OSCARLINE ONWUEMENYI

The Nigeria Extractive Industries Transparency Initiative, NEITI, said it has developed a strategic plan to guide its annual work plans over the next five years.

At the heart of the strategic plan are four Strategic Goals, which taken together and fully implemented, will lead the extractive industry transparency watchdog to impact more robustly on accountability in the sector.

It is often hard to measure the impact of an agency, especially one engaged in the business of holding others accountable. More so, given the entrenched corruption and various interests in the nation’s oil and gas industry, the job of keeping operators on their toes, and be seen to be doing so, is indeed herculean.

Over the years, the management of NEITI has faced the question of what has been the noticeable impact of its activities on poverty reduction in the land. Many citizens anxiously wonder about the efforts of the agency in generating more revenue for the national coffers, thereby making more money available for poverty reduction and wealth creation.

Ingrained in the urgency of these questions is the fact that the impact of an agency in the mold of NEITI would most probably be measured mainly in its ability to create the necessary environment to make poverty reduction interventions more efficient and effective.

But the impact of the NEITI on the Nigerian society can be measured indirectly. First, through its core function of disclosing and publishing company payments and government receipts of revenues from the extractive industry, the government and Nigerians are ‘empowered’ to demand their rightful share from the Federation Account, in accordance with the law.

In addition, through its financial, physical and process audits of the industry, NEITI monitors and publicises the extent to which gas penalities are paid by oil and gas companies, and the degree to which the penalties serve as disincentive to continued gas flaring in the Niger Delta.

The underlying philosophy of the Extractive Industries Transparency Initiative, EITI, is the belief that strengthened transparency of natural resource revenue can reduce corruption, transform economies, reduce poverty and raise the standard of living in resource-rich countries. Nigeria’s voluntary decision to embrace the EITI was in the context of the comprehensive socio-economic reform programme embarked by the Federal government in 2003. NEITI is therefore, part of the institutional and governance reform.

The primary objectives of the NEITI are to ensure due process and transparency in the payments made by all extractive industry, EI companies to the Federal Government and statutory recipients. Others include monitoring and ensuring accountability in the revenue receipts of the Federal Government from these companies, eliminating all forms of corrupt practices in the determination, payments, receipts and posting of revenue accruing to government from the companies’ operations.

NEITI is equally expected to ensure transparency and accountability in the application of resources from payments received from EI companies and promotes conformity with the principles of the EITI.

NEITI’s output is represented mainly by three comprehensive audit reports, covering financial flows, physical volumetric data, governance or management processes on issues in the oil and gas sector for the period 1999 – 2008. During this period, the country has produced three reports which are not only disaggregated but are in three inter-related parts – financial, physical and process.

The Executive Secretary of NEITI, Mrs. Zainab Ahmed, explained at a recent workshop to discuss the five-year strategic plan, that in terms of the scope of the value chains, the depth of information and data disclosed, and the number of years covered, the NEITI audit reports are unparalleled in the history of the EITI globally.

Indeed, the audit reports revealed very weighty issues which when addressed would significantly improve governance and revenue management in the industry.

According to Ahmed, “The issues include poor institutional linkages between the technical and the financial aspects of the industry, poor information system exemplified by much reliance on paper-based data and information storing, retrieval and sharing system.

“Other lapses include inefficient system of financial management, poor metering infrastructure and grossly inefficient measurement for crude oil production accounting. Besides, there was no precise, clear and workable basis for determining production volumes, royalty purposes and reliable fiscal regime.”

Ahmed stressed that the NEITI reports exposed inadequate capacity of the relevant regulatory agencies to confidently and rigorously verify royalty and petroleum profit tax computations prepared by companies in a manner that checks the large discretionary powers of the Petroleum Minister. “These deficiencies revealed by NEITI in all its audits have over the years cost the Nigerian government dearly. They were the key sources of waste, fraud and monumental corruption,” she said.

On his part, the Chairman of the National Stakeholders Working Group, NSWG, of NEITI, Prof. Assisi Asobie, argued that there are several benefits that have accrued to Nigeria from implementing the EITI, including the creation of a new ‘consensual framework’ for reporting and disclosure of payments and receipts in the extractive industry sector.

He pointed out that by embracing the EITI principles, “the sector is now becoming open for public participation and scrutiny.

For instance, as public opinion surveys indicate, the generation and publication of accurate data and credible information on flows of revenue, physical volumes of production and governance or management process and practices in the oil and gas sector have become major tools for holding companies and government to account.”

Asobie further noted that there is a widening acceptance of the need for due process, coupled with transparency in the payments made by the EI companies to government and other recipients.

“In addition, there is growing acceptance of the imperative of promoting accountability and ending corruption in revenue payments and receipts in the sector and belief that citizens’ welfare is likely to be maximized when there is entrenched culture of transparency and accountability, by government, in the application of resources and revenues generated in the sector.”

He added that within the four years of NEITI, between 2004 and 2008, there was evidence of credit rating of Nigeria and higher level of credibility for the government within the international community. According to him, NEITI as part of the overall government economic reforms agenda has clearly pointed the way on how to increase the revenue accruing to the Federation Account.

In general, NEITI has put the nation on the alert that it has information to show that the fiscal regime now being operated does not enable Nigeria to optimize its financial benefits from the oil and gas sector, and should not be consolidated into the Petroleum Industry Bill, PIB, currently before the National Assembly.