Inclusion of contract transparency clauses in the Petroleum Industry Bill (PIB) will save the country billions of naira lost annually to opaque agreements in the oil and gas industry, the Nigerian Extractive Industries Transparency Initiative (NEITI) and civil society organisations (CSOs) said on Thursday.
Nigeria is currently battling to resolve a dispute with a British engineering firm, Process & Industrial Development Limited (P&ID) over the alleged breach of a 2010 gas contract agreement by the Nigerian National Petroleum Corporation (NNPC) and the Ministry of Petroleum Resources.
Legal authorities, including the officials in the Office of the Attorney-General of the Federation and Minister of Justice, were left in the dark about the details of the contract until the matter resulted in a dispute in court.
Besides, concerns have always been expressed over the impact of confidentiality clauses in contracts signed by the joint venture operators in the country’s oil and gas industry.
To curb the losses, civil society groups have urged the National Assembly to pay special attention to the clause on contract transparency in the PIB currently undergoing passage.
The call was made during the maiden media roundtable on contract transparency organised by the Centre for Transparency Advocacy (CTA) in collaboration with the Media Initiative for Transparency in Extractive Industries (MITEI) and Contract Advocacy Network (CONTRANET).
In a goodwill message he sent to the event, the executive secretary of NEITI, Waziri Adio, said the lawmakers should ensure they monitored closely those clauses in the PIB that would promote and preserve contract transparency.
Mr Adio, who was represented by NEITI’s communication and advocacy officer, Kazeem Lameed, said operators in the country’s oil and gas industry have no excuse not to disclose terms and conditions in their contracts, except they have something to hide.
He said section 83 (3) and (5) of the PIB, which focuses on contract transparency in Nigeria’s oil and gas sector, provides that all NNPC contracts shall not be confidential, but shall also be published within one year of its effective date.
The clause, he noted, makes provision for mandatory oil revenue savings and systemic disclosure to avoid the country’s interest being jeopardised or mortgaged.
In his presentation, the representative of the Facility for Oil Sector Reform (FOSTER), Leo Ugboajah, lamented the absence of laws making contract transparency mandatory in the country at the moment, except those in the PIB currently pending in the National Assembly.
Mr Ugbaajah, in his presentation titled ‘Research of Findings on the Impact of Lack of Contract Transparency’, charged the CSOs that since the subject is covered by the PIB, they must do all within their powers to ensure contract disclosure was mandatory.
To ensure that local contractors operating without a legislative backing do not succeed in getting the clause expunged from the PIB, Mr Ugboajah said Nigerians must be allowed to know what the contracts contain.
“The CSOs must be on the watch out, because a simple mistake could cause the county a fortune. Service contracts are more important, because they determine the amount of revenue the country earns from the industry, not the license contracts.”
Earlier, the executive director of CTA, Faith Nwadishi, said the Extractive Industry Transparency Initiative (EITI), a global transparency group Nigeria is signatory to, has made contract transparency mandatory in the oil and gas industry.
Ms Nwadishhi said findings by CTA and other partners in a report presented at the event, showed that several contracts in the extractive industries were not publicly disclosed.
She said such contracts included agreements and licenses in the oil and gas industry awarded to service companies for the production of oil and gas from various mineral assets held by joint venture arrangements.
“The passage of the PIB has been ongoing for almost 20 years. The PIB gives us the opportunity for Nigeria to meet the requirements of the EITI. If the PIB now makes it mandatory, we should have a law that has taken it up much higher,” Ms Nwadishi said.
Mr Nwadishi expressed fears that local contractors could push for the contract transparency clauses to be removed from the PIB, adding that: “We must look out for local contractors, people who don’t have that standard of contract transparency who will want to do a push back. They want to do business as usual. This is when we will amplify our voices so that members the National Assembly will look for that provision,” she said
“The National Assembly must hasten the process for the passage of the PIB, as some sections in the bill would enhance transparency in extractive industries contracts. The passage of the PIB would not only boost transparency in contracts, but also help to address secrecy in some of the deals.”