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Tag: NEITI

  • Kachikwu’s petition: CSO seeks conclusion of PIGB

    Kachikwu’s petition: CSO seeks conclusion of PIGB

    The Africa Network for Environment and Economic Justice (ANEEJ), on Thursday, called on the National Assembly and President Muhammadu Buhari to conclude the passage and assent of the Petroleum Industry Governance Bill.

    A conclusion of the enactment, according to the Civil Society Organization, will forestall the reoccurrence of the issues in the oil and gas sector that the Minister of State for Petroleum, Dr Ibe Kachikwu alleged against the Group Managing Director of the NNPC, Dr Maikanti Baru in his petition to President Buhari.

    The petition was on the arbitrary award of $25 billion contracts, insubordination, among other infractions of the NNPC boss.  

    ANEEJ Executive Director, Rev. David Ugolor made the call for the enactment of the PIGB  in a statement to journalists in Abuja yesterday. 

    He applauded the Senate for moving quickly to unravel allegations of inappropriateness levelled by the Minister of State, noting that the response of Mr President concerning the allegations of disregard for due process in the award of contracts by the NNPC GM, would define the perception of the reforms which have been going on in the oil sector.

    Ugolor said that “Since the Senate has waded into the matter, we suggest that Mr President as well must invite the Nigerian Extractive Industry Transparency Initiative, NEITI, to carry out a comprehensive and forensic audit of the allegations. 

    “Among statutory functions of the NEITI include the regulation of matters related to the due process in the award of contracts in the extractive sector of the Nigerian sector.

    “We believe that the inconsistencies being thrown up by the startling revelations from the Minister of State for Petroleum Resources include some of the issues which the Petroleum Industry Governance Bill seeks to address and redress’, the Rev Ugolor has pointed out.”

    The statement noted that in anticipation of such a rift in the industry, ANEEJ anticipated wrote an online petition. 

    The statement reads in parts: “The present administration since inception has defined itself first through its corruption stance, and more by the reforms it has introduced in the oil sector. It scrapped the opaque oil swap which made it possible for individuals within government to line their pockets with millions of dollars and has replaced it with the Direct Sale, Direct Purchase scheme.

    “That lofty plan of Direct Sale, Direct Purchase stands in jeopardy if all the contracts that have been awarded and the companies they have been awarded are not subject to thorough vetting and investigations by both the Senate and the NEITI.” 

  • Nigeria must apply caution on oil revenue spending, says NEITI

    Nigeria must apply caution on oil revenue spending, says NEITI

    The Nigeria Extractive Industries Transparency Initiative (NEITI) has advised Nigeria to apply restraint in spending oil revenues, in view of the experience from economic recession and instability in the oil market.

    The agency said the time had come for the country to embrace a robust saving culture, irrespective of whether oil prices are low or high, noting the importance of healthy savings as one of the tools for tackling resource curse.

    It recommended that the federating units, especially the federal and state governments seek the speedy resolution of pending cases at the Supreme Court on the constitutionality of remittances to the Excess Crude Account, and the Nigeria Sovereign Investment Authority.

    It also said there is urgent need for the government to amend Section 162 of the 1999 Constitution, drawing on the political consensus that led to the creation of the Excess Crude Account (ECA) and the Nigeria Sovereign Investment Authority (NSIA). NEITI noted that oil revenue savings in the ECA and Stabilisation Fund should be consolidated into the Nigeria Sovereign Investment Authority. “We are persuaded by the recent 9 out 10 score ranking of NSIA by the global sovereign wealth institute transparency index, the highest by an African Sovereign Wealth Fund,” it said.

    NEITI Director of Communications Ogbonnaya Orji noted that the NSIA was the only one of the three funds that has recorded profit, adding that NSIA should be strengthened with appropriate guarantees on transparent and accountable governance to reassure stakeholders.

    Orji, who spoke with The Nation on phone, said the time to separate government expenditure from oil revenues and pursue prudent macro-economic policies was now. He said these measures were critical success factors that would rescue the country from resource curse syndrome.

