Nigeria’s oil and gas and mining sectors still remain among the least transparent in the world, according to the Natural Resources Governance Institute’s (NRGI), latest report.
The NRGI, an independent non-profit organisation, ranked Nigeria in its report 55 out of 89 countries assessed with a score of 42 of 100 points.
Specifically, the 2017 Resource Governance Index (RGI), which assesses how 89 resource-rich countries govern their oil, gas and mineral wealth, particularly scored Nigeria low in the area of licensing, pointing out that the Nigerian government rarely discloses government officials’ financial interest in the extractive sector or identities of beneficial owners of extractive companies.
The report also scored Nigeria 17 out of 100, placing it 77 out of the 89 countries reviewed in the assessment of licensing, pointed out that though the government has made commitment with the Extractive Industries Transparency Initiative (EITI) and the Open Government Partnership (OGP), it is yet to disclose details of contracts in oil, gas and mining contracts in its “Seven Big Wins” strategy.
“Licensing is the weakest link in Nigeria’s “value realization” component, with a score of 17 of 100 points for the policy area, placing it 77th among 89 assessments. This score and ranking reflect high levels of capacity in key areas of decision-making, including qualification of companies, process rules and disclosure of terms”.
It however stated that despite some improvements in transparency, Nigeria National Petroleum Corporation’s (NNPC) performance and accountability challenges persist.
The report sated further that improving transparency could help address Nigeria’s failing performance in licensing, adding that the country’s Excess Crude Account (ECA) deemed the most poorly governed sovereign wealth fund of all assessed.
Nigeria is one of the world’s most resource-dependent countries, with oil and gas sales constituting 90 percent of the country’s exports in 2015. The strength of oil and gas sector’s governance therefore impacts the wellbeing of Nigeria’s 182 million citizens.
The 2017 Resource Governance Index, compiled by the Natural Resource Governance Institute (NRGI), shows that governance challenges are present throughout Nigeria’s oil industry decision chain.
According to the findings of the index, value is lost particularly in licensing and in NNPC’s sales of government oil, as well as when revenues from oil and gas are shared and saved.
It said that despite some progress in transparency of revenue collection over the past five years, tracking payments from oil and gas companies remains challenging. In terms of the governance of sub national resource revenue sharing, Nigeria ranks 11th in the index. However, the public lacks access to audited information on revenue flows to lower levels of government, and this contributes to the gap between the legal framework and implementation.
“NNPC has made some new disclosures under the Buhari administration, but the details and revenue implications of many of its high-value transactions remain secret,” said Sarah Muyonga, Nigeria country manager for NRGI.
“Furthermore, the Nigerian government does not regularly publicly disclose government officials’ 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.”
The NNPC it stated achieved a poor governance score of 44 of 100 points, falling below the sub-Saharan African average for state-owned enterprises (SOEs), despite being the largest SOE on the continent. “The company does not disclose detailed annual reports on its finances, despite top officials having committed to doing so, and little information is publicly available, particularly concerning some of NNPC’s least efficient and most questionable activities”.
A finding with huge implications for the country concerns its largest sovereign wealth fund. Nigeria’s Excess Crude Account (ECA) is the most poorly governed sovereign wealth fund assessed by the index, ranking last alongside the Qatari Investment Authority.
Muyonga added: “Improving governance of the state-owned enterprise NNPC is crucial, and will hugely benefit the lives of millions if done effectively. The government discloses almost none of the rules or practices governing deposits, withdrawals or investments of the ECA. Given that the ECA is the largest fund by asset balance in Nigeria, this constitutes a vast governance concern at the end of the oil sector value chain.”
Olusola Bello
