Accountability, probity and transparency in Nigeria’s petroleum sector (I)

Since the beginning of the year 2012, questions have started to be asked once again about accountability, probity and transparency in the operation and management of the all-important Nigeria’s petroleum (oil and gas) sector.

For example, almost all the previous successive Nigerian governments (military and civilian alike) have instituted investigations into the operation and management of the affairs of the sector in the past years. The latest of such series of investigations are the ongoing Senate, House of Representatives and ministerial probes of the key institutional players in the operations and management of the sector.

These multi-faceted parallel probes are going on simultaneously at the moment. For example, the Nigerian National Petroleum Corporation (NNPC) – Nigeria’s flagship public-owned petroleum sector development corporation – and its numerous subsidiary business units (SBUs) have been under investigation by both the executive and legislative arms of the Federal Government of Nigeria (FGN) under the leadership of President Goodluck Jonathan since the beginning of this year.

The questions raised thus far emanate both from the legislative and executive arms of government, respectively, as well as from the Nigerian general public, organized civil society groups and international bilateral and multi-lateral donors and development communities.

For instance, it was the massive revolt by Nigerians under the leadership of organized Labour – the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC)) – and civil society groups against the Jonathan administration’s resolve to eliminate the existing wasteful fossil fuel subsidy regime that provided the impetus for both the National Assembly and the presidency to initiate the current wave of petroleum sector probes.

But, as stated above, this latest development is not entirely new to the dynamics of the Nigerian petroleum sector’s development over the years, particularly since the late 1980s. There exists a large chronology of probes and critical academic studies of the Nigerian petroleum sector over a period of four decades of the sector’s five decades of existence. However, the current concerns are rooted in yet the continuous, heightened and deep-seated lack of proper accountability, probity and transparency in the operation and management of the sector. The manifestations of systemic all-round policy and institutional failures are all over the place and do not require many costly and sophisticated analyses to see the rots with the naked eyes.

It was largely the opacity, secrecy and systemic corruption in the operation and management of the NNPC, its subsidiary companies, and other associated public agencies and private entities operating within the sector that have been  key concerns and focus of all the past and present probes or investigations of the sector. For example, with the restoration of democratic rule in Nigeria in 1999, the Federal Government of Nigeria under Olusegun Obasanjo succumbed to international anti-corruption pressures for the country to join the newly formed Extractive Industries Transparency Initiative (EITI) – a voluntary international best practice code and standards for extractive industries.

Simply put, EITI is a global anti-corruption movement or covenant for natural resource-rich developing and emerging countries. Therefore, following Nigeria’s embracing and formally joining of EITI, President Obasanjo established the Nigerian branch of the movement known as the Nigeria Extractive Industries Transparency Initiative (NEITI).

However, even before NEITI was established, the Nigerian government in late 1999 requested the World Bank to undertake a management audit of the NNPC. The management audit was to complement the extensive studies and analyses carried out earlier by international consultants, including Booz-Allen & Hamilton in 1982, 1983, and 1984; Arthur Andersen & Co. in 1988, 1989 and 1990; and Peat Marwick in 1994. Also, the World Bank’s contracted management audit of the NNPC was carried out in parallel with financial audit (Flow of Funds Study and Studies on Upstream and Downstream Issues) as an essential input to the management audit.

Furthermore, while this exercise was completed, the House of Representatives under the speakership of Ghali Umar Na’Abba instituted a probe of the activities of the NNPC covering the period 1999-2001. I served as a consultant to the Ibrahim Abubakar Gayama-led ad-hoc committee that carried out that investigation. Much water had passed under bridge since then and the rest is now history.

Thus, the current barrage of probes/audits of the activities of the NNPC, including those by the Economic and Financial Crimes Commission (EFCC), probe of the fuel subsidy payouts, the external audits of the petroleum sector being conducted by NEITI, as well as the recently inaugurated Petroleum Revenues Committee chaired by Nuhu Ribadu are all geared toward ensuring accountability, probity and transparency in the petroleum sector, according to the Nigerian authorities.

In the coming weeks, I intend to focus on the main findings and conclusions of the World Bank 2000 Report on the Management Audit of the NNPC. I must say that this is not a WikiLeaks-styled expose. This is done in light of President Jonathan’s effort to make Nigerians fully understand and appreciate the need to sanitize and transform this vital sector of the national economy for the benefit of all.