APPRAISAL OF THE PETROLEUM SECTOR NATURAL RESOURCE GOVERNANCE IN NIGERIA* ABSTRACT The work seeks to appraise the Nigerian Petroleum sector and the issue of Natural resource governance. This issue aggregate to create a situation hereafter referred to as “resource curse”, which provides the rational basis for understanding the prevalence of poverty in many resource rich countries. It also seeks to interrogates how law, corporate governance and institutional restructuring can help reform the Nigeria Petroleum sector to actualize the ideals of sustainable industry. The Nigeria Petroleum sector remains an enclave that provides a tiny proportion of the overall employment and has relatively few direct linkages with the rest of the economy. This to a large extent includes the challenge of transparency and accountability in revenue management. A Doctrinal methodology, combining primary and secondary sources of information was adopted in this work. The key legislations are the constitution of the Federal Republic of Nigeria 1999 as (altered), the Petroleum Industry Act 2021, Petroleum Profit Tax Act 2007, Audit Act 1956, Fiscal Responsibility Act 2007, Public Procurement Act 2007, and Nigerian Extractive Transparency Initiative (NEITI). The work finds that Nigeria’s unwholesome reliance on Petroleum and rent seeking has created structural imbalances and socio-economic maladies in the economy. And identifies the challenges in Nigeria’s quest to institutionalize Natural Resource governance and has made policy recommendations with a view to reforming and institutionalizing the practices of Natural Resource governance within the Nigeria context. The works concludes that good natural resource governance that embodies corporate governance is essential to the realization of the laudable objective of the Petroleum Industry Act, without which the exploitation of the petroleum resources in Nigeria will not attain its desired objective of impacting positively on the other sectors of the economy. ____________ *Anthony Ndudi MekwunyeLL.B (Hons) LL.M, M.Phil BL, Legal Practitioner, anthonymekwunye@gmail.com INTRODUCTION The Nigerian Petroleum sector is plagued by high incidence of lack of transparency and accountability, this menace is so evident that Nigeria is unable to account for the volumes of IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 16 mailto:anthonymekwunye@gmail.com crude oil produced, exported and the receipts of the proceeds of sale.1 For instance, it was reported that a total of $27,361,347,275 was reportedly lost from the period of January to December 20172.This colossal loss has been attributed to a number of factors such as discretionary deductions by the Nigerian National Petroleum Corporation (NNPC) from its earnings and misappropriation of such funds, improper tax deductions, unpaid Niger Delta Development Commission (NDDC) contributions and discretionary award of oil block.3 The opaque operation of the sector has made it difficult for the Nigerian Extractive Transparency Initiative (NEITI) to effectively track how transparent the operations of the sector have been over the years. It appears therefore that the extant governance structure has not been able to adequately mainstream issues of transparency and accountability. Nigeria continues to face the daunting task of restructuring the petroleum-based economy, whose revenues have been squandered through corruption and mismanagement4. The National Assembly recently passed the Petroleum Industry Act (PIA).5 Important issues have been raised concerning the quality of the PIA framework and its ability to serve as a catalyst for the country’s economic development. Does it, for instance embody key natural resource governance precepts aimed at re-structuring and positioning the petroleum industry to better serve as a catalyst for the country’s economic development. Does it, for instance embody key natural resource governance precepts aimed at restructuring and positioning the Petroleum industry to better serve the development needs of the country? This is more so when Nigeria is compared with jurisdictions such as Norway and Brazil that have through strong governance frameworks been able to derive benefits from the exploitation of their natural resources while _____________________ 2 Also, Nigeria lost about $64 million between the second quarter of 2015 and the first quarter of 2017 due to unmetered oil wells. See Akintayo, O. (2018) Nigeria lost over $27bn Oil Revenue in 3years' Sweet Crude Reports. Vol 4(55) pp 1-4.See also Katsouris, C. and Sayne, A. (2013) Nigeria's Criminal Crude: International Options to Combat the Export of Stolen Oil (Chatham House) available at https://chathamhouse.org/publications/ papers/view/194254 accessed 5th May 2021. Where the authors indicate that “Nigerian Crude oil is being stolen on an industrial scale. Nigeria losses at least 100'000 barrels of oil per day, around 5% of total output, in the first quarter of 2013 to theft from its onshore and swamp operations alone… Nigeria’s dynamic, overcrowded political economy drives competition for looted resources. Poor governance has encouraged violent opportunism around oil and opened doors for organized crime. “See also Eboh, M. “How Petroleum Sector drove Nigeria into Economic Recession “The Vanguard News available at https://www.Vanguard News available at https://www.vanguardngr.com/2017/01/ petroleum-sector-drove-Nigeria-economic-recession/amp/Accessed; 29th April, 2021. 