By Tengi George-Ikoli
the need for an empirical tool to help government manage petroleum resource for the benefits of the people informed the adoption of the Natural Resource Charter (NRC) in Nigeria. The Charter which promotes global best practices to effectively manage natural resource endowments for public good is domesticated in Nigeria through the Nigeria Natural Resource Charter (NNRC). Over the span of its 8-year in existence, the NNRC has used this tool to guide the Nigerian government, civil society, industry players and others on how best to manage natural resources for the benefit of the Nigerian economy and the Nigerian people.
This is achieved through a set of 12 principles or precepts used to determine how best to manage natural resource wealth for the benefit of current and future generations of citizens covering the kinds of decisions and policies that are required to successfully govern a petroleum sector. The NNRC conducts a bi-annual assessment of petroleum resource governance in Nigeria using those 12 precepts. Thus far, it has conducted three; 2012, 2014, 2017 and more recently, 2019, analyzing the Nigeria’s governance of her petroleum wealth, identifying crucial changes that have taken place in the sector since the last benchmarking exercise was conducted.
In the most recent assessment, examining changes to Nigeria’s petroleum resource management strategies from 2017 to 2019, encapsulated in the NNRC”s Benchmarking Exercise Reports (BER), the findings show that there has not been a strong enough concerted effort to change the fate of the Nigerian economy or the prospects of its people proven by Nigeria becoming the poverty capital of the world. Analysts have pointed out issues such as the rising debt, weak savings, weak transparency focused reforms, obsolete legal and regulatory frameworks among others. All these do not bode well for the sector or its prospects against the growing pool of resource rich countries; alternatives to Nigeria’s petroleum resource. This is why the NNRC welcomes the promises made by the Minister of State for Petroleum to bring about changes in the sector and will work collaboratively to ensure these goals and others necessary for sector growth and sustainable development are achieved.
The NNRC plans over this quarter and the next to exponentially increase its advocacy and offer support to the government to find ways to address these governance lapses to put Nigeria in a better stead to compete with the global market for the investments. These 12 benchmarks cover the main decisions required to transform assets under the ground into development above ground.
The first one deals with strategy, legal framework, and institutions: resource management should secure the greatest benefit for citizens through an inclusive and comprehensive national strategy, clear legal framework, and competent institutions.
The second; transparency and accountability: resource governance requires decision makers to be accountable to an informed public.
The third; exploration, licensing, and monitoring operations: the government should encourage efficient exploration and production operations, and allocate rights transparently.
The fourth; taxation and other company payments: tax regimes and contractual terms should enable the government realise the full value of its resources consistent with attracting necessary investment, and should be robust to changing circumstances.
The fifth; local impacts: the government should pursue opportunities for local benefits and account for, mitigate, and offset the environmental and social costs of resource extraction projects.
The six; state-owned enterprises (SOEs): nationally-owned companies should be accountable, with well-defined mandates and an objective of commercial efficiency.
The seventh; investing for growth: the government should invest revenues to achieve optimal and equitable outcomes, for current and future generations.
The eight; stabilising expenditure: the government should smooth domestic spending of revenues to account for revenue volatility.
The ninth; public spending: the government should use revenues as an opportunity to increase the efficiency of public spending at the national and sub-national levels.
The tenth; private sector development: the government should facilitate private sector investments to diversify the economy and to engage in the extractive sector.
The eleventh; role of extractive companies: companies should commit to the highest environmental, social, and human rights standards, and to sustainable development.
The twelfth and last precept assesses the role of international community: governments and international organisations should promote an upward harmonisation of standards to support sustainable development.
According to Tengi George-Ikoli, Program Coordinator NNRC, Nigeria has made some marginal progress against the precepts over the years. “However, we anticipate that the most significant changes will be seen when the Petroleum Industry Bill (PIB) is finally passed and implemented, with the governance component impacting precept 6, administration; precept 3, host communities; precept 5 and 11 and fiscal; precept 4.” The NNRC is open to providing support to this government as it embarks on a journey to optimizing the benefits of Nigeria’s resource endowments for the benefits of Nigerians, she added.
Tengi George-Ikoli: Program Coordinator, Nigeria Natural Resource Charter (NNRC)