Talk for journalists' course 08.05.04
One of my most striking introductions to the politics of oil in Nigeria came
during a visit to Bayelsa state the day before last year's presidential elections.
The governor's lodge in Sagbama had been torched, in an apparent dispute over
alleged ballot-rigging: the building was gutted and at least eight cars were
torched. The governor's spokesman dismissed the event as an "isolated incident".
At the state electoral commission, an official showed me how high turnouts
had brought the ruling People's Democratic Party success in parliamentary elections
the previous week. In the House of Representatives seat of Brass/Nembe, the
131,335 valid ballots cast exceeded the 129,535 registered voters. It was an
important lesson about official transparency in Nigeria: even basic information,
reluctantly disclosed, can be a good deal more revealing than intended.
I see this talk is entitled "Tracking Nigeria's oil money". That's
quite a billing to live up to. It conjures an image of a fearless reporter painstakingly
assembling the evidence across the country and abroad, producing the definitive
account of where the estimated $300bn that the country has earned from oil over
the last quarter-century has gone. Unfortunately, for some inexplicable reason,
the FT has yet to give me three months off and tens of thousands of dollars
to complete this task. In the mean-time, as the aphorism has it, "we try".
What I do hope to do is to offer you a few thoughts based on my own experience
of living in Lagos for two years. I'm the west Africa correspondent of the Financial
Times, a London based business newspaper that sells copies all over the world.
I travel in the region but spend most of my time in Nigeria, where in my better
moments I get out of the office and try to understand what is going on.
In this talk, I want to consider the meaning of the government's claims to
be committed to transparency. This is a message the finance ministry has been
taking to western capitals for many months, in search of more favourable treatment
on issues such as debt relief. Our job is to see whether the claims are true,
how we can use any information that becomes available and to decide what sort
of questions we can ask to provoke further illuminating disclosures.
Let me make a disclaimer at the outset. We foreign journalists don't do anywhere
near enough work on the kind of issues I will talk about, for all sorts of reasons.
In fact, I've been pausing often while writing this talk to think: 'that's a
really good idea for a story, why I haven't I done this'? So please see this
talk as a way of starting a debate, and be assured that the points I make could
equally be directed towards me and my colleagues as to Nigerian journalists.
I'll talk for a short time only and then I hope you'll hit me with lots of questions.
"Tracking Nigeria's oil money" could almost as well be paraphrased
"tracking Nigeria's government spending". Oil accounts for three-quarters
of government revenues and more than 90 per cent of export earnings. The International
Monetary Fund estimates that oil revenues over the next five years will exceed
$100bn, or almost $1,000 for every Nigerian. International oil companies are
already developing huge offshore fields and more will no doubt be discovered.
The questions begin with how much oil Nigeria produces. That ought to relatively
straightforward: until a recent reduction, the country had an Opec quota of
fractionally more than 2m barrels a day. Yet the April report of the London-based
Centre for Global Energy Studies tells us that Nigeria produced around 2.34m
barrels a day in both February and March. So immediately we have a discrepancy
and a set of interesting questions: why is the government busting the quota
and where is the extra money going? I didn't have time to cross-reference the
figures with the ministry of finance's own statistics for oil production, but
I'm sure the answers could be interesting. This is just one of many complicated
supply-side issues we could address, but, having seen the programme for this
course, I suspect the workshop given by Jenik Radon tomorrow will give you much
more detailed and authoritative information than I can.
I'd like to concentrate on a different part of the process: after the oil money
is received, how is it spent? Ngozi Okonjo-Iweala, the new finance minister
and a former colleague of Prof Stiglitz, has talked a lot about accountability.
Her ministry has begun publishing details in newspapers of how much oil revenue,
customs duties and corporate taxes the federal government remits to states and
local authorities. She says it's been the one of the most controversial things
she's done. I'm not surprised: the details are really interesting and certainly
taught me a lot about the way wealth is distributed at an official level.
The figures illustrate the way oil-producing states have benefited hugely from
the extra allocation they have been granted through a Supreme Court judgement.
We learn that, according to the latest figures available on the finance ministry's
website, that Delta state is the top earner with 5.52bn naira a month, or $40m.
