Nigeria’s oil sector governance weak and worrying, says NRGI

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Governance of the Nigerian oil and gas sector is weak and does not meet key measures of transparency and accountability, the Natural Resource Governance Institute said.

The NRGI, in its 2021 Resource Governance Index report, noted that as Africa’s largest oil and gas producer, Nigeria’s production reached nearly two million barrels per day in 2020.

He said: “The hydrocarbon sector accounts for over 85% of Nigeria’s merchandise exports, with export earnings amounting to around $ 55 billion in 2019 and around 65% of tax revenue.

“Nigeria’s governance of its critical oil and gas sector is of concern, with cases of corruption, fiscal mismanagement and environmental degradation in the Niger Delta, all reported in the six decades since the start of the crisis. production.

The institute noted that even before the coronavirus pandemic and the 2020 oil price shock, the industry was stuck in a cycle of high uncertainty, rising and falling spending, and diminishing returns.

He said production had mostly stagnated, foreign direct investment had declined and oil revenues were below what had been budgeted.

NRGI said: “Nigeria’s oil and gas sector scored 53 points in RGI 2021, up 11 points from RGI 2017. The sector has largely stagnated, with little tangible improvement seen in most dimensions. governance.

“While improvements have been recorded in the governance of the NNPC, which has started to disclose more detailed information on commodity sales, licensing governance remains ‘weak’ and the lack of disclosures related to social impacts and environment is typical of the lack of transparency in the petroleum sector. .

“Nigeria’s enabling environment remains ‘poor’, with subcomponents assessing perceptions of political stability, corruption and government effectiveness receiving ‘fail’ ratings.

The institute said the country’s ability to leverage its oil and gas sector remained weak, with the licensing sub-component scoring a “fail” of 25 points, with a general lack of transparency in this part of the sector.

He said: “There is currently no publicly accessible cadastre or license registry, nor any disclosure regarding the location and ownership of the various oil and gas licenses. Major governance challenges were identified in the licensing process itself.

“Regarding the pre-licensing process, the 1969 Petroleum Act does not require the Minister or any other actor to establish criteria by which companies become qualified to participate in licensing,” and there is no obligation to disclose any tender conditions or rules governing the process in that process. Act.”

According to the report, the Petroleum Resources Department typically issues guidelines for formal tenders, but not for one-off awards outside of a formal process.

He said: “The law does not require the licensing authority to disclose the list of companies that have submitted bids for a license. Researchers have found no rule requiring the government to disclose contracts signed with extractive companies, and the Nigerian government has not made these contracts public.

“Contract transparency is crucial to enable citizens, parliamentarians and other oversight actors to analyze whether the country is getting a good deal for its resources, and the Nigerian government should disclose contracts in a timely manner. ”

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