The allegation that the Nigerian National Petroleum Corporation (NNPC) has not been transparent in accounting for oil sales proceeds makes the systemic reform of the oil sector and the urgent passage of the Petroleum Industry Bill (PIB) imperative, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, has said.
The minister made the call in an opinion article published in the Financial Times on Wednesday.
Okonjo-Iweala who lamented the delay in the passage of the PIB, said the draft law contained provisions to transform the oil and gas sector, including turning the NNPC into a commercial enterprise, which would open up the corporation and the oil industry to be more transparent and accountable to Nigerians.
“Yet the passage of the bill has been delayed in the National Assembly as a result of intensive lobbying by interest groups â€“ some Nigerian, some foreign â€“ who benefit from the status quo either through favourable oil deals or favourable treatment by the Nigerian tax system. “We call on these groups to allow the billâ€™s passage. And we urge our National Assembly to have the courage to pass this long overdue bill now,” she said.
On the allegation by suspended Central Bank of Nigeria (CBN) Governor, Mallam Sanusi Lamido Sanusi, that NNPC had failed to remit $20 billion to the Federation Account, she explained that an inquiry into the issue should take a forensic approach to critically examine the corporation’s accounts and those of its subsidiaries.
Sanusi had initially put the unremitted oil revenue at $49.8 billion but he later accepted, after an assessment of the finance ministry and other agencies, that the unaccounted figure was $10.8 billion. Later, he gave a new figure of $20 billion as the unremitted funds.
Okonjo-Iweala also reassured Nigerians that the recent setbacks, which have reinforced Nigeriansâ€™ decade-long mistrust of government-owned oil agencies, will not undo the nation’s progress, adding that the countryâ€™s future lies not only in oil and gas but in other sectors such as agriculture, housing, creative arts and services, which account for more than 80 per cent of Gross Domestic Product (GDP).
She said though the allegations of the unremitted oil funds and leadership changes at the central bank had attracted the wrong attention to Nigeria and unsettled the market albeit temporarily, the nation’s economic fundamentals remained strong.
She added: “The fundamentals remain strong. Inflation is at 8 per cent, down from 12 per cent at the start of 2012. The fiscal deficit is 1.9 per cent of gross domestic product and government debt is under control at 21 per cent of GDP. The IMF expects the economy to grow by 7.3 per cent in 2014, up from 6.2 per cent a year earlier.
“At the Nigerian Stock Exchange, the All Share Index dropped by about 3 per cent in the days following Sanusiâ€™s suspension but has since recovered. The exchange rate is stabilising. Although foreign exchange reserves have dropped slightly to $39 billion, this still provides a healthy level of import cover by the International Monetary Fund measures.”
According to her, the federal government has pledged to put aside a portion of oil revenue to help insulate the economy from external shocks and the economic team of the government is vigilant against the risk of the economy overheating.
“I will ensure that fiscal policy remains tight, and that the acting central bank governor is committed to tight monetary policies,” she said, adding that maintaining economic stability is the governmentâ€™s most important aim, although a difficult task in an election year.
“We are, however, determined to keep the economy on the right path,” she assured Nigerians.
On corruption, she argued that while government must pursue and punish those engaged in corrupt acts, building strong institutions is the most enduring way to tackle corruption in a systemic way.
“This is unglamorous work requiring patient effort over many years. Yet this is precisely what is needed to move development forward,” she added.
She also said government was committed to pursuing economic reforms that would speed up the nation’s development, stressing that the transformation of the power sector is based on this premise.
“We privatised our power generation and distribution assets and liberalised the sector to allow private investors to play a role in building new infrastructure. We are also creating a strong electricity regulatory authority. This is one of the worldâ€™s most comprehensive and transparent privatisation exercises, and has attracted international investors such as General Electric, Siemens and AES,” she said.
For sustainable growth and development, she said Nigeria must build enduring institutions in all sectors.
“We must fight corruption: and we must ensure that as our country develops, it also becomes more transparent,” she said.