5 November 2012

Nigeria: Another Oily Report

Photo: Vanguard
Cartoonist depicts corruption in Nigerian petroleum sector


Not counting the Petroleum Industry Bill, for the second time this year, a report on the oil industry is generating a storm before there is a chance to consider it.

While the House of Representatives report was truncated over allegations that committee members were compromised, the report of the President's Petroleum Revenue Special Task Force, was presented last week with controversy.

Mallam Nuhu Ribadu, chairman of the task force and his deputy, Steve Orosanye, disagreed over the report before President Goodluck Jonathan. The controversy began with the leaked report which the task force disowned, but Orosanye said the report which listed debts to government, losses of revenue, with a notable example in the under-pricing of feedstock gas was "flawed".

"For Liquefied Natural Gas, the price at which the feedstock gas is sold to NLNG seems too generous, compared to prices obtainable on the international market. The estimated cumulative deficit between value obtainable on the international market and what is currently being obtained from NLNG, over the 10-year period, amounts to approximately US$29 billion," the report said.

The report made harsh remarks, mostly known, about government's poor funding of its obligations to the joint venture partners, loss of crude and slack processes for revenue collections ranging from signature bonus to taxes. It is official again that the oil and gas sector operates with standards that are challenging to monitor.

Orosanye, a former Permanent Secretary at the State House and former Head of Civil Service of the Federation, said the figures in the report were not verified and that some members neither saw nor signed the final draft. Mr Bernard Otti, another task force member supported him. The President asked those with contrary views to submit their objections to the Chief of Staff or the Minister of Petroleum Resources.

Two other members, Sumaila Zubair, the acting secretary and Ignatius Adegunle said Orosanye and Otti, never participated in the meetings.

"No matter how good the efforts that have been put into this exercise, as long as the process is flawed and that report is one that cannot be implemented. I don't know what the report contains. Some of the figures that were in the draft report were un-reconciled figures and I did say in that meeting that we have institutions responsible for this figures," Orosanye told the President.

Like the beleaguered report before it, government has enough information in the Mallam Ribadu report to act, if it wants to salvage a vital sector of the economy. Members with objections to the report should use the window the President offered them to add their positions. There will never be a perfect report on our oil and gas sector.

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