Nigeria Natural Resource Charter Blog/News

NNRC on ENERGY SUBSIDIES IN NIGERIA

April 23, 2013

Event

NNRC-CPPA WORKSHOP ON ENERGY SUBSIDIES IN NIGERIA: OPTIONS AND IMPLICATIONS

26April 2013

LAGOS- 18 April 2013- The Nigerian Natural Resource Charter (NNRC) in collaboration with the Centre for Public Policy Alternatives (CPPA) convened a workshop to launch A Citizens’ Guide to Energy Subsidies in Nigeria. This guide was published by CPPA and the International Institute for Sustainable Development’s Global Subsidies Initiative (GSI). The conveners of the workshop also sought a range of views from participants regarding the current subsidy regime. This was timely especially with recent agitations following the federal Governments proposed complete removal of fuel subsidies in Nigeria.


Key participants at the workshop were some members of the Expert Panel of the NNRC including former Nigerian Minister of Petroleum Resources and Chairman of the Panel, Mr. Odein Ajumogobia, representatives of the Nigerian Employers Consultative Association (NECA) and Nigerian Economic Summit Group (NESG). There were also representatives from the Jetty and Petroleum Tank Farm Owners of Nigeria (JEPTFON), the Trade Union Congress (TUC) and Civil Society Organizations among others.

The workshop commenced with brief comments made by the Chairman of the Expert Panel of the NNRC. This was followed by presentations made by Ms. Chinwe Ezeigbo- researcher with the NNRC- and Dr. Otive Igbuzor- Executive Director of African Centre for Leadership, Strategy and Development (Centre LSD) and member of the Expert Panel of the NNRC.

Ms. Ezeigbo, in her presentation, highlighted the facts regarding subsidies and revenue allocation in Nigeria. She also underlined the recommendations of the Precepts 1, 7 and 9 of the Charter. These precepts prescribe practical ways through which governments can best utilize revenues generated from the resource sector to achieve sustained economic and social development for its citizens.

Dr. Igbuzor focused on the advocacy issues on energy subsidy in Nigeria. He highlighted among other things that subsidies have been used as an opportunity to mismanage resource revenues and encourage corruption in the sector. He also emphasized the need for government to implement subsidies which are targeted towards the poor.

A panel discussion was convened after the presentations to discuss the state of subsidies. Panelists included members of the Expert Panel of the NNRC and representatives of JEPTFON and NECA. A question and answer session was held following these discussions with a range of questions and comments from the audience.

There was no consensus to support either a complete removal or the retention of subsidy in Nigeria. A key reoccurring message, however, was the need for a better management of the subsidy regime to enable transparency and accountability in the use of resource revenues. Also key were the recommendations for strategies to be developed to ensure subsidies are targeted to benefit the poor through, for instance, subsidizing general sectors such as public transportation.  

In the afternoon session, Dr. Folarin Gbadebo-Smith, the Managing Director and Chief Executive Officer for CPPA, introduced the Citizens’ Guide to Energy Subsidies in Nigeria. He gave an overview of its key findings on energy subsidies in Nigeria.  Free copies of the Citizens Guide can be accessed on this link

Presentations made during this workshop can be accessed on this link. Also see news article following this workshop here

What are your views on the following issues? Are resource revenues being used for the benefit of the current and future generations? Is public spending effectively allocated and controlled? Does the development of oil deliver significant economic and social benefits to citizens?

We are invited to express our views on these pertinent issues and more by scoring the industry here.




Image source: Getty Images 


NNRC Business Lunch: What would the Charter say about the Petroleum Industry Bill (PIB)?

March 16, 2013

Event

NNRC Business Lunch: What would the Charter say about the Petroleum Industry Bill (PIB)?

16 March 2013

Lagos-7 March- A Nigerian Natural Resource Charter (NNRC) steered business lunch on the 
Petroleum Industry Bill (PIB) brought together prominent members of the media and some members of the Expert Panel of the NNRC at the Regent Hotel in Lagos.  The event was held to evaluate the key provisions and objectives of the Petroleum Industry Bill (PIB) against best practices outlined in the Charter.

Presentations were made by two members of the Expert Panel of the NNRC- Mr. Tunji Lardner and Ms. Lois Laraba Machunga.