    There are predictions the Nigerian oil reserves would likely dry up in the next 38 years, development economic analysts have said. If the proceeds from oil are not diversified into the non-oil sector, the country may be in for more problems

    NEITI noted that resource-rich countries, including Nigeria, that depend on revenues from natural resources to finance annual budgets, plan early to insulate themselves from  price volatility in the international market and eventual depletion of the resources.

    He said many countries set up stabilisation funds for the rainy day and for the future of the next generation.  This, he said, requires a deliberate policy by the government to set aside money earned from natural resources, especially during periods of high prices to help sustain expenditure when prices fall.

    The stabilisation funds, he added, protect countries against total dependence on natural resources’ revenue and create incentives to look in wards, he restated.

    Furthermore, Orji recalled that saving a portion of oil and gas revenues began in Nigeria in 1989, when the Stabilisation Fund was set up.  The objective was to set aside 0.5 per cent of the Federation Account to support any state that suffers absolute decline in its revenues as a result of circumstances beyond its control.

  • NCDMB, Chevron, Mobil, others lead NEITI compliance ranking

    NCDMB, Chevron, Mobil, others lead NEITI compliance ranking

    The on-going Independent Audit of the Oil and Gas Industry covering 2015 by the Nigeria Extractive Industries Transparency Initiative (NEITI) has recorded 94% compliance by companies and relevant government agencies.
    Fourteen companies topped the ranking table with a maximum score of 100%. The companies are Chevron Nigeria Ltd, Consolidated, Continental, Eroton, Esso Exploration, Mobil Producing Nigeria Unlimited and Niger Delta Petroleum Resources.
    Other oil companies within the 100% compliance ranking include Nigeria Gas Company, Orient Energy, Star Deepwater Petroleum and Waltersmith Petroman. Remarkably, two government agencies, the Federal Inland Revenue Service (FIRS) and the Nigeria Content Development and Monitoring Board also recorded 100% compliance in the ranking.
    The watchdog organization’s Director of Communications, Dr. Orji Ogbonnaya Orji, made this announcement in a statement on Tuesday.
    The statement added that similarly, five companies namely, Shoreline, Statoil, Petrobas, Mid Western and ND Western, scored between 98% to 94% to book their respective places in the  top compliance ranking category.
    Twenty companies scored between 80% and 88% while twelve others recorded between 72% and 75% in an exercise industry experts have described as successful and innovative.
     The Compliance ranking report further showed that only four companies representing 6%, failed to make submissions before the deadline.  Of these four companies, two made submissions after the ranking deadline had elapsed and therefore scored zero ranking, while two others failed to comply at all.
    The criteria for the compliance ranking focused mainly on two major critical areas in the NEITI audit value chain. These are timeliness and completeness in submission of information and data requested by NEITI in the audit templates. While timeliness measured when the covered entities submitted the templates, the completeness considered how many of the applicable templates were submitted.
    Speaking on the ranking exercise, the Executive Secretary of NEITI Mr. Waziri Adio remarked “we decided to rank companies and government agencies covered by the NEITI audit process so as to incentivize timely and complete compliance’’.
    He  added “given that this is the first time we are doing this, we are very impressed with the compliance rate. We commend the high fliers and call for improvement from others. We want to see a situation where all the entities score 100% possibly by next year.’’
    The data collection and voluntary submission of information and data in NEITI/EITI Audit process is a major step in the independent audit value chain.  NEITI wishes to state that this exercise does not represent full compliance assessment with the audit process, as the audit is not yet completed. All entities will be further ranked in terms of their cooperation with the NEITI auditors, the accuracy of their data and level of reconciliation, among others.
    The process began on 2nd May 2017 when the audit templates were dispatched by NEITI to affected companies and relevant government agencies. This was followed by a workshop to enlighten all the companies and relevant government agencies on their roles in populating the audit templates.
    At that workshop, the entities were duly informed of NEITI’s plan to rank them in terms of compliance. NEITI also published the company compliance ranking procedure and the deadline in the national dailies. The deadline was later moved from June 1st  to August 3rd 2017. This became necessary to enable more entities complete the templates and return same to NEITI. During the ranking exercise, sixty-five (65) covered entities, made of up fifty-five (55) oil and gas companies and ten (10) relevant government agencies, participated.
    NEITI’s decision to carry out a compliance ranking for companies and relevant government agencies covered by NEITI process is to push the boundaries of implementation of EITI in Nigeria as provided for in the law and global standards.

