The new
administration of Nigeria’s president elect Muhammadu Buhari will first
sack and replace the top management of the Nigeria National Petroleum
Commission, NNPC, before restructuring the oil company. Then it will
investigate its accounts to restore credibility, APC sources say
.
.
A bill will
be drafted to break the NNPC into four entities, as already prescribed
in the latest PIB draft. But it will also, crucially, remove the oil
minister from the NNPC’s board of directors to curb political
interference.
One APC source also told Reuters that more generally, the petroleum minister’s current powers would be heavily trimmed.
Oil and gas
will have separate companies for upstream, with a third covering
pipelines and refining, and a fourth will be an inspectorate. It could
be submitted to the National Assemblyy in the first quarter of next
year, one NASS APC source said.
The
immediate implication of all these is that foreign oil firms keen to
know how Nigeria’s president elect plans to tax them could be waiting a
long time as he makes ending corruption and reforming the opaque
national oil company his most urgent sector priorities.
The World Bank has already thrown its weight behind Buhari’s promise to probe NNPC over allegations of missing funds.
Four party
sources from Buhari’s All Progressives Congress (APC) told Reuters the
issue of fiscal terms, seen as crucial by the industry, will have to
wait on current thinking about oil and gas policies for Africa’s leading
producer.
Crude output has stagnated close to 2 million barrels per day over the past few years, owing partly to underinvestment.
“We need to
address the structural issues and leave the fiscal for now,” Senator
Bukola Saraki, whose APC party controls both houses of parliament after a
landslide win, told Reuters.
“A more transparent NNPC (Nigeria National Petroleum Corporation) is needed with reasonable accounting,” he said.
Buhari owes
his March 28 victory against incumbent Goodluck Jonathan partly to a
perception that Jonathan allowed corruption to get out of control —
especially in the oil sector.
A string of multibillion dollar oil corruption scandals tainted the NNPC and other bodies that handle energy.
By contrast,
Buhari was seen as one of the few Nigerian leaders to have cracked down
on corruption during his military rule in 1983-1985. Many Nigerians
hope he will again.
“The worry
is that there’s going to be a lot of time wasted in witch-hunting…That
could take a year in which nothing else will happen,” said a Nigerian
investment banker focused on upstream oil and gas projects, who declined
to be named.
APC leader
Bola Tinubu, whose support was instrumental in Buhari’s victory and
wields huge influence, told Reuters a transitional committee would be
set up.
“No way will we discuss that now,” he said.
Jonathan’s administration re-drafted a Petroleum Industry Bill (PIB) in 2012 that had been in the works for a decade.
The PIB was
meant to change everything from fiscal terms to overhauling the NNPC,
environmental rules and revenue sharing, but its comprehensive nature
caused disputes between lawmakers.
Yet the main
thing the oil companies were worried about was tax. The bill proposes
20 percent tax on offshore projects and 50 percent for onshore. Shell,
Exxon and other majors had all complained publicly that the terms are
unfair, given the risk associated with operating in Nigeria.
Uncertainty
over the fiscal terms of the bill have been holding back billions of
dollars of investment, especially into capital-intensive deepwater
offshore, leading some to propose the bill be broken up into several
pieces debated separately.
“It doesn’t need to be an omnibus, you can take things piecemeal,” one APC source said.
Hopes that
doing so would resolve the fiscal issue quicker look slim, since the
voting public are much more concerned about cleaning up graft than
making oil majors happy.
The average
Nigerian benefits little from the country’s huge energy resources while
politicians wear gold watches and build monster homes in the capital
Abuja.
Also, says
Control Risks’ Thomas Hansen, “The cabinet needs to strategise first and
fiscal terms are likely to take longer and require discussions with the
(international oil companies).”
The World Bank reportedly supports Mr Mohammadu Buhari to probe the Nigerian National Petroleum Corporation.
Speaking
during a video conferencing from Washington to journalists from across
Africa on the release of the bank’s analysis of issues shaping Africa
titled ‘Africa’s Pulse’, top officials of the bank said looking into
financial record of the country, especially into allegation of
corruption at the NNPC, would check impunity and build public
institutions in the future.
Answering
questions from journalists, World Bank’s Chief Economist for Africa, Mr.
Francisco Ferreira said, “One norm that has to change is the norm of
impunity. I am from Brazil myself. So, I am also used to a country where
people could be corrupt and escape justice. That keeps the people to
keep doing it.
“So the current stand of the government-elect to look into what happened in the past hopefully will have consequences for the future. And those consequences will be that institutions will be stronger; norms will be cleaner and people will not have to steal millions of dollars from Nigerian National Petroleum Corporation.
“People have
alleged in the past that there had been major corruption scandals
there. If that stops, then that will have very high returns in terms of
the money staying around to be spent on education, health, roads and
power that the poor people in Nigeria across the country need.
SOurce: Abusidiqu
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