3Ibid 11See Okpanachi, E. “Confronting the Governance Challenges of Developing Countries p. 26; See also Saches, J. & Warner, A (1995). Natural Resource Abundance and Economic Growth (Development Discussion Paper No. 517). Cambridge, M.A: Harvard Institute for International Development; Ross, M. (1999). The Political Economy of the Resource Curse. World Politics Vol. 51(2), 297-322; Ross, M. (2001) Does Oil Hinder Democracy? World Politics Vol. 53, 325- 361. IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 17 https://chathamhouse.org/publications/ https://www.vanguard/ https://www.vanguardngr.com/2017/01/ petroleum 4 McPherson, H.M. (2009) Governance and Hyper-Corruption in Resource-Rich African Countries Third World Quarterly Vol' 30(8), 1542. 5 Act to provide for the Governance and Institutional Framework for the Petroleum Industry and Other Related Matters.” limiting its negative impacts on the people and environment6. Similarly, to what extent has the extant legal and institutional framework which include the Petroleum Act, 19697, (the principal legislation) the Nigerian National Petroleum Corporation Act8been able to mainstream good natural resource governance practices in the petroleum sector? This is premised on the concept that certain technocratic reforms of governance institutions can unlock the development potential of the so-called ‘resource dependent states such as Nigeria. Thus, governance is constituted and legitimized by institutions.9 Although, the PIA contain laudable objectives, however, addressing the seeming lack of political will to mainstream and enforce natural resource governance precepts in the petroleum sector and the accompanying institutional competencies is key to realization of the ideals of the PIA. Nigeria continues to grapple with the transparent management of revenues from the petroleum sector. Revenue that accrues from petroleum resources appear to have been captured by special interest’s groups, bureaucrats and politicians for their personal benefit as against the benefit of the citizenry. This sad state of affairs is attributable to the inability of the government to adequately mainstream natural resource governance in the sector. Though the industry is plagued with a plethora of issues, thus this paper seeks to focus on three core problems bedeviling the sector, due to its particular relevance to socio-economic development and sustainability. These problems centre on the legal and regulatory framework which have overtime become obsolete and does not adequately mainstream good governance practices; secondly, the institutional structures which are inherently weak are unable to enforce good governance practices and lastly, the pervading culture of lack of transparency and accountability in revenue management has predisposed the sector to corruption. The inability of a legal regime to adequately mainstream transparency and accountability is indicative of the governance deficits in the management of Nigeria’s natural resource wealth. These manifest in form of undue reliance on obsolete laws and regulations, lack of objectivity in decision making, poor public access to information, non-disclosure of oil revenues, delays ____________ 6Since 1972 Norway has separated policy, regulatory, and commercial functions in the governments administration of petroleum development. This approach particularly its requirement that the national oil company (NOC) only carry out commercial activities, has inspired admiration and imitation as the "canonical model', of good bureaucratic design for the hydrocarbon sector. See Thurber, M'C and Heller, P.R.P (2011) Exporting the "Norwegian Model” The Effect of Administrative Design on Oil Sector Performance' Energy policy Vol 39(9) 5366-5378. However, it is pertinent to inquire IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 18 whether adopting a blanket approach to the governance of natural resource similar to what obtains in a developed country might do more harm than good. 7Cap P10 LFN 2004 8 Cap. P123 LFN 2004 9 Paavola, J. “Institutions and environmental governance: A reconceptualization, Ecological Economics” (2007) Vol. 63(1) 93- 103 occasioned by multiplicity of approvals and approving agencies at various levels of government, poor enforcement, lack of independence and oversight within the relevant agencies, inter-agency rivalry and tax evasion on the part of International Oil Companies (IOCs). The extant frameworks which include the Petroleum Act,10(the principal legislation), and by extension the Petroleum Profit Tax11, the