The Nation Newspaper

Tag: NEITI

  • NEITI and NNPC’s ‘complex’ accounts

    When the suspended Governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, alleged that the Nigerian National Petroleum Corporation (NNPC) was yet to remit $10.8 billion to the Federation Account, the oil firm’s leadership accused him of confusion and ignorance.

    Labouring to defend his dismissal of Sanusi during his last media chat, the president referred to how the CBN chief had tied himself up in knots bandying different figures allegedly not remitted by the NNPC.

    Now, it appears that the list of the ‘ignorant’ and ‘confused’ is getting longer. A presentation made by the Executive Secretary of the Nigerian Extractive Industries Transparency Initiative (NEITI), Mrs. Zainab Ahmed, before the Joint House Committee probing the Berne Declaration report, has claimed that not only was Nigeria losing an estimated $8 billion annually through the crude oil-for-refined products exchange arrangement, aka crude oil swaps, NNPC may have failed to remit $22.8billion to the Federation Account.

    Berne Declaration, a Switzerland-based non-governmental advocacy group published a report titled “Swiss Traders’ Opaque Deals in Nigeria” last year.

    The report alleged that every year Nigeria loses billions of dollars as large volumes of oil are exported for well below the market price. It further alleges that the subsidy scheme for imports of refined petroleum products was systematically defrauded.

    NEITI’s Ahmed told the House Committee on Petroleum Resources (Upstream) that the findings came out of its audit report on the finances of the oil corporation for 2009 to 2011.

    Quick as a flash, NNPC spokesman Dr. Omar Farouk Ibrahim reacted to what he argued was an orchestrated campaign of calumny designed to tarnish the corporation’s image. He said sensational headlines had been written misrepresenting the contents of the NEITI report. Significantly, Ahmed has not retracted her assertions before the committee.

    When she appeared before the hearing Ahmed said, “There is similarity in NEITI’s audit report and the Berne Declaration report. The report has a lot of substance in it. NEITI will go back and link the Berne Declaration report with the NEITI audit report.”

    But until Ahmed comes up with damning evidence against the corporation, NNPC executives can sleep soundly – after all they are the only ones who understand this oily business and its peculiar accounts.

    Even statutory agencies that should be combing through the corporation’s books are throwing in the towel. At its budget defence before the Senate Committee on Drugs, Narcotics, Financial Crimes and Anti-Corruption, the Independent Corrupt Practices Commission (ICPC) said its inability to probe NNPC over the years was down to the ‘sophistication’ of the corporation’s accounts.

    Professor Olu Aina, Acting Chairman of the Commission’s board said: “The account of NNPC is so sophisticated that it would require hiring financial experts to study it for needed investigation the cost of which, however, cannot be afforded by us now due to underfunding.”

    As it was in the beginning, so it is now and forever – the words of Sanusi et al against those of executives who keep telling the rest of us “you can’t understand this!” Truly, we just can’t understand: except if the NNPC spokesman is suggesting that NEITI has now merged with the All Progressives Congress (APC).

  • NEITI: NNPC yet to remit $22.8b

    NEITI: NNPC yet to remit $22.8b

    LAWMAKERS were stunned yesterday to learn that $22.8 billion oil proceeds did not reflect in the books of the Nigeria National Petroleum Corporation (NNPC).

    The Nigeria Extractive Industries Transparency Initiative (NEITI) made the disclosure at the Hon. Muraina Ajibola- headed House of Representatives Joint Committees of Petroleum (Upstream), Petroleum (Downstream) and Justice, investigating the allegation by a Swiss- based Non-Governmental and Advocacy organisation, Berne Declaration, that two Swiss oil trading companies – Vitol and Trafigura – in connivance with the NNPC, skimmed the country of about $6.8 billion in two years.

    In a 29-page presentation before the joint committee, NEITI Executive Secretary, Hajiya Shamsuna Ahmed, said: “These transactions, which sum up to $22.8 billion, are off balance sheet items (not disclosed in NNPC’s Audited Financial Statements). The implication is that there may be significant contingent liabilities to the Federation that are not being disclosed.”

