A Review of the Nigerian Energy Industry

NEITI blames poor implementation of audit report on oil sector rot

The president of the Movement for the Su

Yemie Adeoye 11 February 2014, Sweetcrude, Lagos – The Nigeria Extractive Industries Transparency Initiative, NEITI, says poor implementation of its independent audit reports in the oil and gas sector is the greatest challenge that confronts prudent management of extractive sector revenue.

Chairman of NEITI National Stakeholders Working Group, NSWG, Ledum Mitee, stated this at a workshop in Lagos marking the commencement of NEITI comprehensive audit of the oil and gas sector for the year 2012.

“Granted that by the very nature of our processes these audits are historical and thus unable to clear the current allegations by the Central Bank of Nigeria (CBN), yet we have consistently made the point that with adequate funding and support, we could automate our data collection processes to enable us get real time data which could be resorted to in the event of controversy,” he said.

Explaining that if NEITI reports were given the attention it deserved such issues as confirmation remittances of funds to the federation account would not be a subject of controversy, he said: “I shudder to hope that one useful outcome of the current controversy over allegations of unremitted funds would be the realisation of the need by all relevant agencies and institutions to give NEITI and its audit recommendations the deserved seriousness and support.

“A properly resourced NEITI whose audit recommendations are promptly addressed remains vital not only to our economic wellbeing but the enabling citizens derive needed benefits from our extractive resources.”

The NEITI chairman gave assurance that the ongoing audit was critical to providing reliable information and data required for the proposed massive reforms.

“This exercise that commences the current audit circle is coming at a critical time in our nation’s political development when issues of transparency and accountability are attracting increasing attention and it is also important in two other important respects,” Mitee added.

He continued: “First, it is the first audit that could be conducted under the new set of EITI requirement and standards that was approved by the global body in May, 2013.

“Thus for instance, the current audit would contain information of beneficial ownership amongst other issues. Secondly, it is coming at a time in our national history that the Nation is embroiled in a very unfortunate allegation of non-remittance of oil revenues to the federation account.

“I find the controversy unfortunate for there are issues that ordinarily fall under the NEITI statutory mandate that would have been needless and unnecessary had relevant agencies, officials and institutions taken the NEITI Audit recommendations more seriously”.

The Executive Secretary of NEITI explained that the workshop is to expose all the 88 oil and gas companies and over 24 Federal Government ministries, departments and agencies covered by the audit to the type of information and data which NEITI requires for the audit.

“Specifically, this audit exercise will establish the quantities of hydrocarbons produced, exported or imported and how the licensing process and agreements were reached and implemented between governments through its agencies and the companies. The exercise

will also examine and validate accuracy of royalties and petroleum profit tax payments, petroleum product importation, fuel subsidy management regime, measurement processes and pricing of federation equity crude. It will also check remittances of funds due to government to the Federation account, among others”.

The NEITI Executive Secretary also explained that the exercise will cover other key areas such as mapping of hydrocarbon flows, volumetric analysis and technical
assessment of hydrocarbons streams and examination of procedural systems.

The audit involves data reconciliation, aggregate reporting of hydrocarbons produced and computation of financial implications as well as value analysis during the period under review (2012).

Representatives of 88 companies in the oil and gas companies such as Shell, Chevron, Mobil, Agip and Addax Petroleum Development Company were at the workshop.

The Nigeria National Petroleum Corporation and its subsidiaries, the Central Bank of Nigeria, Federal Inland Revenue Service, Department of Petroleum Resources, Office of the Accountant General of the Federation, Office of the Auditor General of the Federation are among the over 24 government agencies participating in the workshop.

The Minister of Petroleum Resources is expected to address the closing ceremony.

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