Audit Act12, the Fiscal Responsibility Act, 2007 and the Public Procurement Act, 2007 which border on the fiscal regulatory environment of the Petroleum sector have struggled over the years to properly manage and monitor revenue returns from the industry. Thus, the gaps and conflicts existing within these extant laws has fostered a culture that lacks administrative and fiscal guidelines, a poor enforcement regime and lack of independence and uncertainty. Thus, obstructing transparent and accountable resource revenue management. Secondly, the question of enforcement of accountability measures is a subset of the broader question of quality of institutions. Transparency programmes alone no matter how well designed and implemented cannot bring the desired change in the country. Improvements in institutions are critically important to lifting the natural ‘resource curse’. It is further argued that the extant institutions and management structures within the Nigerian Petroleum Industry are weak and lack the requisite independent oversight which are in most cases subjected to executive control. Also, these agencies lack the capacity to manage such a complex and dynamic industry and do not incorporate adequate international standards of transparency and accountability in its framework to allow for sufficient release of information or any means of auditing how the funds are utilized. Thus, the current industry structure and patterns of regulation are deficit, hence, the challenge, with the management of the Nigerian Petroleum Industry (NPI) is how to adequately establish independent and capable administrative agencies manned by persons of integrity who work within a proper legal framework. This requires institutionalizing the highest standards of transparency and accountability in the management process for sustainable development of the country. For the purpose of this paper, discussion will focus mainly on the role of the National Assembly, the Ministry of Finance, Fiscal Responsibility Commission, (FRC) Revenue Mobilization Allocation and Fiscal Commission (RMAFC); The Auditor General of the Federation (AuGF); Bureau of Public Procurement (BPP); Nigerian National Petroleum Corporation (NNPC), and the Department of Petroleum Resources (DPR) to enthrone IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 19 resource governance especially in the coordination of crude oil revenue collection. However, it will be ____________________ 10 1969 Cap P10 LFN 2004 11 Cap. P13 LFN 2004 12 Ordinance Act of 1956, Cap 17 LFN, 1990 discerned that these regulatory institutions have become deputized in relevance in favour of the NNPC arising from the NNPCs fund generating power for the government. Conceptual Framework Understanding the concept of the “resource curse” and its effect on the economy. The resource curse thesis affirms the widely held view that countries endowed with natural resources, such as minerals, oil and gas, has been less able to develop their economies than less endowed natural resource countries. Existing literature on natural resource in Africa has made significant contributions towards the understanding of key challenges and prospects of the sector, especially with regard to governance-related matters. The “resource curse” therefore provides conceptual basis for understanding the correlation or linkage between natural resource and poor economic performance. The ‘curse’ is an aspect commonly attributed to the governance of natural resource exploitation process and the management of the resource rents. Auty13in his seminal workstates that the inability to unlock mineral wealth for the benefit of the citizenry in developing countries is a phenomenon that has become known as “resource curse” or “paradox of plenty”. Flowing from this premise, Sala-I-Martin et al in their empirical work provides ample evidence that indicates that natural resource revenue is more likely to lead to rent-seeking and corruption in countries that have not developed sufficient quality of governance before the natural resource discovery.14Bedeeb et al15opined that the ‘oil curse’ has been attributed to countries whose economies are reliant on oil production as opposed to other natural resources. However, the success stories of some natural resource-abundant countries, such as Norway and Brazil, suggest that the abundance of natural resources is not a curse per se, but the inability of the government to manage natural resource wealth is responsible for the emergence of the ‘resource curse’ in many resource-rich countries such as Nigeria.It is important to distinguish between two key measures of countries natural resources, these are: "resource dependence" and "resource abundance". Brunnschweileret al16 define "resource dependence" to refer to the degree to which a country actually relies on resource revenues and "resource abundance" on the other hand refers to a country's estimated finite endowment of subsoil wealth or deposits of minerals, oil and gas. IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 20 __________________ 13 Auty, R. M. Sustaining Development in Mineral Economies: The Resource Curse Thesis, London; New York, Routledge, 1993 14 Sala-I- Martin, X and Subramanian, A. (2003) Addressing the Natural Resource Curse: An illustration from Nigeria NBR Working Paper Series 9804 Cambridge. Massachusetts: National Bureau of Economic Research. Available at accessed 8th March 2021. 