Oil Price Crash: Mismanagement, Corruption Backlash Hunt Economy
Last year, (NEITI) declared that about $25.3 billion of the nation's oil revenues missing. NEITI's former Executive Secretary, Hajiya Zainab Ahmed, while briefing Kaduna State Governor, Mallam Nasir El-Rufai, said funds from crude product swap amounting to $866 million was lost from 2009 – 2011 and $8, 243 million in 2012.
She said the $25.3 billion was stolen within eight years. Hajiya Ahmed handed over a dossier of alleged corrupt practices by the NNPC to El-Rufai, who is one of the four governors appointed to scrutinise the accounts of the NNPC and the Excess Crude Account (ECA) managed by the last administration to unravel N3.8 trillion not remitted to the Federation Account by the NNPC between 2012 and May 2015 as well as $2.1 billion, said to have been deducted from the Excess Crude Account (ECA.)
The former NEITI boss, who gave the breakdown of how the funds were stolen said that between 2009 – 2012 alone, about 160 million barrels of oil valued at $13.7 billion was stolen. She also said, while subsidy payment from 2005 – 2012 captured that $11.631 billion had been paid to the NNPC, there was no evidence of the money being remitted to the Federation Account.
Till date, Nigerians are yet to come to terms how more than $12.5 billion oil windfall grew wings. The enormous oil wealth came from the sudden jump in oil prices caused by the First Gulf War in 1990 and 1991. Although, accusing fingers have continued to point at administration of military President Ibrahim Babangida for "mismanaging" the $12.5 billion oil windfall from the Gulf War price jump, nothing has yet come of the investigations launched into the scam.
Few years ago, the former World Bank President, Mr. Paul Wolfowitz, expressed concerns over the endemic looting of the public treasury by successive leaders.
He said over $300 billion oil wealth disappeared from the country in the last 40 years. "Nigeria presents a classical example of how people in a resource rich country could wallow in abject poverty," he said, noting that "about 75 per cent of Nigerians live on less than one dollar per day."
Onuegbu said despite the fact that 75 per cent of Nigerians live below the poverty line, more and more people are being pushed into this bracket with increasing cases of unemployment and rising precarious jobs.
According to him, life and living has increasingly become a grind and deeply frustrating, as all the dimensions of poverty keeps exacerbating daily.
The labour unionist noted the socio-economic problems underscore the fact that government's huge budgetary spending, largely from oil, has not translated to a commensurate impact on the lives of ordinary citizens.
"Since the advent of democracy in 1999, the Federal Government has budgeted and spent over N65t, while state governments and their local government counterparts budgeted around N45 trillion, totaling about N110 trillion. This huge gap between government spending and direct effect on the lives of the citizenry can only be explained by the horrendous systemic corruption that currently holds the nation in its thrall.
He said that about 40 per cent of the budget is frittered away through corruption and inefficiency.
"The continued hemorrhaging of our national resources as a result of blow-outs through corruption has undermined the capacity of governments at all levels to deliver on the various promises of democracy to the citizenry," Onuegbu added.
But, President Buhari has promised that his administration would look inwards, enforce regulations to stop financial leakages and adopt global best practices in generating more revenue to mitigate the effect of dwindling oil prices on the economy.
However, the challenge is how he intends to build the trust of Nigerians, whose experiences under previous administrations have been everything but palatable.
Buhari admitted this much when, apparently reading the minds of Nigerians, he said: "I know many people will say I have heard this before. Indeed, trust in government, due to the abuse and negligence of the past, is at an all-time low." How he restores such trust, observers say, will depend largely on how committed his administration is to the diversification agenda, the fight against corruption and the reform of the oil and gas industry.
Experts say that if the refineries were working and Nigeria self-sufficient, the spill over effects would have trickled down to other sectors. The belief is that if the country had been able to produce and refine more crude for its domestic needs, it would have been in a position to export refined products and create jobs to add value to the growth of the local economy, particularly in this period of continued drop in prices.
A specter hunts the economy – the specter of unbridled corruption. In the oil and gas industry, where over $32 billion (N6.4 trillion at N200/$1) was allegedly lost to massive corruption that characterised oil sales by the Nigerian National Petroleum Corporation (NNPC) under the last administration, according to an independent investigative analysis by the Natural Resource Governance Institute (NRGI).
The report revealed that the over $32 billion oil revenue was lost to NNPC's alleged mismanagement of Domestic Crude Allocation (DCA), opaque revenue retention practices and corruption-ridden oil-for-product swap agreements. The report found that the national oil company's discretionary spending from domestic crude oil sale revenues skyrocketed, exceeding $6 billion a year for the 2011 to 2013 period (i.e. over $18 billion in three years). It also found no evidence that the NNPC forwarded to the treasury any revenues from sales of crude from Okono oilfield with volumes of over 100 million barrels, valued at $12.3 billion between 2004 and 2014.
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