Transparency and accountability is critical in the extractives industry, which is the lifeblood the Nigerian economy. This is important to ensure the management of the revenue for development. While these issues are important, it is also the bane of the industry. There have been some attempts to address this by government but there are still major gaps to be addressed. Two reports released in 2014, the African Development Bank African Economic Outlook and the Nigerian Natural Resource Charter Benchmarking Report showed that the Nigerian extractive industry still has some lapses, which need to be addressed to achieve ultimate transparency and accountability in the sector.

A telling incident that corroborates this reports in the sector occurred in 2014. A report by the former governor of the Central Bank of Nigeria, Sanusi Lamido, revealed the lack of accountability and organizational disclosure in the Nigerian National Petroleum Corporation (NNPC), as a result of inadequate audits or poor financial reporting of the corporation when he alleged that NNPC failed to remit about $20 billion in oil proceeds to the federation account over a period of time.

As the benchmarking report succinctly put it “…scarce or inadequate information, insufficient audits, and poor financial reporting standards for public entities like the NNPC continue to undermine industry processes.” The issues identified in theBenchmarking Report that need to be addressed in the sector to improve level of transparency in the industry, are as follows:

  • The government needs to publish a detailed and up-to-date legislation governing the resource sector. The Nigerian government has made an attempt to produce a comprehensive document, the Petroleum Industry Bill (PIB), with the aim of providing a legal framework for restructuring the industry to achieve sustainable development in the country. This is the product of the Nigeria Oil and Gas Sector Reform Implementation Committee (OGIC) which was inaugurated in year 2000 through the National Council on Privatisation (NCP). Unfortunately, the Bill, which is now in its ninth year post-first draft, is still under legislative review, and is yet to be passed. Also, while Passage of the proposed Petroleum Industry Bill is expected to help promote transparency and openness in the administration of petroleum resources, the draft Bill contains provisions that undermine transparency by conferring discretionary powers to the government to grant licences and leases. This needs to be addressed.
  • The government needs to make a regulatory provision for the public disclosure of any financial interests in any extractive activity by public officials. This provision is missing in the Petroleum Industry Bill, which is supposed to be a comprehensive legislation encouraging transparency in the industry. The murky Malabu case, involving a former minister of petroleum who assigned a lucrative oil block to his company demonstrates the importance of this provision for transparency in the sector.
  • The government should publish information on disaggregated revenue streams and quasi-fiscal activities such as monies spent on subsidy, local content development and charity donations. These information, especially regarding subsidies, are not publicly available and contributes to the lack of a coherent debate on the removal or otherwise of this measure. There have also been recommendations by stakeholders for government to enhance accountability in oil revenues by putting in place a verifiable measurement mechanism at the export terminal for oil resources in Nigeria This is currently not in place and losses in revenue can be traced to this.