Why is the Oil sector marred with so much corruption?

The process for the award of contracts and licenses for oil and gas prospecting in Nigeria is tainted by corruption and collusion, according to a report, the 2014 Nigeria Natural Resource Charter (NNRC) Benchmarking Report.

The process, the report disclosed, is ruined with a high degree of uncertainty and political influence, a factor that has hampered the growth of the sector and the economy in general.

 The report, presented by the Nigerian Resource Governance Institute, NRGI, the Centre for Public Policy and Advocacy, CPPA among others, summarises the second benchmarking of Nigeria’s petroleum sector governance against the 12 precepts of the Natural Resource Charter.

The NNRC is led by a 14-member independent, multidisciplinary expert advisory panel, comprising Mr. Odein Ajumogobia, former Minister of Petroleum and Foreign Affairs minister; Mr. Adeola Adenikinju, a Professor of Economics from the University of Ubadan; Mr. Bode Agusto, former Director General of the Budget Office and Professor Akpan Ekpo, Director General, West African Institute for Financial and Economic Management, among others.

The report said, “For instance, where a company is perceived to have the best qualifications, based on the criteria set by, for example, the Department for Petroleum Resources (DPR), such a company may not emerge as the final bid winner. The predictability of the contractual process is significantly diminished as a result.”

The report further highlighted the fact that 67 per cent of marginal fields allocated in the 2003 licensing round are yet to produce a single barrel of oil, 10 years later.