African countries implementing the Extractive Industries Transparency Initiative (EITI) have been called upon to device home-grown strategies to tackle transparency and accountability issues bearing in mind the unique and peculiar nature of the region.

Minister of Mines and Steel Development Dr. Kayode Fayemi made the call when he received a delegation from the Malawi Extractive Industries Transparency Initiative (MWEITI) that came to understudy Nigeria's implementation of the EITI.

The Malawian delegation visited the Minister in his capacity as the Chairman of the NEITI National Stakeholders’ Working Group, which is NEITI’s board. 

Dr. Fayemi advised Africa countries to bring their traditional notions of accountability and values to interrogate existing institutional mechanisms and frameworks while entrenching the values that will stand the test of time and ultimately influence global initiatives like the EITI and make the initiative attractive for their citizens.

“One value we can add is to make the EITI relevant to our people and the government, Dr. Fayemi stated. We joined the initiative voluntarily. We need to have our own clarity of thoughts as to what we will like to see. Annual audits are fine by themselves, but we need to make the issue of transparency tangible for those who are ultimately the victims of lack of transparency especially in the extractive industries. How does what we do in NEITI for instance sit with the African mining vision that African Union Ministers have agreed for the extractive sector in Africa.”

He advised African countries implementing the EITI to use the initiative to help their respective governments by proposing alternatives and options that support reforms in their extractive industries.

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The Nigeria Extractive Industries Transparency Initiative (NEITI) says it will partner with the Niger Delta Development Commission (NDDC) to enthrone transparency and accountability in the operations of the agency.

The Executive Secretary of NEITI, Waziri Adio gave the assessment in his presentation to the Retreat of the Commission held in Port Harcourt

Mr. Adio noted that the NDDC and NEITI were set up with similar mandates targeted at addressing the syndrome of resource curse, a situation where countries like Nigeria blessed with abundant natural resources find their larger population living in abject poverty as a result of over – dependence on the natural resource and mismanagement of revenues accruing from the resource.

He lamented that over the years public perception of NDDC was more of an agency with huge revenue resources but with little impact on the lives of the people of the Niger Delta.

The Executive Secretary who was represented by NEITI’s Director, Communications, Dr. Orji Ogbonnaya Orji urged the new team at the NDDC to carry out a corruption risk assessment that will enable the agency develop a framework to strengthen its operations.

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Abuja: January 31, 2017: All government agencies have been advised to embrace full Implementation of the Freedom of Information Act as an important tool to push the anti –corruption campaign to nooks and cranies of the public service.

The Director General of the Bureau of Public Service Reforms, Dr Joe Abah made the appeal in Abuja while speaking at a ceremony to unveil the FOI portal and the new website of NEITI. The website was designed by R2K, a Non-Governmental Organization with the support of MacArthur Foundation to promote implementation and compliance with the Freedom of Information Act.

Dr Abah stated that the steps taken so far by NEITI to make its operations open, efficient and accountable were consistent with the on-going public service reforms within FGN’s Ministries, Departments and Agencies. The website which is FOI compliant is expected to serve as a model to all government agencies in responding to public inquiries on their operations and services to the citizens.

The Chairman of the Board of Trustees of (R2K) Right to Know and a former member of the House of Representatives,Honorable Uche Onyeagucha identified institutional secrecy as major obstacles to Nigeria’s development. He said that open access to information is a major tool for free speech, freedom of association and citizens participation in governance, transparency and accountability. He commended the federal government’s initiative for the introduction of Bank Verification Number (BVN) noting that, it has added tremendous value in reducing illicit financial transactions.

 

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The Nigeria Extractive Industries Transparency Initiative (NEITI) has unveiled two documents designed to push the boundaries of implementation of transparency and accountability in the extractive industries in Nigeria.

The first document is the Roadmap on Beneficial Ownership disclosure. It seeks to outline Nigeria’s strategy towards the implementation and fulfillment of Requirement 2.5 of the EITI standard which among other things demands public disclosures of the real owners of oil, gas and mining companies that operate in Nigeria.

The roadmap provides comprehensive plans and actions designed to guide Nigeria in its implementation of beneficial ownership disclosure in the extractive industries.

The strategy document also identified the institutional frameworks that are required for effective implementation of ownership transparency, clarity on definition of beneficial owners and explanation on thresholds for public disclosure required in the process.

The document also defined those who fall into the category of Politically Exposed Persons (PEPs) and the reporting obligations expected of them as well as the challenges that may be encountered during the process of data collection, data quality assurance, accessibility and timeliness.

The plan also identified the need for capacity building for all stakeholders expected to be involved in the implementation given the complexity of the extractive industries in Nigeria and highlighted the need for public education and enlightenment on the principles and benefits of Beneficial Ownership disclosures.

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18 January 2017, Abuja--The global Extractive Industries Transparency Initiative (EITI) has ranked Nigeria to have made meaningful progress in using the EITI Standard to improve the governance of its oil, gas and mining sectors.

