Buhari to take charge of Oil Ministry; will not appoint Minister

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As part of efforts to reform the Oil sector and move towards transparency, sources tell Huhuonline that President Muhammadu Buhari is expected to take direct charge of oil issues, indicating that he won’t appoint a Minister for Petroleum Resources, at least for the time being. Rather, the President will combine his office with the duties of the Petroleum Resources Ministry, where he is expected to personally oversee major reforms in the sector, as part of his announced economic policy agenda.

Huhuonline understands that the decision followed meetings with the International Chair of the global Extractive Industries Transparency Initiative (EITI), Clare Short, who underscored the importance of integrating the revised EITI principles and standards in his economic policy agenda as obtainable in resource rich countries of the developed world. In meetings in Abuja with Vice-President Yemi Osinbajo and other administration officials, the EITI chair explained that international development stakeholders have endorsed Buhari’s declared commitment to good governance, transparency and accountability which are consistent with the principles professed by the EITI.

Buhari had reportedly listed the implementation of the findings and recommendations of the local EITI chapter; the Nigerian Extractive Industry Transparency Initiative (NEITI)’s audit reports on operations within Nigeria’s extractive sector as a priority for his administration in his first 100 days in office. EITI principles emphasize public disclosures of information by owners of oil and mining licenses through regular audits of their operations on oil production figures, revenue sharing arrangement between tiers of governments as well as the open process of contract awards in the oil, gas and mining industry.

Short, who headed a delegation of a special EITI implementation committee drawn from 50 member countries, noted that the findings and recommendations of NEITI audit reports over the years had suffered from the absence of a strong political will to implement them; and insisted that Buhari himself should take personal responsibility to oversee reforms in the extractive industry sector, especially oil and gas because the vested interests are too powerful and risks torpedoing any efforts at change. Insisting that only the President’s office can effect the badly changes to the mismanagement, under-payment of taxes and royalties, under-assessment of operational processes as well as other lapses, which costs the government billions of dollars in revenue losses, the EITI chair pressured Buhari to take charge of the Oil Ministry, and to cast a critical eye on the NNPC, which he founded in the 1970s when he was a Minister.

Among the much anticipated reforms, President Buhari is looking at scrapping the subsidy. In addition, he is weighing a divestment and privatization of the NNPC that would the state-owned company and one of the world’s biggest oil companies by output to operate at a profit; to disclose revenue and to be more transparent and accountable to government. Currently, the NNPC regulates itself. President Buhari is also considering making the Oil ministry a directorate subordinate to an energy ministry that would be also responsible for mining and electricity, and placed under the direct supervision of the presidency. The idea is to create closer collaboration among bureaucrats working on similar issues. The “new” Oil minister, assuming there will still be one, would mostly be ceremonial; play an oil-diplomacy role, attending OPEC meetings, while the President would immerse himself in the operations and take a more aggressive military posture against oil bunkering and pipelines vandalism.

Sources also tell Huhuonline that Buhari appears highly sensitive to recommendations in reports by EITI, of which Nigeria is a member. Each year EITI has pointed to shortcomings with regards transparency in Nigeria and underscored the need to overhaul the Nigerian National Petroleum Co (NNPC). Buhari is considering an overhaul of the economy, weighing options that include eliminating ministries, reconfiguring the NNPC, and removing the multibillion-dollar fuel subsidy, which is ridden by corruption and abusive patronage. The international donor community wants Buhari to end the subsidy and is therefore pressuring the new president to take over the Oil ministry so as to keep a close eye on the likely pushback by Labor unions who will call for nationwide strikes and demonstrations if, and when the fuel subsidy regime ends.

Nigeria is Africa’s biggest oil producer, exporting two million barrels of crude daily. It spends much of that windfall—at least $4 billion in this year’s budget—subsidizing gasoline. Nigeria also sits atop the world’s ninth-largest gas reserves. But 18 of its 23 power plants are currently closed, because they can’t get gas. Nigeria currently produces just 1.3 megawatts, less than what Zimbabwe generates for a population a twelfth as big.

Nigeria’s military spent nearly a decade fighting oil thieves in the swamps where they built camps, amassed arms and took oil workers hostage -the conflict ended with the 2009 Niger Delta Amnesty program. It isn’t clear how the army would fare this time, but the risk is even greater that it could backlash into kidnappings and general insecurity.