Rethinking The Legal Paradigm Of Energy Resource Management In Oil-Based Economies: Nigeria As A Case Study

ABSTRACT

The most crucial challenge of nationhood which confronts Nigeria is how to transit

from the state of mere ground rent collector from transnational oil companies who

dominate the nation‟s extractive industry, to a modern State economy in which there

is a reciprocal linkage between the extractive industry and the non-extractive sectors

of the economy, such as manufacturing and agriculture.

Oil remains the linchpin of the Nigerian economy and since its ascendancy in the 70s

as the major foreign exchange earner, (it contributes about 95 per cent of federally

generated revenue),1 and there has been no significant transformation in the living

standards of Nigerians. There is pervasive mass impoverishment and a total

disconnect between Nigeria‟s stupendous petroleum and gas resources and mass

impoverishment. Nigeria‟s chequered post-colonial history is a classical case of the

paradox of abundance and want, its stupendous oil resources seems to be a curse

rather than a blessing.

The study establishes a causal link between the collapse of the parliamentary system

in Nigeria in 1966 through degeneration and revolutionary ouster; resultant

normlessness; statelessness which has since then characterized its bodypolitik and

abysmal State failure. The unconscionable state of the rule of law, arbitrariness and

very wide latitude for discretion characterizing the Nigerian State results in pervasive

1 The World Bank, World Development Indicators 2008, Washington D.C., World Bank Publications,

corruption pandemic as competing rent-seeking elites are content to control resources

rather than innovate for diversification.

The study implicates the lack of centrality of law and the rentier structure of the

Nigerian petro-State in the colossal market (economic) and State failures

characterizing the Nigerian bodypolitik. The convoluted evolution of the Nigerian

legal order disparages the creation of an environment of formal rational law which

would have diffused and induced a highly predictable and calculable economic

environment in which expectations of all economic actors are not wilfully disparaged

by arbitrary rule.

The macro economic model which derives from the study‟s multi-dimensional

analysis is subsequently invoked in the legal prototype which will drive and catalyse

the far reaching changes which are necessary to diversify the Nigerian economy away

from the dominance of the extractive sector to the non-extractive tradeable real sector.

The legal paradigm constitutes a charter for the efficient husbandry of Nigeria‟s

petroleum resources such that at full depletion, Nigeria would have accumulated

sufficient stock of non-oil capital and assets in the post-oil epoch from which it will

earn continuous stream of external receipt from strategic perspective investment of oil

revenue, complemented by a carefully calibrated development of infrastructure.