CISLAC: Improving NEITI Performance Through Stakeholders’ Interface

By Rosemary Nwaebuni/Ruth Okwumbu
The absurdity of heightened poverty occasioned by stunted economic growth in the midst of abundance of natural wealth and the pricking conscience of governance propelled Nigeria’s domestication in 2003, of Extractive Industries Transparency Initiative’s (EITI) globally developed standard for promoting transparency in the management of extractive-based revenues.
That bold step which gave birth to Nigeria Extractive Industries Transparency Initiative (NEITI) in 2004 was aimed at reducing corruption in the extractive industry, particularly the oil sector by instilling a culture of transparency, accountability and due process in the management of revenues accruing there from in such a way as to boost the economy and lessen poverty.
In addition to these tasks, NEITI, a coalition of government, companies and civil society, is also saddled with the responsibility to improve overall governance of the oil and gas sector; tracking the movement of funds generated from the extractive industry sector into the Federation account and the amount distributed there from; conduct annual audit in the Oil, Gas and Solid Mineral sectors; ensure disclosure of revenue received by the three tiers of government (federal, states and local councils); reconcile the amounts paid to government by companies operating in the oil, gas and mining sectors; reduce attendant discrepancies as much as possible; and publish these information and figures for the public to know, in the spirit of transparency.
Prior to the implementation of EITI principles, the country’s extractive sector was bedeviled with corporate fraud on the part of industry operators and government officials; lack of transparency and unnecessary secrecy; discrepancies in the revenue paid to government by the extractive companies and what the government eventually declared; lack of accountability; bungling management of declared revenue; absence of regular auditing in accordance with global best practices; and weak institutional capacities. Improve overall governance of the oil and gas sector
A SWOT analysis of the activities of NEITI for the past ten years would certainly present an interesting picture.
As a government agency, NEITI’s terms of reference could be considered as not only lofty but also an up-hill task, considering the peculiar environment it was meant to operate. It is not common to see a bull dog, no matter how ferocious, turning against its own master. It is also a common saying that ‘he who pays the piper detects the tune’. It is therefore presumptuous to expect excellent performance from a government agency like NEITI.
That notwithstanding, NEITI, acting more like a watch dog has been able to bring about some measure of sanity, decorum and accountability to bear in the operations of the mining, oil and gas sectors.
NEITI instituted and continues the culture of conducting quality and detailed audit of companies operating within the sector leading to interesting and useful disclosures. It carries out independent verification of tax and royalty payments to government on regular basis. This verification exercise yielded huge success with the discovery that extractive companies owe the federal government tax payments to the tune of $8.3 billion.
NEITI’s activities have enhanced public access to information on extractive industry performance, improved capacity development that now enhances engagement, collaborates effectively with civil society, recovered $1m in its early years and $2billion within the last two years. NEITI also secured agreement on $5.8 million to be paid to government by Express Petroleum and Gas Company. Its laudable activities earned NEITI high Flitch rating.
Most notably, through the performance of NEITI, Nigeria achieved the global initiative’s ‘compliant’ status in 2011 and as at 2014, the agency has produced four audit reports on the oil and gas sector, covering a period of 13 years up to 2011.
NEITI has also produced the first audit report for the solid mineral sector covering a period of three years from 2007-2009. Furthermore, in 2014 Nigeria became the first EITI country to go beyond publishing revenue figures to produce a Fiscal Allocations and Statutory Disbursement (FASD) Audit report.
However, the impact of the initiative in terms of delivering the core objectives of improving transparency and overall governance of the extractives sector is still generally low. In fact, new EITI standards adopted in 2013 now make greater demands on implementing countries to move beyond merely publishing reports to show evidence of more positive impact and results.
NEITI’s audits are associated with lapses, which however, can be remediated. Obvious lapses identified in the presentation of the 1999-2004 audit report, informed the Federal Government’s directive to NEITI to develop a strategy to remedy lapses identified in the report. In Pursuance of the remediation process, Civil Society Legislative Advocacy Centre (CISLAC) has held series of Media Interaction on Remediation and Inter-Ministerial Task Team Activities in various states of the federation and recently at the Federal Capital Territory, Abuja.
Accordingly, NEITI developed a comprehensive remediation program , which was approved by government covering five areas, among which are: develop a revenue-flow interface among government agencies; improve Nigeria’s oil and gas metering infrastructure; develop a uniform approach to cost determination; build human and physical capacities of critical government agencies.
However, many numerous governance, process, and operational gaps recorded in all the NEITI audit reports so far produced are yet to be completely addressed (remediation).
Other factors militating against NEITI’s performance include absence of metering infrastructure, which makes the reconciliation of data of physical volumes of crude from export platforms and oil fields inaccurate and doubtful; National Assembly’s abdication of its oversight role; inadequate demonstration of interest by the citizens, resulting in under-utilisation of reports; under-funding of NEITI resulting in donor dependency; and growing poverty which negates EITI’s original goal of poverty reduction and sustainable development.
NEITI can be made more effective with increased support from government, civil society and other stakeholders, including the National ASSEMBLY.
At a Media Interaction on Remediation and Inter-Ministerial Task Team Activities, hosted by Civil Society Legislative Advocacy Centre (CISLAC), with media representatives, civil society and other stakeholders, aimed at x-raying strategies for remediation of identified lapses in NEITI’s audit reports, the executive secretary of NEITI, Zainab Ahmed stated that the bumpy ride of the remedial process has been successful, especially with the aid of the all inclusive Inter-Ministerial Task Team (IMTT) force set up by government to assist the initiative.