Confronting the New Trends in Extractive Revenue Leakage

Maximizing revenue for government requires preventing leakages. Maximizing profit for firms is impossible without minimizing cost. It is in this context that the fiscal instruments employed become critical, writes Kolawole Banwo, who participated at the Financial secrecy society and vested interests_ conference in Bergen.

The exploration, exploitation and marketing of natural resources require enormous financial and technical investments. Hence although governments in resource-rich countries own these resources and are expected to manage (them) on behalf of and for the ultimate benefits of their citizens, they are compelled to enter arrangements with parties that will facilitate the development of the resources. This usually come in the form of contracts with exploration and production companies most of which are privately owned and controlled though publicly quoted with limited liability.

According to Petroleum Intelligence Weekly’s (PIW) ranking in 2010, of the ten biggest oil companies in the world, four were state owned while six were publicly quoted. These were also usually multinational companies with parent companies in one jurisdiction and incorporated subsidiaries in several others. The pattern for oil and gas exploration in Nigeria is no different from this. "Red the whole text at **