15 Badeeb, R.M., Lean, H.H. Clark, J. (2017) The Evolution of the Natural Resource Curse Thesis: A critical Literature Survey. Research Policy Vol. 51 pp 123. 16 Brunnschweiler, C.N. Bulte, E.H. (2008) 'The Resource Curse Revisited and Revised: A tale of Paradoxes, and Red Herrings. Journal of Environ. Econ. Management. Vol. 55(3) pp.258 -264 However, it is important to investigate the mechanisms that link resource dependence to poor economic performance. Two approaches have evolved as mechanisms to address the link: Political and economic. The former being traced to rent-seeking weak institutions and corruption and the latter traced to the 'Dutch disease', volatility of oil prices and failures of economic policies. These economic and political factors are not unique to resource rich economies as they are also endemic to poor resource countries in general. However, Di John17holds the predominant view that natural resource economies experience higher levels of such factors than non-resource economies. Flowing from the above assertions, it can be said that the possession of natural resources is not sufficient to confer economic success. However, to incorporate exceptions to the general theories of the resource curse, several countries have successfully harnessed their resource for the benefit of their citizenry and thereby escaping the "resource curse". Gerelmaa et al18 investigate these theories and states that resource poor countries such as South Korea, Taiwan, Hong Kong and Singapore were among the fastest growing economies, while resource rich countries such as Congo, Sierra Leone, Venezuela and Nigeria and some Middle Eastern countries exhibited the poorest economic growth. In essence, it can be argued that the possession of mineral wealth is not an automatic sentence to the 'curse' as a properly instituted governance structures can eliminate to a large extent the resource 'curse'. To understand the curse' Humphreys at al19made a distinction as to how resource wealth differs from other types of wealth' The authors indicate that, unlike other resources, natural resources (i.e., oil, gas and. minerals) do not need to be produced, but only extracted and the second key difference of natural resource wealth stems from the fact that they are non- renewable. Karl20 follows the distinction by indicating that oil and gas occurs relatively independently of other economic processes and does little to create employment. To him, oil and gas is capital intensive and the skills required for these jobs usually do not fit the profile of a country's unemployed. Similarly, Ross21 indicates that authoritarian regimes in resource rich states can rely more on resource rents than tax revenues, which correspondingly weaken IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 21 public demand for democratic accountability, thus the ease of appropriation of resource rents by those in power mediates the ________________________ 17 Di John, J. ‘Is There Really a Resource Curse? A Critical Survey of Theory and Evidence (2011) Glob.Gov, Vol.17(2) pp. 167- 184. 18 19 Humphreys, M. Sachs, J. Stiglitz, J.E. Escaping the Resource Curse, (Columbia University Press, New York, 2007) page?. 20 Karl, T.L. (2005) Understanding the Resource Curse in Covering Oil: A Reporters Guide to Energy and Development, In: Tsalik, S. Schiffrin, A. (ed) Open Society Institute, New York pp 2l-27; Karl, T.L. (2007) Oil -led development: Social Political and Economic Consequences. Encycl. Energy Vol. 4 pp. 661 - 672. 21Ross, M. (2001) Does Oil Hinder Democracy? World Politics Vol.53 (3)pp.325-361;Ross,M.(2007)How Mineral Rich States Can Reduce Inequality in Escaping the Resource Curse, In: Humphreys M, Jefferery, S.D and Stiglitz, E.J (eds) Columbia University Press, N.Y. pp 236-255. resource dependency relationship. This implies that countries with an abundance of minerals or hydrocarbons can exhibit comparatively high levels of poverty and inequality and economic under-development as a result of its enclave nature which is highly situated in the hands of experts, mostly International Oil Companies (IOCs). In addition, deteriorating environmental quality, institutionalized corruption, the increased frequency of conflict and war, child malnutrition and adult illiteracy are vulnerabilities that most resource rich countries face.22 Natural Resource Governance The meaning of good governance has never really been clearly articulated. However, according to Doornbos,the concept of 'good governance' became prominent in the early 1990s and substituted the structural adjustment term as the ideal concept