    According to her, the funds are from the NNPC’s alternative funding/financing arrangements with its Joint Venture partners in form of third party financing from external financial markets and Modified Carry Arrangement (MCA), which are loans from existing JV partners (international oil companies).

    NEITI faulted the alternative funding transaction entered into by NNPC on behalf of the Federal Government and recommended that “there is, therefore, the need for transparent disclosure of all alternative funding arrangements in the audited financial statements (AFS) of NNPC.

    NEITI also said that $1.73 meant for Joint Venture cash calls had been diverted by NNPC.

    “Non cash call items totaling $1.73 billion were financed from the CBN/NNPC JP Morgan Chase Cash Call Dollar Account. This reduced the amount available for funding JV operations with the attendant implications of NNPC seeking alternative funding arrangements to fund cash call shortfalls,” NEITI said.

    The organisation said the practice should be discouraged and that the NNPC should spend the money on what it is meant for.

    The revelation came as the extractive transparency organisation indicted the national oil corporation over the 2013 Berne Declaration report, alleging an $6.8bn fraud through connivance between the NNPC and some Swiss oil trading companies.

    According to NEITI, the allegation by the Swiss-based organisation “has substance”.

    Answering a question from a member of the committee, Hon. Sunday Karimi, Mrs Ahmed said: “We were not here yesterday (Tuesday), but someone said the GMD NNPC said the Berne Declaration document was baseless. But we think it has quite a lot of substance in it.

    “If it is taken for what it is, then what we need to do is bring greater transparency and better disclosures. Then it will be a useful process.”

    The position of the NEITI is in sharp contrast to that of the Group Managing Director of the NNPC, Andrew Yakubu who said on Tuesday that the claims of the Bernes Declaration “are baseless and without material substance”, requesting that the committee members “set it aside in its entirety”.

    At Tuesday’s hearing, the NNPC said its selection of traders “has standard criteria, which evaluate buyers’ facilities, volume of transactions, turn-over and financial health of the companies.”

    It was, however, revealed during Tuesday’s proceedings that for the year 2011, 500,075,239.3 million litres were under supplied by four oil trading companies and Nigeria is losing about $8 billion every year through a swap agreement entered into by the NNPC.

    NEITI yesterday said it is of the opinion that the NNPC cannot manage its 445 barrels per day crude oil allocation.

    The NEITI boss recommended that “the 445,000 barrels per day allocation should be reviewed to the actual refining capacity of the refineries” and that the Federal Government should consider privatisation of the refineries.

    She said the refineries are performing at far below their name plate capacities and that the operational and overhead costs are the same, irrespective of the volume of production.

    Kingsley Moghalu, Deputy Governor (Operation) at the Central Bank of Nigeria (CBN), answering a question from the committee, said the CBN would check its books to see if it can find any transaction relating to the $6.8 billion allegation.

    He said: “We take note of the Berne Declaration. We will look at our records and see if there’s anything relating to it and get back to the committee.”

  • Fresh unremitted $22.8bn found in NNPC

    A fresh $22.8 billion undisclosed proceeds not reflected in the books of the Nigeria National Petroleum Corporation, has been revealed by the Nigeria Extractive Industries Transparency Initiative.

    This disclosure was made known on Wednesday at the Hon. Muraino Ajibola- headed House of Representatives joint committee of Petroleum (Upstream), Petroleum (Downstream) and Justice sitting, investigating the allegation by a Swiss- based Non- Governmental and Advocacy organization – Berne Declaration, that two Swiss oil trading companies, Vitol and Trafigura, in connivance with NNPC have skimmed the country off about $6.8 billion in two years.

    In a 29-page presentation made by the Executive Secretary of NEITI, Hajiya Shamsuna Ahmed, before the joint committee, she said, “these transactions which sum up to $22.8 billion are off balance sheet items (not disclosed in NNPC’s Audited Financial Statements). The implication is that there may be significant contingent liabilities to the Federation that is not being disclosed.”

    According to her, the funds are from the NNPC’s alternative funding/financing arrangements with its Joint Venture partners in form of third party financing from external financial markets and Modified Carry Arrangement (MCA) which are loans from existing JV partners (International Oil Companies).

