Hello 

Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.


Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.

 

Oil industry probed

25 November 2012, 14:23

Lagos - A probe alleging Nigeria has lost out on tens of billions of dollars in recent years through questionable practices in Africa's biggest oil-and-gas industry has stirred controversy and calls for action.

The report from a government-appointed task force has not been officially made public, but leaked copies have generated strong responses from officials, the state oil firm and private companies, which dispute many of its findings.

Anti-corruption activists seeking changes to an industry that operates with little transparency and which has long been seen as awash with graft have however sought to pressure the government into addressing the problems alleged.

The 139-page report, a copy of which has been obtained by AFP, is a rare look at the inner-workings of an industry that provides Nigeria with more than two-thirds of government revenue and nearly all of its export earnings.

It alleges that Nigeria's government has been shortchanged billions of dollars due to issues including unpaid royalties, exchange rate disparities, theft and pricing discrepancies.

Bidding process

It questions Nigeria's bidding process that grants licences to oil producers as well as the practice of using private traders to act as middlemen in certain aspects of the industry, which it says creates obvious avenues for graft.

Some examples of the amounts the report says Nigeria may have lost or is owed include:

-$29 billion due to what appeared to be lower-than-usual prices for gas sales to NLNG, whose shareholders include Shell, Total, ENI and state oil firm NNPC

-More than $6 billion per year due to crude theft. It says there is evidence members of the security forces profit from it.

Unpaid royalties

-$4.6 billion due to price discrepancies in domestic crude sales

-$3.03 billion in unpaid royalties

-$947 million from gas produced from a Shell offshore field

-$560 million in unpaid signature bonuses

Most of the findings were based on a review of the industry between 2005 through 2011, though some data goes back to 2002.

NNPC disputes much of the report, saying there were major flaws in calculations alleging price discrepancies, exchange rate disparities and apparent losses linked to gas.

Objections

The state firm argued in a statement which detailed its objections that it had presented its analysis to the task force.

"We therefore question the basis of the decision of the task force to ignore this information and data which would have ably assisted it in arriving at verifiable conclusions and recommendations without misleading the public as the report clearly did," it said.

Shell also refuted findings that it owed Nigeria for gas produced at its offshore Bonga field.

"That allegation is incorrect but we cannot comment further as we do not know the basis of the calculations that yielded the $947 million number," it said in a statement in response to questions from AFP.

Concerning sales to liquefied natural gas firm NLNG, Shell said an analysis based only on end-user prices would be wrong since it did not consider costs related to transport and processing, among others issues.

Among the other shareholders in NLNG, France-based Total declined to comment on the report, saying that it "to the best of our knowledge has not been adopted by the federal government of Nigeria."

Italy's ENI referred questions on that specific matter to NLNG, which issued a statement disputing the findings in line with Shell's.

Calls for action

The report has been presented to President Goodluck Jonathan, who has appointed a committee to study it. Such reports are often quickly forgotten in Nigeria, though anti-graft groups have pressed for action.

Instead of using the findings "to combat impunity for corruption in the oil sector, the government has embarked on a widespread public campaign to rubbish the report of a task force that it voluntarily commissioned," prominent anti-graft organisation SERAP said in a statement.

The task force was appointed in February after a nationwide strike and protests brought tens of thousands of people into the streets. It was led by Nuhu Ribadu, a former head of Nigeria's anti-graft agency.

The protests were sparked by an attempt to remove fuel subsidies, which Nigerians view as their only benefit from the oil industry because they keep petrol prices low.

However, the demonstrations grew to embrace a range of issues, particularly corruption in a country viewed as one of the world's most graft-ridden.

Presidential address

The government was forced to take action, partially reneging on fuel subsidies and appointing the task force.

President Jonathan, speaking during a recent televised question-and-answer session, sought to assure a sceptical nation that corruption in the oil industry was being addressed.

"There was never a time that the oil industry has been so attacked from all angles, because a number of Nigerians feel that a lot of wrong things are being done," he said.

- AFP

NEXT ON NEWS24 NIGERIAX

Read News24’s Comments Policy

Comment on this story
0 comments
Add your comment
Comment 0 characters remaining

Read more from our Users

Submitted by
Jibunor George Chuks
Senate house are for the failures

Its the duties of the failed governors and of those who have deteriorated their states and have embezzled the funds of the states to run to the senate. Read more...

Submitted by
Peregrino Brimah
Does Oil And Boko Haram Mix?

A new Boko Haram II terror group reappeared in Borno and was powerfully sponsored to take over from where the defunct Yusufiyyah initial Boko Haram I group that was destroyed by late Umaru Yar’Adua. Read more...

Submitted by
Peregrino Brimah
Jonathan please repossess the mil...

Nigerian will like to know why Federal land needed for the development of the Nigerian army was divided among these beneficiaries. Read more...

The Igbo naked dance for Jonathan

It really boggles one’s mind the degree to which Ndigbo appear to be excessively reveling in complacency over President Goodluck Jonathan’s disposition to Igbo interest.  Read more...

Submitted by
Peregrino Brimah
Boko Haram sponsors: Terror has n...

People try to associate terror with religion. There is a desire to affiliate terror with religion. We feel comfortable designating terrorists within religious or tribal clusters.  Read more...

Submitted by
Peregrino Brimah
Global Fundraiser as civilians ta...

We are calling on all good citizens across the world to support the mission if Nigerian civilian patriots against Boko Haram terrorists. Read more...