Nigerian government refuses to act on oil corruption, but goes after award

Bunkering crude oil theft
Bunkering crude oil theft

While the government fails to act on NEITI report, it raced to pick an award for the office.

Despite having more than N1.3 trillion-about a fourth of the 2013 budget- of government funds locked down by oil and gas firms, the Nigerian government has consistently discarded regulatory reports urging it to sanitize the industry and recover owed funds; and has brushed aside multiple indictments against institutions related to the industry.

But when the agency that has struggled for years to prod the government to act-the Nigerian Extractive Industry and Transparency Initiative, NEITI-received a prized global award recognizing its effort three weeks ago, the same administration that has barely acted, scrambled a top delegation of officials to Australia to receive the award, leaving analysts of the sector fuming.

“There is no question that NEITI and the civil society groups have done exceptionally well towards realizing their mandates to entrench transparency and accountability as well as check corruption in the industry,” said Auwal Rafsanjani, the Executive Director, Civil Society Legislative Advocacy Centre (CISLAC).

“Since 1999, the agency has produced four audit reports on the oil industry. These reports contained far reaching findings that indicted some key government institutions and individuals on corruption, but the Federal Government has failed to act on the recommendations,” he said.

The “Best Extractive Industry Transparency Implementing Country Award” was presented to Nigeria at the 6th Global conference of the Extractive Industries Transparency Initiative (EITI) in Sydney, Australia.

Mr. Rafsanjani said the Federal Government had no moral basis to be honoured, considering its consistent demonstration of lack of political will to enforce the sanctions contained in various audit reports by NEITI since 1999 against companies that failed to uphold transparency and accountability in their operations, by remitting various revenues to government.

The government’s failings were highlighted in the Resource Governance Index report by the Revenue Watch Institute a fortnight ago ranking Nigeria 40th amongst 58 resource-rich countries across the world, a rating that showcased the quality of extractive industries governance. Nigeria scored “very weak”, the report said.

That embarrassing evaluation, NEITI said, was informed by the government’s “slow pace of implementation of findings and recommendations contained in series of its audit reports since 1999.”

Since 1999, outstanding recoverable funds due to the federation account from various oil and gas companies operating in the country stands at about $9.8090 billion (about ₦1.3 trillion).

The amount, according to NEITI Board Chairman, Ledum Mitee, are potential revenue losses due from under assessment/under payments and are not only as a result of the refusal of the companies and covered entities to pay, but also the lack of efforts by concerned government agencies to recover them.

According to NEITI Director of Communications, Ogbonnaya Orji, “Although an Inter-Ministerial Task Team was set up to address the findings and recommendations of NEITI audit reports under a remediation plan developed by the team, implementation by affected government agencies have recorded little progress.”
He cited the instance of NEITI’s audit reports, which consistently recommended inter-agency collaboration to recover an outstanding sum of $9.6 billion from companies (indicted in the audit reports, including the Nigerian National Petroleum Corporation, NNPC) for refusing to pay to government various revenues).

“This fund was uncovered by NEITI as underpayment, under-assessment and variance in royalties, signature bonuses, levies and taxes owed to the Federation,” he said.

In all of it, while the government has refused to act, and has kept mum about the issues raised and has given no indication about recovering federal funds, it was swift to respond when the award came, and has since brashly flaunted the recognition as reflective of its anti-corruption efforts.

“You now have a situation where Nigeria is leading in transparency in the extractive industry sector in the world,” Information Minister, Labaran Maku, said on Tuesday at the review of performance of government ministries. “This is important because it shows that when you have the right policies and transparency, corruption is reduced.”

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While presenting the award to the Minister of Mines and Steel Development, Musa Sada, who was the Head of the Federal Government delegation to the EITI Conference, the Chair of the International Board of EITI, Claire Short, said it was in recognition of NEITI’s effort in implementing the most comprehensive EITI principles in the oil, gas and mining sectors, describing NEITI’s auditing process as “courageous and ambitious.”

In line with EITI principles, it is mandatory for each member-country of the international agency to submit an annual financial audit of their extractive industries detailing the revenue flows, in terms of what was paid by the operating companies to government, and what government agencies received from the companies.

But, Nigeria’s auditing process covers three phases, including physical – covering operation facilities, oil and gas fields and depots in the extractive industries, while process audit covers the detailed processes showing how the revenues paid to and received by government was calculated by the various agencies and institutions involved in the management of the revenues from the extractive industries.

The EITI International Board said it was delighted that NEITI’s interventions have helped the Nigerian government recover over $2billion from agencies that withheld revenues they should have paid to government, adding that another outstanding sum of $9.6billion was uncovered as potential revenues to the Federation.

Civil society groups have criticized the federal government for showing a penchant for awards than political will to fight corruption in the extractive industry.

“It’s a shame that government would go about collecting awards when it is not implementing recommendations of its agency meant to take the industry to the next level in terms of transparency and accountability. The award is laughable, because it contradicts the recent report by Revenue Watch Institute, which classified Nigeria as weak in terms of governance issues,” said Executive Director, Centre for Social Justice, Ezeh Onyekpere.

“Nigerians have to be very careful, because there all kinds of dubious awards out there. What should interest us should be those issues that touch on the lives of Nigerians. We cannot be talking about transparency and accountability in the oil industry when nobody, including the president, can tell us categorically how many barrels of crude oil the country is producing and exporting in a day. Besides, nobody cares about metering our oil wells, unlike what happens in other countries. So, what is the basis for the award? Is it for promoting corruption and impunity?”

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