    NEITI faulted the alternative funding transaction entered into by NNPC on behalf of the Federal Government and recommended that “there is therefore, the need for transparent disclosure of all alternative funding arrangements in the audited financial statements (AFS) of the corporation.

    NEITI also said that $1.73 meant for Joint Venture cash calls have been diverted by the NNPC.

    “Non cash call items totaling $1.73 billion were financed from the CBN/NNPC JP Morgan Chase Cash Call Dollar Account. This reduced the amount available for funding JV operations with the attendant implications of NNPC seeking alternative funding arrangements to fund cash call shortfalls,” NEITI said.

     

  • Alison-Madueke orders agencies to work with NEITI

    Alison-Madueke orders agencies to work with NEITI

    The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, on Tuesday directed agencies under the ministry to collaborate with Nigerian Extractive Industries Transparency Initiative (NEITI) for audit and revenue recovery.

    Alison-Madueke gave the directive at the Public Enlightenment Workshop on Oil and Gas Industry Audit for 2012, organised by NEITI in Lagos.

    The minister also urged other stakeholders to cooperate with NEITI in the ongoing audit by providing timely information and data to the agency.

    “One of the cardinal points of President Goodluck Jonathan’s administration was the passage of the Petroleum Industry Bill (PIB) that is to ensure transparency, accountability and constructive reforms in the oil and gas industry.

    “I’m delighted that NEITI has valuable contributions on the bill.

    “Clearly, my presence at this event today justifies that my ministry, department, parastatals, agency, NNPC and all its subsidiaries are in full support of NEITI audit process.

    “This is true measure of transparency and accountability in the oil and gas industry. We shall continue to provide the requite support to NEITI,’’ she said.

    Alison-Madueke said that NEITI’s audit had identified that some payments had been under assessed and under payment of taxes and royalties in the oil and gas industry.

    She charged agencies and department under the ministry to work closely with NEITI in the recovery of all revenues due to Federal Government.

    “Let me say that NEITI reports are vital instruments which government will continue to work with.

    “As a result of the important work of NEITI, an inter-ministerial taxes team has been reconstituted by Federal Government to implements and address all the remedial issues and identify outstanding government revenues,” she said.

     

  • NEITI seeks funding to automate data collection

    NEITI seeks funding to automate data collection

    The Nigerian Extractive Industries Transparency Initiative (NEITI) has called on the government to adequately fund the agency to be able automate its data collection and processing.

    The automation would enable it give real time information on receipts and payments, which could have saved the nation ongoing controversies over alleged non-remittances and disagreements among the government agencies.

    The Chairman of NEITI, Mr. Ledum Mitee, who spoke to reporters during the launch of the organisation’s enlightenment campaign on oil and gas industry audit for the year 2012, held in Lagos.

    Ledum said the agency would not be able to clear the issue of alleged $20 billion unremitted revenues by the Nigerian National Petroleum Corporation (NNPC), which the Central Bank of Nigeria (CBN) levelled against it because NEITI had not audited the oil and gas industry operations within the period in contention.

    He said: “We have consistently made the point that with adequate funding and support, we could automate our data collection processes to enable us get real time data which could be resorted to in the event of this kind of controversy.

    “Arising from the above, I hope that one useful outcome of the current controversy over allegations of unremitted funds would be the realisation of the need by all relevant agencies and institutions to give NEITI and its audit recommendations the deserved seriousness and support.

    “A properly resourced NEITI, whose audit recommendations are promptly addressed, remains vital not only to our economic well-being, but to enabling citizens derive needed benefits from our extractive resources.”

    EITI implementation in Nigeria, he explained, was built on a basic framework of free, open, and unrestricted disclosure of taxes, royalties, bonuses, rents, amongst others, paid by extractive companies to public coffers in resource rich countries.

    He said: “The EITI process equally requires an implementing country such as Nigeria to engage an independent auditor to verify and certify the figures disclosed by companies and government respectively and reconcile any discrepancies between them.

