Accounting and the Management of Petroleum Subsidies in Nigeria

• In Event: International Issues

Abstract

Purpose – This paper critically examines the claim that as a technology of market solution, accounting, in particular International Public Sector Accounting Standards (IPSAS), would improve transparency and accountability in corruptly-managed subsidies on petroleum products, employed by Nigeria to redistribute wealth as part of its welfare programme.

Design/methodology/approach – A qualitative methodology was utilised to explore links between neoliberalism, accounting and accountability in a socio-political context, focusing on Nigeria. The data used was a comprehensive analysis of relevant documents and reports, and in-depth interviews with key actors in the Nigerian oil and gas sector, as well as members of the National Assembly, other public officials and professionals, notably accountants.

Findings – Outcomes before and after the removal of subsidies from petroleum and kerosene products are presented. Before the removal of subsidies, transfer pricing and other accounting practices were utilised to manipulate the cost price and the sale of imported petroleum and kerosene products to Nigerian customers as well as to justify economic rent in both processes. The commitment to market forces (deregulate the petroleum and kerosene market) and the enlisting of accounting to reduce corruption and increase efficiency in the management of the subsidies, witnessed the continued use of accounting practices to conceal a lack of accountability and corruption in the management. The adoption of IPSAS as a technology of market solution, with the main objective of improving transparency and accountability and reducing corruption in the management of the subsidies, also failed to be actualised.

Originality/value – This study challenges the neoliberal assumption that in a corrupt socio-political context with ineffective institutions of governance and a weak regulatory framework such as Nigeria, technology of market solution such as IPSAS, is a means of improving transparency and accountability and hence addressing corruption.

Keywords – Neoliberalism, accounting, accountability, IPSAS, subsidy, corruption, international financial institutions.

Paper type - Research paper

Authors

• Owolabi Bakre, Queen Mary University of LOndon

• Simeon Femi Fayemi, Queen Mary University of London