     

  • Transfer oil revenue savings to SWF – NEITI

    Transfer oil revenue savings to SWF – NEITI

    The Nigeria Extractive Industries Transparency Initiative (NEITI) on Wednesday called for the transfer of all the country’s oil revenue savings into the Nigerian Sovereign Investment Authority (NSIA).

    The Director of Communications at NEITI, Dr. Orji Ogbonnaya Orji, made the call in a statement in Abuja.

    Orji said the position was made known in NEITI’s paper titled: “The case for a robust oil savings fund for Nigeria,” adding that it was informed by the transparency rating of the NSIA by the global Sovereign Wealth Institute.’’

    He said the NSIA had been scored nine out of 10 on the Sovereign Wealth Institute’s transparency index, the highest score by any African Sovereign Wealth Fund.

    He said the Nigeria Sovereign Wealth Fund was set up in 2011 to build a savings base, develop infrastructure and provide stabilisation in times of economic stress for the country.

    “The fund was structured into three components – the Future Generations’ Fund 40 per cent, Nigeria Infrastructure Fund 40 per cent and 20 per cent for the Stabilisation Fund,” Orji said.

    He said from a modest “seed capital” of less than $310 million in 1996, the total asset value of the Norway’s sovereign wealth fund “is currently $922 billion.”

    He recommended that the $95 million currently in the Stabilisation Fund and the $2.3 billion in the Excess Crude Account (ECA) should be transferred into the SWF as investment savings.

    NAN

     

  • NEITI: Nigeria saved only $3.9b from oil proceeds in 37 years

    NEITI: Nigeria saved only $3.9b from oil proceeds in 37 years

    •Agency seeks consolidation of oil savings accounts

    THE Nigeria Extractive Industries Transparency Initiative (NEITI) yesterday regretted that the country could only save $3.9billion from its oil proceeds between 1980 and June 2017.

    NEITI’s Executive Secretary Waziri Adio gave the figure yesterday in Abuja, at the presentation of its occasional paper, titled: “The case for a robust oil savings fund for Nigeria”.

    The report stressed the need for savings and more savings despite the oil benchmark price.

    His words: “Nigeria currently has three oil savings funds. They are the Sovereign Wealth Fund with $1.5billion, the Excess Crude Account $2.3billion, and the Stabilisation Funds with N29.02 billion ($95million).

    “In the last 40 years of oil production, Nigeria has extracted about 31billion barrel of its oil reserves. However, from 1980 to 2015, the country exported crude oil worth about $1.09 trillion but has a current balance of $3.9billion as at June 2017 in the three funds.”

    He called on the Federal Government to consolidate oil trust funds into the Nigeria Sovereign Wealth Fund to yield return on investment.

    He added that with $3.9 billion in Nigeria’s oil savings funds, which merely accounts for 16 per cent of the N7.44 trillion of the federal budget, it shows that Nigeria’s economy is highly vulnerable and unprotected.

    According to the NEITI boss, “when people are talking about how we ended in this trouble and how we will get out of it, little attention is paid to savings – that we didn’t have enough savings, when the prices were high, we thought it would be high forever living in Fools’ paradise and when the prices fell, we didn’t have enough to fall back on.”

    He added that Nigeria has to move away from its present state of “spend it all” or “save and spend attitude” to real savings culture, otherwise the country will continue to be vulnerable.

    The report added that most countries that established one or more oil revenue funds have accumulated huge savings in their stabilisation accounts. On the other hand, it said Nigeria’s ECA has been dogged by questions about its constitutionality, which have hindered regular remittances into the accounts.

    But the ECA also faces governance issues bordering on transparency and failure to adhere to the fiscal rules guiding the operations of the ECA.  In the end, distrust by subnational governments about the management of the fund coupled with lack of political will has prevented the government from effectively implementing its savings and stabilisation policy.

