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Enhancing revenue transparency in oil & gas company reporting
Transparency International
Transparency International
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"A country’s oil, gas, and mining sectors, also known as the ‘extractive industries’ (EI), have the potential to produce enormous national wealth. According to recent figures, global oil exports generated nearly US$ 900 billion in revenue, equivalent to slightly more than half of the national income recorded for the poorest 53 countries.1 Yet natural resource wealth too often has come as a curse to many countries possessing it. Nearly sixty per cent of the world’s poor live in countries endowed with natural resources. Among the developing world, empirical evidence suggests that resource-rich countries are plagued by slower growth, conflicts and civil wars, as evident by the turbulence gripping the oil-rich Niger Delta region. World Bank data also indicates that oil-reliant economies exhibit strikingly low levels of public accountability and civil and political rights. With substantial oil and gas revenues flowing into the national budget, citizens have scant control over government spending decisions and transparency seems a long-off aim.2 This creates an environment which ultimately could lead to corruption. Corruption in resource-rich countries has meant that oil and gas revenues which should be invested in schools, hospitals, infrastructure and clean water are misappropriated or mismanaged, hindering these countries’ development. Human Rights Watch, a non-governmental organisation, has estimated that in Angola more than US$ 4 billion in state oil revenues ‘disappeared’ between 1997 and 2002, roughly the entire amount spent on government social programmes in the same period.3 In Nigeria, national and international watchdogs have suggested that corruption is fuelling the country’s political, economic and social problems, with substantial sums of oil revenues going missing each year.4 While Nigeria’s net oil export revenue in 2007 was estimated at US$ 411 per capita,5 most Nigerians continue to subsist on less than one dollar a day.6 The country is trying to address the challenges of its resource wealth by requiring the company-by-company disclosure of revenue payments for all firms operating in Nigeria. National legislation passed in 2004 and signed into law in 2007 provides the statutory backing for its implementation in Nigeria. Good practice shows that such a regulatory step can help to better leverage a nation’s resource wealth for a country’s citizens and development as well as tackle corruption."
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2008
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With permission of the license/copyright holder