    “A report of this exercise by the auditor is therefore, put in the public domain in a comprehensive manner by the Multi-Stakeholder Group (MSG). Interestingly, the decision by Nigeria to join the global initiative was deliberate and the over-reaching objective was targeted at improving governance in the natural resource-rich countries like Nigeria through prudent use of these resources to reduce poverty, improve the quality of lives of citizens, and provide basic social infrastructure, jobs and others required for peace and security to reign in the society.

    “It is to underscore that critical objective that the NEITI Act went beyond the basic EITI standards and requirements of reconciliation of financial payments and receipts to include conduct of regular physical and process audits of the entire value chain and even extends to value for money audits, amongst other functions.”

  • Please pass Petroleum Industry Bill now

    Please pass Petroleum Industry Bill now

    SIR: Nigeria National Petroleum Corporation (NNPC) was created in 1977 by the Federal Government as a parastatal to improve in its drive for revenue from crude oil production among others. Nigeria produces about 2.3 million of crude oil per day and it is the only OPEC member that imports fuel.

    NNPC has been accused of not paying money realized from the sales of crude oil to government coffers for years. With the current 2.3 million barrels/day crude oil production and a benchmark of N79/barrel, Nigeria is to make N181.7 million/day which is N5,451 million per month. For years now the nation’s four refineries have not been working well to produce refined petroleum products to meet local consumption despite trillions of naira sunk into them in dubious Turn Around Maintenance by successive governments.

    It is believed that the crippling of the refineries is a deliberate play by some influential Nigerians to force the nation to continue the importation of refined petroleum products for local consumption from foreign nations that import our crude oil only to refine same for export. With trillions of naira spent by the federal government on fuel subsidies, NNPC, importing oil companies and some influential Nigerians are benefitting from importation of fuel. It is also believed that some eminent Nigerians and past leaders have refineries abroad which take Nigerian crude, process it and export same to Nigeria. That was why private initiatives to build refineries have not been successful in the country.

    Nigerian crude oil is being stolen on an industrial scale. Recently, the Nigeria Extractive Industries Transparency Initiative (NEITI) disclosed that between 2009 and 2011, Nigeria lost 136 billion barrels of crude oil totaling $11 billion to theft and pipeline vandalism. Proceeds are laundered through world financial centres. Both high ranking and influential Nigerians including military profited from the system. At present, it is believed that about 500,000 barrels of crude oil/day is being lost of which 420,000 barrels was from shutting and 80,000 barrels/day being stolen.

    In view of this, NNPC needs to be restructured and strengthened. This calls for the passage of PIB now. In Brazil and Indonesia, the agencies responsible for the production of crude oil have been restructured and are now effective in generating more revenues for their governments. It is suggested that small refineries be set up by private investors all over the country instead of large refineries as was done in Venezuela. Also, the passage of PIB by the National Assembly is designed to restructure the NNPC, capture and address potential environmental and operational hazards associated with oil and gas industry. It is largely expected to provide for transparent, regulatory framework and competitive fiscal rules of general application of oil and gas industry. It would also see that Nigeria crude oil reserves and production are increased through improved investments in exploration and production within a competitive business environment.

    • Shamsi A. Dabiri

    Akute, Ogun State

  • NEITI plans forum on metering for crude oil

    A forum to dialogue on the installation of metering infrastructure to adequately measure the quality of crude produced in Nigeria will hold in the first quarter of 2014.

    In a statement issued yesterday by its Director of Communications of the Nigeria Extractive Industries Transparency Initiative (NEITI), Dr Orji Ogbonnaya Orji, in Abuja, it said the debate on the possibility of embracing a metering system to accurately measure the quality of crude produced has remained a major issue in NEITI oil and gas industry reports.

    The statement added that the Civil Society Legislative Advocacy Centre (CISLAC) had proposed to collaborate with NEITI to organise the policy dialogue.

    It said the proposed dialogue would assemble individuals and stakeholders knowledgeable on the issue of metering and what is obtainable in the country.

    “The participants will appraise the status quo, its challenges and the cost to the nation, implication for the sector and the constraints for remediation.

    “It will also recommended actionable strategies for implementing a remediation action plan on metering that the in-coming Inter-ministerial Task Team can implement.’’

