Buhari bent on tackling Nigeria's oil monster

Nigeria’s national oil corporation has reportedly diverted more than $30 billion in oil revenue since 2009, equivalent to the gross domestic product of more than 30 African countries, but President Muhammadu Buhari is determined to clean it up.

Some estimates even put the “lost” funds at $50 billion. If that were a country, it would be Africa’s 11th biggest economy, at par with Tunisia’s entire GDP, and larger than the economic output of Ghana, Tanzania, Uganda, Ivory Coast or the Democratic Republic of Congo.

In a way, Buhari’s presidency brings Nigeria’s oil story full circle. As oil minister during military rule in the 1970s,  Buhari himself oversaw the birth of the Nigerian National Petroleum Corporation (NNPC), that was intended to manage the oil assets of Africa’s biggest crude producer, in the public interest.

Now, as democratically elected president, he intends to break up the opaque bureaucracy to ensure taxpayers get their fair share. History isn’t on his side.

“No Nigerian leader, including Buhari himself from the 1980s, has managed to sanitise the oil sector,” said Philippe de Pontet, head of the Africa practice at the Eurasia Group in New York. “Buhari’s challenge is not only to depoliticise NNPC but to disentangle its vested interests and its rogue commercial operations, which won’t be easy.”

Buhari made cleaning up the 24,000-employee colossus, the largest government-owned company a key plank in the election campaign that toppled President Goodluck Jonathan in March. He plans to split the NNPC in two, creating a regulator and a vehicle for investments, according to Femi Adesina, a presidential spokesman.

So far, the president has fired the board and management of the company and replaced its Jonathan-appointed chief with Emmanuel Ibe Kachikwu, who was executive vice-chairman of Exxon Mobil Africa. He has also ordered a review of oil-swap contracts and barred 113 vessels from loading oil and gas, about 250,000 barrels of Nigerian crude; about 10% of the country’s daily output, are stolen daily, Buhari has said.

‘Mind-boggling’

“A lot of damage has been done to the integrity of Nigeria with individuals and institutions already compromised,” Buhari told an audience in Washington last month. “The amount involved is mind-boggling.”

Nigeria’s transparency watchdog says the NNPC has diverted more than $30 billion in oil revenue from the state since 2009.

The situation is increasingly desperate because, with a halving in Brent crude prices in the past year, government coffers are “virtually empty,” Buhari said after less than a month in office; about two-thirds of the country’s almost 180 million people live on less than a dollar a day.

Set up to defend Nigeria’s interests with foreign majors, the company controls an aggregate 55% share in joint ventures with the likes of Royal Dutch Shell Plc, Exxon Mobil Corp. and Chevron Corp. Crude exports account for about two-thirds of government revenue.