Nige­ri­ans im­pa­tient for oil sec­tor anti-cor­rup­tion re­forms, but it’ll be a long jour­ney


Nige­rian Pres­i­dent Muham­madu Buhari’s ap­point­ment of a Har­vard-ed­u­cated lawyer to run the state oil com­pany demon­strates his anti-cor­rup­tion re­solve — but only marks the start of a long re­form jour­ney, an­a­lysts say.

In­dus­try observers note the for­mi­da­ble chal­lenge he faces in sani­tis­ing a sec­tor that ac­counts for 70 per­cent of the coun­try’s rev­enue, but which is no­to­ri­ous for mis­man­age­ment and ram­pant theft.

Buhari took of­fice May 29 af­ter be­ing elected on an an­ticor­rup­tion ticket, pledg­ing to re­cover “mind-bog­gling” amounts of stolen oil money and bring those re­spon­si­ble to book.

In early Au­gust he ap­pointed Em­manuel Ibe Kachikwu, a for­mer ex­ec­u­tive vice-chair­man of Exxon-Mo­bil Africa, to head the Nige­rian Na­tional Petroleum Cor­po­ra­tion (NNPC) af­ter sack­ing the en­tire board.

Speak­ing to jour­nal­ists in the cap­i­tal Abuja Thurs­day, Kachikwu fired an open­ing salvo, promis- ing to up­root NNPC’s “any­thing goes” cul­ture and warn­ing un­der­per­form­ing em­ploy­ees will lose their jobs.

“At the end of the day, NNPC isn’t a public ser­vice, it is a cor­po­ra­tion and it is go­ing to be run like a com­pany, gen­er­at­ing money and profit for Nige­ri­ans,” Kachikwu vowed.

John Camp­bell, a se­nior fel­low for Africa pol­icy stud­ies at the Coun­cil on For­eign Re­la­tions, told AFP suc­cess in com­bat­ing cor­rup­tion within the oil in­dus­try would re­quire “a revo­lu­tion in gov­er­nance.”

He wel­comed the ap­point­ment of Kachikwu, a man­ager with decades of pri­vate sec­tor ex­pe­ri­ence, as a clear sig­nal of the pres­i­dent’s re­form agenda which “fits the pat­tern of Buhari ap­point­ing tech­nocrats based on merit.”

But he was less op­ti­mistic on the new leader’s chances of clean­ing up the in­dus­try, ask­ing: “Can a tiger change its stripes?”

Buhari was the oil min­is­ter re­spon­si­ble for the launch of the NNPC in 1977, now a joint ven- ture with 24,000 work­ers be­tween the gov­ern­ment and multi­na­tional cor­po­ra­tions in­clud­ing ExxonMo­bil, Chevron and Royal Dutch Shell.

The for­mer mil­i­tary ruler re­puted for his au­to­cratic stance on cor­rup­tion and “in­dis­ci­pline” is two months into his pres­i­dency and has yet to ap­point a cab­i­net, let alone an oil min­is­ter.

‘Baba Go Slow’

An­a­lysts have com­plained that he has been vague about achiev­ing his goals, and have voiced frus­tra­tion at his slow pace.

“Buhari’s crit­ics call him ‘Baba Go Slow’ and ar­gue that the pol­icy in­er­tia was an in­evitable de­vel­op­ment aris­ing from the com­plex­i­ties of a young and ide­o­log­i­cally di­verse elec­tion coali­tion,” Ronak Gol­pal­das, a sov­er­eign risk an­a­lyst at South Africa’s Rand Mer­chant Bank told AFP.

“How­ever, his sup­port­ers have urged pa­tience, ar­gu­ing that the de­lays are in­dica­tive of a deep de­sire to cre­ate the foun­da­tions for sus­tained eco­nomic growth via cred­i­ble and tech­no­cratic ap­point­ments.”

Africa’s largest econ­omy and most pro­lific oil pro­ducer churns out roughly two mil­lion bar­rels of crude per day, but or­di­nary peo­ple have not ben­e­fited. Twothirds of the nearly 180 mil­lion pop­u­la­tion live on less than US$1 a day.

Buhari has ac­cused the pre­vi­ous ad­min­is­tra­tion of Good­luck Jonathan of leav­ing the trea­sury “vir­tu­ally empty,” and is strug­gling to rein­vig­o­rate an oilde­pen­dent econ­omy weak­ened by the halv­ing of crude prices since 2014.

He has or­dered a re­view of oil­swap con­tracts, al­leg­ing 250,000 bar­rels of crude a day were stolen dur­ing the pre­vi­ous regime, with the prof­its go­ing into in­di­vid­ual bank ac­counts.

The Nat­u­ral Re­source Gov­er­nance In­sti­tute (NRGI), a New York-based in­de­pen­dent watchdog, said in a re­port ear­lier this month Nige­ria was fail­ing to re­cover the full value of oil sold by the NNPC amid poorly struc­tured

deals and un­ac­count­able spend­ing.

‘Shad­owy deals’

“In­side NNPC Oil Sales: A Case for Re­form in Nige­ria” is de­scribed as the first in-depth, in­de­pen­dent anal­y­sis of the “com­pli­cated and shad­owy deals” through which NNPC sells Nige­ria’s oil.

The re­port de­tails how the cor­po­ra­tion has been in­creas­ingly with­hold­ing large sums of money from the Nige­rian trea­sury.

It re­tained an es­ti­mated US$12.3 bil­lion from the sale of 110 mil­lion bar­rels of oil over 10 years from a sin­gle block con­trolled by a sub­sidiary, NRGI claims.

Oil buy­ers are of­ten un­qual­i­fied in­ter­me­di­aries who cap­ture mar­gins for them­selves while adding lit­tle value to deals, it said, while oil-for-fuel swap agree­ments and other con­tracts are opaque and con­tain un­bal­anced terms.

In 2013, the trea­sury re­ceived only 58 per­cent from US$16.8 bil­lion worth of oil NNPC had ear­marked for its un­der­per­form­ing re­finer­ies, NRGI said.

“Oil sales are Nige­ria’s big­gest rev­enue stream, but man­age­ment has wors­ened in re­cent years,” said Aaron Sayne, co-au­thor of the re­port.

Alexan­dra Gillies, who also worked on the anal­y­sis, said the com­bi­na­tion of a new gov­ern­ment and bud­getary short­falls of­fered Nige­ria “its best chance in years” to over­haul NNPC oil deals.

“Ev­ery­one — from trad­ing com­pa­nies to Nige­rian cit­i­zens — is wait­ing to see how the new gov­ern­ment will ap­proach these trans­ac­tions, in­clud­ing the al­lo­ca­tion of new ex­port or swap con­tracts,” she said.


A pic­ture taken on Oct. 21, 2011 shows an illegal oil re­fin­ery along the Imo River in Abia State, Nige­ria.

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