Nigeria last month said it would publicly disclose all government oil and gas revenue.
Nigerian President Olusegun Obasanjo made the announcement Nov. 7 in Berlin before a meeting of anticorruption group Transparency International (TI). Obasanjo also said companies operating in his country must individually publish payments to state agencies. Human rights groups embraced his statement.
"We are overjoyed at the thought that one of world's major oil-producing nations has come out so clearly in favor of revenue transparency," said TI Pres. Peter Eigen.
"The Nigerian model of both state and company accountability, coming from Africa's biggest oil producer, has set a standard that others must follow," said Simon Taylor, director of Global Witness. Both groups want the US and the World Bank to aggressively link loans and aid to anticorruption initiatives.
Industry response
Oil companies with large investments in Nigeria and elsewhere in Africa also praised Obasanjo. But US-based companies stressed that governments—not corporations—should decide how oil revenue is accounted for. "As a company with a long history of operations in Nigeria, we are fully supportive of the president's bold move to tackle such a difficult issue as transparency and good governance," said Chevron- Texaco Corp. Chairman Dave O'Reilly. "This announcement is fully in line with what we have long believed and called for: that efforts to address the management of oil revenues be led by affected governments, not imposed on them by others.
Royal Dutch/Shell Group also welcomed Nigeria's action. In a Nov. 14 speech before the Council on Foreign Relations, Shell Chairman Philip Watts said government and corporate action is needed to ensure oil revenue goes toward sustainable development. "The obligation to help African countries achieve development falls to governments, both in Africa and elsewhere, and to international companies operating on the continent," he said. "Governments are uniquely positioned to prevent conflict, reduce corruption, and enable foreign and local investment. But international businesses should support the achievement of good governance by operating efficiently, profitably, and to the highest standards of ethical, transparent behavior, and by actively supporting fundamental human rights."
Nigeria's action makes it the first country to formally participate in the UK-led Extractive Industries Transparency Initiative. EITI is a voluntary anticorruption program aimed at resource-rich developing countries. Thirty nations, including the US and Nigeria, and 17 oil and mining companies met in London last June; Nigeria was one of several countries encouraged to participate in a pilot program that ties future development deals with specific transparency goals.
Next steps
Meanwhile, the World Bank is not sure how effective Nigeria's policy will be.
Some World Bank officials suggested it is still unclear how much government revenue will be reported. Ideally, arrangements will be made to include all government revenue, including money received from state-owned oil companies. But if the Nigerians exclude how much the state oil company earns from a concession, it could make tracking petrodollars nearly impossible.