The federal government should take issues raised by the report seriously

The historical lack of transparency and accountability in the operation of the oil and gas sector in our country threw up a situation in which the Nigerian National Petroleum Corporation (NNPC) and the Nigerian Petroleum Development Corporation (NPDC) were alleged to have failed to remit $21.778 billion and N316.074 billion to the Federation Account. “Considering the difficulties the government has been facing in securing as little as $1billion foreign loan, recovering these funds will significantly enhance government’s fiscal position in the short term,” said the Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI) Mr. Waziri Adio. Mr. Adio rightly argued that these unremitted funds should be seen as low-hanging fruits for the current administration.

Details of the unremitted funds, according to NEITI’s latest Policy Brief, included an outstanding $1.7 billion from the transfer of eight oil mining leases (OMLs) to NPDC from the Shell JV and $2.2 million from four other OMLs to the same NPDC from the Agip JV. Others were: $148.3 million paid as cash calls on the transferred OMLs, $1.45 billion and N70 billion legacy liabilities of NPDC, N243 billion from domestic crude allocation to NNPC, and $15.8 billion paid to NNPC as NLNG dividends between 2000 and 2014.

However, the report went beyond issue of unremitted monies to concerns about transparency and efficiency in the operations of NPDC. For instance, since 2005, NNPC has transferred 16 OMLs to NPDC. Yet, according to the report, “the process of transfer of these assets raises serious questions, as there appears to be no clear-cut criteria for transfer of oil mining assets to NPDC.” The process for the transfer of critical national assets to NPDC, according to the NEITI, “does not seem to pass the transparency test. One of the upshots of this is the under-valuation of these assets, thereby depriving the federation of optimal value for the assets.”

While we commend the leadership of NEITI for beaming searchlights on the operations of the oil and gas sector with a view to making them more transparent, it is important for the federal government to take the reports very seriously. When critical institutions of state turn a blind eye to issues of transparency, what follows is a fertile environment for corruption and waste which in turn endanger the system. We therefore believe that implementing some of the recommendations in the latest NEITI policy brief will not only help in bringing more money to government coffers, it will also begin the process of cleaning, and getting optimal results from the sector that still remains the backbone of our economy.

Some of the recommendations in the NEITI report include recovering the $21.7b and N316 billion withheld or owed by NNPC and NPDC; retrieval of the OMLs divested to NPDC that are not fully paid for so they could be auctioned for higher value to the country, and the review of the status and operations of NPDC in line with global best practices to ensure greater efficiency and optimal value to the country. NEITI also recommended that the FG should investigate the status and use of NLNG dividends from 2000 to 2014 and undertake criminal proceedings against anyone found wanting as well as fast-track comprehensive reforms of the improving petroleum sector.

To deliver on its mandate, NEITI could also do with more political, administrative and funding supports, especially from a government elected on the platform of curbing corruption, fighting insecurity and growing the economy. Meanwhile, in its policy brief, NEITI proposed “a root-and-branch reform to deepen efficiency, transparency and accountability in Nigeria’s improving but not yet squeaky-clean petroleum sector”. Yet that will not happen until the government begins to take more seriously NEITI itself and the issue of transparency and accountability in a sector that is very critical to both the economy and national security.