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NEITI seeks support for contract transparency

The Nigeria Extractive Industries Transparency Initiative (NEITI) has called on the National Assembly to ensure that contract transparency is clearly embedded as a key provision in the Petroleum Industry Bill (PIB).

Defending its position in a Memo to the National Assembly at the public hearing on the PIB by the House of Representatives,  the Executive Secretary of NEITI, Mrs Zainab Ahmed explained the issue of contract transparency is already a law in the United States through the recent Dodd –Frank Act, while The European Union has also recently endorsed similar legislations for adoption by all EU Member countries.

“In conformity with the global trends and EITI principles which Nigeria is a signatory, NEITI is proposing the creation of a register that will contain comprehensive information and data about holders of oil, gas and mining licenses.  Such a register should also contain information on corporate entities of all those that bid for or invest in the upstream sector of the oil and gas industry,  the identities of the beneficial owners of oil blocks and licences, including all exploration and production contracts”.

Ahmed also said that the global Extractive Industries Transparency Initiative (EITI) recently aligned with the trend by formulating executive principles to promote openness in the award of oil, gas and mining licenses.  The EITI principles also cover transparency in developing contractual obligations that guide businesses in the oil and gas industry.

On the contentious issue of confidentiality clause, which determines the nature of information that companies can share with the public on their operations, the NEITI Executive Secretary observed that section 174 of the PIB contains contradictory provision on the issue of confidentiality clauses. “This created mix signals on what information shall or shall not be made public by the companies.  NEITI is therefore of the position that the process of maintaining confidentiality of industrial information by the companies should be clarified in the legislation”.

As regards the growing public concern that Nigerians don’t know exactly the quantity of crude oil it produces, Ahmed drew the attention of the House of Representatives to NEITI’s recommendations that the PIB should provide for installation of dependable metering infrastructure to guarantee accurate measurement of crude produced, including at the oil flow stations and the crude export terminals, adding that this was  the trend in developed countries such as United States, United Kingdom, Norway.

She expressed concern that the PIB as presently drafted has no clear provision for installation of metering infrastructure for accurate measurement of the quantity of crude that Nigeria produces and requested for a redress of the situation.

The Executive Secretary also stated NEITI’s position that oil and gas companies in Nigeria should be compelled by the proposed legislation to embrace installation of metering measurement mechanism at identified critical points in the production chain.

On allocation of oil blocks and mining licenses, she made a clarification that NEITI supports the position being widely canvassed that the PIB should provide for transparent, open and competitive bidding process in the award and allocation of oil blocks and licenses.

She however added that NEITI should be empowered by the PIB to effectively monitor the exercise as well as scrutinise all contractual obligations and carry out other functions by widening and strengthening the scope of its responsibilities as already provided in section 190(6) of the draft legislation of the Bill.

She observed that the enthronement of competitive bidding process will attract wider business opportunities, capacity development, professionalism, efficiency and huge diverse foreign direct investments to Nigerian economy in general and the extractive industry in particular.


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