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A rash of committees for Nigeria’s oil industry

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The rash of committees and special task forces recently announced by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke may be a grand effort to inspire confidence in Nigeria’s oil and gas industry, especially as it relates to the management of oil revenues, but past government’s have a well established reputation for setting up committees, usually composed of cronies – with little or no effect; more like the Shakespearean maxim: all sound and fury, signifying nothing.

Many industry experts who spoke to Sweetcrudeagainst the background of the rash of committees and task forces view the creation of the ad-hoc bodies as papering over burgeoning cracks on the very pillars sustaining the industry.

One of the major critics of the committees and task forces, ANEEJ, a non-governmental organisation noted that the terms of reference of the Petroleum revenue Task Force is in conflict with provisions of the NEITI Act.

The main problem, they say, is the wanton discretionary powers that rest with politicians in the country, whether elected or appointed. In this case, particularly, observers point to the increasingly growing powers of cabinet ministers to conveniently appropriate agencies and departments that play vital roles in ensuring accountability, transparency and equity in the industry.

They note, for instance, how in the last one year the Minister of Petroleum Resources has annexed various agencies and departments in the industry that were formerly under the supervision of the Presidency and directly overseen by the Office of the Secretary to the Government of the Federation.

Until the coming of this government last year, agencies that are very vital to the smooth running of the industry including the Petroleum Products Pricing Regulatory Agency (PPPRA), the Petroleum Equalisation Fund (Management) Board and the Petroleum Technology Development Fund (PTDF), were under the supervision of the presidency.

*Diezani Alison-Madueke

The movement of these agencies to the ministerial supervision has been criticized as over-reaching, and an effort to expand the frontiers of cronyism. Some observers have therefore argued that too much discretionary power given to government officials has been the source of favouritism and nepotism, which remains at the heart of the corruption morass the industry wallows in.

But government officials have explained that the decision to move supervisory reins of the agencies to the ministry is a necessary step to enhance their efficiency and performance as well as check acts of malfeasance, fraud, over-payments and related illegalities.

With regard to the PPPRA, particularly, they noted that the government has over the years run a subsidy regime in petroleum imports where the difference between the cost of importation and the pump price is paid for by the government to pre-approved oil marketing companies and importers.

“Over the years, this bill has grown exponentially to unsustainable levels,” Alison-Madueke observed, adding that as Petroleum Minister, she has been extremely concerned with the figures.

She added that, “Following the recent transfer of the PPPRA to my ministry last year, I have moved quickly to change management and inaugurate a comprehensive reform process which include drastic cuts in the list of importers, review of payments and procedures, as well as massive redeployment of staff within the agency.”

Plethora of committees

In the last two months following the violent protests that rocked the entire country over government’s withdrawal of petroleum subsidies, the Minister of Petroleum Resources has announced the creation of about four committees and special task forces, among other actions aimed at rebuilding confidence of Nigerians and the international community in the management oil resources.

Oil industry observers were confounded when, following the outcry over claims of corruption and malfeasance in the management of the fuel subsidy regime, the minister of petroleum resources invited the Economic and Financial Crimes Commission (EFCC) to “immediately review and investigate all transactions made in relation to petroleum products importation and subsidy payments” over a period of time.

The action by government was in line with its promise to organized labour during negotiations over the removal of subsidy, when it promised to clamp down on alleged acts of corruption within the petroleum industry, critics claim that the minister of petroleum superintended the PPPRA in the last 12 months and should not be the one inviting the EFCC to probe her activities.

Even though the minister claims that the move has presidential approval for the anti-graft agency to review all payments made in respect of subsidies on PMS and kerosene, and “to take all necessary steps to prosecute any incidence of malfeasance, fraud, over-invoicing, and related illegalities in an open and transparent manner,” critics say they don’t expect anything to come out of the exercise.

Meanwhile, the minister of petroleum resources also set up a unit within her ministry to be headed by an independent auditor to review the KPMG and other audit reports on the Nigerian National Petroleum Corporation, NNPC, and other parastatals and to immediately begin implementation of their findings.

“I am en-paneling another unit in my office to begin a comprehensive review of the management and controls within all parastatals and in the Ministry of Petroleum Resources, including but not limited to NNPC, PPPRA and DPR. Accordingly, I expect a report in 30 days to enable us take further action reforming management, personnel, and other practices and procedures in parastatals within the Ministry,” Alison-Madueke explained.