The decision was contained in a congratulatory letter signed by the Chair of the global EITI and former Prime Minister of Sweden, Mr. Fredrik Reinfeldt following the EITI Board’s decision and the subsequent publication of the EITI Validation report on Nigeria. 

The letter addressed to the Chairman of the NEITI National Stakeholders’ Working Group (NSWG) and Minister of Mines and Steel Development, Dr. KayodeFayemi noted that “After a careful review of Nigeria’s efforts and the NSWG’s comments throughout the Validation process, the EITI Board has decided that Nigeria is making meaningful progress in implementing the EITI Standard.”

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30 December 2016, Abuja-- Nigeria earned $55.5 billion from the oil and gas sector and N55.82 billion from the solid minerals sector in 2014, the latest audit reports of the Nigeria Extractive Industries Transparency Initiative (NEITI) have revealed.

The NEITI 2014 audit reports also show that a total of $4.7 billion and N318.2 billion that should have gone to the Federation Account were not remitted by NPDC and its parent company, NNPC. Losses from crude-for-product swap and Offshore Processing Arrangements (OPA) were put at $198.7 million in 2014.

At the close of the 2014 audits, NPDC had not paid the outstanding $1.7 billion for the eight OMLs under the Shell JV divested to it by NNPC. NPDC had also not paid for the four OMLs under the NAOC JV divested to it by NNPC. Those four assets were recently valued by DPR at $2.25 billion; NPDC had sought clarification for the basis of the valuation.

According to the reports, the total revenue flows for the oil and gas sector fell from $58.07 to $55.5 billion between 2013 and 2014, a decline of about 5%. However, revenue flow for the solid minerals sector in 2014 showed a marked improvement over the previous year, with a 48% rise from the N37.676 billion of 2013 to N55.8 billion in 2014.

Forty-one (41) oil and gas companies and 16 government agencies were audited for the 2014 Oil and Gas Audit cycle. These were the producing companies that made material payments of $5 million and above to the federation in 2014 and the government agencies that received funds on behalf of the federation.

109 producing assets were active in the year, comprising:  59 Joint Venture (JV) licenses; 26 Sole Risk and Marginal Field Operating (SRMF) licenses; 23 Production Sharing Contract (PSC) licenses; and one Service Contract (SC) license.

The 2014 oil and gas audit, which was conducted by SIAO and Co., a Nigerian accounting and auditing firm, also reveals the following: 22 billion litres of petroleum products were imported as against the 20 billion litres imported in 2013, with 950 million litres of the products locally produced in 2014 as against the 2.6 billion litres locally produced in 2013; N1.2 trillion was processed as subsidy claims in 2014 as against the N1.3 trillion processed for subsidy in 2013; and N426.6 billion was distributed in 2014 under the Subsidy Re-investment Programme (SURE-P), same as the SURE-P figure for 2013.

Other major highlights of the 2014 Oil and Gas Audit report include the following:

1. Unremitted Funds  by NPDC

N68.28 billion was the outstanding liabilities from NPDC for PAYE, WHT, EDT, VAT and NDDC Levy while $3.3 billion was the outstanding liabilities for Royalty Oil, Royalty Gas, PPT and Gas Flare Penalty. (Breakdown of the outstanding liabilities of NPDC is in Table 1 below)

2. Shortfall of N250 billion in Remittance to Federation Account by NNPC

The value of crude oil allocated to NNPC for domestic use in 2014 came to $15.67billion or N2.44trillion.Only N1.36trillion was received in the year 2014 in respect of domestic crude oil;while the total deduction from domestic crude sales was N830 billion.This therefore leaves an unremitted balance of N250billion from the domestic crude sales.

 3. $1.42billion NLNG Dividend for 2014 Not Remitted by NNPC, totaling $15.8 billion Not Remitted between 2000 and 2014

  • NLNG paid $1.42 billion to NNPC as dividends, loan and interest repayments for 2014 but the amount could not be traced to the Federation Account.
  • Between 2005 and 2013, there was an outstanding of $12.92 billion of dividends, interest and loan repayment made by NLNG to NNPC but not remitted to the Federation Account;
  • The 2014 audit uncovered evidence of $1.5 billion paid by NLNG to NNPC between 2000 and 2004 but also not remitted.
  • This brings the sum of unremitted NLNG dividends, interest and loan repayment to $15.8 billion as at the end of 2014. (Year-by-year breakdown in Table 2 below).

