Nigeria’s Oil Sector Records Poor Performance On Local Impacts Extraction, Management
By Simon Ugwu
Over the years, the Benchmarking Exercise Report (BER) has recorded Nigeria’s continuous poor performance against precept five and six on local impacts of extraction and the management of Nigeria’s petroleum sector respectively.
Tengi George-Ikoli, program Coordinator, Nigeria Natural Resource Charter (NNRC), made this known at the launch of the 2019 NNRC’s BER with the theme: Evaluating Petroleum Resource management in Nigeria held last week in Lagos.
“Over the years, the BER have recorded Nigeria’s continuous poor performance against precepts five and six on local impacts of extraction and management of Nigeria’s petroleum sector respectively. Nigeria’s performance against the precepts in general has only recorded marginal changes. The basic tenet precept one underperformed, while there were marginal improvements against four, six, eight, 11nad 12”, she said.
“Precept six remained at the red but has an arrow up indicating some improvement owing t changes to NNPC’s funding arrangements having improved its ability to meet its Joint Venture Capital obligation. It should be noted here that the Nigeria’s performance against precept one, three, four, five and six would have improved, if the Petroleum Industry Bill had been passed and implemented”, she added.
This according to her would mean that the benchmarks against each of those precept would have been achieved and Nigeria would at least be close to extracting the optimal benefits from its petroleum resource for public good.
Speaking further, she said, “to turn the tide to support Nigeria’s performance and benefits secured for its citizens, Nigeria must ask herself the most basic tenet for effective resource management as encapsulated in the NNRC’s precept one”.
“The NNRC is a policy institute that implements the Natural Resource Charter and remains committed to advocating for the use of natural resources for the benefit of Nigerians. The Charter provides a basis for determining whether or not resources are used for the benefit of resource rich citizens. It is comprised of 12 precepts/preconditions for global best practices. The NNRC evaluates Nigeria’s management of her petroleum resources against those precepts using a ‘Traffic light system’ stressed the program Coordinator.
“People often ask why of all natural resources, NNRC focuses on the petroleum resources because the petroleum sector is the mainstay of Nigeria’s economy. It is a sector that contributes 90 percent of Nigeria’s foreign exchange earnings and 70 per cent of government revenue, without which it would be difficult to service Nigeria’s debt or run the government. Nigeria’s growth is directly affected by changes in the price of crude; I avert your minds to the last economic recession in 2016-2017. Without proper management of Nigeria’s petroleum resources, Nigeria could fall into another recession if prices depreciate further and our output reduce”, she warned.
The 2019 BER covers the findings of our evaluation of Nigeria’s petroleum resource management from the beginning of 2018 to the end of 2019. It is a policy document which can be used to guide the Nigerian government and interested stakeholders on how to improve the sector.