NEITI Audit Report: Experts devise strategies for impactful dissemination

By Abubakar Jimoh

The role of civil society has been described as paramount in active public debate on various disclosures and issues by the Nigerian Extractive Industry Transparency Initiative (NEITI) to promote transparency, accountability and good governance in the extractive sector.

This was revealed by the Chairperson, NEITI Civil Society Steering Committee (CSSC) also Snr. Program Officer, CISLAC Mr. Kolawole Banwo, during Inaugural Meeting of the Committee held in Kano state recently.
He observed that civil society representatives are able to speak freely on transparency and natural resource governance issues, as it is evident that NEITI Reports play a significant role in contributing to civil society’s analysis, research and advocacy.

Giving the instances of the Remediation sub-committee of the CSSC which provides concrete recommendations to the government for reform of the extractive sector as a direct result of NEITI’s Reports, the Chair also did not conceal the fact that civil society has promoted and engaged in discussions around the revised Petroleum Industry and Governance Bill (PIGB) in July 2016.

If passed into law, the new PIGB will provide appropriate legal and regulatory framework particularly important for optimal performance of the oil and gas sector. It will pave way for efficient and effective governing institutions with clear and separate roles for the petroleum industry; establish a framework for the creation of commercially oriented and profit driven petroleum entities that ensures value addition and internationalization of the petroleum industry; promote transparency and accountability in the administration of the petroleum resources of Nigeria; and foster a conducive business environment for petroleum industry operations.

He said while the right for civil society organisations to develop their independent programs to promote transparency in the extractive industries was explicitly recognized, there were no indications that civil society had been restricted from engaging in outreach to broader civil society, including related to discussions about MSG representation and the EITI process.

“Civil society is encouraged to be involved in the design, implementation, monitoring and evaluation of the EITI through participation in meetings of the NSWG, the CSSC and dissemination events. There are examples of broader civil society groups being engaged and asked to provide input to the development of the EITI in Nigeria,” Banwo explained.

He however, lamented lack of recent capacity building engagement by civil society outside Abuja and Lagos. “There do not appear to be recent examples of dissemination events in local communities by NEITI or civil society organisations, although this appears to have been more common in the past.
“Except as concerns dissemination, there is no evidence that the broader constituency is consulted or otherwise engaged in the design, implementation, monitoring or evaluation of the EITI process.

“Despite a favorable framework for civil society engagement, the impression from the stakeholder consultations is that civil society on the MSG does not in fact function as a link between the EITI and the broader constituency,” the Chair bemoaned.

In order to achieve meaningful progress, he further recommended the need to ensure full involvement of civil society in the design, implementation, monitoring and evaluation of the EITI process.

Explaining the concept of “resource curse”, Director of Communications, NEITI, Dr. Orji Ogbonnaya Orji, noted that merely possession of abundant natural resources neither guarantees economic growth nor socio-economic development. He said the tendency for resource-rich countries to be underdeveloped described the theory of “resource curse”.

Given the Dutch theory of “resource curse”, he said the menace featured in appreciation of the exchange rate of resource rich countries’ currencies comparing to those of the world which consequently reduced the global competitiveness of their manufactured and other tradable goods, and resulted in contraction of other tradable sectors of the economy.

On institutional challenges of “resource curse”, the Director observed that prevalence of poor economic policy or management, weak political, bureaucratic and economic institutions breed corruption.

He listed as consequences of “resource curse”, weak institutions, absence of infrastructure, docile population unable to demand accountability, emergence of parasitic elites, poor and ineffective tax culture, violence and social conflicts, agitation for identity and resource control.
As part of the efforts to avert “resource curse”, Extractive Industry Transparency Initiative (EITI) was introduced to promote transparency and accountability around payments made by extractive industry companies and revenues received by governments.

According to him, the Initiative is designed to stimulate debate on public priorities; empower citizens to hold their governments to account for the use of revenues accruing from natural resources; promote transparency, accountability, sustainable development and eradication of poverty; help governments attract direct foreign investments, secure support and cooperation of global enterprises; build trust among host communities and the operating companies; prevent corruption; help countries succeed in improving their tax collection systems.

Recounting the benefits of implementing EITI in Nigeria, Dr. Orji explained that the Initiative has created a framework for reporting and disclosure of receipts and payments in the extractive industry; enabled publication of accurate and credible data on revenue flows; led to acceptance of the need for due process and transparency in the operations of the extractive industry companies; enhanced transparency and accountability by government in the application of revenues from the extractive industries; improved credit rating and higher level of credibility for Nigerian government within the international community.

