Audit of Nigeria’s Extractive Industry: BPP asks NEITI to select new auditors

NEITI has already begun the process of selecting new auditors

The Bureau for Public Procurement, BPP, has asked the Nigeria Extractive Industries Transparency Initiative, NEITI, to initiate a fresh process to select a competent and experienced consultant to conduct the 2012 audit of the country’s oil and gas industry.

The Director General of BPP, Emeka Ezeh, who confirmed the development, said the decision to void the process held in April 2013 followed a review, which revealed that aspects of the exercise did not comply substantially with the provisions of the Public Procurement Act, 2007.

“As a regulator, once we looked at the process and found that the criteria they (NEITI) set up themselves were not being followed, we had a responsibility to intervene and ask that due process be followed. That’s what we did,” Mr. Ezeh said.

He refused to expatiate on those criteria, saying he would not want to be associated with an act capable of jeopardizing the process.

At the bids opening exercise held in April 2013, the Executive Secretary of NEITI, Zainab Ahmed, had said the criteria involved the publication of the request for expression of interest, EOI, from prospective bidders, in addition to a number of other conditions to qualify for selection as consultant.

At the end of the bids submission deadline, Mrs. Ahmed said a total of 43 EOIs were received, prior to the commencement of the selection process approved by the National Stakeholders Working Group, NSWG in November 2012.

Following a report to the NSWG, she said request for proposals, RFPs, were issued to 21 shortlisted bidders, at the end of which only 19 responded.

The BPP guidelines to bidders assigned 80 per cent of the requirements for the technical proposal, with the financial proposal making up the remaining 20 per cent.

Specifically, the criteria underlined the significance of the experience of the company in financial and process audit; demonstrable skills and competence, including best practices in solid minerals audit, and familiarity with the EITI principles and processes.

Other criteria included adequacy of the consultant’s proposed work plan and methodology, including the organization and competency of the staff.

Only bidders that attained the minimum technical score of 75 points, and met all the statutory requirements were expected to proceed to the financial evaluation stage before the recommendation for selection of the final bidder with the highest weighted score.

At the end of the financial bids exercise, Taju Audu/Effectivo Consortium, recorded a technical score of 86.86 per cent, with a financial bid offer of N139.5 million, while Sada Idris & Co., posted 83.93 per cent technical score and N122.5 million financial bid.

Sada Idris & Co., selected to handle the 2009-2011 audit process, battled to ward off scathing criticisms for failing to meet several deadlines for the publication of the report.

Similarly, Abayomi Dosunmu & Co. scored 77.17 per cent as technical score and N113.898 million as financial bid, while Olaolu Olabimtan & Co. got 75.11 per cent technical score, with N71.82 million financial bid.

But, NEITI spokesperson, Ogbonanya Orji, said NEITI was planning to expand the scope of the audit to address two key issues that were not covered by previous audits.

The issues include the need to highlight beneficial ownership, by attempting to unveil the identity of the owners of the oil blocks in the country, and contract transparency, particularly about how the oil blocks were acquired by their owners, to establish if they were being exploited in line with the terms they were acquired.

Mr. Orji, who said the 2012 audit would be the first time to be conducted based on the EITI principles and rules, stressed the need to ensure that a more competent consultant that was familiar with these rules was selected to handle the process.

He said after NEITI discovered that the consultant that emerged at the end of the April 2013 exercise could not defend most of the claims contained in its proposal, a report was sent to the BPP recommending the cancellation of the bid.

The decision, he said, was aimed at avoiding the pitfalls of the past, particularly delays associated with past audits as a result of the inexperience and incompetence of the consultant.

“Why NEITI wants to be careful with the process this time is because it is looking for a consultant with exceptional competence, with adequate understanding of the complexities associated with fiscal computation of oil and gas revenues, which is the core issue in the audit process,” Mr. Orji said.

He said a fresh process to select a new consultant to handle the exercise has already commenced, and is expected to be concluded before the end of March, to pave the way for the take-off of the audit proper by April.