Beaming searchlight on extractive industry
The emergence of Extractive Industries Transparency Initiative (EITI), a global initiative that promotes transparency in the management of revenue from natural resources was as a saving grace for many countries in terms of resource governance.
In Nigeria, the decision to implement EITI, after it was signed in 2003 and supported with legislation in May, 2007, was also part of the overall reform programme of the country.
With the advent of Nigeria Extractive Industries Transparency Initiative (NEITI), a coalition of government, companies and civil society, expectations were rife that the management of the nation’s extractive industry will be characterised by transparency and accountability.
Under the tri-sector approach of NEITI, the state provides welfare and security, while the private sector is concerned with investment and profit, and Civil Society Organisations (CSOs) saddled with the job of protecting the interests of the poor and advocate for participation, transparency and accountability.
Before now, Nigeria’s earnings from oil and gas sector were shrouded in secrecy without records of oil exports due to lack of functioning metres in the loading bay.
According to experts, for a country with Sovereign Wealth Fund (SWF) investments worth $1.5 Billion and the 10th largest reserves in the world worth $3.7trillion, the absence of functioning measuring metre for its oil industry was a sad commentary.
But the recent release of 2007-2011 Fiscal Allocation and Statutory Disbursement (FASD) Audit Report by NEITI, which revealed that the nation earned $143.5 billion between the period under review, according to stakeholders, has opened a new vista in the quest to ensuring transparency and accountability in managing the nation’s earnings in the extractive industry.
The audit report, which was the first comprehensive oil and gas report in the history of the country tracked records on the quantities of hydrocarbon produced, exported or imported, and how the licensing process and agreements were reached and implemented between government through its agencies and the companies.
It equally has information and data on signature bonuses, payment issues, basis for petroleum product importation, fuel subsidy management regime, measurement processes and pricing of federation equity crude, crude oil theft and cost of sabotage to the nation’s economy, especially in the downstream operations.
The publication is in compliance with EITI’s requirement, to which Nigeria is a signatory since 2003.
Under this requirement, member countries are expected to publish, on a regular basis, audit reports to acquaint the citizens with current information and data on what companies paid to government in terms of royalties, taxes, levies, signature bonuses, rents, among others, and make public what government received from the companies for their business with our natural resources.
Through NEITI, company payments and government revenues from oil, gas and mining are disclosed, reconciled, discrepancies reduced, published and disseminated.
The goal is that with transparency in payments and receipts, corruption is reduced.
The information and data contained in the report, stakeholders said, will be valuable to promoting public education, awareness, discussions and informed debate on extractive revenue governance and utilization in Nigeria.
It is also intended to serve as a tool for the civil society, the legislature, the media and the citizens for purposes of advocacy and engagement in holding government and companies accountable.
However, to ensure that advocacy capabilities of the CSOs are expanded and equipped with necessary information that will enable them ask critical questions about how oil revenue was being disbursed among various tiers of governments and agencies of government, an Ibadan based Non Governmental organization, The Centre for Public Private Cooperation (CPPC) in collaboration with NEITI and Department For International Development (DFID) recently organized a three day workshop for CSOs in Lagos.
The workshop organized for South West CSOs include a One-Day Dissemination workshop and Two-Day Capacity Training on 2007–2011 Fiscal Allocation and Statutory Disbursement (FASD) Audit Report.
Participants at the workshop were drawn from international donor agency, civil society groups, non-governmental organizations from Ekiti, Ondo, Osun, Oyo, Ogun, and Lagos States; representatives from women/religious groups, academia, NEITI and the media.
The Programme Officer for CPPC, Mrs. Kenny Williams, said the workshop was aimed at providing CSOs the opportunity to deepen their advocacies in oil and gas revenue tracking in the southwest.
According to her, the NEITI report was an attempt at promoting transparency and accountability in the oil and gas industry since it revealed, for the first time, how much the country is earning
People, she said, could now act on the information to ask relevant questions with a view to holding government accountable.
“We know that oil is like a paradox for nations which are rich in oil and gas.
“The training was a timely intervention for CSOs, which had not been doing much especially when a new government is coming on board.
“We do hope that with the new government, the change that Nigerians are yearning for in the oil and gas sector will become a reality”, she added.
For the Team Leader, Communications Department of NEITI, Obiageli Onuorah, who spoke on behalf of the Executive Secretary, Mrs. Zainab Ahmed, as well as Director of Communications, Dr. Orji Ogbonnaya, the CSOs as unbiased arbiter, are expected to take it from where the report stops by asking the necessary questions as well as holding both government and companies accountable.
She noted that the training was aimed at building capacity for CSOs to understand what the audit is all about and empower them to select areas they want to run their advocacies on.
“The civil society organisations are seen as unbiased arbiters. We have the company, government and the private sector, but civil societies are the ones to ask the questions, they are the ones to take the bite, they are the ones to hold both government and companies accountable”. She noted.
Onuorah, who flagged off the technical session with presentations on “The NEITI Mandate” and “Facts behind the Fiscal Allocation and Statutory Disbursement (FASD) 2007 – 2011 Audit” said the Audit report showed lack of proper record keeping in the country as well as threw up shoddy execution of capital projects in Nigeria.
She said: “For example, in a state like Nasarawa, the sum of N1, 471,625,617.00 was paid in 2008 for Farin Ruwa Hydro Electric Power Project. The only structure at the project site was a sign post and a block of building used as the security post. There is no access road leading to the dam.”
Onuorah also noted that the continued dependence on oil revenue is not sustainable and was the reason for increasing rate of corruption, rent- seeking, lack of creativity and Nigeria’s cycle of poverty in the midst of plenty.
“The report also depicted the inability of the states to develop and generate their own revenues and over reliance on mineral revenue as well as high recurrent expenditure of the states which impact negatively on the available funds for capital expenditure.
“For instance, Imo State recorded poor investment in its infrastructure based projects both in amount expended and percentage of total revenue committed.
“A robust tax system can aid accountability and good governance.
“Instead of relying predominantly on allocations from federation accounts, state and local governments must contribute to their coffers by improving IGR (Internally Generated Revenue” , she noted.
Director of CPPC, Prof Ademola Ariyo, who made a presentation on “Utilizing Oil Revenue for People’s Welfare”, said the workshop was a delegated assignment to mobilize the civil societies to open up the oil and gas sector.
“As you are aware, oil is the golden egg of the economy but has become a black box. That has led to widespread corruption in the oil sector.
“Regarding the issue of oil bunkering, theft of oil and subsidy that has been demystified, people can now know about it and know whom to hold accountable”, he added.
For a participant, Miss Aderoke Ige, of Justice Development and Peace Commission, Ibadan, the workshop was an eye opener having revealed that government agencies like NEITI have done a lot to improve transparency and accountability in the system.
Ige, who is also a lawyer, said, it was remarkable to know that organisations like NEITI was desirous to partner with civil societies by providing them with the necessary tools to engage government and companies in the sector.
She expressed optimism that the advocacy capacity of CSOs in the Southwest will expand in line with their mandates.
Participants in the workshop also observed that knowledge on NEITI and its mandate is inadequate and that there is high reliance on oil resource at the detriment of other sectors of the economy.
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