Teaching Comparative Government and Politics

Tuesday, March 29, 2016

Executive power and corruption

Nigeria's President Buhari has promised to end corruption. But the corruption surrounding petroleum, oil, and gasoline might be bigger than the executive power Buhari holds.

Buhari's battle to clean up Nigeria's oil industry
The revelation by Nigeria's auditor general that $16bn (£11bn) of oil revenue went missing in 2014 has emphasised the scale of the task facing President Muhammadu Buhari in his efforts to clean up the oil sector…

There are many ways of illegally tapping oil revenues, and crime in the oil sector is easily the second biggest industry in the country after oil production…

The state oil company is involved in oil production but also regulates the sector and handles government oil revenues, creating conflicts of interest and opportunities for theft.

Last May, Mr Buhari chose Emmanuel Kachikwu [the former executive vice-chairman at ExxonMobil Africa] as the man to sort it out…

Now as NNPC group managing director and junior oil minister he has replaced the heads of all eight of the firm's divisions and said the corporation's monthly losses have been reduced to $15m (£11m)…

Refinery for "bunkered" oil
Oil theft - or bunkering as it is known in Nigeria - grew out of protests against the lack of benefit that people form the Delta were getting from oil production. They saw little investment and received few skilled jobs but experienced water, soil and land pollution.

Estimates vary, but bunkerers now take about 200,000 barrels of crude oil a day…

As a president from the north, Mr Buhari will find calming the southern Delta region almost impossible in this divided country, particularly as some security and political officials have been accused of being involved in bunkering…

Some of the least reported but most lucrative forms of crime in the oil industry revolve around fuel imports.

Although Nigeria is an important crude oil exporter, it imports most of its refined petroleum products and there are many ways to exploit the subsidies paid on these shipments…

The entire fuel distribution and refining sector will have to be rebuilt from the ground up, if Mr Buhari is to end the corruption and theft.

A good method of judging his success will be if the NNPC's four refineries are brought back into full use or replaced.

Most fuel imports are only necessary because all four have been out of use or operated intermittently for many years, generating a lot of money for those behind the scams.

The enormity of the task makes it unlikely that the president will manage to tackle all forms of crime in the oil sector, even if he serves two four-year terms of office.

Given Nigeria's track record, he would do well to win the battle on even one front.

But his tough reputation on corruption means the chances of success are greater than they have been for many years.

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