By ADAM NOSSITER
Published: February 8, 20
Jane Hahn for The New York Times
Billions of dollars in immense oil riches have been funneled to places like Ibeno, but fishermen must still deal with environmental degradation of their water.
Jane Hahn for The New York Times
An oil drum littered a road in Bodo. Some $22 billion in federal funds remain largely unaccounted for, analysts and good-government groups say.
Closer to the people, schools are crumbling, commerce spills from squalid shacks, soldiers operate checkpoints and militants hide in the creeks.
Billions of dollars of Nigeria’s immense oil riches have been funneled to places like this in the last year alone, yet they have not brought the country peace. The region is still plagued by huge disparities of wealth, kidnappings, sabotage and threats of more to come.
In recent months this conundrum — a flood of oil wealth yet continued unrest — has emerged again amid signs that the rebellion is not over. A deadly bombing attack claimed by southern insurgents struck at the heart of Nigerian power in Abuja, the capital, killing at least 12 people last October. Since then, gunmen have attacked an offshore oil rig and seized hostages, including two Americans. The Nigerian military has conducted raids on militants, with civilian casualties. Two weeks ago, the leading militant group threatened a new wave of attacks on the oil industry.
Making sure oil profits return to this impoverished region has long been a rallying cry of the militants, but the recent increase in money here — a great deal more money — has brought more questions than calm to the Niger Delta.
In particular, foreign diplomats, analysts and rating agencies, not to mention the residents themselves, wonder what the government has done with nearly $30 billion in supplementary oil revenues. More of this money has gone to the Niger Delta than anywhere else, under a federal formula that favors the oil-producing region, but evidence of how it has been spent is elusive.
Toward the end of 2008, about $30 billion sat in Nigeria’s Excess Crude Account, a government fund of extra revenue that exceeds what the government has budgeted from the projected price of oil. When oil prices are high, money flows into the account, and it becomes an irresistible, unaccounted-for jackpot, especially for the largely autonomous governors of Nigeria’s 36 states, according to financial analysts and good-government groups.
From $30 billion, the fund had trickled down to about $450 million by mid-2010, according to Veronica Kalema of Fitch Ratings, which late last year downgraded Nigeria’s outlook from “stable” to “negative” partly because of the vast and largely unaccounted outflow from the Excess Crude Account.
By the beginning of this year, the fund had trickled down to about $300 million, according to reports in the Nigerian media. Officials with the Finance Ministry did not respond to calls for comment this month, but about $15 billion was spent in 2010 alone, Ms. Kalema said.
Some of the vast pile of cash, perhaps $5 billion to $8 billion, has been spent on so-far unfruitful efforts to upgrade Nigeria’s feeble power output, which remains no better than that of a mid-size American city for a nation of over 150 million people, Africa’s most populous. But the rest, some $22 billion or more, remains largely unaccounted for.
“Where the hell did the remaining $22 billion-plus go?” asked a foreign-based adviser to the Nigerian government who asked to remain anonymous because of his continuing relationship with it. “Most of the remaining $22 billion was drawn down by the state governments without any particular projects to spend it on, just on the basis of, there’s money sitting in the accounts, lets draw it down.”
It is entirely possible that nobody has a clear picture of what has become of this vast sum after it was parceled out at meetings of the state governors.
“It’s basically free money,” said another financial consultant who has advised the Nigerian government. “Once you get it, there are no checks and balances on what happens to it.”
The results, or lack of them, are visible in places like this steamy state capital at Nigeria’s southern edge. Empty grandiose shells — the unfinished hotel looks like a giant waffle cone — tower over swamps, near brand-new poured-concrete government buildings alongside ramshackle corrugated-metal-roofed shacks.
Along Isaac Boro Road are sprawling mansions and hotels, some finished and some not, and “all or nearly all belong to members of the state house of assembly, which is quite disconcerting to me,” said Antoine Heuty of the Revenue Watch Institute, financed by George Soros, which runs a budget-watching project here in Bayelsa State.
