Revenue Watch has ranked Nigeria amongst the weakest of 58 countries covered in the study of transparency and proper management of its oil resources.
Revenue Watch Instituted, RWI, has ranked Nigeria ‘weak’ among the world’s 58 countries covered in the study conducted on transparency and accountability in the governance and management of their oil, gas and mining sectors.
In the Resource Governance Index report published on Wednesday, the Institute noted that over 80 per cent of the world’s leading oil and gas-producing and mining countries failed to meet “satisfactory standards” for managing their natural resources.
In 47 of the 58 Index countries, governments are yet to embrace openness and accountability in their operations, despite that they collectively account for more than 85 percent of the world’s oil production capacity, 90 percent of diamonds and 80 percent of copper, generating trillions of dollars annually.
“The lives of over a billion citizens could be transformed if their governments managed their oil, gas and minerals in a more open, accountable manner,” the report said.
Countries are judged on four factors: legal framework, transparency levels, government checks and balances, and governance.
The report, which ranked Nigeria 40th out of 58 countries, with a composite performance score of 42 per cent, noted that though the country fared relatively better with strong performances on the institutional and legal aspects, emerging 22nd with a score of 66 per cent, its record in safeguards and quality controls was average, coming 31st with a score of 53 per cent.
According to the report, though Nigeria’s “partial” score of 66 per cent suggests a substantial public access to information, the reality is that revenue disclosure policies are incomplete, despite efforts by the Nigeria Extractive Industries transparency Initiative, NEITI, to compel companies to disclose what they pay to government and vice versa.
While the Minister of Petroleum Resources is empowered to grant operational licenses for oil exploration activities, the report said the Department of Petroleum Resources, DPR, which is supervised by the minister is responsible for the licensing process as the agency regulating the sector.
Again, it noted that with the Federal Inland Revenue Service, FIRS, receiving taxes on petroleum profits and other hydrocarbon-related levies and the DPR collecting rents, royalties, license fees, bonuses, and other payments, some revenues may go unreported between the treasury and the National Assembly.
On reporting practices and enabling environment, the report said Nigeria performed dismally, with rankings of 42nd and 44th and scores of 38 and 18 per cent respectively, citing lack of contract transparency and incomplete reporting on most aspects of the petroleum industry.
It accused the Ministry of Petroleum Resources of publishing little information on the upstream licensing process, fiscal and production arrangements, contracts, environmental impact assessments, or operational data, while information are often not available on revenue flows.
On the other hand, the report said the Finance Ministry and Central Bank of Nigeria, CBN, regularly publish information on production volumes, fuel prices, value of resource exports, estimates of investment in exploration and development, production costs, costs of subsidies, production stream values, royalties, special taxes, and the government’s share in production sharing contracts.
On safeguards & quality controls, the report said Nigeria’s “partial” score shows incomplete government monitoring, with substantial conflict-of-interest disclosure requirements, based on the practice where the Minister of Petroleum Resources still exercises wide discretionary powers in the award of oil licenses, with limited oversight of the process by the National Assembly.
It noted the conflict in the revenue figures in the audit of public accounts by the Office of the Auditor General of the Federation and those of the Nigerian National Petroleum Corporation, NNPC; adding that the country does not have published rules and information on its asset and transactions about the Excess Crude Oil Account, which currently receives revenues directly from oil extraction.
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