Nigeria’s approach to missing money in the oil industry

Nigeria’s approach to missing money in the oil industry

Lamido Sanusi was appointed governor of the Central Bank of Nigeria in June 2010 for a five-year term. In February 2014 he raised questions about shortfalls in oil receipts from the Nigerian National Petroleum Corporation (NNPC), the state oil corporation.

The scale of the problem is hotly contested. Sanusi reportedly started with queries about $50bn. These were subsequently revised down to ‘only’ $20bn but, according to press reports, even Nigerian ministers accepted that the amount in issue was $10.8bn.

President of Brazil Dilma Rousseff and Nigeria's president Goodluck-Jonathan
President of Brazil Dilma Rousseff and Nigeria’s president Goodluck-Jonathan

The response of Nigerian president Goodluck Jonathan) was to suspend Sanusi from office, on the grounds that he had been responsible for financial mismanagement of the Central Bank. Sanusi was subsequently also alleged to be involved in terrorist financing and investigated by the Nigerian State Security Service. None of these allegations seems to have come to anything and Sanusi successfully sued the government for harassment, obtaining an injunction, an order for compensation and the return of his passport.

The pressure was sufficient to force the government, through its well-respected finance minister Ngozi Okonjo Iweala, to announce in May 2014 that PricewaterhouseCoopers (PwC) had been appointed to carry out an independent forensic investigation. The highlights of that report, although not the report itself, were finally released last month by the auditor general of Nigeria.

The response has been mixed. The opposition say that the report lacked credibility from the start and the house of representatives has reportedly invited PwC to explain its findings, and indeed to hand over the report itself, citing concerns that it raises more questions than it answers.

NNPC says publicly and loudly that it has been vindicated by PwC and there have been press reports denouncing Sanusi for lying. The public are urged to move along; nothing to see here. But even the government-sanctioned ‘highlights’ of the PwC report raise some difficult questions.

PwC’s view is that NNPC must account to the government for $1.48bn. This is far short of the original claims of missing revenues and NNPC has been quick to say that this was for various non-revenue amounts and never in dispute (although it would presumably also accept that it has not, to date, been paid).

PwC has also apparently urged an immediate overhaul of NNPC, criticising it for an unsustainable business model under which it cannot pay its operating costs and make payments due to the Nigerian state without third-party funding.

PwC also questioned NNPC’s transfer of rights for eight oil fields for a quoted amount of $1.85bn. PwC has reportedly expressed surprise that the amount payable was not higher, and apparently only $100m has actually been paid so far, which is a significant shortfall.

PwC added to this concerns about the infamous Nigerian kerosene subsidy. This is $3.38bn seemingly spent by NNPC on maintaining a target price of 25 cents per litre in the domestic kerosene market.

The above is an excerpt from an article in the UK Law society gazette by Nicola Boulton that takes a critical look at Brazil and Nigeria, two oil producing countries, and compares how they are handling the corruption issues in their oil sector.

Click here to read more.

 

Follow us @sabinewsnaija

 

 

 

About The Author

Osigweh Lilian Oluchi is a graduate of the University of Lagos where she obtained a B.A (Hons) in English, Masters in Public and International affairs (MPIA). Currently works with 1stnews as a Database Manager / Writer. [email protected]

Related posts

Leave a Reply

Your email address will not be published.