    The statement said the programme became necessary because the country depend largely on the International Oil Companies (IOCs) to determine the volume of resources extracted and exported.

    “Several components of government take and revenue is dependent on volume and so the accuracy of this substantially determines revenue.

    “Considering the non-renewable nature of oil and gas and the need to maximise revenues and government take, reliance on IOCs for volumes places the nation at a disadvantage as under-disclosure of volume works in their favour,’’ it said.

    The statement also said a Roundtable for Civil Society Organisation originally scheduled to hold on Tuesday and Wednesday next week has been shifted to December 16 and 17.

    Others are the Forum put in place in partnership with the Revenue Watch Institute to review the findings and recommendations on various NEITI independent audit reports earlier slated for this week.

    The forum, which will now hold in the first quarter of next year, will among other things, examine the NEITI oil and gas audit reports, covering 1999 to 2011 and the Nuhu Ribadu-Petroleum Revenue Special Task Force report.

    Also to be examined are the report on the KPMG audit of NNPC, the Kalu Idika Kalu reports on refineries and the House of Representatives Ad Hoc Committee report on fuel subsidy (2009-2011).

    Others are the Magnus Abe-led Senate Joint Committee on Petroleum Resources (2005-2011) and the Aig-Imoukhuede-led Technical Committee on Subsidy Claims and Payments.

     

  • What shall we do with this oil ministry?

    Call it the house of sleaze and you will not be mistaken. Call it the Hammer House of Horrific Corruption and it fits even more perfectly. Such is the state of Nigeria’s petroleum industry as represented by the Nigerian National Petroleum Corporation (NNPC). In the over three decades of its existence, corruption has become so much its second nature that it probably does not know the difference anymore. And being the honey pot of the nation is always in cahoots with any government in power that it has also become the sluiceway of official graft at the highest levels. NNPC plus Federal Government equals an evil template, an ominous Siamese twin that is medically inseparable.

    The Ministry of Petroleum Resources, NNPC and all the other little horrors down the line have become a long chain of legitimised fraud; it is a carefully developed and nurtured subculture of criminality that the nation seems to have come to accept and live with. In all the frequent exposures by the Nigerian Extractive Industries Transparency Initiative (NEITI) reports, National Assembly reports and international expose, it is never heard that anyone gets sanctioned or prosecuted. Worse still, this thriving cult has extirpated efficiency and vanquished any iota of corporate governance and work ethics.

    The result of this is that NNPC has shrunken from being the biggest national oil corporation in Africa to a worthless, ossified stealing field with no meaningful development going on in its hollow labyrinth in the last two decades. On the other hand, almost all its infrastructure are in their end stage, dysfunctional and derelict. For instance, all its four refineries are near comatose; its pipelines laid many decades ago are in dire need of replacement and repair; its storage facilities are 20 years behind time and the hollow, shambling giant is ravage by insider-induced scavenging and oil theft. It is a dire situation that has reached its nadir in the last two years of the current minister, Mrs. Diezani Alison-Madueke. If there was a modicum of commonsense before her time, what we have now under Alison-Madueke is akin to a free-for-all. She seems so utterly bereft of any ideas and all systems seem to have gone loose: if it is not unmanageable revenue losses, it is turnaround maintenance scam at the refineries; if it is not blatant oil theft, it is subsidy fraud, oil bloc gerrymandering, shady oil-for-loan deals, on and on.

    Hardball has been triggered into this long sad treatise by the untrammeled mess that what used to be Nigeria’s oil glory has become. The local media have shouted themselves hoarse but it has been like water thrown on pumpkins. The story today is another sad report from abroad; a Swiss-based non-governmental advocacy group, Berne Declaration, in its current report, accused the NNPC of conniving with some foreign oil trading companies based in Europe to defraud Nigeria of subsidy payments amounting to about $6.8 billion. The bottom-line of the report is that the “The all-powerful national oil firm, the Nigerian National Petroleum Corporation, categorised as the most opaque national oil company on the planet, itself, is evidence of Nigeria’s ‘resource curse’ at work.”