While inaugurating the Special Petroleum Industry Bill (PIB) Task Force a few weeks later, the Minister said it was a result of ‘listening to the voices of the people of Nigeria when, over the last few weeks, they spoke in unison’ for accelerated reforms in the oil and gas industry, adding that, ‘these reforms will anchor in the on the new Petroleum Industry Bill (PIB)’.

She noted that the committee will work to hasten the passage of the ubiquitous oil and gas bill to replace all past industry legislations, stressing that despite the challenges faced in passing the bill during the previous National Assembly, the government has renewed its determination to work with the present legislature.

Right on the heels of the Special PIB Task Force, the petroleum minister created the National Refineries Special Task Force (NRSTF) to ‘ensure self-sufficiency of petroleum products in Nigeria within a strong framework in the shortest possible time’.

The NRSTF, the terms of reference notes, is further mandated to conduct a high-level assessment of the Port Harcourt, Warri and Kaduna Refineries, review all past reports and assessments and produce a diagnostic report complete with a ‘Change Journey Map’. It is also to review the operations of the four national refineries with a view to improving efficiency and commercial viability, among other issues.

The Minster of Petroleum Resources went a step further to appoint a Special Task Force on Governance and Controls in the Nigerian National Petroleum Corporation, NNPC, and other parastatals within her ministry. This special task force is charged with the review of ‘all management controls within NNPC and other parastatals; design a new corporate governance code for ensuring full transparency, good governance and global best practices in the oil and gas behemoth, as well as design a blueprint for separating policy from operations, and set key performance indices for the corporation and the parastatals, among other functions.

One outstanding point about the many task forces, it must be noted, is that they are populated by very eminent citizens with great knowledge and experience in the private sector, governance and politics, anti-corruption, economy, law, labour and other activities, which proponents of the committees believe will be brought to bear in achieving the various mandates.

Notable among the membership of the committees are a former anti-corruption czar, Mallam Nuhu Ribadu, top political economist, Dr. Kalu Idika Kalu, Senators Udoma Udo Udoma and Tunde Ogbeha, among other prominent Nigerians.

Interestingly, the setting up of these ‘special’ task forces have been received with mixed feelings among operators and other stakeholders in the industry. The Managing Director/Chief Executive, International Energy Services, Dr. Diran Fawibe, in a telephone interview, told Sweetcrudethat the task forces are Federal government’s way of “monitoring what is happening with oil and gas revenues, and to ensure that government is not losing money.”

He argued that government in recent times, had lost a lot of revenue from the petroleum industry, and needed to block all avenues of waste.

But a non-governmental organization, the Africa Network for Environment and Economic Justice (ANEEJ) has argued that the plethora of committees that have been set up by the minister are mere duplication of functions that are hitherto undertaken by government agencies, and may have rendered those agencies redundant or irrelevant.

The Executive Director, ANEEJ, Rev. David Ugolor said that while the appointment of the task force may enhance probity and accountability in the operation of the petroleum industry, ‘it also underscores the mass protests that swept across the country calling for reforms in the nation’s oil and gas sector’. He added that the committees set up by the minister are ‘more like desperation for a big cover up’.

According to the NGO, “The number of committees and Task Forces set up by the Minister since President Goodluck Jonathan’s national broadcast, which saw to the end of the mass action, including inviting the Economic and Financial Crimes Commission (EFCC) to investigate the activities of the ministry, while she still presides, even as the National Assembly is probing the affairs of the ministry with startling revelations tumbling in from her principal staff, is indicative of a rudderless system and national malaise.

“The multiplicity of committees and Task Forces reinforce the fear Nigerians have in the sector and point to the fact that the passage of the Petroleum Industry Bill (PIB) devoid of sector encumbrances remains the panacea to the deep rooted corruption in the oil and gas sector in Nigeria.”

Revenue taskforce

Notwithstanding the parade of stars in the revenue taskforce including Ribadu and Olisa Agbakoba, the NGO expressed concern about the absence of the Nigeria Extractive Industries Transparency Initiative, NEITI, which is statutorily saddled with the responsibility of managing revenue transparency in the extractive sector. “In other words, the terms of reference of the Task Force conflicts with the NEITI Act,” it added.

It said further, said, “The objective of the committee summarizes the five (5) objectives of NEITI as stated in section 2(a-e) of NEITI Act 2007. Section 3(f) of the NEITI Act 2007 empowers NEITI to monitor and ensure that all payments due to the Federal Government from all extractive industry companies including taxes, royalties, dividends, bonuses, penalties, levels and such like are duly made.