In his presentation, Mr. Lardner – a prominent public policy analyst and Executive Director of WANGONeT – discussed how the objectives of the present PIB addressed issues of social development, equity and transformations as proposed in Precepts 1, 2, 11 and 12 of the Charter. He analyzed how the provisions of the current PIB ensure that every transaction in the oil and gas value chain culminates into the transformation of the lives of Nigerians.  The precepts examined by Mr. Lardner suggest best practices aimed at ensuring that the greatest social and economic benefits accrue to the people of Nigeria from the exploitation of its national resources.

Ms. Lois Laraba Machunga- an industry expert and founder of JALZ Energy Ltd- benchmarked the provisions of the PIB against the guidelines in Precepts 3 to 6 of the Charter. These precepts suggest best practices for activities on the value chain regarding the fiscal regime, award of contracts, local impacts and the workings of the national oil company. Ms. Machunga highlighted issues in the PIB which do not satisfy international best practices as suggested in the Charter and which need to be addressed.

A key observation made during the presentation was that there are overarching institutional challenges in several sectors beyond the petroleum sector. For instance there is a significant gap between legislation and implementation of legislation. Should these larger systemic issues continue to go unaddressed; even the best PIB will not be a success. A lively discussion followed the experts’ presentations. From prominent bloggers to television personalities, journalists focused on strategies for a better way forward, keeping the NNRC best practices in mind.

The members of the Expert Panel of the NNRC came together in November 2012 to discuss and score the Nigerian oil and gas industry as it stands against international best practices suggested in the Charter. The result from this scoring was compiled into a report called the “Benchmarking Report”. This report was disseminated to participants at this event. The report provides a comprehensive overview of the state of the industry against international best practices. Future scoring reports will serve as a useful analytical tool in order to track the progress made in the sector. Click here to access benchmarking report: http://nigerianrc.org/content/benchmarking-exercise-report

How do you think Nigeria is doing in governing its oil and gas sector? We invite the public to provide their opinion on the state of the industry against the precepts by conducting their own scoring here: http://nigerianrc.org/have-your-say

There are more NNRC events planned for April that will facilitate discussions with stakeholders on the fuel subsidy dilemma and the local content challenge. Visit the website for updates on these events.

 

To read the presentations made at this event, click here: http://nigerianrc.org/content/expert-panel-presentations  

Fuel Subsidy: New Report with Facts

March 14, 2013

 

 Fuel Subsidy: New Report with Facts

A new piece of research from NOI Polls sought to find out how people buy fuel, where they buy it from and how much they buy for. The results confirm what we as Nigerians can probably guess – that people are paying more at the pump than they should. Now, for the first time, we have hard evidence to push forward the stagnant debate over subsidy removal.


This research shows that the official selling price for fuel, which is N97 per litre, is only observed in the regions that include Lagos State and Abuja. More than 40% of people surveyed purchase fuel at the official selling price in those areas. More than 38% of the people surveyed in the rest of the country pay between N110 to N120 for fuel.


Despite the fact that a majority of the geo-political zones pay more than the official selling price for fuel, there is still an aversion to complete removal of the subsidy. 59% of the people surveyed are not in support of the government’s decision to remove fuel subsidy. This is likely linked to the fact that 70% of respondents interviewed nationally say that reduction of fuel subsidy has increased spending in their households.


This research reiterates the fact that the fuel subsidy regime as it is in Nigeria is ineffective. This is demonstrated especially by the evidence that shows that many Nigerians purchase fuel at prices way above the official pump price stipulated after partial-subsidy removal by government. In effect, fuel marketers benefit twice with every Nigerian that purchases fuel above the fuel pump price of N97.


Various reasons were given by respondents as to why they think fuel is sold at different prices in different states. A majority of the people interviewed blamed the differences in fuel pump prices on lack of government monitoring of filling stations outside Abuja and Lagos. 24% attributed the variation in pricing to the cost of importing fuel, which might differ for fuel marketers. 14% blamed the price variations on greedy operators of filling stations who exploit the public by hoarding fuel. .


The reason for the continued aversion to complete removal of subsidy by respondents was not given in this research. Aversion to the subsidy could be due to a lack of or poor quality of information. It could also be due to lack of trust in government’s competence to pass on the benefits of removal back to those most affected as promised. Subsequent research by NOI Polls, expected to be undertaken on a quarterly basis for the rest of the year, will hopefully provide more insight to this. 

