Nigeria’s oil and gas industry has been placed in a weak performance band scoring 53 of 100 rating points in the latest Resource Governance Index released by the Natural Resource Governance Institute (NRGI).

The 2021 Resource Governance Index assesses how 18 resource-rich countries govern their oil, gas and mineral wealth.

NRGI, in the report explained that the weak performance band of Nigeria, the largest oil and gas producer in Africa, was as a result of gross mismanagement in the governance of the country’s oil and gas sector.

The institution highlighted corruption, fiscal mismanagement and environmental degradation of the Niger Delta as factors that influenced the weak rating.

Weakness in value realisation, licensing process and an overall ineffective enabling environment were some of the other defects highlighted in the report.

Faulting the sector’s company licensing process, NRGI said there was a general lack of transparency in the country’s oil industry adding that there is currently no publicly accessible cadastre or registry of licenses.

It said the 1969 Petroleum Act did not require the minister or any other actor to establish criteria by which companies become qualified to participate in licensing, and there is no requirement to disclose biddable terms or rules governing the process.

In terms of value realisation, revenue management and enabling environment, Nigeria’s oil and gas sector scored 56, 68 and 36 points respectively.

The new rating comes a few days after President Muhammadu Buhari regime appointed Mele Kyari as Chief Executive Officer of the Nigerian National Petroleum Corporation (NNPC) on the occasion of the approval of the incorporation of the petroleum industry regulators.

NRGI recommended that the Buhari regime should ensure that the articles of association for new NNPC entities created by the PIA contain binding obligations to publish audited financials and detailed commodity sale data.

It also advised relevant government agencies to disclose more information on the climate risks and impacts of the country’s existing and planned oil and gas sector operations.

The institution called for the creation of a multi-stakeholder task force, with representatives from all relevant government bodies, a range of civil society organisations, research institutions and communities, to develop an evidence-based, consultative energy transition plan for Nigeria.

The index composite score is made up of three components. Two measure key characteristics of the sector’s value realisation and revenue management and the third captures the broader context of governance, the enabling environment.