…Says audit reports have made impact on extractive industry
08 March 2017, Sweetcrude, Abuja – The Nigerian Extractive Industries Transparency Initiative (NEITI) has expressed concern over the unavailability of metering infrastructure to measure oil and gas production in the country, as well as the delay in the passage of the Petroleum Industry Bill (PIB).
The Executive Secretary of NEITI, Mr. Waziri Adio, who noted this on Tuesday at a workshop for media practitioners in Abuja, explained that the absence of an efficient metering infrastructure for oil and gas production has cost the country billions of dollars over the years.
According to Adio, “NEITI reports reveal very weighty issues which when addressed would significantly improve governance and revenue management in the industry. The issues include poor institutional linkages between the technical of 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 system for crude oil production accounting. Besides, there is no clear basis for determining production volumes for royalty purposes and reliable fiscal regime.”
He added that NEITI reports also exposed inadequate capacity for the relevant regulatory agencies to confidently verify royalty and petroleum profit tax computations prepared by companies.
“These deficiencies revealed by NEITI in all its of audits over the years cost the Nigerian federation dearly. They were key sources of waste, fraud and monumental corruption,” he stated.
Meanwhile, Adio has argued that the impact of NEITI on the Nigerian society can only be quantified by the when measured against the huge revenues recovered and accruing to the Federation which is being channeled to the provision and upgrading of critical infrastructure for the citizenry.
He explained that the underlying philosophy of Extractive Industries Transparency Initiative (EITI) is the belief that strengthened transparency of natural resources revenue can reduce corruption, transform economies, reduce poverty, and raise the living standards of entire populations in resource-rich countries.
According to him, “Nigeria’s voluntary decision to embrace the EITI was in the context of the comprehensive socio-economic reform programme embarked upon by the Federal Government of Nigeria in 2003.
“The primary objectives of the NEITI are to ensure that there is due process and transparency in the payments made by all extractive industry companies to the Federal Government and statutory recipients.”
Adio added that, “NEITI is equally expected to ensure transparency and accountability in the application of resources from payments received from extractive industry companies and promotes conformity with the principles of the Extractive Industries Transparency Initiative.”
The Executive Secretary noted that it was gratifying to note that NEITI reports have become major instruments leading the on-going massive reforms in the sector.
“For instance, all NEITI recommendations since 1999 are now leading the reforms. These include NEITI recommendations for the restructuring of the NNPC, removal of fuel subsidy, cancellation of SWAP/OPA and Federal Government’s exit from JV cash calls.
“In addition, there has been a clear directive on the remittance of NLNG dividends directly to the Federation account. A close look at the NEITI reports from 2000-2014 showed unremitted NLNG loans and interest repayments to the tune of $15.8 billion.
“Our other regulations that are being implemented include the review of all expired MoUs and agreements in the oil and gas sector which in the past has led to huge losses of revenues to the Federation. We applaud the new team in NNPC for the courage to implement the on-going reforms,” he added.
Also speaking at the event, the Chairman of Communications Committee of the National Stakeholders Working Group, NSWG, of NEITI, Otunba Gbenya Onayiga, stressed that the governing board was ready to beyond revenue transparency to implementing such EITI standards like beneficial ownership transparency, contract as well as expenditure transparency.
He said, “While we welcome the on-going reforms in the oil, gas and mining sectors, we believe that the time to translate the reforms into impact has come.”