The audit of the solid minerals sector was conducted by Amedu Onekpe and Co, a Nigerian accounting and auditing firm. The following are the highlights of the solid minerals audit report:

  • Total of 498 companies covered, out which only 39 met the materiality threshold payments of N3 million and above. But these 39 companies accounted for 90.89% of total payments for the sector.
  • Dangote Cement accounted for 32.18% of the total N1.2 billion paid as royalties for the sector;
  • Of the 36 million tons produced in the sector, limestone and granite accounted for 56.68% and 30.59% respectively;
  • Increase in coal production from 106,456 tons in 2013 to 127, 467 tons in 2014 about 20%;
  • The value of exports of solid minerals in 2014 was $26.14 million out of which Lead/Zinc accounted for 90.13% with Free on Board (FOB) value of $23.561 million.
  • Exports figures reported by companies were different from those declared by Government Agencies.
  • Multiplicity of taxes, fees and levies imposed by the three tiers of government on extractive companies makes the environment unsuitable for business.
  • Inefficiency in the system of record keeping and reconciliation process by Government Agencies result in the huge variances between company payments and government receipts.
  • The poor monitoring and regulation by regulatory agencies in the sector result in gross under-declaration and misstatement of production volumes, leading to significant revenue loss to the government.
  • A total of N9.9 billion that accrued up to 31st December 2014 was shared in July 2016 among the three tiers of government. This is the first time revenue from this sector would be disbursed.
  • The solid minerals sector accounted for 4% of total national export earnings for the year 2014; this disclosure reconfirmed Nigeria’s over dependence on oil and gas and marginal interest in the solid minerals sector in spite of the infinite opportunities.

On the whole the two reports revealed that most of the remedial issues flagged in previous NEITI audits remain unresolved.

NEITI therefore urges the legislature, media, civil society groups and citizens at large to use the information and data contained therein to trigger informed debates, strengthen the demand for reforms, and hold governments and companies to account.

The release of these reports by NEITI is in accordance with the global Extractive Industries Transparency Initiative (EITI) standards which encourage implementing countries to release their independent industry audit reports at most two years in arrears.

The detailed information and data, findings and recommendations contained in the comprehensive reports are available on the NEITI Website www.neiti.gov.ng.

Table 1: Breakdown of Amount Withheld by NPDC

S No. Un-remitted Funds Naira (million) Un-remitted Funds Dollar (million)
  PAYE 42 Royalty Oil 451.4
  WHT 17,1000 Royalty Gas 15.2
  EDT 15,700 PPT 991
  VAT 7,000 Gas Flare Penalty 1820
  NDDC LEVY 28,300
  TOTAL 68.2 million   3.3 billion

Table 2: Breakdown of NLNG Dividends from 2000 to 2014

Year USD'000
2000 211,341.00
2001 322,077.00
2002 226,562.00
2003 436,272.00
2004 280,095.00
2005 207,282.00
2006 332,980.00
2007 842,957.00
2008 2,613,170.00
2009 879,839.00
2010 1,427,512.00
2011 2,537,503.00
2012 2,795,531.00
2013 1,289,592.00
2014 1,420,000.00
Total 15,822,713.00A

 

The Nigeria Extractive Industries Transparency Initiative (NEITI)   has commended the Federal Government’s decision to terminate cash call payments on   Joint Venture Agreements with major international oil companies.

NEITI is relieved that the exit from this funding arrangement which has lasted over forty years has received the endorsement of the Federal Executive Council.

NEITI applauds this landmark decision as most timely, bold, courageous and a huge relief given the avoidable huge debt burden which JV Cash payments have imposed on the nation over these years.

We note that all NEITI independent audit reports on the oil and gas industry since the last ten years had alerted the nation that the management of JV Cash Call regime had constituted drain pipe to the country’s scarce oil and gas revenues.   

For instance, NEITI Reports disclosed that from 2009 to 2013, NNPC had made total Cash Call payments of N2.4 trillion and another $16.2 billion respectively as Cash Calls obligations for Joint Venture operations in the oil and gas industry.

NEITI Reports equally expressed concerns on the process lapses in the management of the Cash Call and the wider implications to huge revenue leakages.

From NEITI Reports, a breakdown of the naira components of the payments alone shows that in 2009, the country paid N460.24 billion while Cash Call for 2010 stood at N441.44 billion. In 2011, the sum of N416.58 billion was paid, and in 2012, the figure rose to N612.93 billion while in 2013 the sum of N492.81billion was paid as Cash Call to JV operations.

A similar breakdown of payments in foreign currency shows that in 2009, the sum of $3.73 billion dollars was paid. This marginally increased to $3.78 billion in 2011 while $2.60 billion was spent by the nation on Cash Call. The total Cash call payments for 2012 and 2013 were $3.10billion and $2.98billion respectively.

The decision of the Federal Government to terminate this funding arrangement with   major oil companies is therefore a bold step in the right direction. One immediate benefit is that it   will   free the country from   complex financial burden and allow the resources to be channeled to other national priorities.

NEITI is therefore pleased that an important finding and recommendation outlined in its independent audit reports ignored over the years have been implemented as part of the on-going reforms.

We commend the Minister of State for Petroleum Resources, Ibe Kachikwu, and the management of the NNPC for responding adequately to this remedial issue in NEITI Reports in the overall interest of the nation.  

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