Buhari's Challenges: Oil Sector And Dwindling Revenue

Buhari's Challenges: Oil Sector And Dwindling Revenue

The #OpenNASS campaign and legislator salaries have gotten a lot of attention in recent weeks, but the National Assembly is not the only thing that needs to be more open.

Nigerian Extractive Industries Transparency Initiative (NEITI) in its 2012 audit report discovered that total dividend loans and interest repayment from the Nigeria Liquefied Natural Gas Limited (NLNG) paid to the Nigerian National Petroleum Corporation (NNPC) in 2012 amounts to $2.8 billion. Can President Muhammadu Buhari enhance accountability in the oil sector?

NEITI has been mandated by law to promote transparency and accountability in the management of Nigeria’s oil, gas and mining revenues. It is the national version of the Extractive Industries Transparency Initiative, which is a global movement aimed at ensuring that extractive resources aid sustainable development.

The NNPC has been accused of not being accountable and transparent in its dealings in the oil and gas industry. According to the audit report, the NNPC was unable to provide any evidence to show that the funds were remitted to the federation as required by law. The total amount received by the NNPC from the NLNG under the same circumstances which have not been remitted to the federation stands at $11.6billion.

READ ALSO: How Buhari Can Fix The Oil Sector

Zainab Ahmed, the executive secretary of NEITI, described the whole transaction as opaque at a recent oil and gas conference at Abuja's International Conference Center in May this year. At the conference, she called for a full investigation into the transfer of eight oil wells sold by the NNPC to the Nigeria Petroleum Development Company (NPDC) in 2010 and 2011 to ascertain the actual cost of the oil blocks and revenue loss to the federation in the whole transaction.

But can the new administration of President Buhari make the oil and gas industry its main priority particularly recovering unremitted funds? NEITI has now added its voice to the call on President Buhari should remove subsidy, to save the country from huge revenue loss and embarrassment that oil mismanagement has caused.

Amara Nwankpa of Oil Revenue Tracking Initiative opined that the new government should prioritize the re-structuring of the upstream sector to maximize the value it delivers not only to Nigerians but also to the communities impacted by mining activity.

Oil Revenue Information Tracking Initiative is an advocacy initiative of the Shehu Musa Yar'Adua Foundation to contribute to good governance of Nigeria's natural resources by improving public understanding of the key issues. The initiative has been active since March 2013.

READ ALSO: Jonathan Remitted $100M For Sold $1.85B Oil Block

In a conversation with Naij, Amara Nwankpa, who is also the coordinator of public policy initiatives at Shehu Musa Yar'Adua Foundation, opined that the deregulation of the downstream and restructuring of the upstream should be carried out in a manner that it will increase value to oil communities and also ‘attract private investment to improve Nigeria’s capacity to add value and consume its own oil.’

Nwankpa is optimistic that the president can bring on board the change needed.

"President Buhari comes into office with a reputation of being tough on corruption. That could have positive impacts on attitudes and culture in the industry. The anti-corruption reputation could also buy him necessary goodwill to make the contentious changes needed to improve the value chain in the sector," he said.

He, however, fears that the president might not be able to properly settle to deliver the much awaited overhaul of the oil and gas industry.

"Beyond the reputation for fighting corruption, Buhari's administration has shown no compelling understanding of the key issues affecting the sector beyond corruption. Perhaps there is a steep learning curve ahead for the new administration. This means there is a chance that he could run out of time before he is able to make any telling difference,"  the coordinator noted.

Source: Legit.ng

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