This is also reproduced in the terms of reference of the Ribadu-led task force, which is mandated to take all necessary steps to collect all debts due and owing: to obtain agreements and enforce payment terms by all oil industry operations.”

Besides, the NGO noted, “NEITI being established by an Act of the National Assembly and the taskforce being established by the Minister of Petroleum raises the question of who will be accountable to Nigerians in the case of corruption and absence of transparency in the sector.”

But again, Fawibe argued that there is no conflict of responsibilities with NEITI, but rather complementary, saying, “The specific duties of NEITI have been taken care of by the law. But when you have specific objectives, government has the responsibility to set up a taskforce to complement the existing system and not to have overlap of functions.”

Besides he added that NEITI is backed by the law, its functions are superior to those of the task force.

Also, “The terms of reference of the Task Force is silent on their tenure, it only requests them to make monthly reports to the Minister. Will the Task Force last forever or what is the time frame for their operation?” ANEEJ wondered.

Meanwhile, a member of the Special PIB Task Force and President of the Trade Union Congress, TUC, Mr. Peter Esele has explained the reason for his non-participation in the meetings of the Special Task Force, so far, calling the formation of various task forces and committees to tackle the rot in the petroleum industry a sign that the authorities had failed.

According to Esele, “I do not think that we need all of these task forces and committees that are popping up all over the place, especially since the protest by Nigerians against the removal of subsidy. Most of these committees are simply duplicating certain roles and duties of agencies and organizations that have been in existence.

“Particularly, the one on Petroleum Revenue Special Task Force, which is charged to do what the Nigerian Extractive Industries Transparency Initiative (NEITI) has been doing. All the government needed to do was to go back to several audit reports produced by NEITI to see the missing revenues, and gaps in the management of the oil and gas resources in the country.”

According to Esele, “One of the reasons I am yet to attend any of the three meetings held by the Special PIB Task Force so far, is because I was not convinced that it was the right thing to do; I felt the creation of the task force was unnecessary in the first place. I also had to make certain what PIB document we would be discussing, given that we know there have been different PIB documents flying all over the place.

“Also, I felt I needed to consult with my constituency (labour and civil society) before I make myself available for the Task Force. It is vital that before I sit in that committee that I have a position I represent, and that is the position of organized labour and the civil society.”

Perhaps, the most virulent critique of government’s disposition to special task forces is the former Chairman of NEITI, Prof. Assisi Asobie. Asobie who took a swipe at the Federal Government for paying lip service to the quest for transparency and accountability, saying “the gap between rhetoric and practice is gargantuan.”

Prof. Asobie, who spoke on “EITI Implementation and the Federal Government of Nigeria’s Transformation Agenda” at the NEITI national conference in Abuja, said full implementation of the provisions of the NEITI Act 2007 remains the most veritable means of combating corruption in the nation’s oil and gas industry.

“Transparency is not about setting up committees and task forces to verify revenue payments and receipts. It is the actual disclosure of receipts by government and payments by companies based on data from accounts audited to international standards. It is the wide and prompt dissemination and publication of such disclosures for all and sundry to see, examine and utilize to hold government and companies to account,” he posited.

According to the former NEITI boss, for the national transformation agenda to be meaningful, the government must wholly embrace the principles of transparency and accountability in its activities, build trust among the citizens to accept ownership of the agenda, as well as establish structures for implementation of the Extractive industries Transparency Initiative (EITI) principles.

He noted that while transparency provides the basis for national transformation, trust would prevent corruption as well as enrich the debate for national development by providing the citizens and the legislature to hold government to account in the utilization of natural resource wealth.

He identified transparency and accountability as the key elements of good governance, noting that what is being practiced in both the public and private sectors of the economy today is bad governance, which has been blamed for the country’s under-development as a result of the mismanagement of resources through corruption, waste and economic crimes.

Other elements of good government, Mr. Asobie pointed out, include openness, fairness and equity in dealing with citizens; efficiency and effective service provision; clear and transparent laws and regulations; consistent and coherent policy formulation; respect for the rule of law, and high standard of ethical behavior.

“Transparency is what you do first and foremost to yourself, by yourself, for the benefit of the public”, he said. “In the context of the EITI, it is disclosing honestly what you produce and earn, or what you pump and pay, what you allocate, disburse and spend. It is putting information and data freely in the public domain about you and your activities and operations,” Asobie stated.

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