- Title: NIGERIA: Mixed reactions after President orders audit of state energy firm
- Date: 2nd April 2014
- Summary: LAGOS, NIGERIA (FILE) (REUTERS) OVERHEAD VIEW OF LAGOS STREET SCENE
- Embargoed: 17th April 2014 13:00
- Keywords:
- Location: Nigeria
- Country: Nigeria
- Topics: Business,Energy
- Reuters ID: LVA42C7PAVRQKC30T2M2OI63DSAX
- Story Text: Nigeria recently held its annual energy summit which saw country heads of Shell, Chevron, Exxon Mobil, Total and Eni give briefings on the state of Africa's biggest energy industry.
With oil corruption scandals rocking the political scene in recent months and spooking financial markets, officials were keen to reassure hundreds of investors who flew in for the summit.
The president has authorised a forensic audit of the national energy company, Nigeria National Petroleum Corporation (NNPC) after weeks of public uproar over an alleged 20 billion US dollars in missing state revenues.
Ajisa Felekon, a broker who works in the oil inudustry, says the allegations are having a negative impact on business.
"Definitely if the allegations are substantiated then we can say it's gonna have a very very serious adverse effect on the industry and even when it's not substantiated yet it still remains a speculation and we are already feeling the negative impact on the industry," he said.
However, some industry experts believe the oil scandal will not adversely affect the industry and will not discourage investors from coming to the West African country.
"Well, it has nothing to do with investment, true investment really does not look at distractions; it's like an every year thing, it's an annual thing, it comes and goes. Throw allegations today it goes tomorrow and that has nothing to do with investments," said Florida Okunowo, coordinator of the Nigeria Association of Indigenous Petroleum Exploration and Production Companies.
Central Bank Governor Lamido Sanusi wrote a letter last September to President Goodluck Jonathan saying almost 50 billion US dollars in revenues from oil exports from January 2012 to July 2013 had not been remitted to the federation account, in a clear violation of the law.
He lowered the estimate to 20 billion US dollars in testimony to a Senate committee investigating the case last month, days before he was suspended by Jonathan for what the president said was unrelated "financial recklessness" and "gross misconduct" at the central bank.
Government sources and a wide spectrum of the public believe his removal was politically motivated.
The NNPC has repeatedly denied Sanusi's allegations, which they say are unfounded and did not respond until now to calls for an independent audit.
Nigeria's Finance Minister Ngozi Okonjo-Iweala and a Senate committee investigating the graft allegations had also called for a forensic audit of NNPC since Sanusi presented evidence.
Abubakar Bukola Saraki a member of the Senate Committee on Finance welcomed the audit.
"I think first of all it shows that we are a country that is making efforts to ensure that we stamp out corruption, we improve the management of our resources, we make it more accountable, more transparent, we see to where the deficiencies are and where there are leakages, we see how best practices at least we need to explain some of the discrepancies that as regards the 20 billion. How much was revenue how much cannot be accounted for, what should be done about that, what do we do going forward?" he said.
Africa's biggest oil producer and the continent's second-largest economy has a reputation for corruption but the scale of the alleged oil graft is unprecedented and Sanusi is the most high-profile figure to raise issues directly to the president.
Despite the challenges, Nigeria still has enormous potential.
Industry experts believe with a new legal framework and some government reforms Nigeria could double its oil output to four million barrels per day.
Oil majors are desperate to expand offshore, while smaller London-listed oil firms are fighting over divested assets in the Niger Delta.
Financial analyst, Henry Boyo remains skeptical, saying a long history of high-level government corruption means the audit is likely to have little impact.
"It's a no win situation for the government because if indeed we even brought forensic experts you know, to do the audit and these people were all made of angels you know from heaven whatever and they come up and say nothing was missing, Nigerians will still not believe because why, they believe that such things had happened in the past and you know, nothing good came out of it so they still won't believe," said Boyo.
Residents in Nigeria's commercial capital Lagos say the missing oil money ought to be accounted for in order to fund development projects.
"If this fund can be recovered, it will be very very important and maybe useful to the society and we believe things affecting the country today," said Celestine Nonso a Lagos resident.
An important supplier to the United States because of the oil's high gasoline content, Nigeria has attracted billions of dollars of investments from the world's top oil companies.
Yet poverty in Africa's second biggest economy is rising, with almost 100 million people living on less than a dollar a day.
The percentage of Nigerians living in absolute poverty - those who can afford only the bare essentials of food, shelter and clothing - has risen to around 60 percent. - Copyright Holder: FILE REUTERS (CAN SELL)
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