An oily affair

Guardian

2 March 2011

An oily affair

A new audit report on the oil and gas industry exposes how Nigeria is fleeced by companies and regulators. Stakeholders call for full scale investigations of the deals.

FAR from the Wikileaks report that indicted Shell and some government agencies involvement in shady deals, a new report claims high level of corruption and manipulation of financial transactions by many oil and gas companies operating in the country, including the lapses of the industry regulators and financial institutions. The oil and gas industry is the mainstay of the economy.

But due to the fact that the industry spins millions of dollars daily, every organ acts as if the money would never run out as such, little care is taken to account for earnings.

There are widespread beliefs that some private operators and individuals routinely manipulate the system to line their pockets. These have again been brought to the open by a newly released audit report that revealed dirty dealings in the sector.  

Championed by the Nigeria Extractive Industries Transparency Initiative (NEITI), the report, which covers the period 2006 to 2008, uncovered lots of shady deals by some of the so called “respected” companies in the industry.

Besides, it reveals the pitiable state of some of the government parastatals that are expected to monitor the events and account for national royalties, taxes and other oil proceeds, as they give room for un-reconciled huge differences.

The audit report stated: “The un-reconciled difference at the date of this report is 3.1 million barrels over the three-year period, as set out in section five of this report. This represents 0.25 per cent of government lifting in the period. The amount cannot be valued as the dates of the component lifting have not been identified; based on a simple average. However, the value could be in the region of $240 million.” 

NEITI however assured that it would continue to work on the items with a view to fully explaining the differences in the supplementary report, planned for March 31, 2011. 

Many of the companies were also captured in the mess, with some withholding some amount of money due to government in terms of tax or royalty, while others either wrongly accounted for payments or intentionally desists from paying due to some controversial issues that are yet to be investigated till today.