HOW much does Nigeria actually earn from the sale of crude oil and gas? In any other country in the world, the answer would be readily available to the public. But Nigeria is no ordinary state and its most senior officials proved it convincingly this month: No one knows for certain how much we earn from our chief export commodity.
When the country’s central bank, its finance ministry, its budget office, its petroleum ministry and the state-owned oil company give conflicting figures on its earnings from oil, then, the rot in public finance administration here is brought out in bold relief. Worse, neither the President nor the National Assembly has demonstrated sufficient outrage at the mess. Instead, the government has carried on as if missing oil revenues of gargantuan proportions are of minor consequence.
The latest drama over oil revenues began early in the month when a letter by the Central Bank of Nigeria Governor, Lamido Sanusi, leaked to the press. In it, the CBN boss alleged that, in clear violation of the law, the notoriously corrupt Nigerian National Petroleum Corporation failed to remit a hefty sum of $49.8 billion to the Federation Account between 2012 and July this year. It said that based on documentation from pre-shipment inspectors, NNPC lifted 594.02 barrels of oil valued at $65.33 billion within the period but repatriated only $15.52 billion, a mere 24 per cent of the value earned.
Sanusi further highlighted the damage NNPC’s actions and adamant lack of transparency and accountability were doing to the economy. The response was swift. The NNPC accused the CBN governor of “ignorance of the workings of the oil and gas industry and the modality for remitting crude oil sales revenue into the Federation Account.” To prove this “ignorance,” it said 618.55 million barrels of crude were actually lifted in the period, 4.13 per cent more than the CBN’s figure.
Furious denials from the Presidency were followed up by meetings of the top stakeholders and the bizarre “consensus” that exposed just how messy our public finance administration has become. Emerging from a “joint committee to reconcile their differences,” Sanusi; Finance Minister, Ngozi Okonjo-Iweala; Petroleum Resources Minister, Diezani Alison-Madueke; Director-General of the Budget Office, Bright Okogu; and Group Managing Director of the NNPC, Andrew Yakubu; further confounded Nigerians. First, Sanusi admitted that $24 billion of the missing money had been found to belong to third parties on whose behalf NNPC shipped crude. But he insisted that $12 billion, arising from domestic crude lifting, was still unaccounted for.
But at the same news conference, Okonjo-Iweala, who is also the Coordinating Minister for the Economy, quickly interjected: “I just want to add that what we found out was $10.8 billion (missing)…” And for the first time since it gained notoriety for doing as it pleases with public money, the NNPC acknowledged shortfalls in remittances to the Federation Account.
But oil and gas revenues provide roughly 90 per cent of Nigeria’s external earnings and over 70 per cent of the national budget. Its contribution of 24 per cent to Gross Domestic Product, coupled with the failure of successive governments to diversify our exports, have put the economy at the mercy of crude oil. Already, shortfalls in oil receipts have put the national and 36 states’ budget plans in some disarray.
This is not about who is right and who is wrong. The key issue here is still lack of good fiscal transparency practices for oil resource revenue management. According to the International Monetary Fund, the four pillars of fiscal transparency in resource management are clarity of roles and responsibilities; open budget processes; public availability of information and assurances of integrity. Most, if not all of these, are more honoured in the breach than in the observance.
The National Assembly should shake off its timidity and act decisively in defence of the Nigerian people. While other countries with prudent and transparent management practices, including Botswana, Canada, Chile, and Norway, have benefited from resource wealth, our country remains stuck in the tangle of the resource curse. IMF says when administration (in oil resource management) is weak, ownership of such wealth provides ample scope for inefficient policies, discretionary behaviour, and outright corruption, all of which could contribute to poor growth performance and eventual dissipation of national oil wealth.
Stripped of all the rigmarole and obfuscation, this is all about corruption and brazen disregard for the constitution and extant laws. Lifting of crude, its pricing, sharing of the proceeds and documentation are precise sciences. The NNPC’s proffering of a higher crude lifting figure proves that it can keep accurate records of all its transactions when it suits its managers. The decades-old discrepancies frequently discovered in its accounts by local and international audits can only be explained by the monumental corruption thriving in the corporation. Nigeria is surely one of the few countries in the world where no one in or outside government knows the exact quantity of crude oil lifted by the state-owned oil company or how much it earns.
Such in-your-face corruption is not tolerated even in failed states. Since successive presidents have failed to obey the law, it is not too late for the National Assembly to rise up to its constitutional duty and draw the battle line with the Presidency over the out-of-control NNPC. An immediate priority should be given to improving the quality and public disclosure of data on resource revenue transactions at all times. The NNPC must henceforth be made accountable to the people through the parliament. If President Goodluck Jonathan fails to bring the corporation to account, the parliament should, as a last resort, refuse to pass the budget.
Credits: PunchNG
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