A Review of the Nigerian Energy Industry

FG direct oil companies to submit to NEITI process

Alison-MaduekeYemie Adeoye 12 February 2014, Sweetcrude, Lagos – The Federal Government has reinstated its commitment to the implementation of the Extractive Industries Transparency Initiative, EITI, principles as an integral part of planned reforms in the oil and gas industry in Nigeria.

Minister of Petroleum Resources, Mrs. Deziani Alison Madueke conveyed the commitment Tuesday in Lagos while addressing the closing ceremony of a workshop for companies and government agencies covered by the 2012 NEITI independent audit of the oil and gas industry.

In the words of the Petroleum Minister, “my presence at this event testifies to the fact that Ministry of Petroleum Resources, its departments, parastatals and agencies including the NNPC and all its subsidiaries are in full support of the NEITI process and the enthronement of transparency and accountability in the oil and gas industry.  We shall provide the required support to NEITI, apply its principles to our operations and support all efforts to uphold its independence, in pursuit of this principle, we will continue to work with NEITI to collectively deal with challenges in the process and in our operations”

Mrs. Madueke stated that it was in the interest of government, the Ministry of Petroleum Resources and the oil and gas industry for NEITI process to be internalized in the sector and seen as a leading partner in the proposed reforms of the sector.

“Let me at this juncture re-state that one of the cardinal reasons behind President Goodluck Jonathan administration’s strong support for the Petroleum Industry Bill is on the need to enshrine transparency, accountability as pillars of the reforms of  the oil and gas industry. The Minister expressed delight that NEITI has made valuable contributions to the Petroleum Industry Bill”.

While appreciating the importance of the workshop, the Minister directed all companies in the oil and gas industry as well as government agencies under the Ministry to take the exercise very seriously.

“Let me once again direct all companies in the oil and gas industry as well as relevant agencies under the Ministry of Petroleum Resources to comply and fully cooperate with the audit through timely provision of information and data required by NEITI. Compliance and cooperation with NEITI in this assignment is mandatory and compulsory”

The Minister commended NEITI for the insightful revelations from its last audit that over $7.8 billion remain outstanding recoverable funds in the hands of companies as a result of either underassessment or underpayments of taxes, royalties, levies, signature bonuses etc.

She described the recovery of these huge sums of money as critical to government. “ I hereby direct the NNPC, the Department of Petroleum Resources (DPR) and all other agencies important in efforts to recover these funds to work closely with NEITI for early recovery and remittances of these funds to the federation account.

The Executive Secretary of NEITI and Chairman of NEITI Board, Ledum Mitee in their various speeches welcomed the emerging working partnership based on defined roles between the Ministry of Petroleum Resources and NEITI in the implementation of EITI principles in Nigeria.

The Chairman reaffirmed the commitment of the National Stakeholders Working Group (NSWG) to work with government companies and the civil society to enthrone openness and accountability in the Nigeria’s oil and gas industry.

Mr. Ledum Mitee requested the Minister to provide institutional support for NEITI to fully implement the new Extractive Industries Transparency Initiative standards in the industry. The new global standards, he added requires full disclosure of beneficial ownership of oil and gas companies and contract transparency in transactions.

The NEITI 2012 industry audit of the sector covers disclosure of all companies payments reconciled against all government receipts, track financial flows in the industry. Others are to identify discrepancies and map hydrocarbon flows within the period under review.

The exercise also involves amongst others the checking the amount of crude oil exported, sales and utilization of gas, refinery balances, petroleum products importation and distribution. The audit will also check coastal liftings, subsidy payments, hydrocarbon products balances, gross volumes of oil and gas produced from various fields, crude liftings from the terminals etc.  The findings of the industry audit are expected to be made public within nine months.

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