Why transparency, accountability in oil/gas sector should be focus for 2019 election
Natural resources can be a blessing or a curse for resource rich countries depending on how they are managed. It presents a unique opportunity for the government to use the revenues to transform their economies and improve the lives of their citizens. But in many countries, failure to adequately manage revenues accrued from natural resource wealth has led to the ‘resource curse’, which could and has led to depreciated standards of living. Nigeria is a typical example of a country that is suffering from this problem.
One major challenge presented by petroleum wealth has been managing the expectations of citizens. Stakeholders’ perceptions of what the benefits are or ought to be may be at variance with the actual realities. Failure to adequately manage the divergence in expectations can lead to conflict and tension between stakeholders. Transparency, in terms of provision of adequate information to the public, enables the government to be held accountable for its stewardship of oil and gas resources.
It is in an effort to overcome these challenges that the Nigeria Natural Resource Charter(NNRC) in its 2017 Benchmarking Exercise Report proposed options to help the government chart the right course in positively exploiting Nigeria’s resource wealth for the overall benefit of the people.
According to the organisation there is no better way to achieve this than making ‘transparency’ and ‘accountability’ watchwords in official policy formulation.
It therefore urged the Federal Government to work harder to engender greater transparency in the Oil and Gas sector. “If the ongoing plans to bring the sector at par with developed countries of the world, to attract the right level of investment and growth for the economy, transparency has to be at the forefront of the government’s agenda. This should be the focus of any government vying for elections in 2019”
Transparency and Accountability issues were considered at all chapters of the 2017 Benchmarking Exercise Report (BER) released by Nigeria Natural Resource Charter (NNRC) organization, which is a non-governmental organization that promotes policy reforms in the extractive sector. However, the BER’s are solely focused on assessing the petroleum sector
The report catalogued developments within the Oil and Gas sector in the last three years using the 12 ‘economic principles’ or as we refer to them ‘precepts’, as a tool to assess governance in the sector. The precepts consider the decision making process required to achieve effective resource management from the foundations of resource governance to effectively administering the revenues accrued for sustainable development.
Precept 2 of the Natural Resource Charter framework specifically addresses resource governance as it pertains to transparency and accountability. It assesses the extent to which a government is held accountable to an informed public in its management of the nation’s natural resources. It states that a nation, in which the quality of public information about natural resources is low and its timeliness poor, increases the difficultly in holding the government and companies to account. Also, it posits that in a nation where transparency is lacking and accountability weak, it is very hard to achieve sustainable development.
Transparency has many dimensions and can be best described as involving ready access to reliable, comprehensive, timely, understandable, and internationally comparable information. It involves disclosing and publishing information in a robust manner and encompasses engagement from multiple stakeholders. In addition to fighting corruption, which is epidemic in the oil and gas sector, transparency supports accountability and reduces inefficiencies. It also enhances relations between stakeholders as it boosts trust between society, government, and companies, helping to avoid misperceptions and reducing local tensions.
From an investor’s perspective, it also improves the business climate. As Lord Brown, the former CEO of BP, argues, “it is rare for a company to lose business by being too transparent. In fact, opacity can create political risk by allowing rumor to predominate over facts and by allowing contracts to become entangled with the personal interests of officials.”
The just released Benchmarking Exercise Report (BER) shows that the government has taken steps to improve transparency and accountability of public institutions, a development which stakeholders in the industry laud as commendable. The Report equally notes that equally put in place are instruments to track public spending while information management systems have been deployed in government agencies with some recording significance improvements in service delivery.
Equally notable from the Report are efforts by the government to implement the principles of the open government partnership by launching the Nigeria open contracting portal. The Report however, highlighted that public institutions in the oil and gas sector are yet to prioritize proactive disclosure of information and in places where this is available, it is quite limited, outdated and yet to meet internationally accepted standards. It further stated that oversight functions by requisite institutions are still ineffective yielding sub-optimal outcomes while accountability mechanisms expected to serve as a deterrent against fraud are not strictly enforced.
The BER also notes that on issues of licensing, exploration and monitoring, that there has not been significant change since 2014. Nigeria, the BER notes, still does not meet the natural resource charter benchmark. Laws, policies and practices reveal absence of strategic impact assessment and poor disclosure of exploration and licensing information.
Monitoring of operations across every stage of projects is ineffective as the government agencies responsible lack some technical capacity and are not always sufficiently resourced. Oversight institutions are weak, inefficient and in some cases, compromised. It is however expected that the component parts of the Petroleum Industry Bill will adequately address this when finally passed into law. But for the time being, not much has been achieved.
In spite of the relative achievements and other efforts of the government to improve on transparency, so much is still left to be done. The need for greater transparency in Nigeria’s oil and gas sector cannot be overemphasized if government’s efforts at growing the sector and effectively competing are to be achieved.
The government must in the coming months prove to Nigerians that they have a plan to address this in the manifestos which we expect will be rolling out in quick succession shortly. We all have a role to play in ensuring this and we hope that these deliberations will result in a plan to collectively hold the government accountable to improving petroleum resource management.
Olusola Bello