    The report states that two Swiss ‘letter-box’ companies by the names, Vitol and Trafigura had exclusive and un-transparent partnerships with the NNPC, which had given them over 26 per cent of the market share. “Vitol and Trafigura alone took respectively 13.44 per cent and 13.49 per cent of Nigeria’s crude oil exports in 2011 for a cumulative value of $6.8 billion.” It further states that more than 56 per cent of the oil output up for sale by the NNPC in 2011 valued at $14 billion was sold to Swiss companies or Nigerian companies with ‘letterbox’ subsidiaries in Switzerland. It notes that Nigeria is the only major oil producing company that sells 100 per cent of its crude to private traders rather than market it itself in the open market and benefit from the resulting market value.

    Who will save Nigeria from this mess?

  • Group seeks law for extractive industries

    Agroup, CSR-in-Action, has called on policy makers and stakeholders to ensure that the right legal frameworks are put in place in the extractive industries.

    The Executive Director, CSR-in-Action, Bekeme Masade, told reporters in Lagos that the efforts to sustain the industries had become imperative because of the major constraints to sustainability in the sector derived from the ever-increasing demand for natural resources, consumption of resources especially energy and water needed to extract and process metals, and the increasing environmental pollution and degradation generated by the extraction process.

    She said: “There is no gainsaying that activities carried out in the process of extracting raw materials have huge negative environmental and social impact on the lives of those in the local communities. Therefore, the enactment of legislation such as the Nigerian Extractive Industries Transparency Initiative Act (NEITI) 2007, was a step in the right direction towards regulating transparency and accountability and on a larger note poverty reduction. There is the need for a revisit of the initiative in the form of strengthening its mandates and processes and this requires the collaboration of multiple stakeholders.”

    She also said: “We are excited to have Shell, Seven Energy and Statoil sponsor this year’s event.”

    In view of the need for multiple stakeholders’collaboration, Masade said the group would organise its second seminar with the theme Sustainability in the Extractive Industries (SITEI),” on Thursday in Lagos.

    The sub-theme of the seminar is Policy, affirmative action and sustained growth.

     

     

    The Minister of Solid Minerals Development, Musa Mohammed Sada; former Vice President, World Bank, African Region, Mrs. Obiageli Ezekwesili; Director, Department of Petroleum Resources, George Osahon; Executive Director, Africa Progress Panel, Caroline Kende-Robb; Executive Secretary, NEITI, Mrs. Zainab Ahmed and Director-General, Nigerian Economic Summit Group, Frank Nweke Jr., are being expected at the event.

     

  • Experts back NEITI on oil licences allocation

    The position of the Nigerian Extractive Initiative Transparency Industry (NEITI) that the award of oil licences should be open, transparent, competitive and in accordance with international bid processes, has been supported by experts.

    Prof Adeola Akinnisiju of the Geology Department, University of Ibadan, and Emeka Ene, president of Petroleum technology Association of Nigeria, agreed that NEITI’s position must be respected in view of its role as a watchdog in the extractive industry.

    Akinnisiju, who is the president, Association of International Energy Economics, argued that NEITI is trying to correct some of the lapses in the bidding and allocation of marginal oil fields in the country, saying the issue of allocation of oil wells and licences was not without discrepancies. He said the Petroleum Industry Bill (PIB) would address them when passed.

    “That the president and the Minister of Petroleum Resources were vested with discretionary powers to issue licences to marginal field operators may not be far from the truth. There are lapses in the laws guiding the issuance and allocation of oil licences/wells, and that is what NEITI is trying to correct. The body is trying to ensure that the right legislations are put in place to restrain some political officer holders from dabbling into sensitive issues in the oil and gas industry,” Akinnisiju said.

    He said PIB would ensure a true bidding process, and further limit the powers of some political appointees who issue licences indiscriminately.

    Ene said the legal allocation of oil wells was germane to the growth of the industry, adding that the industry is sensitive, and therefore requires that competent hands manage it.

    He said oil discovery ad exploration, among others, should not be left in the hands of mediocres, adding that the fitness level of people applying for licences must be ascertained for growth.