The Bitumen Challenge

Newswatch (Lagos) May 5, 2003 Posted to the web May 5, 2003 Phillip Oladunjoye

Nigeria's dependence on aid as main revenue earner may be broken as exploitation of bitumen promises billions of naira in annual revenue

It is a big boost for the Nigerian economy. A large deposit of bitumen estimated at 42 billion barrels in Agbabu, Ode-Irele community in Ondo State currently being explored and exploited will fetch at least N155 billion annually.

C. O. Akubueze, an estate surveyor and valuer, said the local market alone in Nigeria is estimated at about N20 billion annually while it is also projected to pump into the economy N135 billion annually from its exportation, he said.

Oyewola Oworu, special technical adviser to the minister on solid mineral development, said the communities where bitumen was being explored would also benefit from the exploitation and exploration of the bitumen. According to him, the communities would have equity in the project, where the compensation due to the communities would be re-invested in the project. This investment, he said, would yield streams of income for the development of the communities. "There is a proposal on ground that the communities might have to invest in the exploitation of the bitumen. The proposal has been presented to the two firms authorised to mine bitumen in the country," he said.

The two firms authorised to mine bitumen in the country are Beecon Limited and Nisand Limited. The companies, however, have promised to employ 20,600 Nigerians before the end of July this year.

President Olusegun Obasanjo also promised to develop a seaport in Ondo State based on the success of the bitumen project. This, he said, would serve as motivation for the commencement of mineral mining in other parts of the country.

Modupe Adelaja, minister of solid minerals said the bitumen project would enhance industrialisation of the country. Newswatch gathered that commercial activities in major cities in Ondo State have improved as a result of the bitumen project. Rents in major towns like Akure, Ondo , Ore and Owo have gone up sharply in anticipation of the commercial exploration and exploitation of bitumen. A two-bedroom bungalow in the highbrow residential areas in the state capital now attract an annual rental income of at least N150,000, from between N30,000 and N40,000 it attracted some years back.

The state capital has witnessed an avalanche of banks with colourful edifice in recent time. In anticipation of increased commercial activities, Biola Olaseinde, chairman, Nigeria Institute of Estate Surveyors and Valuers, NIESV, Ondo State branch, said the state had already started feeling the impact of the project. "Akure and other cities are growing, so are our commercial and business activities. Both the federal and the state governments are providing infrastructure because of the bitumen project, and these will, no doubt, attract more foreign investment to the state. We are already feeling the effect of the project on residential and commercial properties," he said.

In spite of the benefits of the project in the state, the communities have expressed fear over the adverse impact the exploration might have on the people. A community leader in Ode-Aye, who pleaded anonymity, said the community was not opposed to the project but demanded that thorough environmental impact assessment survey be carried out so that the people would know the potential socio-economic losses that might follow the implementation of the project. "We are not opposed to this project which has a lot of potentials, for the country in terms of foreign exchange earnings as well as employment opportunities for our youths, but we are concerned about the safety of lives and properties and the future of the present generation of youths and those yet unborn," he said.

Adebayo Adefarati, governor of Ondo State , had recommended that adequate compensation be paid to those that would be affected in the exploitation. "There cannot be a peaceful exploration of bitumen without the payment of adequate compensation to those that will be affected," he said.

Akubueze opined that the individuals within the mineral-producing communities should be developed to avoid conflict between the communities and the companies carrying out the mining project. 'In mineral-producing areas, the emphasis is centred on the provision of infrastructure for economic growth only. But this should not be so. For sustainable development, the authorities concerned must foster the development of each human being. Failure to do this will generate conflict as experiences in oil-producing areas have shown," he explained.

But the Federal Government seems to have made provision in its new national policy on solid minerals to allay the fears of the communities where solid minerals are being mined. The policy provided for adequate preservation of the environment. It also analysed health and safety measures that must be followed in the mining industry.

The policy states in part that "issues connected with environments, health and safety form an integral part of development. It follows, therefore, that the environmental impact, health and safety measures need to be incorporated from the beginning in any development project.

Oworu affirmed that the ministry of solid minerals had embarked on a strategy which would be endorsed by all stakeholders in the mining industry to avoid the repeat of the Niger Delta experience where disagreement over cash compensation has always led to hostilities between the communities and the oil companies. Newswatch gathered that the bitumen deposit in Ondo State is the second largest deposit of bitumen in the world. Venezuela is said to be the largest producer of bitumen.

Bitumen was first discovered in Nigeria by the Germans in 1901. Nigeria has 42 billion barrels of bitumen resources which stretches over an expanse of land covering Ondo, Edo , Lagos and Ogun states.

Bitumen is said to have about 44 by-products that are vital for industrial production. The tar-sand, which is the major by-product of bitumen, is a main raw material for road construction. Bitumen can also be used to produce fuel, oil, asphalt, and insecticide.

President Olusegun Obasanjo had inaugurated the bitumen project implementation committee, August 28, 2000 , to look into the modalities of exploring the product in commercial quantities. The committee was headed by Julius Ihonvbere, a professor. The committee, however, prepared the groundwork within two years for the commissioning of the bitumen project. Obasanjo described the bitumen project a launch pad for the Federal Government's plan to diversify the economy.