Extractive Industries Transparency Initiative (EITI), What NEITI is all about and NEITI/DPR Alliance to Curtail Oil Theft
INTRODUCTION
Nigeria has vast deposits of natural-resource wealth; however, harvesting these resources in order to provide an optimal financial return has often been challenging. Furthermore, the financial gains have not always translated into an improved socio-economic standing of the country’s citizens.
It is argued that the main reasons for this are mismanagement of natural-resource wealth and a lack of transparency and accountability in the petroleum sector. The Extractive Industries Transparency Initiative (EITI), specifically the Nigerian Extractive Industries Transparency Initiative (NEITI) aims to deal with these issues.
It does this by interrogating the underlying assumptions that transparency in the form of increased information disclosure inevitably leads to enhanced accountability and reduced corruption. Nigeria’s commitment to EITI implementation is very strong for several reasons.
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Nigeria is a quintessential resource rich country with a large population of very poor people. Several national and international studies have shown that, at the root of Nigeria’s underdevelopments and its people’s poverty is the lack of transparency and accountability in the management of the revenues derived from its natural resources.
It is not surprising that Nigeria has played a key role in shaping the nature of the EITI’s framework of governance and rules of engagement. The NEITI is also not just a subset of EITI; it is EITI and extra.
What is Extractive Industries Transparency Initiative (EITI)?
The Extractive Industries Transparency Initiative (EITI) is a global standard for the good governance of oil, gas and mineral resources. It seeks to address the key governance issues in the extractive sectors. It is a multi-stakeholder governance approach that brings together resource-rich developing countries, companies operating in the extractive industries, investor associations and civil society organizations.
(EITI) was first launched in September 2002 by the then UK Prime Minister, Tony Blair during the World Summit on Sustainable Development in Johannesburg, following years of academic debate, as well as lobbying by civil societies and companies, on the management of government revenues from the extractive industries.
In particular, the EITI was established to be an answer to public discussions on the “Resource Curse” or the “Paradox of Plenty”. NGOs such as Global Witness and “Publish What You Pay”, as well as companies such as BP pushed the UK government to working towards an international transparency norm.
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The EITI Standard requires information along the extractive industry value chain from the point of extraction, to how the revenue makes its way through the government and its contribution to the economy.
This includes how licenses and contracts are allocated and registered, who the beneficial owners of those operations are, what the fiscal and legal arrangements are, how much is produced, how much is paid, where the revenue is allocated, and its contributions to the economy, including employment.
The EITI Standard is implemented in 55 countries around the world. Each of these countries is required to publish an annual EITI Report to disclosing information on: contracts and licenses, production, revenue collection, revenue allocation, and social and economic spending.
What Nigerian extractives industries transparency initiatives (NEITI) is all about:
The Nigerian Extractive Industries Transparency Initiative (NEITI) occupies an important place in Nigeria’s socio- economic reform. It represents a national domestication of the global Extractive Industries Transparency Initiative (EITI). The underlying principle of the EITI is the belief that sustainable development which
encapsulates eradication of poverty is possible in resource rich countries which are often victims of “resource curse”. But it is only possible when the government of resource rich countries recognize that it is their sovereign duty to manage their country’s resource wealth for the benefits of all their citizens. A complementary fundamental tenet of the EITI is the conviction that public understanding of national revenue and public expenditure, over time, facilitates public debate and informs rational choice of appropriate option and strategies for sustainable development.
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Nigeria was the first country in the world to formally declare its intention to implement the global EITI framework and the Nigeria Extractive Industries Transparency Initiate (NEITI) was officially launched by then President Olusegun Obasanjo in 2004 to implement the global EITI framework. Indeed, Nigeria is considered a flagship in global EITI implementation as the NEITI agenda far surpassed the global EITI standard.
In setting such a wide remit of conducting not just a financial audit as required by EITI but also conducting physical and process audits, NEITI set itself up as a significant player in the extractive industry regulatory space, a key driver of transparency in the Nigerian extractive industry and a critical part of the Nigerian governments anti-corruption reforms. NEITI’s key role is to drive transparency in the Nigerian extractive industry.
NEITI – DPR Alliance to Curtail Oil Theft
The Nigeria Extractive Industries Transparency Initiative (NEITI) and the Department of Petroleum Resources, DPR, have mutually agreed to work in partnership towards curbing stealing of crude oil and improve on the industry’s transparency drive of the present administration.
The Nigerian Extractive Industries Transparency Initiative (NEITI) has revealed that Nigeria lost 619.7 million barrels of crude oil valued at N16.25 trillion ($46.16 billion) to crude oil theft between 2009 and 2020.
Orji Ogbonnaya, the executive secretary of NEITI, said this during a policy dialogue on the utilisation of beneficial ownership data in the fight against corruption in Nigeria’s crude swap deals, held in Abuja. He said the volume of crude oil stolen represented a loss of over 140 thousand barrels per day, adding that between 2009 and 2018, the country lost 4.2 billion litres of petroleum products from refineries valued at $1.84 billion.
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In his opening remark at the meeting Orji said that NEITI has established a template to measure oil revenue earning of government through rentals, taxes and royalties and would like the DPR to offer more technical support to enable NEITI succeed in the task set for itself.
Orji, said previous reports and finding of NEITI revealed lopsided contract awards, massive stealing of crude and other illegal activities that has led to non-remittances of accruable revenue to government.
He said the body has unveiled two documents designed to enhance transparency and accountability in the extractive industries.
The document seeks to outline Nigeria’s strategy towards the implementation and fulfillment of Requirement 2.5 of the EITI standard which among other things, demands public disclosures of the real owners of oil, gas and mining companies that operate in Nigeria.
According to him, the roadmap provides comprehensive plans and actions designed to guide Nigeria in its implementation of beneficial ownership disclosure in the extractive industries.
The strategy document also identified the institutional frameworks that are required for effective implementation of ownership transparency, clarity on definition of beneficial owners and explanation on thresholds for public disclosure required in the process.
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CONCLUTION
The primary benefits of EITI to member countries include but not limited to the following:
- Ensures that revenues generated from oil, gas and solid mineral resources aid development and better living standard for the people.
- Strengthens accountability and good governance.
- Promotes greater economic and political stability and contributes to the prevention of conflict based around the oil, gas and mining sectors.
- Strengthens budget process, monitoring and oversight.
- Reinforces broader anti-corruption and good governance agenda.
- Builds citizens trust in public institutions.
- Reduces social conflict and suspicion; through availability of information on revenue payments and receipts, thereby making governments more accountable.