The International Chair of the global Extractive Industries Transparency Initiative (EITI), Clare Short, has urged President Muhammadu Buhari to integrate the principles of the group into his administration’s economic policy framework.
The EITI principles emphasize public disclosures of information and data by owners of oil and mining licenses through regular audits of their operations on oil production figures, revenue sharing arrangement between tiers of governments as well as the open process of contract awards in the oil, gas and mining industry.
The revised EITI standards equally encourages contract transparency in companies and government, with particular focus on expenditures incurred by the oil and gas companies on the provision of social services, public infrastructure and fuel subsidy payments.
The EITI Chair told the Vice president, Yemi Osinbajo, during a meeting in Abuja that there was need for the government to urgently consider a major shakeup in the oil and gas industry if the benefits from Nigeria’s abundant hydrocarbon resources were to be felt by all Nigerians.
Nigeria is one of the world’s seven highest producers of hydrocarbon. But, the World Bank ranks the country as one of the poorest.
THE World Bank President, Jim Yong Kim, said Nigeria was one of the top five countries with the largest population of poor people in the world.
To ensure that the exploitation of the oil and gas resources and the management of the revenues that accrue from benefit the people, the EITI international Chair recommended massive reforms of the structures of the industry by the Nigerian government.
“The NEITI Reports (based on its audits) have all the information and data that will guide the government to reform the industry,” the EITI Chair said. “It is important that the government integrates the NEITI into its overall economic policy team.”
Although NEITI has, since 1999, conducted four audits of the country’s oil and gas industry, its findings and recommendations have hardly been implemented by successive governments accused of lacking the political will to do so.
The non-implementation of the recommendations on several cases of mismanagement, underpayment of taxes, royalties, under-assessment, deliberate refusal to remit collected revenues to government coffers and other lapses resulted in massive losses of oil revenues by the government, with its attendant negative consequences on national development.
Chairman of NEITI Board, Ledum Mitee, said the Fiscal Allocation and Statutory Disbursement Audit report in 2014 had revealed that between 2007 and 2011 alone, Nigeria earned about N30.09 trn as total revenue from oil and non-oil sources.
NEITI Reports had revealed a total revenue loss of $9.8bn to the Federation as a result of underpayments, underassessment of taxes, rents, royalties and other process lapses, with only $2.4 bn recovered.
Details of the recoveries showed that $1 bn came from the 1999-2004 audit reports, while $550mn was from the 2005 exercise, with $447mn recovered from 2006-2008 audit. The 2009-2011 reports showed that about $416 mn was recovered.
Mr. Mitee appealed to government to overhaul the Inter Ministerial Task Team (IMTT) set up to implement NEITI reports, accusing it of making very little progress in its assignment.
The Executive Secretary of NEITI, Zainab Ahmed, reiterated the agency’s call on government to divest Nigeria’s interest in the joint ventures operations to free the country from the funding obligations imposed on government by the agreements.
Mrs Ahmed also advised government to critically examine the management of domestic crude allocations as well as reconsider the removal of fuel subsidy, abrogation of the oil swap arrangement and recovery of huge outstanding sums by oil companies as a result of underpayments, underassessment of taxes, rents and royalties.
She expressed optimism that the present administration would provide the necessary political will to enable NEITI recover the outstanding $7.4 bn into government coffers, to support national development.
The Vice President, Yemi Osinbajo assured that government was going to take all necessary steps to implement the findings and recommendations contained in the various NEITI Audit Reports.
He reaffirmed the present governments’ commitment to integrate the EITI principles and standards as part of the plans to reform the oil and gas sector.
Mr. Osinbajo, who commended NEITI for its courage, diligence and commitment to corporate good governance in the oil, gas and mining industries, said government would carefully study the reports to ensure that the findings and recommendations guided government actions on the reforms.
Nigeria, which joined the global EITI in 2003, began implementation of the principles in 2004, followed by a legal framework through the NEITI Act in 2007.