Highlighting the roles and responsibilities of stakeholders in the dissemination NEITI reports, the Team Leader, Outreach, NEITI, Obiageli Onuorah, noted that civil society has the responsibilities towards community participation, social mobilisation, advocacy for remediation, public education, enlightenment and dissemination, monitoring and oversight, whistle blowing and feedback.

She mentioned as part of civil society’s expectation from the process: good governance, transparency and accountability, comprehensive reforms in the extractive sector, economy diversification, poverty alleviation, effective dissemination and simplification of the reports, social harmony, environmental justice, corporate Social Responsibility, generational equity, strong political will, enforcement and sustainable development.

The Executive Director, Centre LSD, Dr. Otive Igbuzor, explained that while the challenge of transparency and accountability, especially for countries that depend on revenue from mineral resources, is a global one, according to him, it is only through the efficient management of resources that such countries can deliver social and economic benefits to their citizens.

He said: “There is significant evidence that corruption is widespread in Nigeria. The main revenue source for the country is oil and is therefore prone to the political economy of oil. The idea of revenue transparency has gained currency with the Extractive Industry Transparency Initiative (EITI).”

Reviewing the impacts of implementation of the NEITI’s Strategic Plan 2013-2017, he commended the Strategic Plan for opening, especially the oil and gas sector to greater public scrutiny, reducing discrepancies between receipts and payments, improving quality and speed of data collection.
The Executive Director however, did not hide the fact that NEIT has been unable to deliver timely audits in a way that would maximize the currency and relevance of its audit reports with limited impact and stakeholders.

“The review showed that remediation remains the weakest link in NEITI’s operations is majority of issues raised in the audit reports which are yet to be resolved.

“While NEITI has performed considerably well in its reporting and dissemination responsibilities, the fundamental assumption that increased openness would lead necessarily to greater accountability in the management of extractive has not materialized. This is evidenced by the huge gap between the volume of revenue earned over time and Nigeria’s development indices. It is also evidenced by the weak governance indices that the country has recorded both in the governance of the extractive sector and the economy.

“The reality therefore calls for a review of the underlying assumption of the relationship between transparency, accountability and ultimately shared prosperity for the citizens,” he said.

Identifying remedial issues in 2014 Report, Michael Uzoigwe representing the Facility for Oil Sector Transformation (FOSTER) observed weak arrangements around the domestic crude oil allocation; opaque and discretionary license and lease award processes; weak arrangements for monitoring and measuring crude and liquids, from well-heads to terminals; 2000 Memorandum of Understanding (MOU)-fiscal terms- between NNPC and Joint Venture Companies; Petroleum Profit Tax (PPT) underassessment and issues with other taxes and income; loss of gas income for the Federation and Production Sharing Contract (PSC) Gas Agreement.

Uzoigwe noted the effort and improvement in addressing the 2014 remedial issues when he said through civil society advocacy, the delayed payment for domestic allocations received by Nigeria National Petroleum Corporation (NNPC) had been resolved with a joint monitoring framework developed by OAGF, Revenue Mobilisation Allocation and Fiscal Commission and NNPC to ensure payments were made by Corporation as at when due.

He explained that the civil society engage with Department of Petroleum Resources and MPR to fast track pending out of court settlement with Shell had helped to prevent loss of revenue from some oil blocks.

Uzoigwe added that the civil society’s engage with DPR to define industry standard production point to serve as standard benchmark for the purpose of computing royalty has resulted in the provision of a uniform basis for measurement of crude oil, and the proposed new measurement guideline.

Stressing the roles of civil society in NEITI process, Executive Director, Africa Network for Environment and Economic Justice (ANEEJ), Rev. David Ugolor noted that active participation of civil society in EITI Process is key to ensure that EITI leads to greater accountability.

“The participation of civil society in the EITI process is formally assessed at two stages of EITI Implementation—during the candidate assessment and validation, and hoc basis in response to special request. Civil Society provision in the EITI Standard remains consistent at every stage of EITI Implementation and the evidence changes according to the situation of the Country, stage of implementation, and availability of information.

“The NEITI Act and the Memorandum of Understanding (MOU) between the Civil Society and National Stakeholder Working Group (NSWG) provides a robust framework for civil role in the NEITI Implementation. The civil society representatives in the NSWG are expected to reflect the perspectives of their constituency in the meetings.

“Civil society can also provide input into the Work Plan through their representatives in the NSWG. Civil Society can also undertake research and advocacy around the implementation of the Work Plan. Civil Society can use their various network like the Publish What You Pay Campaign to support the implementation of concrete outcome of the annual audit report. Civil Society can also build alliance with other stakeholders to influence the NSWG to adopt concrete measures that will improve the EITI Standards. Civil Society can also use the annual audit report to engage in evidence based advocacy to end corruption in the oil sector,” Rev. Ugolor added.


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