Some $200 million from the Excess Crude Account alone was pouring into Bayelsa State each month during parts of 2008. But local watchdogs contend that after money was approved for projects, it was never spent and remains unaccounted for. They cite about $2 million planned for the renovation of a hospital at Igbogene (except that there was no hospital there in need of renovation, they said), $2.6 million approved for an AIDS facility that state Health Ministry officials were unaware of, and $3.3 million for hospital construction in Bayelsa that the Health Ministry also knew nothing about.
Billions of dollars of Nigeria’s immense oil riches have been funneled to places like this in the last year alone, yet they have not brought the country peace. The region is still plagued by huge disparities of wealth, kidnappings, sabotage and threats of more to come.
In recent months this conundrum — a flood of oil wealth yet continued unrest — has emerged again amid signs that the rebellion is not over. A deadly bombing attack claimed by southern insurgents struck at the heart of Nigerian power in Abuja, the capital, killing at least 12 people last October. Since then, gunmen have attacked an offshore oil rig and seized hostages, including two Americans. The Nigerian military has conducted raids on militants, with civilian casualties. Two weeks ago, the leading militant group threatened a new wave of attacks on the oil industry.
Making sure oil profits return to this impoverished region has long been a rallying cry of the militants, but the recent increase in money here — a great deal more money — has brought more questions than calm to the Niger Delta.
In particular, foreign diplomats, analysts and rating agencies, not to mention the residents themselves, wonder what the government has done with nearly $30 billion in supplementary oil revenues. More of this money has gone to the Niger Delta than anywhere else, under a federal formula that favors the oil-producing region, but evidence of how it has been spent is elusive.
Toward the end of 2008, about $30 billion sat in Nigeria’s Excess Crude Account, a government fund of extra revenue that exceeds what the government has budgeted from the projected price of oil. When oil prices are high, money flows into the account, and it becomes an irresistible, unaccounted-for jackpot, especially for the largely autonomous governors of Nigeria’s 36 states, according to financial analysts and good-government groups.
From $30 billion, the fund had trickled down to about $450 million by mid-2010, according to Veronica Kalema of Fitch Ratings, which late last year downgraded Nigeria’s outlook from “stable” to “negative” partly because of the vast and largely unaccounted outflow from the Excess Crude Account.
By the beginning of this year, the fund had trickled down to about $300 million, according to reports in the Nigerian media. Officials with the Finance Ministry did not respond to calls for comment this month, but about $15 billion was spent in 2010 alone, Ms. Kalema said.
Some of the vast pile of cash, perhaps $5 billion to $8 billion, has been spent on so-far unfruitful efforts to upgrade Nigeria’s feeble power output, which remains no better than that of a mid-size American city for a nation of over 150 million people, Africa’s most populous. But the rest, some $22 billion or more, remains largely unaccounted for.
“Where the hell did the remaining $22 billion-plus go?” asked a foreign-based adviser to the Nigerian government who asked to remain anonymous because of his continuing relationship with it. “Most of the remaining $22 billion was drawn down by the state governments without any particular projects to spend it on, just on the basis of, there’s money sitting in the accounts, lets draw it down.”
It is entirely possible that nobody has a clear picture of what has become of this vast sum after it was parceled out at meetings of the state governors.
“It’s basically free money,” said another financial consultant who has advised the Nigerian government. “Once you get it, there are no checks and balances on what happens to it.”
The results, or lack of them, are visible in places like this steamy state capital at Nigeria’s southern edge. Empty grandiose shells — the unfinished hotel looks like a giant waffle cone — tower over swamps, near brand-new poured-concrete government buildings alongside ramshackle corrugated-metal-roofed shacks.
Along Isaac Boro Road are sprawling mansions and hotels, some finished and some not, and “all or nearly all belong to members of the state house of assembly, which is quite disconcerting to me,” said Antoine Heuty of the Revenue Watch Institute, financed by George Soros, which runs a budget-watching project here in Bayelsa State.
