By Felix Ayarouh

Recently, the Honourable Minister of Petroleum Resources, Mrs Diezani Alison-Madueke ordered an immediate investigation into the management of 445,000 BPD domestic crude purchase by the Nigeria National Petroleum Corporation (NNPC) and remittance to the Federation Account.

This is a welcome development; however, the government should act now rather than wait for the report of the investigation or the passage of the Petroleum Industry Bill – since the country is losing billions of naira daily.

Albeit, the recent oil subsidy scandal, Nigeria’s oil and gas resources management are still shrouded in secrecy and corruption. This development shows how a few conspire against economic development and hinders the lives of over 160 million citizens from economic transformation.

It is aphoristic (and supported by the empirical evidence) that corruption was and is still inherent in the oil and gas industry and allegedly occurs in all sectors of the industry. Although the President Jonathan’s administration has not executed any licensing round, but it can occur in the licensing stage – where government officials might be tempted to ask for kickbacks in the issuance and renewal of upstream petroleum licenses and leases. Also, as was widely reported, it has its deep roots in the downstream sector – oil subsidy scandal were serious graft was alleged to have occurred in fuel importation among others.

The Nigerian Extractive Industry Transparency Initiative (NEITI) expressed concern over the country’s poor rating in the recent global report issued by Revenue Watch Institute (RWI). The institutes Resource Governance Index (RGI) measures the transparency and accountability in the oil, gas and mining sector of 58 countries worldwide and finds that Nigeria fail to meet satisfactory standards on how its oil and gas resources are governed.

The report went on to state that opacity, corruption and weak processes are the major problems of the industry. The report ranked Nigeria 40th position out of 58 resource-rich countries across the world. Furthermore, in the group of 17 sub-Saharan African countries ranked in the RGI report, Nigeria lagged behind 10 countries, which included Ghana, Liberia, Zambia, South Africa and Morocco among others.

The Africa Progress Panel (APP), an organization that portrays itself as possessing cutting edge policy analysis skills and advocate for equitable and sustainable development in Africa in its recent report “Equity in Extractives” also decried the lack of accountability and transparency in the nation’s national oil company. The report cited the numerous examples of shortcomings in the revenue administration of the NNPC that have been identified.

The report further stated that, a task force set up by the government concluded that around US$6.8 billion had been lost between 2010 and 2012, as a result of corruption and mismanagement involving transfers of fuel subsidies. And that another government investigative body identified losses of US$29 billion resulting from natural gas pricing, along with missing payments connected to concessions and production-sharing arrangements.

It is no accident that at every stage of the petroleum industry reform process, including reports, findings and recommendations since the late 1990’s the common denominator has always been corruption and mismanagement.  From the foregoing, the leadership and the very entities charged with policy implementation may have collectively failed to recognize – or just as likely, abdicated responsibility for this endemic and corrosive social problem.

The NNPC has refused to issue its annual reports and provides limited information on its balance sheet; it only reports to its Board of Directors. The lack of transparency and accountability may have a pernicious effect on public financing. I humbly call on the honorable minister to immediately demand a full financial disclosure of all transactions entered into by NNPC after the fuel subsidy scandal and request a quarterly mandatory published financial report of its activities.