Akwa Ibom, Bayelsa and Rivers, also oil producing states, earned more than 4bn
naira a month. By comparison, Lagos, home to sub-Saharan Africa's largest city,
receives less than 2bn naira a month.
>From my own visits to Delta, Rivers and Bayelsa, I haven't seen much evidence
- to put it mildly - that life is better than the non oil-producing states.
The governments of these states have made a lot of fuss about how they should
be getting more benefit from the resources they have on their land: Victor Attah,
the governor of Akwa Ibom, even read publicly from the Bible's book of Lamentations
to make his case. "Our inheritance has been turned over to aliens, and
our houses to foreigners," he said in 2002. "We have become orphans
and waifs, our mothers are like widows."
Now these governors have what they want, where is the extra money going? The
budget is predicated on an oil price of $25 a barrel but international prices
are around $40. There will be a lot of extra money sloshing around in the states
this year.
Similar questions can be raised, perhaps even more forcefully, about the local
government revenue figures that are also published on the same website. Here
is an opportunity for reporters at a local level to inform their readers just
how much the authorities are receiving on their behalf. I'm sure some people
are doing this at the moment - and I appreciate that local reporters come under
a lot of political pressure to censor themselves - but there should be more
of it and local civil society groups should be more involved.
The finance ministry details are a start, but the government should be publishing
even more. From what I could see yesterday, the figures hadn't been updated
since February. Now that might not be so bad for a paper like the FT, where
publication of stories from Africa sometimes seems to take place on a geological
time-scale. But it's not much good for those of you putting out chunky papers
on Nigeria every day. The minister says she wants transparency, so she and her
officials should be held to that.
Another weakness of the government's approach is that much of what it publishes
contains facts but little commentary. Transparency is not just about publishing
raw data. Without the accompanying context, figures often risk being meaningless.
This year's budget is a good example. The draft budget contained a large amount
of tables detailing government spending - 157 pages in all - but not a single
word of accompanying explanation or justification. It was strong on the "what"
but not on the "why". This, of course, is where journalists come in,
both in terms of pressing the ministry to be more informative and in doing their
own independent research.
Since we're talking about oil, let's open the page quite by chance at the....department
of petroleum resources (p83). In the headquarters spending allowance of 52.5m,
entertainment and hospitality, including house rents, comes to 2.15m naira.
That's about $15,000. Now it's true that when Dennis Kozlowski was the head
of Tyco International he spent about that amount on an umbrella stand. But it's
not the quantum that's important: it's what's done with the money. Who is benefiting
from this and why - is this on legitimate government business or, as more sceptical
observers might suggest, so that senior civil servants can have somewhere pleasant
to live funded by the taxpayer?
That's without even mentioning the miscellaneous expenses of 9.5m naira - almost
one fifth of the department's total headquarters spending.
Much media attention focused on the budget proposal to spend 10bn naira on
a new presidential jet. It's a lot of money and a legitimate issue to scrutinise.
Yet there are so many other intriguing details left hanging by the budget. What
of the 4m naira proposed for the maintenance of the presidential yacht, or the
20m naira allocated to the national security adviser's office for the administration
and welfare of political refugees and their entourages. Can the government produce
evidence of whom this money is being spent on and what it is being used to buy?
The government's plan to publish full accounts and do historic audits for the
Nigerian National Petroleum Corporation also demands careful scrutiny. President
Obasanjo used this as the centrepiece for his speech late last November at the
tenth-anniversary celebrations held by Transparency International at its Berlin
headquarters. Yet the project has already been significantly delayed: the improved
accounts promised early this year by Funsho Kupolokun, NNPC managing director,
have yet to materialise.
At a deeper level, the changes in the oil industry raise questions about a
different kind of corruption: not stealing money directly, but making policies
to favour your own interests or those of your allies. It's an issue everywhere,
whether it's the British government and its position on tobacco advertising
or the US government and its attitude towards the big oil companies where so
many of its senior officials once worked. Nigeria is no different.
Vanguard newspaper did some good work recently pointing out how petrol marketing
companies were still getting a subsidy from the NNPC despite the fact that the
price controls imposed on them had been abolished. In other words, according
to the report, the marketing companies were making profits not just out of the
Nigerian consumer at the pump but out of the taxpayer who provides the NNPC
subsidy. It's the kind of issue that, once exposed, attracts the attention of
civil society organisations and movements such as the Nigeria Labour Congress,
creating the possibility of real pressure on the government to justify its policy
or change it.
