Nigerian President Muhammadu Buhari dissolved the board of the state oil company on Friday in an attempt to fight corruption in the industry.
“He said he was going to clean up the oil industry,” Femi Adesina, a spokesman for Buhari, said by phone from the capital, Abuja. “There’s no way he could proceed with the same board in place.”
Buhari, who defeated Goodluck Jonathan in March elections and became head of state on May 29, pledged during his campaign to clamp down on graft, including in the oil sector, which the government depends on for about two-thirds of revenue and 90 percent of export earnings.
Buhari’s All Progressives Congress said it would probably strip the Nigerian National Petroleum Corp. of regulatory powers and would look into breaking the company into more efficient, commercially-driven units.
“Some measure of unbundling will happen,” Kayode Fayemi, the APC’s policy director, said in an interview in April. Calls to Ohi Alegbe, a NNPC spokesman based in Abuja, didn’t connect.
“It’s about time,” Bismarck Rewane, chief executive officer of the Lagos-based consultancy Financial Derivatives Co., said by phone. “That place is a financial cancer. He should go below the board and clean up that place.”
The NNPC had the worst disclosure record of 44 international and national energy companies analyzed in a 2011 report by Transparency International and the Revenue Watch Institute.
Last year, Jonathan suspended then central bank Governor Lamido Sanusi after he alleged the NNPC hadn’t remitted $20 billion to the government. A PricewaterhouseCoopers LLP report into the matter released in April said the company needed to refund as much as $4.29 billion.
The NNPC has a “blank check” to spend without limits or control, according to the PwC report. Accounting and monitoring systems for oil revenue appear to be weak and inaccurate, while data from different sources are plagued by “significant discrepancies,” it said.
Buhari’s move may have been more of a formality as the current board had little power without a head, according to Clement Nwankwo, the executive director of the Abuja-based Policy and Legal Advocacy Centre.
“It was inevitable,” Nwankwo said by phone Friday. “The head of the board is the minister of petroleum and there hasn’t been one since May 29. The board has been redundant since then.”