IMF policy approaches

Nigeria was the first country to "benefit" from the IMF's policy support instrument (PSI) (a non-lending instrument which began in mid-2005, see Update 48), to which reform of the power sector is central. The PSI was central to the cancellation of Nigeria's foreign debt with the Paris Club in 2005, which needed IMF endorsement for the deal to go ahead. Former finance minister Ngozi Okonjo-Iweala, now managing director of the World Bank played a key role in the agreement.

key ingredients of the IMF's PSI were controversially passed during president Obasanjo's last few days in office, leading to a national strike in June 2007. These included the sale of the Kaduna and Port Harcourt oil refineries; the sale of the Egbin power station and other national assets; an increase in the cost of petroleum products; an increase in value added tax; and the non-implementation of the 15 per cent increase in civil service salaries.

The sale of the Eleme Petrochemicals plant, in Port Harcourt, was a structural reform of the PSI in October 2005. The plant is the largest of its kind on the continent. National newspapers report that it was sold for approximately $225 million to the Nigerian subsidiary of the Indonesian firm, Indorama Group. The National Union of Petroleum and Natural Gas Workers described this amount as "not worth the spare parts available at the plant".⁴

The World Bank funded the implementation of the bill for the implementation of the Nigerian Extractive Industries Transparency Initiative (NEITI). NEITI is central to the energy question in Nigeria, particularly in light of the failure to channel massive oil and gas revenues to for the benefit of national development. NEITI was developed together with the procurement bill and the freedom of information bill. However, in the event only NEITI was approved by both the Senate of the National Assembly and the House of Representatives, and with a significant amendment. This appeared without explanation, at the last minute and allows much greater leeway to oil companies over the issue of disclosure. To the provision on the power of NEITI to obtain information from companies' volume of sales of oil, gas and other minerals extracted was added the caveat that "provided that such information shall not be used in any manner prejudicial to the contractual obligation of proprietary interests of the extractive industry company". According to the Civil Society Legislative Advocacy Centre, these clauses have the potential "to defeat the entire essence of the transparency campaign in the extractive industry". Despite this blatant violation of both due process and disclosure, the IMF praised the NEITI bill as "good progress in efforts to improve governance and reduce corruption". The bill was passed by the Nigerian Senate in May 2007, days before the end of Obasanjo's tenure.