Over the last couple of weeks, a lot of details concerning how Nigeria’s former Minister of Petroleum, Diezeani Alison Madueke, allegedly embezzled public funds have emerged. The stories are mind-blowing, to put mildly, one of them is that she awarded lucrative contracts to her cronies who were neither qualified nor even executed them. In return for this, she was rewarded with luxury apartments in exclusive areas of London and furniture worth $4 million from upscale Houston stores. In fact one of her Cronies purchased an $80 million yacht! which Jay z-the Billionaire musician, apparently had to lease from him at a time. Quartz has a pretty good summary on the findings, you should read it.
To be absolutely honest, as with most Nigerian scandals, I was not shocked. The truth is with the amount of power vested in the Minister of Petroleum, it was hard for this not to happen. The Minister has the power to independently commission, grant, amend, renew, extend or revoke licenses for oil companies – given the far reaching implications these decisions have on the rest of society, that is a lot of power for one person. This should not be the case
In this post, I promised to blog about the recently released Resource Governance Index published by the Natural Resource Governance Institute (NRGI) which measures the governance of oil & gas and (or) mining sectors in 81 countries across the world. Reading it enabled me put a lot of things that happen within the Nigerian oil industry within its appropriate context. Here are some of the findings;
- Nigeria ranks 55th among the 89 countries considered in the index
- The weakest link in Nigeria’s oil and gas sector is licensing where it ranks 77th out of the 89 countries considered. This is due to high levels of opacity in the qualification of companies, process rules and disclosure of terms.
- Tracking payments from oil and gas companies remains a challenge. There is lack of public access to revenue flows to the lower levels of government.
- The Nigerian National Petroleum Corporation (NNPC) does not report detailed annual reports of its finances especially earnings by its subsidiaries, cost of production and how much it spends on non-commercial activities. NNPC staff have significant discretion around how NNPC sells the government’s share of oil production.
- Nigeria’s Excess Crude Account (ECA) ranks last as the most poorly governed sovereign wealth fund. It does not publish the rules which govern deposits, withdrawals and investments from the funds.
What these finding primarily reveals is the extreme opacity and poor institutionalisation of rules in the oil industry, this explains why it was pretty easy for Diezeani to embezzle all of those funds. For an industry that accounts for over 80% of Nigeria’s exports revenue, more needs to be done to encourage transparency and accountability to the Nigerian people and ensure that everyone stands the chance to benefit from our commonwealth. While I commend the lawmakers for passing the Petroleum Industry Governance Bill (PIGB), which withers some of the powers of the Minister, there is need to expedite the process of passing the entire Petroleum Industry Bill (PIB). This damning opacity and wanton theft should not be allowed to persist unchecked! Other recommendations from the report include:
- Improvement of laws and the strengthening of their implementation
- Availablity of more and granular data i.e true beneficial owners of companies, payments made by companies to government and governments deals.
- Regulation and disclosure of oil sales by the NNPC
- Opening up the civic space to enable citizens organise and make demands on their leaders
- Strengthening of global norms and institutions – home countries of multinationals i.e Shell, have a responsibility to ensure that their branches abroad behave responsibly.
I hope Diezeani is brought to book and made to account for every penny that her and her cronies embezzled. However, what is even more important to me, is that the entire Industry is restructured such that there is greater transparency and accountability regarding the management of our oil and gas resources and revenue. This is the only way we can ensure that such incidents do not occur in the future. Nigerians deserve better.
Have a great week everyone!
Don’t forget to share and comment, as always I look forward to knowing what you think about this issue.