NEITI urges reforms in oil, gas sector, wants due process in award of oil blocks

President Muhammadu Buhari has been urged to commence the implementation of ‘change agenda’ from the oil and gas sector, in order to sanitise the major source of the nation’s earnings and enhance economic growth.

The Nigeria Extractive Industries Transparency Initiative (NEITI) made the call in a statement after a five-day capacity building workshop on oil and gas sector governance by the civil society steering committee.
It said the Federal Government should also review discretionary award of oil blocks to ensure that due process are followed henceforth.

“The principle of discretionary award of oil blocks contradicts the principles of due process, transparency and competition captured in the NEITI Act 2007. The non-adherence to these principles has resulted in loss of huge revenues to the Federation and denies Nigerians value from natural resources,” it stated.
The statement signed by the Chair, Civil Society Steering Committee (CSSC) of NEITI, Faith Nwadishi, also stated that the Federal Government should implement a phased divestment of its shares in the upstream oil and gas joint ventures (JV), adding that the call has become necessary in view of the huge cash call debt obligation which the JV arrangement has imposed on the nation’s lean resources.

“This divestment will open the arrangement for private sector participation and enhance increased inflow of revenue to the federation. Above all, it will reduce the corrupt practices, wastes and other leakages associated with the management of the JVs over the years. Part of the proceeds from divestment should be strategically channeled to the development of infrastructure, agriculture, power, transport, solid minerals, education and health sectors while the remaining should be reserved for future generation,” it stated.

Putting the subsidy payment between 2011 and 2012 at about N3.2 trillion, NEITI said that corruption, which is of massive proportion in the oil and gas sector, particularly the abuse of the petroleum subsidy regime and all oil and gas audit remediation issues, should be urgently and thoroughly investigated and addressed by the Federal Government.

“The CSSC find it unacceptable that in two years (2011-2012) over N3.2 trillion was paid as subsidy as revealed by NEITI audit reports. We also call on all the NEITI Inter-Ministerial Task Team (IMTT) members to show more commitment in addressing all remediation issues including the unremitted $11.6billion dividends paid by the Nigeria Liquefied Natural Gas (NLNG) to NNPC on behalf of the federation. We therefore call on special presidential intervention on the nagging issue of the failure of the IMTT to carry out its mandate on remedial issues outlined by the NEITI audit reports,” NEITI stated.

It added that the daily allocations of 445,000 barrels of crude oil to NNPC should be reviewed downwards in view of the fact that the four refineries operate around 20 percent capacity utilization.

“The allocation of crude oil beyond the refineries capacity to refine and which is subsequently exported and re-imported under swap and offshore processing arrangements, constitutes huge economic losses as it creates room for abuse and corruption. Government should create enabling environment for private investment in building refineries. Meanwhile, Government should carry out the necessary turn-around maintenance of all refineries to make them operate at their optimum capacity and efficiency.”

NEITI also urged President Buhari and the 8th National Assembly to demonstrate their patriotism and political will to promote transparency and accountability in the oil and gas sector by ensuring that the PIB is passed and signed into law within the first 100 days of the life of this administration. They also called on the Department of Petroleum Resources (DPR) to urgently develop and enforce a regulatory framework for the installation of uniform metering system at all oil well-heads in Nigeria in line with international best practices.

It is also recommended that the President should immediately direct NEITI to conduct the Fiscal Allocation and Statutory Disbursement (FASD) audit in all the 36 states and 774 councils.
The body said the audit will reveal how states and councils are spending their allocations from the oil and gas sector.