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The great $6.8 billion Nigerian oil scandal

African Globe

The revelation of gargantuan levels of corruption in the Nigerian government’s fuel subsidy program is sparking a groundswell of activity among opposition and civil society groups.

Opposition politicians, civic activists and trade unionists have joined forces to demand action against grand corruption at the heart of government. They say it’s their biggest show of strength on Nigeria’s streets since protests in January that forced the government to back down on its plans to abolish the fuel subsidy scheme.

At the core of the opposition protests are the findings of a parliamentary report released April 23 that reveals the government presided over the loss of $6.8 billion from its fuel subsidy program from 2009-11 through theft and mismanagement.

“The government misread public feeling on the fuel subsidy,” says Tunji Lardner, executive director of Lagos-based information platform WANGONeT. “Hundreds of thousands of small businesses and millions of jobs were set up as the basis of the subsidy — protecting that and prosecuting corruption is a popular cause,” he explains.

Adding to the opposition’s anger are allegations that more than $28 million has been stolen from pension funds administered by the office of the head of the civil service. State investigators suspect the extent of pension fraud in the country is far larger.

This, together with the government’s announcement that it will increase electricity tariffs by 50 percent, has ignited a new round of popular outrage, say activists.

National secretary of the Conference of Nigerian Political Parties Osita Okechukwu says, “It’s a perfect storm for the government. We are taking them to the High Court for breaching the constitution, but you will also see protests backed by opposition parties and the trade unions.”

An incendiary report

Okechukwu said that the findings of the House of Representatives committee formed to probe fuel subsidy payments are proving incendiary. The committee, chaired by Farouk Lawan, was set up at the height of mass protests against government plans to remove the subsidy. Its 209-page report backs up the protestors’ argument that it was state corruption, not growing demand for fuel, that raised the cost of the subsidy in 2011.

Politicians in the ruling People’s Democratic Party (PDP) are skeptical that oppositionists will be able to repeat the mobilization seen in January. By offering to retain half of the subsidy, they believe they have shown enough flexibility towards the protestors. Okechukwu and activists in groups such as Enough is Enough Nigeria are unconvinced, arguing pressure is mounting to hold politicians to account.

“In our protests, we will have three key demands,” says Okechukwu. “All those responsible for the subsidy fraud should be sacked. They should be prosecuted, and the stolen monies returned to the state treasury.”

Growing pressure

Activists say that trade union backing will be critical. It was the unions’ threat of national strike action — including closing down oil production – that forced the government to compromise in January. “There’s no point in going onto the streets to protest if the banks and government offices are still open,” said a grassroots organizer.

In the frame for the protestors are petroleum resources minister Diezani Allison-Madueke, Nigerian National Petroleum Corporation (NNPC) chief executive Austen Oniwon, former accountant general and current Gombe State governor Ibrahim Dankwambo and the chairman of the Petroleum Products Pricing Regulatory Authority Ahmadu Ali.

Dankwambo, who professes his innocence, was accountant general when his office approved 128 subsidy payments of $6.2 million in a single day in 2009. At that time, 36 oil marketing companies were registered with the state oil company. Lawmakers argue that as chairman of the NNPCboard, Allison-Madueke should have known and stopped the state company’s role in subsidy fraud. The Lawan committee concluded that the NNPC was not accountable to any body or authority.

Wheels of the bill keep turning

Opposition action has been pushing the government to speed up efforts to get the Petroleum Industry Bill (PIB) into law, according to Lai Yahaya, director of the Abuja-based Facility for Oil Sector Transparency.

“But the wheels turn extremely slowly,” he warns. “It will probably take five years to implement the PIB — don’t forget that the Power Sector Reform Act was introduced in 2001,wasn’t passed until 2005 and government is still working on its implementation.”

Should the coalition of grassroots activists, trade unionists and political parties hold together, it could spell real trouble for the Jonathan government. Many in the political establishment see it as an opportunity to weaken Nigeria’s President Goodluck Jonathan, who is suspected of seeking to run for a second term in 2015. Should the protests take off in force again, the government will have to abandon its insouciant reaction towards the Lawan report.

Jonathan’s allies are urging a minimalist approach — setting up further probes and prosecuting some of the mid-level officials involved in the subsidy scam. Government could also sue some of the smaller oil marketing companies and jail their directors in response to public anger. Few insiders expect action against the bigger companies named by Lawan, their owners or indeed their allies at the top of government. A major reshuffle — in which Allison-Madueke would be moved or sacked–would be a last resort, if the opposition pressure was sustained. One suggestion heard in the National Assembly in early May was that Jonathan might appoint anti-corruption campaigner Ribadu as petroleum minister to silence the growing protests. That, along with much else that the government is currently doing, could have uncontrollable consequences.

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