    Adio added that it was not the first time Nigeria will be experiencing economic downturn, adding that when Nigeria faced a similar challenge in 2008/2009, the country had a chance to deal with the situation and without having to borrow since the country had an excess of $60 billion in reserves.

    In his words: “We were one of the very few countries that didn’t have to go and borrow, and we didn’t have to go through what we are going through now and this happened in 2008/2009 and by the time the prices started rising again and selling above $100, we were just blowing it.”

    The report, however, recommended that the Federal Government seeks speedy resolution on Supreme Court cases related to oil funds, and de-link government expenditure from oil revenue to pursue policy initiatives that pursues prudent macro-economic policies, better economic and social environment for the next generation.

     

  • NEITI alleges ‘fundamental error’ in PIGB

    NEITI alleges ‘fundamental error’ in PIGB

    The Nigeria Extractive Industries Transparency Initiative (NEITI) has alleged fundamental error in the Petroleum Industry Governance Bill (PIGB) passed  by the Senate.

    The bill, the NEITI said, should be specific on operations of the industry as guided by the principles of the Extractive Industry Transparency Initiative (EITI), which Nigeria signed into.

    Its Director of Communications, Ogbonnaya Orji, who spoke with The Nation on telephone, said a quick review of the bill showed there was no specific provision that the NEITI principles are enshrined in the governance process, adding it is a fundamental error that needed to be corrected.

    “We have already seen that the former Petroleum Industry Bill (PIB) specifically provided that all the processes in the oil and gas should be guided by the principle of extractive industry transparency initiative. We have not seen this provided in the PIGB and the House of Representatives needs to correct that,” he stated.

    He maintained that the House of Representatives needed to correct the error, adding there has to be a specific provision since Nigeria is a member of the Global Extractive Transparency Initiative. Therefore, the laws in the industry should be consistent and should guide the principle of the PIGB, which he said NEITI is implementing in Nigeria.

    Orji agreed that the bill will address the governance aspect of the industry, saying that the governance bill will address issues in the process of doing business in the industry.

    He also noted that there was still another fundamental area of the legislation that was still untouched. This, he said, has to do with the fiscal, adding the original PIB that was done in the past was broken into bits and pieces, saying “the senate just concentrated on the governance and policy aspects of the bill.”

    “We still expect another legislation that deals with the fiscals, which will deal with who takes what and how. The fiscal aspect of the bill is still very important.”

    The petroleum industry governance bill is the first part of the modified version of the much awaited Petroleum Industry Bill (PIB), which the Senate passed into law recently.

    The bill, if eventually passed by the House of Representatives and signed into law by the President, will lead to unbundling and restructuring of the Nigeria National Petroleum Corporation (NNPC) and the Department for Petroleum Resources (DPR), and also create new agencies with more responsibilities.

    While commending the Senate on the passage of the governance bill, NEITI noted the process would not be complete until the House of Representatives deems it necessary to summon similar courage to give the bill an accelerated consideration on its merit in overriding public interest.

    Ogbonnaya believed the PIGB will make a very good impact as governance process in the industry is very fundamental even in determining the financials, adding it is a milestone that has been recorded in terms of progress.

    He noted that no investor will want to bring investment into an environment he is not sure what the rule would be. Existence of the law, he said, would make it clear what the rules are and again make the environment more predictable in terms of legal framework.

