the aim should be a win-win situation for both parties. These communities should benefit from the exploration of their resources and private sector should be required to conform to socially responsible behaviour.

So much promise …

Manufacturers lose over ₦20bn annually due to the poor state of the roads in the country and the country loses over a trillion naira annually because of this. It is quite frustrating to be faced with this problem when we have an abundance of the main component of our solution.

We have the second largest deposit of bitumen in the world. That is a lot.

We could supply bitumen to build roads across the globe. We could tap into the billion-dollar market and grow our export earnings.

We could literally build a better Nigeria, one road at a time, help to build a better world; the whole time creating jobs and bettering the lives of Nigerians. Imagine that.

The trick, however, is also not to become overly dependent on this new black gold or another 50 years from now we would be back here, same problem, same weak solution, different resource. Rinse and repeat.