for aid conditionality23. He further indicates that though by extension it signifies sound administration and management, in another logic it allowed the "depoliticization of the development process, turning fundamentally political issues into objective judgement on what is good and bad"24. Similarly, Mkandawire suggests that the concept has been devoid of politics or purely administrative at all but rather "good governance has often been used as a signifier for the same macro- economic policies as those previously termed structural adjustment and an instrument for ensuring the implementation of adjusted programmes.25Bourgouin et al indicates that the extensive literature on the resource curse extensively adopts the framework of good governance often linking political science with institutional economics which highlights mechanisms to link resource curse. AccordinglyOkoli et al suggest that: - governance is arguably, the most crucial challenge of government and politics in contemporary states. "It refers to the capacity of the state to develop and leverage civic synergies to enable her effectively oversee its jurisdiction, enforce its values, implement its policies, control its population, as well as harness and exploit its resources for the advancement of the common good.27 IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 22 __________________ 22 Though the literature is voluminous, the seminal works are Auty, R.M. Sustaining Development in Mineral Economies: The Resource Curse Thesis' New York Oxford University Press, 1993; Karl, T.L. The paradox of Plenty: Oil booms and petro states Berkeley: University of California Press, 2001; Ross, M.L. Does Oil hinder democracy? World Politics 53(3); Ross, M.L. The oil curse: How Petroleum wealth shapes the development of nations @Princeton: Princeton University Press, 20 1 2). 23 Boschini, A. Peterson, J, &Roine, J. (2013) The Resource Curse and its potential reversal. World Development Vol. 43. pp 19-41. 24 Ibid. 25Mkandawire, T, (2007) Good governance: the itinerary of an idea. Development in Practice. vol 17 (4-5) p. 253-276 outcomes to poor institutions, mostly concerning rent-seeking behaviour by political elites. 26Bourgouin, F. et al (2013) From good governance to the contextual politics of extractive regime change. In: Jewellord N.S. et al (ed) Resource Governance and Developmental States: Critical International Political Economy Perspectives. Macmillan Distribution, England. P 87 - 104. 27 Okoli, A.l. and Uhembe, C. A. (2015) 'Crisis of Natural Resource Governance in Nigeria's Extractive Industry: Examining the Phenomenon of Artisanal Mining/Quarrying' Global Journal of Human-Social Science. Vol l5 (5). Similarly, Roba et aldefinegovernance as a system of engendering control and regulation in any public domain to encompasses governmental and non-governmental measures geared towards ensuring guided and regulated life in governmental, civil and corporate practices.28 The European Commission define Good governance as going beyond tackling corruption; it includes such things as "access to health, education and justice, pluralism in the media, the functioning of parliament and the management of public accounts and natural resources".29 Oviedo, in his articlecontextualizes governance in the extractives, where he indicates that without adequate governance mechanisms, conflicts over natural resources are often accentuated, as different sets of actors seek to utilize resources based on their specific needs or priorities.30 Flowing from this, Roba et al define natural resource governance as the rules and regulations that determine (or govern) natural resourceuse and the way these rules and regulations are developed andenforced. It is thus about relationships and who has the power andresponsibility to make and implement decisions.31 The authors also indicate that Natural resource governance refers to the application of the governance concept and principlesin determining how natural resources are exploited and utilized byrelevant stakeholders. It encompasses norms, rules, institutionsand mechanisms that regulate the decisions and conducts ofgovernments, organizations and individual stakeholders in relationto natural resource access, control, allocation, exploitation anduse.32 However, Grant et al in their article titled New Approaches to the Governance of Africa's Natural Resources' takes a narrower approach to Natural Resource Governance and indicates that rather than focus the governance of natural resources with actors (state and non- state) involved in the process, it should be more aligned to the fundamental rules that guide themanagement of natural resources. The authors indicate that policy prescriptions should not focus on a change in actor behaviour but towards improving resource governance.33 IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 23 ___________________________ 28 Roba, G. Gibbons, S.S. and Mahadi, Y.Y. (2013 'Booklet l: Strengthening natural resource governance in Garba Tula' International Union for the Conservation of Nature (IUCN) accessed 10 May 2021. 