 

 

The Nigerian Natural Resource Charter and Anti-corruption Prospects

December 4, 2012


The UN Anti-Corruption day (the 9th of December) is approaching!

This day has been set aside by the international community to raise awareness on corruption and on the role of the United Nations Convention on Anti-Corruption (to which Nigeria is signatory) in combating and preventing it. Fighting corruption through transparency and accountability are top priorities for the oil and gas sector here in Nigeria. But improving governance in the natural resource sector is often an elusive task.

The Nigerian Extractive Industries Transparency Initiative (NEITI) is the Nigeria's first foray into international initiatives working to improve revenue management.  It is geared towards achieving transparency in the publication of revenues accrued from the extractive industry. Nigeria’s first three NEITI audit reports were regarded as the ‘gold-standard’ for other countries to follow. Find information about NEITI on this link: http://www.neiti.org.ng/ 

Again, Nigeria is a pioneer with its work as one of the first countries to integrate the Natural Resource Charter which is a global initiative also aimed at transparency and accountability in the natural resource sector. Governing the sector both responsibly and transparently, for the maximum benefit of the people, requires a series of responsible choices along the entire policy decision chain; from the point of making a decision to extract the resource to the management of the revenues accrued from production. The Charter is useful because it gives guidelines on how the activities along the entire value chain of natural resource exploitation should be conducted for the benefit of the citizens. These guidelines are based on best practices gleaned from countries who have been able to positively benefit from their natural resource explotiation. 

The Nigerian Natural Resource Charter complements NEITI’s efforts and achievements in order to make clear the responsible path for exploiting resource
wealth to the benefit of all Nigerians. Whereas NEITI focuses its efforts on matching revenues reported by companies with that received by the government, the NRC looks beyond revenues at the entire natural resource value chain. The 12 Precept design of the NRC allows accountability actors (that means, you!) to assess where Nigeria is today and more clearly make a conscious decision of where it should be going. Find more information about the NRC on this link: http://naturalresourcecharter.org/ 

In early November, the Expert Panel of the NRC met in Lagos. The experts scored the performance of the Nigerian oil and gas sector against the precepts of
 the Charter. Their conclusion was clear. There is a need for a complete overhaul of the system. (See the scoring and presentations made by the experts on this link: http://nigerianrc.org/content/expert-panel-discussion-presentations)

Understanding how corruption is allowed to exist in a system is the first step in fighting corruption! Breaking down how the natural resource sector works into 12 bite sized pieces (the precepts) is a good way to tackle the irregularities in the sector.  It can be best compared to a stethoscope for conducting a health check on the sector. The principles in the Charter would aid better understanding of how the sector can work best. This can be a way to identify where corrupt practices might exist in the sector. It can also be a tool to guide informed questions about the processes in the sector and advocate for change when necessary. 

The next steps towards fighting corruption in this sector (and in Nigeria in general!) lie with us. Accountability and transparency are not far-fetched if we can actively work towards it. The NNRC is a powerful idea whose time has come in Nigeria. Let’s make good use of it! 

 

Case study: A comprehensive resource development strategy - Norway’s path to inclusive and sustainable development

September 17, 2012

Norway is a often used as a shining example of good natural resource management. First in a series of short case studies, "A comprehensive resource development strategy: Norway's path to inclusive and sustainable development" charts the creation of a comprehensive policy framework that helped Norway resist many of the problems facing resource-rich countries, and establish the country as one of the most successful economies in the world. The case study highlights many of the issues contained in Precept 1 of the Natural Resource Charter. In particular, it highlights some of the factors already present in the country that ensured the success of the policy framework, but cautions that such factors may not be easily replicated in other countries. The case also suggests that the path to sustainable development is not yet complete, and further structural changes may be necessary.

Reversing the Resource Curse: Theory and Practice

September 4, 2012

The Natural Resource Charter, Revenue Watch and the School of Public Policy at the Central European University are now accepting applications for the advanced course: "Reversing the Resource Curse: Theory and Practice."

To apply, interested individuals should submit the application form by 23 September 2012, accompanied by:

- a resume

- a letter from your employer in support of your application, which also describes your organization’s work related to the extractives industries

- a short essay (no more than two pages) on the challenges faced by the extractives industries in your country of origin/residence (or internationally) and on your expectations of how you will support you in your efforts to help address these challenges.

Download the course brochure to learn more.

 

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