The need to ensure Nigerians get the maximum benefits from its oil and gas resources is the motivation behind the Nigeria Natural Resource Charter framework for policy formulation. Tengi George –Ikoli, programme coordinator, NNRC, said that the framework is a tool for effective resource management in the country.
From findings by NNRC, Nigeria has earned more than $1 trillion from oil revenue since its inception, with that the country is still ranked high in major underdevelopment indicators such as poverty, infant and maternal mortality among others. In its comparative analysis of resource-rich countries, it is obvious that development outcomes hinge not strongly on the resource endowment per se, but crucially on effective management and good governance of the resource. “This is a major conclusion of the most recent assessment; 2017 Benchmarking Exercise Report (BER) assessing Nigeria’s oil and gas resource management strategies conducted by the NNRC. The 12 precepts of the Natural Resource Charter provides insights into the revenue management strategies adopted in Nigeria using oil and gas resource revenues from 2015 to 2017. In particular, precept 4, 7, and 8 touched on the weak fiscal regime, the linkages between revenue and development, and concerns around stabilising expenditure.”In its precept 4, which assessed the taxation and other company payments, NNRC revealed that over the years taxation has served as a viable source of revenue to the federal government of Nigeria. However, in the process of collecting taxes on extractives, there have been some major challenges in balancing taxes and ensuring that the exploitation of resources remains attractive to foreign investors. The NGO recommended that the following steps should be taken to make taxation attractive to foreign and local companies: the first is setting fiscal terms that are neither too high nor too low and that provide a suitable share of both the risk and return of extraction operation; legal framework the provides sufficient assurances to investors should be created, but is not so rigid that the assurances prevent the government from responding if economic circumstances change significantly. Also, authorities collect the full amount of revenue set by the fiscal terms, and ensure that government officials are held to account for each of these tasks.
In its precept 5, NNRC stated that it is of great importance to ensure the equitable distribution of resources to host communities and citizens of a producing country in timely and professional manner.
On state owned enterprises which precept 6 took a critical study, NNRC stated that the optimal performance of state owned enterprises (SOEs) is a critical component of the extractive value chain. If properly harnessed it can ensure the sustainable harnessing of extractive revenues and rapid development across the nation.
By Pita Ochai