Remediation: NASS Should Walk The Talk

The National Assembly recently committed to ensuring the implementation of outstanding remedial issues contained in the reports of the oil and gas sector independent audits conducted by the Nigeria Extractive Industries Transparency Initiative (NEITI), by establishing a Parliamentary Forum on EITI which would address remediation issues.

The group expected to be drawn from relevant Committees in the Senate and House of Representatives will coordinate legislative actions on implementation of remedial issues identified by NEITI’s independent audit reports.

Nigeria is a member of the global Extractive Industries Transparency Initiative (EITI) and implements its principles through NEITI which is backed by an Act of Parliament. As part of its responsibilities, and as required by the EITI, the NEITI secretariat is tasked with ensuring transparency and accountability in the extractive sector by conducting regular audits of the sector’s operations to determine if companies paid what they are supposed to pay and if government received what is due it.

But the agency has taken the task beyond the scope of the EITI’s requirement by going further to scrutinize if other arms of government got what is constitutionally due them from extractive resources, through the conduct of the Fiscal Allocation and Statutory Disbursement (FASD) audit. This is aside several other reports and policy papers regularly turned out by the agency with a view to giving Nigerians better insight into the operations of the oil and gas sector and how revenue from it is utilized.

Over the years, NEITI has conducted eight circles of audit on the oil and sector. They include the 1999-2004, 2005, 2006-2008, 2009-2011, 2012, 2013, 2014, with the most recent being the 2015 audit. The report of the 2016 audit is expected to be released soon.

However, while all these reports have exposed age-long rot in the sector and recommended ways to address the challenges and bring our industry at par with competitors in line with global best practice, these recommendations have sadly, received little or no attention. A very frustrating reality!

For instance, some major outstanding remediation issues in the 2014 oil and gas sector audit alone include; $7 billion total unremitted payments to government, $1.8 billion accumulated unremitted gas flare penalty, $2.3 billion outstanding NPDC PPT liability, $.147 billion Cash Call balance from NAPIMS among others.

We believe that these monies, apart from the possibility of being rapidly recovered to the federation account, could have been prevented from occurring if remediation of previous reports had been implemented.

Worst still, a recent review of major outstanding remedial issues of NEITI reports at a roundtable meeting organized by the Nigeria Natural Resource Chatter (NNRC), showed that N1.25 trillion of the $7 billion total unremitted revenue found in the 2014 audit is by the state oil firm alone. This, the former Minister of State for Petroleum Resources, Dr. Odein Ajumogobia said was enough to fund a third of the 2018 recurrent budget.

The review also put crude oil losses due to theft and deferred production on account of vandalism and sabotage at $14.2 billion while lost domestic crude was about $1.5 billion between 2009 and 2013. Moreover, the need to review the archaic 1993 production sharing contracts to which the country has reportedly lost some $60 billion – according ministry of petroleum resources sources – is another major area that calls for urgent attention. NEITI says it is presently conducting an independent study to verify the true extent of what has been lost to the existing PSCs.

In a country where oil proceeds accounts for 95percent of foreign exchange and 80percent of budgetary revenue, and where 70percent of citizens live on about $1 a day, such homogenous losses must be curbed as a matter of urgency, and implementation of remedial issues should no longer be accorded mere political talks.

We urge the 8th National Assembly to match words with action and urgently set up the parliamentary forum to begin to look into these outstanding issues. We believe that issues of poor governance, inadequate metering infrastructure, under payments, under assessment, under remittance, gas flare, among others, which are prevalent in the industry today, would be adequately checked if remediation is implemented.  This, we are confident, will translate to a competitive, attractive operating environment and better revenue for government.




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