  • Unremitted N1.76tr: NEITI seeks review oil assets transfer

    Unremitted N1.76tr: NEITI seeks review oil assets transfer

    NIGERIAN National Petroleum Corporation (NNPC) upstream subsidiary – the Nigerian Petroleum Development Company (NPDC) – is holding on to N1.76 trillion (consisting $5.5 billion and N72.4 billion), the Nigeria Extractive Industries Transparency Initiative (NEITI) alerted yesterday.
    The agency urged the Federal Government to revisit and re-evaluate the transfer of some oil assets and unremitted revenues in the custody of the NPDC.
    Making the call as part of the transparency agency’s continued review of the highlights of its latest edition of policy brief entitled: “Unremitted funds, oil sector reforms and economic recovery”, NEITI underlined the importance of the step.
    Its Executive Secretary Waziri Adio said in Abuja that the move has become imperative considering NNPC’s under-valuation and refusal to pay for some federal assets.
    According to Adio, the NPDC has been unable to either make returns on investments on the assets or be accountable to the federation over its management of the oil assets in its custody.
    The NEITI Policy Brief put the total unremitted revenues to the federation at N1.76 trillion.
    Details of the outstanding revenues by the NPDC to the Federation Account in respect of the transferred oil assets by the NNPC include: $1.7 billion in respect of the transfer of right oil mining leases, OMLs from the Shell Petroleum Development Company (SPDC) joint venture.
    Another $2.23 billion was also outstanding in respect of the transfer of four OMLs from the Nigerian Agip Oil Company (NAOC JV).
    The NEITI report said the NPDC was yet to refund about $148.3 million and about N2.42 billion, being cash-calls paid to it by the Federal Government for the transferred OMLs.

  • NEITI begins 2015-2016 oil sector audit

    NEITI begins 2015-2016 oil sector audit

    The Nigeria Extractive Industries Transparency Initiative (NEITI) has commenced a comprehensive audit of the oil and gas sector for  2015 and 2016.

    Its Executive Secretary, Mr. Waziri Adio announced this in Lagos at a workshop for major oil companies and relevant government agencies expected to participate in the exercise.

    According to a statement endorsed by its Director of Communication, Dr Orji Ogbonnaya, the independent audit of the oil and gas sector will examine the fiscal, physical and process issues from, within and among the companies and relevant government agencies.

    Adio stressed that NEITI is committed to working closely with the companies under the EITI framework to create good business environment that is conducive for the inflow of more foreign direct investments into the extractive sector. He added that, for this to happen, there is need to encourage all companies to embrace transparency, accountability and corporate governance in conformity with the EITI standards.

    According to the report, major international oil and gas companies operating in the country were represented at the workshop.

  • NEITI to Fed Govt: Probe NPDC’s refusal to transfer $5.5b, N72.4b

    NEITI to Fed Govt: Probe NPDC’s refusal to transfer $5.5b, N72.4b

    The Nigeria Extractive Industries Transparency Initiative (NEITI) has advised the Federal Government to probe why a whopping  $5.5billion and N72.4billion were not remiitted to the government by the Nigeria Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC).

    It also wants the government to re-valuate the transfer of the federation oil assets by the NNPC to NPDC.

    Its Executive Secretary, Mr. Waziri Adio, while answering questions from reporters on the highlights of the released NEITI Policy Brief entitled “unremitted funds, oil sector reforms and economic recovery” gave the advice.

    Mr. Adio stated that the review has become imperative in view of the under-valuation, non–payment for the assets and the inability of the NPDC to either make returns on the investments or be accountable to the federation over its management of Nigeria’s oil assets in its custody.

    The NEITI Policy Brief has put the total unremitted revenues to the federation by the NPDC at about $5.5billion and another N72.4billion.  NEITI also observed that beyond the issue of unremitted monies, there are issues of transparency and efficiency with the operations of NPDC noting that, ‘‘since 2005, NNPC has transferred 16 OMLs to NPDC. However, the process of transfer of these assets raises serious questions, as there appears to be no clear-cut criteria for transfer of oil mining assets to NPDC. The process for the transfer of Federation’s assets to NPDC does not seem to pass the transparency test. One of the upshoots of this is the undervaluation of these assets, thereby depriving the federation of optimal value for the assets’’.

    The undervaluation NEITI reported, results from NNPCs divestment of its 55 per cent shares in the Shell Joint Venture which it valued at $1.8billion. PricewaterhouseCoopers’ (PwC) valuation of the same assets was $3.4 billion. In addition, four other assets were divested in 2012 by NNPC to NPDC under the NAOC JV which the DPR valued at $2.225billion. NPDC is contesting these valuations even though it currently operates these 12 OMLs without paying in full, the undervalued rates (paid only a $100million) nor the new figures arrived at by PwC and the DPR. In total, the non-payment for the 12 oil blocks by NPDC total $3.925billion.