The oil lifting contracts awarded by NNPC are a further controversial example
of an area in which there are longstanding allegations that public policy has
been used for private gain. The Corporate Affairs Commission in Abuja, where
all businesses are supposed to be registered, has all sorts of logistical problems,
but it is possible to get useful information from it concerning the management
and ownership of companies. I know that, as in other countries, ownership is
often disguised through third parties. But names that do crop up are often suggestive
- and, in an environment in which officials are rarely held accountable, there's
always the possibility that people will be carelessly open in the information
they provide.
Then there are plenty of stories to do on how the oil multinationals operate
in Nigeria. A good example is the announcement by Royal Dutch/Shell that a third
of the 3.9bn barrels of oil reserves it downgraded earlier this year were in
Nigeria. Shell relied largely on the highly questionable practice of revising
oil data, rather than discovering new oil and gas, to raise its proved reserves
in Nigeria in the past three years. The whole issue of why they did this - was
it to improve their own image with investors, to please the Nigerian government
or both - is critical and important.
I know you do good stories already and face all sorts of obstacles to doing
even more. Nigeria desperately needs freedom of information laws to compel officials
to release information that the public has a right to know, for example. On
a broader political level, the kind of institutions that are supposed to investigate
and prosecute allegations raised in the media are mostly lamentably inadequate.
The limited information that has been made available over the past few years
has allowed journalists to write powerful stories about alleged corruption.
The internet publication of the presidential election results allowed ThisDay
- and other newspapers - to do some good work in highlighting extraordinary
voting patterns in President Obasanjo's home state. Perhaps as striking as the
99.92 per cent vote in favour of the president was the fact that hundreds of
thousands of people who voted for the president didn't bother to vote in the
gubernatorial election, even though ballot papers for both were issued at the
same time. The publicity may not have got the election rerun, but it provided
material on the record to which Nigerians and foreigners can refer time and
again as evidence of ballot-rigging.
At the airport in the oil city of Warri a couple of weeks ago, immigration
officials were there to examine the passports of oil company workers and other
foreigners arriving from Lagos. I said to the official that I was surprised
at the check, as we had come on a domestic flight and other airports in Nigeria
did not ask for documents from expatriates travelling internally. He replied
enigmatically: "There are things that happen in Warri that do not happen
elsewhere."
That seemed to me a pretty concise summary of the kind of culture of arrogant
opacity that has characterised the oil industry in Nigeria. The government has
promised to make system more accountable. Let's keep the pressure on them to
do this and hammer them if they don't.
ENDS
NNPC ACCOUNTS -EITI AND NNPC
AUDITOR-GENERAL'S REPORT
VANGUARD GOOD WORK ON OIL MARKETERS.
TRANSPARENCY AND ELECTIONS
We saw the power of this transparency in ThisDay breakdown of voting figures
in presidential election in Ogun. The president scored a modest 99.92 per cent
of the vote.
Look at other governors, especially in the Delta. Journalism is full of frustrating
stories where you suspect someone is doing something wrong but you can't quite
prove it. But here there is irrefutable evidence eg in Bayelsa - higher turnout
that number of votes and also ballot papers found in burned state governor's
lodge. No-one believes these results: drill down, be forensic, present the evidence
in an unanswerable form. Then you have done your job: it should start a public
debate, get civil society organisations interested.
Something about NNPC accounts....
Something about what the finance minister is now publishing...
Something about the EITI NNPC audits...
Something about quota-busting (central bank figures)
Details of production figures...are they rising?
Halliburton?
What about reserves...why did Shell exaggerate its reserves and why does government
connive.
Vanguard some good work on petrol subsidy still there from NNPC to marketers.
Budget - $25 a barrel - so how much will this leave over in excess?
Use the fact that the government is officially committed to transparency...
Growth rate
http://www.fmf.gov.ng/
http://www.fmf.gov.ng/a.htm
Realise that we as foreign journalists are very privileged...we are paid a
lot of money, good technology, backed up by rich organisations. We all come
up against an official culture of not imparting information.
