A Review of the Nigerian Energy Industry

FT urges audit to resolve missing oil fund

Diezani Alison Madueke25December 2013, Lagos – The Financial Times (FT) of London has asked President Goodluck Jonathan to order a forensic external audit of the oil accounts to clear up the confusion over missing oil funds.

The global media firm said more than a generation technocrats, politicians and oil men have wrestled over whether and how to go about strengthening oversight of Nigeria’s opaque oil industry.

“One conclusion that can be drawn from the official confusion this month over the proportion of oil revenues going missing is that little progress has been made in bringing greater transparency to the sector. Africa’s leading oil producer still hosts an industry subject to billions of dollars in abuse, in obvious need of more stringent monitoring.

“The latest debate around the issue was sparked by a leaked letter to Goodluck Jonathan, the president. In it the central bank governor warned that the state oil company had failed between January 2012 and July 2013 to account for nearly $50bn in revenues from oil sales. “Somewhat inured though many Nigerians are to big-ticket scandals, the scale of this revelation elicited a sharp national intake of breath,” it said.

The FT said such audit could go two ways. “It could expose the real extent of losses owing to gross mismanagement and knock a further dent in public confidence. However, it could also show that government is serious about plugging the holes, while adding urgency to the passage of legislation meant to restore the industry back to health,” it said.

It said the central bank’s calculations contained big omissions and that after poring over the data, officials have whittled the figure for related shortfalls down to more like $11 billion. “There are big questions still left to answer, however. The first is how the state oil company justifies withholding the $11 billion identified. This in turn is part of a bigger puzzle over falling oil revenues that drove the central bank governor to raise the alarm in the first place.

“It could expose the real extent of losses owing to gross mismanagement and knock a further dent in public confidence. However, it could also show that government is serious about plugging the holes, while adding urgency to the passage of legislation meant to restore the industry back to health,” it said.

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