Concerns over rot In Nigeria’s oil sector ahead of confab

Major oil industry executives will gather in Abuja, Nigeria’s capital for an annual conference on 18 February.

The conference will be graced by government ministers and top officials from major oil producers including Shell, Exxon, Total and Chevron, as well as Nigeria’s state petroleum firm NNPC.

The conference will bring government officials and major oil producers under pressure following reports of alleged large-scale corruption and mismanagement in the country’s oil sector. Several reports have shown that Nigeria has lost tens of billions of dollars in recent years through questionable practices in the industry.

Although it is unlikely that these oil execs will discuss oil theft. Several papers have been presented but not much action has been taken. Recently, the government renewed its push to overhaul the oil industry, presenting a 223-page bill to the legislature in July that would reshape taxes and royalties as well as restructure NNPC, among other measures.

The bill has stalled, as previous versions have, though Oil Minister Diezani Alison-Madueke has said that negotiations are ongoing with the industry. Major oil firms have argued that the fiscal terms in the bill are too harsh and would prevent new investment, while the government says it is fair to all sides, though it is willing to work out a compromise.

Latest report from a government-appointed panel showed that billions of dollars have been stolen through questionable oil practices. Another audit released earlier this month said NNPC owes the government $8.3 billion for the period from 2009 through 2011. Beyond that, a parliamentary committee report in 2012 said $6.8 billion in revenue was lost between 2009 and 2011 in Nigeria’s fraud-ridden fuel subsidy programme.

Despite pledges from the government to clean up the oil sector, there has been little change in response to such findings. NNPC and firms including Shell, which has been the country’s biggest producer, have denied any wrongdoing.

Auwal Ibrahim Musa Rafsanjani, Civil Society Legislative Advocacy Centre, Transparency International’s local partner said solutions have not become because there is no political will to pursue it. “You have all the issues there. Solutions have been provided, but there is no political will to act on them,” he explained.

The oil industry is Nigeria’s mainstay; with crude production at 2.0 million barrels per day in January, according to the International Energy Agency. The government also derives 80 per cent of its revenue and nearly all of its export earnings from the industry, leaving the country vulnerable to potential tumbles in oil prices.
AFP