- Category: GENERAL
- Published on Tuesday, 03 July 2012 10:26
- Written by Maram Mazen and Chris Kay
[Bloomberg] Lawan led a Nigerian parliamentary committee that grilled fuel importers in January over accusations they received 1.1 trillion naira ($6.7 billion) in illegal payments. Now, Lawan is under the spotlight, facing police questioning over allegations, which he denies, that he took a $620,000 bribe from a fuel importer and frequent
donor to Nigeria’s ruling party.
His transition from accuser to accused is symptomatic of the web of allegations and political infighting that have hamstrung President Goodluck Jonathan’s ability to meet his pledge to end fuel subsidies, reorganize the oil industry and clean up the financial markets, said Roddy Barclay, a Nigeria analyst at Control Risks, a London-based business consulting group. That’s put on hold billions of dollars in investment from companies such as China State Construction Engineering Corp. (601668) and Royal Dutch Shell Plc (RDSA) and weakened support for his government.
“The initial groundswell of optimism surrounding Jonathan’s reform agenda has given way to a more sober appraisal,” Barclay said. “The government’s record on driving reform and tackling corruption has been underwhelming.”
The record includes an aborted attempt to completely end fuel subsidies that were the equivalent of more than half of last year’s budget and a failure for three years to win parliamentary approval of a law that changes how Africa’s biggest oil and gas industry is regulated and funded. Jonathan also has been unable to unify his fractious ruling People’s Democratic Party to push through his legislative agenda.
Jonathan’s office, in a statement yesterday, said the bill will be evaluated by the “relevant government ministries” and be presented to his Cabinet before being sent to Parliament.
“This is the real world and cleaning up a system like that in Nigeria that has embedded itself over decades is going to take time,” said Gary van Staden, a political analyst at NKC Independent Economists, a Paarl, South Africa-based risk advisory group.
Jonathan, 54, had raised expectations for change by appointing Ngozi Okonjo-Iweala, a former managing director of the World Bank, as finance minister; Olusegun Aganga, an ex- Goldman Sachs (GS) managing director, as trade and investment minister; and Arunma Oteh, once vice president of the African Development Bank, as head of the Securities and Exchange Commission. He also retained Lamido Sanusi as central bank governor.
“Jonathan made a clear political statement on coming to office,” said Barclay. “The international community lauded these technocratic appointments, which were seen as a signal of Jonathan’s commitment to driving an ambitious reform agenda.”
Delivering change in Africa’s most populous nation has been more troublesome.
The president’s partial reversal of a plan to eliminate fuel subsidies in January, due to opposition from unions, civil groups and members of Parliament, puts at risk agreements such as the $23.8 billion accord China State Construction signed with the state-owned Nigerian National Petroleum Corp. in May 2010 to build new refineries and a petrochemical plant.
Nigeria’s ability to attract private investment in refineries, the Petroleum Ministry said in December, depends on allowing the market to set prices, which the subsidies depress.
The delay in the new petroleum law has kept out at least $40 billion in investments, Rolake Akinkugbe, London-based energy analyst at Ecobank Research, said in an e-mailed note on May 15. Companies including Shell, Exxon Mobil Corp. (XOM), Chevron Corp. (CVX), Total SA (FP) and Eni SpA (ENI) have said the draft bill’s proposed tax hikes would make exploration “uneconomical.” They pump more than 90 percent of the country’s oil through ventures with state-owned Nigerian National Petroleum Corp.
“A lack of clarity as to when and what form the reforms will take makes it very difficult for the oil companies to know what they will be buying into,” Antony Goldman, the head of PM Consulting, a London-based risk advisory company, said in a June 27 telephone interview.
Offshore exploration, which found billion-barrel fields such as Shell-run Bonga and Chevron-operated Agbami in the late 1990s, is at a 10-year low, according to Department of Petroleum Resources figures released in February last year, the latest data available.
Jonathan’s ability to act is hampered by opposition to his government in Parliament, even among members of his ruling party.
“One of the problems we have is that some Nigerians play politics with everything, but we cannot destroy our country because of personal political ambitions,” Jonathan said in a speech in Rio de Janeiro to Nigerians living in Brazil, according to a June 20 e-mailed statement. Much of the criticism of his government, he said, was based on lies.
As a southern Christian from the oil-rich Niger River delta, he’s enjoyed little support in the mainly Muslim north, where the Boko Haram Islamist group has carried out a violent campaign to impose strict Shariah law that has killed more than 1,000 people in the past 18 months, according to the U.S. State Department.
The government’s inability to deal with the Boko Haram insurgency prompted Jonathan to fire his defense and security ministers on June 22, saying the government needed to change tactics.
“While they may not all be linked directly, the climate of economic reform in Nigeria has certainly reversed under the blistering attacks from Boko Haram and a less than enthusiastic defense of the reform agenda by President Jonathan,” Sebastian Spio-Garbrah, managing director of New York-based DaMina Advisors LLP, a frontier-market risk adviser, said in an e- mailed response to questions.
Responding to criticism that he’s failing to deal with graft, Jonathan’s office issued a statement on July 1 listing steps he has taken, including the dismissal of the head of the Nigerian National Petroleum Corp. and three senior directors on June 26.
Lawan’s parliamentary committee said the state oil company should repay 704 billion naira in illegal fuel-subsidy payments and needed an overhaul of its management and board.
“President Jonathan remains fully committed to the diligent and effective implementation of his administration’s agenda for national transformation and the eradication of official corruption,” according to the statement.
It may not be enough, analysts at CSL Research in London led by Guy Czartoryski wrote June 27 in an e-mailed note to clients.
“A further move to indict and prosecute other involved parties who allegedly benefited from the subsidy fraud is needed to restore dwindling confidence in the government’s sincerity and ability to tackle corruption and wholly reform the petroleum sector,” they said.
Jonathan’s economic team has suffered setbacks too. SEC head Oteh was suspended on June 13 by the agency’s board following an audit of spending on celebrations of the 50th anniversary of the capital market.
Oteh had created enemies by firing Ndi Okereke-Onyiuke as head of Nigerian Stock Exchange, saying the action was needed to curb “poor corporate governance,” manipulation of the market and financial waste. She cited cases in which hundreds of Rolex watches were bought as gifts and 1.7 billion naira was shared among employees of the bourse.
Oteh’s fate “is actually a manifestation of that battle between regulatory autonomy and vested interests,” Bismark Rewane, chief executive officer of Lagos-based Financial Derivatives Co. and a council member of the Nigerian Stock Exchange, said by phone on June 13.
After central bank Governor Sanusi criticized members of Parliament in 2010 for awarding themselves jumbo pay packets, lawmakers initiated a process to amend the central bank act to curb its independence and subject its budget to parliamentary review and approval.
Nigeria’s “image and credentials are being questioned right now,” Rewane said. “The reality is that Mr President has to move swiftly to restore the credentials of Nigeria as a country that’s fighting corruption.”