29 The European Commission (2006) 'Governance in the Consensus on Development' . accessed 10th May 2021. 30 Oviedo, G. "Improving Governance of Protected Areas for Conservation and Equity." Cited in Surkin, J. Natural Resource Governance, Empowerment and Poverty Reduction (IUCN Gland, 2011) accessed 25th May 2021. 76 Iluezi, O. E. Oil and Gas Regulation In Nigeria: Assignment Of Rights In the Upstream Sector. Available at. Accessed 25 th May 2021 77Nwokeji, U.G. (n56). 78 See Transparency International available at accessed 24 th May 2018. 79Agbiboa, D.E. (2013) Corruption and Economic Crimes in Nigeria: Social and Economic Perspectives African Security Review Yol.22(l): 47-66. Cited in Agbiboa D.E. (2014) Under- Development in practice: Nigeria and the Enduring problem of corruption. Development in Practice Yol.24 (3) pp. 390-404. 80 Ibid. 81Adelegan, A.E. (2017) Oil and Gas Sectoral Law Reform and its Implications for Economic Development in Nigeria. International Journal of Development and Economic Sustainability Vol. (5) 3 pp.24-31. transparency, accountability and ethical conduct should be deepened. What exists in Nigeria is endemic corruption and poor governance structures which have existed prior to the discovery of oil and possibly due to the existence of authoritarian regimes. The current approach and legal framework for the governance of petroleum resources revenue lacks transparency and no mechanisms for ensuring that those who manage the revenues are accountable to the people on both the exploitation of the resource and the manner in which the revenues are applied. Thus, adopting the right policies and building transparent and accountable and capable institutions, Nigeria's resource wealth can be used to lift its people out of poverty. Conclusion IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 34 A vibrant regulation and an equitable framework for the transparent and accountable distribution of petroleum revenues are important to effectively manage the Nigerian petroleum industry. But the attainment of these factors is often dependent on other factors which may extend beyond the province of law to bring about a holistic approach to reform. For instance, a vibrant law would often depend on the human capacity from which it can source professional employees, these issues were identified under the discussion of the PPTA where staff of the FIRS are limited in capacity to understand therudiments of transfer pricing or financial reports of the IOCs. There is a need to strengthen tax rules and develop competent manpower to carry out transfer audits. Thus, no matter how laudable the PIA is, supporting legislations which are obsolete or lacking in enforcement capacity will continue to lag the sector in bringing about the needful changes that is long over- due. Similarly, an industry cannot itself operate where there is unbridled corruption, in such a situation poverty is at its highest as revenues are not equitably distributed due to political and elite capture. Revenue authorities as well as Anti-Corruption institutions should endeavour to develop integrated data to aid information sharing. Thus, institutional cooperation between the Federal Inland Revenue Service (FIRS), Bureau of Public Procurement, Fiscal Responsibility Commission, Cooperate Affairs Commission (CAC) The Securities and Exchange Commission (SEC) and anti- corruption agencies, The Economic and Financial Crimes Commission (EFCC) and the independent Corrupt Practices Commission (ICPC)) which were created specifically to tackle corruption in Nigeria. With cooperation amongst these agencies, this can detect the flow of funds, however, what exists is inter- agency rivalry and lack of cooperation. It is pertinent to note that tax evasion and tax avoidance are a global problem and Nigeria must be part of the global tax agenda, such as the Multilateral Competent Authority Agreement 2019 and the Global transparency forum on access to information and the African Peer Review mechanism. Thus, except Nigeria belongs to these global bodies, the country will continue to be shut from contemporary initiatives to fight tax crimes and further "race to the bottom". Strict accountability mechanisms are required to address corruption, thus, to attemptan isolated reform may thwart the overall objective. It is important that several factors through legal and extra-legal means are embedded to ensure sustainability in the sector. The attainment of that fine balance between developed legal institutional frameworks that are managed by capable individuals on the one hand, while on the other hand are regulating IJO- International Journal of Social Science and Humanities Research ( ISSN 2811-2466 ) Volume 5 | Issue 08 | August 2022 | https://www.ijojournals.com/index.php/ssh/index 35 without being unduly burdensome on operators is the hallmark of effective petroleum industry regulation. 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