Latest update November 30th, 2024 12:15 AM
Nigeria loses billions in profits to well-connected middlemen in oil sales
Oil is arguably Nigeria’s biggest revenue earner. Its federal government regulates the sale of the crude, selling roughly one million barrels per day via the Nigerian National Petroleum Corporation (NNPC). Yet, each year, billions of dollars from these transactions never reach the country’s treasury says the Natural Resource Governance Institute (NRGI).
According to the body, which has been working with the Nigerian government to address this state of affairs, the billions in losses were due to suboptimal sales contracts. The Institute also noted that billions in profits were lost to well-connected middlemen.
With its investigative reports on the opaque deals that were being cut and the significant revenue that was flowing into the pockets of the middlemen instead of the treasury, NRGI was able to stir the Nigerian Parliament and other civil society actors into action.
NNPC subsequently canceled all of the costliest oil sales contracts that NRGI criticised, while acknowledging that the contracts were skewed in favour of the companies that held them. NNPC also went on to slash the number of middlemen companies with which it dealt; cut scandal-prone bilateral sales to smaller African countries; sign more sales contracts with refiners; and boost the transparency of the contracting process.
It even released its first financial reporting data for oil sales in a decade. In the wake of these reforms, NRGI noted that multiple jurisdictions began investigating their officials and companies involved in past deals for any sign of corruption. Interestingly, several were hauled before the court and read a number of charges.
By highlighting the mistakes Nigeria made, NRGI said that it is hoped that other governments of oil producing nations would cede to ensuring every effort is made to provide greater reporting on the sale of crude. It stressed that transparency is key for every step of the decision-making process.
Late last month, the Energy Department had announced that it will be taking steps to ensure citizens are able to access records on the sale of the nation’s oil.
According to the department, the records will explain how, when, and for how much the country’s crude oil is being sold. It had also stated that it will be collaborating with the Guyana Extractive Industries Transparency Initiative Secretariat regarding the mechanisms to allow public access to this information.
The department had also informed the nation that the first three lifts of Guyana’s oil from the Stabroek Block will be sold to Shell Western Supply and Trading Limited. This subsidiary of Shell, the third largest oil company in the world, is based in Barbados. The three lifts which are due in February 2020, will amount to three million barrels of Liza Crude.
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