    NEITI questioned the situation where NPDC deliberately refuses to be accountable in its management of Nigeria’s oil assets entrusted in its care. “NPDC continues to be unaccountable to state institutions and the laws of the country. NPDC has consistently declined to give account of its operations and its management of national oil assets in its possession. NPDC failed to cooperate with the forensic audit ordered by the Auditor-General of the Federation in 2015. Similarly, the company failed to cooperate with NEITI for five audit cycles and only partially cooperated during the 2013 and 2014 audits,’’ NEITI said.

    NEITI also expressed concerns over NPDC’s technical expertise and financial capability to manage Nigeria’s oil assets. “The lack of technical know-how has been evident since the mid-2000s when the NPDC started engaging in service contracts with international oil companies. Also, NPDC’s lack of finances has been evident since the beginning of the 2010s, when the company resorted to Strategic Alliance Agreements (SAAs) with indigenous oil companies to carry out production on the fields in its possession,” it lamented.

    NEITI maintained that if NPDC was established to foster indigenous participation in the upstream sector, it has not in the past three decades, demonstrated ability to either maximise its production capacity or show that it has the financial muscle to operate independently. “In mid-2006, total output from its wholly owned production was just 10,000 bpd. On the other hand, production from its service contract agreement with Agip was 65,000 bpd… Despite NPDC’s clear operational and capacity deficiencies, the company continues to be allocated valuable concessions of Nigeria’s most productive OMLs,” NEITI noted.

    The NEITI chief concluded that the call on the government to revisit and re-valuate the divestments of Nigeria’s oil assets at a time the country is passing through very difficult economic challenges is therefore appropriate and timely.

  • NEITI urges govt to recover $22b, N316b from NNPC

    NEITI urges govt to recover $22b, N316b from NNPC

    A report on the Nigerian National Petroleum Corporation (NNPC) and its subsidiaries has shown that $22 billion is yet to be remitted to the treasury by the oil giant.
    The government should recover the cash, Nigeria Extractive Industries Transparency Initiative (NEITI) said yesterday.
    Its Executive Secretary, Waziri Adio, told reporters in Abuja at an interactive session that “audits of the oil and gas sector carried out by NEITI show that the NNPC and its upstream arm, Nigerian Petroleum Development Company (NPDC), have failed to remit $21.778 billion and N316.074 billion to the Federation Account”.
    Quoting from the report, Adio said the funds were due from three main sources, which he listed as:
    •federation assets divested to NPDC;
    •the company’s legacy liabilities payment for domestic crude allocation to NNPC; and
    •dividends from investment in Nigerian Liquefied Natural Gas Company (NLNG) paid to the NNPC.
    Adio claimed that the corporation had been withholding the funds.
    The unremitted funds, the NEITI chief added, fall under the categories of the full payment for the 12 Oil Mining Leases (OMLs) divested from Shell and Agip Ventures as well as NNPC divestment of 55 per cent of its stake in the Shell JV valued at $1.8 billion by the Department of Petroleum Resources (DPR).
    The audit revealed that cash calls amounting to $552 million were erroneously paid on these divested assets by the National Petroleum Investment Management Services (NAPIMS), the investment arm of NNPC.
    The NPDC was said to have refunded $424 million to NAPIMS, but the money was not remitted to the Federation Account.
    NEITI added that the NPDC was yet to refund $148.278 million and N2.42 billion from the cash calls mistakenly paid to it.
    It added that unremitted revenues in this category include arrears of liabilities of taxes, royalties and levies, leaving the amount owed by the NPDC at $5.531 billion and N72.435 billion.
    Adio said the NNPC explained that it withheld the funds to pay for downstream related operational costs and subsidies.
    But he said the explanation was doubtful since such withholdings regularly exceeded actual subsidy costs.
    Waziri called on the government to recover the money and use it to put the economy on a sound and sustainable footing.
    He added that the OMLs that had not been fully paid for should be retrieved from NPDC, revalued and auctioned to enable the country get proper value for them.
    The NEITI chief called on the government to investigate the status and use of NLNG dividends from 2004 to 2014. Criminal proceedings should be instituted against anyone found wanting, Adio suggested.