Nigeria's Oil Corruption

Recently Nigeria announced that their oil production had reached a record 2.7 million barrels a day, but some experts challenge to believe it. It was said that oil was being stolen at a record rate, and traders’ figures show that output is well below the government’s statistics. Former senior World Banker, Oby Ezekwesili, claims that $400 billion of Nigeria’s oil revenue has been stolen or misspent since the country’s initial independence in 1960. Nigeria is Africa’s biggest oil producer and according to BP it has the world’s ninth largest gas reserves. A report last May reported a fraud amounting of $6.8 billion over a subsidy for petrol imports. Worst of all the oil wealth that should have benefited the people seems to be dispersing into other areas. I chose this article because it has a lot to do with the resource curse and rentier state theory that we have been discussing in class. Nigeria suffers from the resource curse because it is a poor state that has high amounts of natural resources. Since large portions of revenue comes from an external source, like oil in Nigeria there is a rentier effect. Since most the wealth from the natural resource is not being spread down towards the people it makes the state less democratic.

We should care about his issue because other than it taking away a lot of democracy and benefits to the people and state, it has many long term environmental effects. Pipeline sabotage now accounts for more than half the spills in the region. A UN report last year claims that Royal Dutch Shell and the state oil firm (NNPC) have over polluted Ogoniland. Weak regulations have lead to many spills by corporations like Shell and Chevron, since the environmental devastation from the oil-producing delta continues to go unchecked. I believe to help fix the problem the Petroleum industry Bill that has been in the works for over 15 years should finally be passed. It intends to overhaul the industry, make it more transparent, and improve regulatory institutions and fiscal policies while bringing everything up to global standards. Even with the reform the state-run oil monopoly called the Nigerian National Petroleum Corporation (NNPC), will still control the majority of the industry from exploration and production to refining; along with pipelines and petrochemicals. It is considered a “slush fund to the government” and is accountable to no one. To help fix this issue the corporation should be sold and turned into an independent, profitable company that is along the lines of Brazil’s Petrobras. With these actions it could help the country turn itself around instead of shooting itself in the foot over and over again.

Sources:

http://www.economist.com/news/middle-east-and-africa/21564906-goodluck-jonathan-says-he-wants-reform-oil-industry-really