Some $200 million from the Excess Crude Account alone was pouring into Bayelsa State each month during parts of 2008. But local watchdogs contend that after money was approved for projects, it was never spent and remains unaccounted for. They cite about $2 million planned for the renovation of a hospital at Igbogene (except that there was no hospital there in need of renovation, they said), $2.6 million approved for an AIDS facility that state Health Ministry officials were unaware of, and $3.3 million for hospital construction in Bayelsa that the Health Ministry also knew nothing about.
The New York Times
The lack of results is visible in places like Yenagoa, a state capital.
“We have these situations occurring over and over, and we find it is just very difficult to have a clear picture of how money is spent,” said Philip Slaboh of the Bayelsa NGO Forum, a good-government group.
Yet Bayelsa State has become, in theory, one of the more transparent in Nigeria, putting its annual budget on the Internet and moving toward paying salaries electronically, not in the cash that is otherwise omnipresent in Nigeria, aiding corruption. Earlier in the decade, a former Bayelsa governor, Diepreye Alamieyeseigha, siphoned millions in oil money into private accounts before fleeing Britain disguised as a woman in an attempt to escape prosecution. He was convicted of fraud in 2007 and sentenced to two years’ imprisonment.
But the new transparency is limited. “I agree that nobody knows how much money coming into the state is allocated to agriculture, education” and other areas, said Dimieari von Kemedi, a top official in Bayelsa’s state government.
An audit of three state ministries under way late last year “is not going to make those ministries look good, so we don’t want to do it for the whole government,” Mr. Kemedi said. “You don’t want to collapse government.”
He defended the unfinished hotel tower and mall: “Those who think government should not be building hotels have limited ambitions,” Mr. Kemedi said.
Nearby, a light bulb hung in a classroom at the Okaka Community Primary School, and giant chunks of plaster were missing from a covered walkway to protect the students during frequent rains. Not a single school in Yenagoa has been renovated, said Wisdom Wilson of the Relief Initiative for Good Governance and Sustainable Development.
“Since the return of democracy, people have not seen any physical dividend,” said Alagoa Morris, of the Environmental Rights Action group, in Yenagoa. Mr. Morris travels the region, and though skeptical about the continued existence of camps, notes: “It would be wrong for us to say all the arms have been dropped.”
He added, “It’s so sad that the federal government has not addressed the underlying problems of the militancy.”
nytimes.com/2011/02/09/world/africa/09nigeria.html?pagewanted=2&ref=africa
Yet Bayelsa State has become, in theory, one of the more transparent in Nigeria, putting its annual budget on the Internet and moving toward paying salaries electronically, not in the cash that is otherwise omnipresent in Nigeria, aiding corruption. Earlier in the decade, a former Bayelsa governor, Diepreye Alamieyeseigha, siphoned millions in oil money into private accounts before fleeing Britain disguised as a woman in an attempt to escape prosecution. He was convicted of fraud in 2007 and sentenced to two years’ imprisonment.
But the new transparency is limited. “I agree that nobody knows how much money coming into the state is allocated to agriculture, education” and other areas, said Dimieari von Kemedi, a top official in Bayelsa’s state government.
An audit of three state ministries under way late last year “is not going to make those ministries look good, so we don’t want to do it for the whole government,” Mr. Kemedi said. “You don’t want to collapse government.”
He defended the unfinished hotel tower and mall: “Those who think government should not be building hotels have limited ambitions,” Mr. Kemedi said.
Nearby, a light bulb hung in a classroom at the Okaka Community Primary School, and giant chunks of plaster were missing from a covered walkway to protect the students during frequent rains. Not a single school in Yenagoa has been renovated, said Wisdom Wilson of the Relief Initiative for Good Governance and Sustainable Development.
“Since the return of democracy, people have not seen any physical dividend,” said Alagoa Morris, of the Environmental Rights Action group, in Yenagoa. Mr. Morris travels the region, and though skeptical about the continued existence of camps, notes: “It would be wrong for us to say all the arms have been dropped.”
He added, “It’s so sad that the federal government has not addressed the underlying problems of the militancy.”
nytimes.com/2011/02/09/world/africa/09nigeria.html?pagewanted=2&ref=africa
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