Can Buhari clean up corruption in Nigeria’s oil industry?

July 2, 2015 91 Views 1 Comment

President Muhammadu Buhari vowed on Tuesday to reform and streamline the country’s oil and gas sector. Since taking office on May 29, his administration has been investigating the “sickening” extent of corruption in the sector under his predecessor’s watch. $19 billion, or nearly half of the state oil company’s alleged revenue since 2012, did not make it into the government’s excess revenue account, and was apparently lost to corruption. (The fund now contains only $2 billion.)

Buhari has already began cleaning house and laying the foundation for a more transparent future. Last week saw him dissolve the board of the Nigerian National Petroleum Co. (NNPC). The National Economic Council, which was set up by Buhari, in turn created a four-member committee of Nigerian state governors who are now probing the books of the NNPC and trying to determine where the funds went.

These governors have felt the pinch from the lack of federally-distributed oil revenue. “We have not been given a time frame, but, as you can imagine, state governments are under pressure. Many of our state governments are unable to pay salaries on time without recourse to borrowing, so this is very important to us,” Kaduna state Gov. Nasir El-Rufai told local media on Monday.

Furthermore, government sources have said that Buhari may not name a cabinet until September as he takes time to find credible ministers and build a government untainted by the corruption of the past. “Bringing them in now may disrupt the clean-up going on,” said presidential media adviser Garba Shehu.

Instead, Buhari is personally taking the lead in streamlining the country’s oil sector. Meeting with the heads of ExxonMobil and the Nigeria Liquefied Natural Gas Company, he admitted that “bureaucratic bottlenecks” by multiple state agencies had harmed their operations. But he assured them that “his administration will undertake appropriate reforms and implement fresh policies to boost national income from oil and gas production.” He also pledged to improve security so that investment would increase in the sector. (For oil producers already hurt by the global fall in crude prices, the chronic oil theft, maritime piracy, and pipeline vandalism in Nigeria have only made things worse.)

As a former general, Buhari prefers working in a decisive, top-down fashion. Given that corruption is a national security threat to Nigeria — harming the efficacy of the fight against the Boko Haram terrorists and draining the cash-strapped government’s main revenue source — it will take a firm hand to right the sinking ship.