NEITI demands more automation in oil, gas production processes

NEITIOscarline Onwuemenyi 14 May 2013, Abuja – The Nigerian Extractive Industries Transparency Initiative, NEITI, has said that only an automated process that is devoid of human elements would guarantee the effective, timely, accurate and reliable audit and reporting on the operations of the country’s oil and gas industry.

NEITI Director of Communications, Mr. Orji Ogbonnaya Orji, who disclosed this in Abuja, explained that the manual system currently being adopted by government agencies as well as companies involved in oil and gas production has been responsible for the gaps experienced in effective audit reporting in recent times.

He identified some of the gaps to include the difficulties that successive consulting firms hired to conduct the audits face in collating the required information for the exercise from the operating companies,

This has been responsible for the delays and missed deadlines experienced in recent times in the submission of its final audit reports, he lamented

According to him, “An automated audit process will make the exercise more effective, efficient, transparent and reliable, instead of the current manual procedure in data gathering, collation and management with its attendant problems.”

The agency had early last year awarded a N226.6 million contract to the accounting firm of Sada Idris & Co. to produce a three phased core audit on the oil and gas industry, comprising financial flows, physical and process reports, to bring up-to-date its secretariat records in line with its national mandate and rules of the global EITI principles.

Apart from reviewing and reconciling all revenues collected by government agencies on behalf of the Federal Government, the consultant was also mandated to review all payments by all the oil and gas companies operating in the country, to ensure that they complied with international reporting standards and rules of the global Extractive Industries Transparency Initiative, EITI.

However, at the expiration of the nine months deadline, the company only managed to publish the report on the financial flows, with process and physical reports still pending, despite three deadline extensions and a final 21 days ultimatum, which expired on April 24.

The NEITI spokesman decried reports that the failure by the consultant to turn in all the three reports on time for Nigeria to submit them to the EITI Secretariat before the December 31, 2012 deadline was posing a potential threat to country’s status as a leading member and one of the 34 EITI Compliant countries.

“I wish to state that there is no threat whatsoever to NEITI’s validation as a Compliant member of the global Extractive Industries Transparency Initiative”, Mr. Orji said. “I wish to also state that the integrity of NEITI audit reports, methods and procedures remain solidly on granite and one that can be taken to the bank.

“By publishing the financial flows of the 2009-2011 oil and gas audit report as at when due, NEITI and Nigeria is in no default of the Global EITI requirement as at today. The remaining part of the report is solely a requirement of the NEITI Act under our (NEITI) national mandate,” he stated.

He said Nigeria’s independent decision to go the extra mile to conduct an audit beyond mere financial flows to cover the physical ways and processes the revenues were paid by oil companies and received by government is currently being reviewed and considered for adoption by the EITI secretariat as a model of audit reporting for other member-countries.

Insisting the country was not under any obligation to submit more than the financial flows report already submitted to EITI Secretariat, Mr. Orji said not submitting the remaining two reports is not capable of attracting sanctions from the EITI, adding that reports, which are now ready would be reviewed by the NEITI Board before being submitted to the Executive Council of the Federation, FEC, for final approval.

According to the director, the noticeable delays in the audit implementation schedule are not peculiar to Sada Idris & Co., as this has been the recurring experience that NEITI has been battling to overcome over the years, pointing out that with the scope of the audit now expanded to cover issues on oil theft and fuel subsidy, the covered entities have grown from 38 to 59, with the attendant additional responsibilities to the consultant in collating the information and data for the final report.

He said these challenges have made NEITI’s quest for automated auditing process a top priority on its five-year strategic plan, adding that it is currently in discussion with the World Bank to establish an automated system that is expected to become functional before the next auditing exercise.

Orji disclosed that the Norwegian government has pledged its support to NEITI to help realise the plan, even as he urged the Federal Government to expedite action to ensure that the automated audit system becomes operational in the country in the near future to remove the challenges in the process.

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