*Nigeria ranks 55th among 89
*11th in terms of revenue sharing
*Excess Crude Account ranks 33rd out of 34 countries reviewed
07 July 2017, Sweetcrude, Lagos — Nigeria has ranked 55th among 89 countries presently struggling with the governance of its oil and gas resources, according to data obtained by Sweetcrude Reports from Nigerian Resource Governance Institute, (NRGI).
In terms of Value Realisation, the Institute scored Nigeria 50 out of 100 points, in Revenue Realisation, it ranked in 44 out of 100 marks, and in the area of Enabling Environment, 31 out of 100 marks.
The total brings the country to an average of 42 points out of 100, ranking 55th position among 89 countries with governance challenges.
The country has the largest oil and gas reserves in sub-Saharan Africa with an estimated 37 billion barrels of oil and 188 trillion cubic feet of gas.
Nigeria is one of the most resource-dependent countries- oil and gas contributed the majority of government revenues and constituted 90 percent of Nigeria’s exports in 2015.
According to NRGI, the country which also has the largest population in Africa has governance challenges throughout the extractive value chain.
“Value is lost particularly in licensing and in the Nigerian National Petroleum Corporation’s (NNPC) sales of government oil, as well as when revenues from oil and gas are shared and saved,” it said.
Furthermore, a history of scandals involving top officials and the NNPC has plagued the sector and drawn public attention to corruption and asset recovery, it said.
NRGI said despite some progress in the transparency of revenue collection over the past five years, tracking payments from oil and gas companies remains challenging.
According to Extractive Industries Transparency Initiative, EITI data, just over half of public revenues from oil and gas were distributed to the federal government. The rest was shared between the states and local governments.
In terms of revenue sharing, Nigeria ranks 11th, alongside the United States (Gulf of Mexico) and Ecuador.
NRGI then pointed out that the public “lacks access to audited information on revenue flows to lower levels of government, and this contributes to the gap between the quality of the legal framework and actual implementation”.
“NNPC, the largest SOE on the continent, achieves a poor governance score of 44 of 100. The Corporation mainly scores well on indicators that measure elements of transparency required by EITI reporting, such as transfers to government and production volume disclosure. NNPC has recently strengthened some of its reporting practices, particularly for high-level financial data. However, the company does not disclose detailed annual reports on its finances, despite top officials have made a commitment to do so. Little information is publicly available, particularly concerning some of NNPC’s least efficient and most questionable activities, notable earnings by its subsidiaries, the costs of its operations and its significant spending on non-commercial activities,” it said.
It also said that government agencies and external auditors have disputed NNPC’s interpretations of rules set in the constitution and the NNPC Act governing monetary transfer between NNPC and the government. Officials exercise significant discretion around how NNPC sells the government’s share of oil production, citing cases of when selecting buyers, pricing exports or transferring sales proceeds to the government.
The Nigerian National Petroleum Corporation, NNPC, which is a 100 percent owned company and earned $6,992 million as at 2014, was scored 44 out of 100 marks, ranked 42nd out of 174 state-owned enterprises, and 33rd out of 52 oil and gas state-owned enterprises.
NRGI said Nigeria’s Excess Crude Account, (ECA), is the most poorly governed sovereign wealth fund assessed, ranking last alongside the Qatari Investment Authority.
“The government discloses almost none of the rules or practices governing deposits, withdrawals or investments of ECA, Nigeria also has other natural resources funds, some of which are more transparent that the ECA. As the largest fund by asset balance, the ECA constitutes a vast governance concern at the end of the oil sector value chain”, it said.
Therefore, Nigeria’s Excess Crude Account with $2,400 million in 2017, scored four out of 100 marks, ranking 33rd out of 34 countries reviewed.