At an oil and gas reforms workshop which took place in Abuja in August 2015, I had the privilege of listening to as many scholars and stakeholders in the industry as possible. Everyone had something useful to say, against the background that a new set of politicians had just taken over as government and was looking to chart a different course in the oil and gas sector. Based on the Reports of the Bern Declaration and that of the Natural Resource Governance Institute, NRDI, we all just realized that one of the biggest heists in the oil and gas sector had been taking place right under our noses. When Nigeria barters its crude for fuel as a refined commodity for local consumption, it gets the crude as crude without asking for payment for all the allied products from the crude. The allied products that we are talking about include gas, diesel and that commodity known as engine oil. What this translates to is that while we were paying a subsidy for bringing in only half of what we should bring in, we were losing three-quarters of what we apparently did not know that we could get. In 2012, and that is according to information released by NEITI, Nigeria earned $6.9billion as revenue from oil and gas. Now, if this piece of information is accurate, it means that if we had sold our crude oil and factored in what should accrue from our oil in terms of diesel, and engine oil, our income from our crude sales would have somewhat quadrupled. Part of what is responsible for this anomaly is what the Bern and the NDRI state inter alia, that Nigeria engages in battering our crude oil for refined products, aka oil swap, with ubiquitous behemoths, and that there is a certain domestic crude allocation to the NNPC. The Bern Declaration also said that the NNPC illegally retains revenue accruable to the nation; that it relies on an over-abundance of middlemen to lift crude, together with a total lack of a system of checks and balances within the system.
To redress these glitches, both reports recommend the elimination of direct crude allocation to the NNPC and transparency in payment flows, the development of an explicit revenue collection framework for the NNPC, the winding down of all Offshore Processing Agreements, OPAs, the sale of crude to end users and the strengthening of a programme of transparency and accountability. It is cheerful that the government has plans to cancel the oil swap deal. In an announcement of February 2, 2016, the Petroleum Minister said that government was adopting Direct-Sale–Direct-Purchase, DSDP, arrangement billed to take off from March 2016. I want to encourage the Energy Minister to take care to negotiate a better deal for Nigeria wherein all allied products from our crude is factored into the costs that would prevail in the DSDP regime. As well, a colleague of mine has suggested that Nigeria should be seeking to focus more on reforming the oil sector and creating alternatives to oil rather than spending useful time wringing fingers over a crash in oil prices.
And if you ask me, this last point is what I hope this discussion should be about. The oil and gas workshop threw up issues that I think are still worth talking about. A discussant at that workshop advised that instead of focusing on what accrues to us from oil, we should rather focus on HOW those monies are spent. The point that that official was trying to highlight I guess is that we are where we are now because monies that come in from oil were over the years just shared at the three tiers of government, and were unreasonably appropriated as emoluments to political office holders without a plan for today. To begin to examine what we should do next, I hear that the National Economic Council NEC has recently engaged two audit firms – the one an international firm, KPMG, and the other a local one, ISO, to conduct forensic audits on the crude oil remittances from the NNPC and 81 government revenue generating agencies following submission of an interim report by the ad hoc committee of NEC, chaired by Governor Adams Oshiomhole of Edo State.
While the proposed audit by the Federal Government into 81 government revenue generating agencies seems to be the proper thing to do at this point when government desperately needs to fund its projects with recovered looted funds from those who have allegedly stolen from the common purse, the engagement of another international audit firm, KPMG, to audit the accounts of the NNPC for forensic needs raises many questions. For example, in April 2015, Nigeria engaged the services of four international audit firms to look into the allegations of a former Central Bank governor Lamido Sanusi Lamido that the NNPC failed to remit $20billion to the federation account. When the biggest of the four audit firms, PwC, released its report after a massive media blitz, the firm indicted the NNPC and the NPDC and asked both organisations to make a refund to the federation account to a minimum of $1.48bn.
Part of that eternal thing about being government anywhere in the world is that government is more about being economical with the truth in most cases. Most of these supposedly ‘independent’ probes are usually unreliable and cannot be 100% reliable. Therefore the point must be made that since the NNPC and NPDC were found culpable in the misappropriation of public funds, it lends credence to the fact that certain elements within the remote and immediate administrations prior to this current one stole a lot of money. All must be brought under the current searchlight for sanity in the public sector.
While I support the ongoing arms probe, Nigerians hope that those who have been found to have dipped their fingers into public funds and participated in the misapplication of these funds must be made to pay the monies back, together with the proceeds from such heists. Mr. President seems to have run into a brick wall of the Judiciary, and already has a headache. But other methods of recouping these stolen monies can be explored. Since 2002 or thereabouts, the United Nations Convention Against Corruption, UNCAC, has put in place a Voluntary Disclosure Programme, VDP, as a measure to stem corruption, recoup stolen funds and punish the culprits. What makes the VDP option an option is that it goes beyond the emotions being peddled in the public square, and addresses the issues. For instance if a person who has embezzled some money agrees to return what he has embezzled, together with the proceeds, he gets a lighter punishment because that action of voluntarily disclosing his involvement in corruption reduces the strain on the system. It is different from the plea bargain. A person who bargains is already a convicted person who has put the system to the test. Most people, including the media houses that collected monies from Col Sambo Dasuki have returned these monies, all totaling N6.6trillion, according to Mr. President.
We can also block obvious avenues of corruption by supporting my campaign for an end to a state-sponsorship of the looting of public funds, aka ‘security votes’ for political office holders. Half the monies that are appropriated for these public servants as ‘security votes’ can go into our dead stadiums and libraries, our non-existent parks and recreational facilities. Most of all, the security votes can go to a programme of feeding all our children in primary schools.