As Nigeria commemorates 26 years of uninterrupted democracy today, the country must confront the enduring contradictions of its oil and gas industry. The sector has shaped national politics, fueled economic cycles, and exposed democratic shortcomings, yet it remains deeply entangled in inefficiencies, elite capture, and unfulfilled promises.
Since the transition to civilian rule on May 29, 1999, and the institutionalization of June 12 as Democracy Day, oil has continued to bankroll government revenues. However, the anticipated dividends of democracy—transparency, inclusive growth, and citizen participation—have struggled to take root in the petroleum industry.
Oil: The Wealth that Deepens Economic Fragility
Nigeria’s democracy has been sustained largely through the petroleum sector, which contributes nearly 90% of foreign exchange earnings and more than half of government revenues. However, the economy remains highly vulnerable to external oil shocks that continually disrupt budgetary planning and fiscal stability.
Between 1999 and 2024, the country endured multiple oil price crashes, most notably in 2008, 2014, and during the 2020 pandemic, each triggering economic contraction, exchange rate volatility, and inflation. In 2020, oil prices briefly fell below $0 per barrel due to a global supply glut and weak demand. The Nigerian economy contracted by 6.1% that year, driven by a combination of the pandemic and the oil shock, deepening debt levels, and weakening of the naira.
Although democratic governments established fiscal buffers like the Excess Crude Account (ECA) in 2004, the Nigeria Sovereign Investment Authority (NSIA) in 2011, and the ₦20 trillion InfraCorp in 2021, political interference and weak institutional discipline have hampered long-term savings and transparent fiscal management.
Petroleum Industry Act: An Incomplete Revolution
The passage of the Petroleum Industry Act (PIA) in 2021 stands as a major legislative milestone in Nigeria’s democratic journey. The PIA aimed to restructure the oil and gas sector by commercializing the Nigerian National Petroleum Corporation (now NNPC Ltd), establishing new regulatory agencies, and creating frameworks for host community engagement.
Despite these reforms, implementation has lagged behind expectations. NNPC Ltd has shown some profit margins in recent audited reports, but it still operates with limited public oversight and transparency. The newly created regulators, the NUPRC and NMDPRA, continue to face credibility challenges due to alleged regulatory capture and political interference.
Furthermore, the Host Community Trust Funds, designed to allocate 3% of oil company expenses to impacted communities, remain inconsistently funded and poorly managed. The gap between legislative aspiration and institutional reality underscores the fragility of reform in Nigeria’s democracy.
Fuel Subsidy Removal: Reform Meets Public Discontent
In May 2023, the federal government removed petrol subsidies, ending a regime that had cost the country over ₦18 trillion between 2005 and 2022. The move was aimed at freeing up fiscal space and redirecting funds toward infrastructure development and economic diversification.
However, the aftermath has been painful for citizens. Fuel prices have surged from ₦185 to over ₦900 per litre in parts of the country, while inflation has climbed and real wages have stagnated. Although the policy may improve macroeconomic indicators, it has exposed millions to heightened economic vulnerability in the absence of robust social protection programs.
The Niger Delta: Still Bearing the Burden
In the oil-rich Niger Delta, the democratic promise of inclusive development remains largely unfulfilled. Environmental degradation continues to afflict communities, with oil spills, pipeline leaks, and gas flaring poisoning water sources, destroying farmlands, and endangering public health.
While the government claims a commitment to emissions reduction, satellite data shows that gas flaring has dropped from 471 billion to 224 billion standard cubic feet per year between 2018 and 2022. However, enforcement remains weak and violations often go unpunished. The 2011 UNEP report on Ogoniland recommended a comprehensive clean-up, but progress has been painfully slow, hindered by underfunding and limited community involvement.
Nigeria has pledged to end gas flaring by 2030 and achieve net-zero emissions by 2060, yet the energy transition must be inclusive and environmentally just. Without targeted investment in clean energy and ecological restoration, oil-producing communities will remain marginalized.
Dangote Refinery: A New Dawn or Another Missed Opportunity?
The commissioning of the Dangote Petroleum Refinery in May 2023 signaled hope for domestic refining capacity. With a projected output of 650,000 barrels per day, the refinery could transform Nigeria from an importer to a net exporter of refined products, saving billions in foreign exchange.
Yet the refinery has yet to reach full production capacity due to logistical constraints and regulatory uncertainties. NNPC Ltd, which owns a 20% stake in the project, still imports most of the nation’s petrol. Without streamlined regulations and improved infrastructure, the refinery’s full potential may remain unrealized.
The Elusive Transparency in Oil Contracts
One of the persistent failures of Nigeria’s democratic system is the opacity surrounding oil licensing and contracting. Successive licensing rounds, including those for marginal fields, have been marred by political interference and allegations of corruption.
Despite the efforts of transparency watchdogs like the Nigeria Extractive Industries Transparency Initiative (NEITI), access to full oil contract data and beneficial ownership disclosures remains limited. The government must mandate the publication of all contracts, payments, and production figures if democracy is to earn public trust.
Charting a Democratic Path for the Oil Sector
For Nigeria to democratize its oil wealth, the following steps must be prioritized:
- Empower oversight institutions and civil society with legal authority and real-time access to oil sector data.
- Accelerate investments in refining capacity, natural gas infrastructure, and renewable energy as part of a coordinated energy transition strategy.
- Reform host community engagement to include transparent decision-making and benefit-sharing mechanisms that prioritize local development.
- Enforce competitive bidding and open contracting to prevent elite capture of national resources.
Democracy Must Deliver Economic Justice
After 26 years of civilian rule, Nigeria stands at a crossroads. While legislative frameworks like the PIA signal progress, democratic governance must translate reform into tangible, people-centered outcomes.
The oil sector cannot remain an enclave for vested interests. It must serve as a vehicle for national development, environmental restoration, and social equity. Democracy, if it is to endure, must go beyond the ballot to deliver accountability and economic justice.
This Democracy Day should not merely celebrate civil liberties. It must renew our collective resolve to transform oil wealth into a public good, lifting every Nigerian, from the creeks of the Delta to the corridors of power in Abuja.
