A new report by the Natural Resource Governance Institute (NRGI) has revealed that despite some progress in transparency of revenue collection over the past five years, tracking payments from oil and gas companies operating in Nigeriaremains challenging with the countryâ€™s Excess Crude Account (ECA) being the most poorly governed sovereign wealth fund assessed by the index, ranking last alongside the Qatari Investment Authority.
The NRGI report released yesterday further alleged that the federal government disclosed almost none of the rules or practices governing deposits, withdrawals or investments of the ECA.
The report noted that though Nigeria also has other natural resource funds, some of which are more transparent than the ECA, it acknowledged that the ECA as the largest fund by asset balance, constitutes a vast governance concern at the end of the oil sector value chain.
Nigeria scored 42 of 100 points and ranks 55th among 89 assessments in the 2017 Resource Governance Index (RGI).
According to the report, licensing is the weakest link in Nigeriaâ€™s value realisation component, with a score of 17 of 100, placing it 77th among 89 country licensing assessments.
â€œThis score and ranking reflect high levels of opacity in key areas of decision-making, including qualification of companies, process rules and disclosure of terms,â€ the report said.
â€œThe Nigerian government does not regularly publicly disclose government officialsâ€™ financial interests in the extractive sector or the identities of beneficial owners of extractive companies, though it has made some early commitments to do so with the Extractive Industries Transparency Initiative (EITI) and the Open Government Partnership (OGP). The government has committed to disclosing all oil, gas and mining contracts in its â€œseven big winsâ€ policy strategy and as part of its OGP action plan, but thus far, it has not disclosed contracts,â€ the report added.
Citing NEITI reports, NRGI noted that despite some progress in transparency of revenue collection over the past five years, tracking payments from oil and gas companies remains challenging.
â€œIn terms of revenue sharing, Nigeria ranks 11th, alongside the United States (Gulf of Mexico) and Ecuador. The public lacks access to audited information on revenue flows to lower levels of government, and this contributes to the gap between the quality of the legal framework and actual implementation,â€ said the report.
NRGI also argued that despite some improvements in transparency, NNPCâ€™s performance and accountability challenges still persist.
According to the report, NNPC achieves a poor governance score of 44 of 100.
â€œThe corporation mainly scores well on indicators that measure elements of transparency required by EITI reporting, such as transfers to government and production volume disclosure,â€ the report added.
The report acknowledged that NNPC has recently strengthened some of its reporting practices, particularly for high-level financial data. However, the report pointed out that the company does not disclose detailed annual reports on its finances, despite top officials having made a commitment to do so.
â€œLittle information is publicly available, particularly concerning some of NNPCâ€™s least efficient and most questionable activities, notably earnings by its subsidiaries, the costs of its operations and its significant spending on non-commercial activities. Government agencies and external auditors have disputed NNPCâ€™s interpretation of rules set in the constitution and the NNPC Act governing monetary transfers between NNPC and the government,â€ said NRGI.
Nigeria Country Manager for NRGI, Sarah Muyonga, said NNPC had made some new disclosures under the Muhammadu Buhari administration, but added that â€œthe details and revenue implications of many of its high-value transactions remain secret.â€
â€œFurthermore, the Nigerian government does not regularly publicly disclose government officialsâ€™ financial interests in the extractive sector or the identities of beneficial owners of extractive companies. This enables widespread corruption, with which Nigerians are all too familiar,â€ Muyonga added.