EITI Standards: Extractive Accountability Fulcrum

Revenues from natural resources when properly utilized will engender development, creates jobs and address poverty. Nigeria, a country in transition needs huge investments in infrastructure, education, health and others. This is possible if revenues from natural resources are properly harnessed and utilized. Unfortunately, transparency and accountability in Nigeria’s natural resources continue to pose a great challenge both for the state and the citizens.

However, we are glad that Nigeria is one of the Extractive Industries Transparency Initiative (EITI) countries. We hope to see the EITI process established to promote good governance in the management of natural resources work in Nigeria. EITI is particularly designed to encourage transparency practices in all transactions between the government and extractive companies.

In spite Nigeria being EITI country, there are issues to be addressed relating to oil and gas revenue transparency. However, there are evidence that show the country’s compliance to accountability in the extractive sector. But, for us to have the required entrenched accountability there is no other way, but, for the state to adhere to the principles and standards of EITI, in the management of extractive revenues.

EITI standard goes beyond revenue transparency, but, creates linkages to wider reforms in the extractive sector.  Beyond reforms, it projects Nigeria to have met the global expectation creating the foundation for revenue transparency and utilization that will address poverty.

For instance, EITI standard helped to uncover inconsistencies in payments due and actual payments made.  Nigeria is an example, 1999 to 2008 EITI report uncovered a loss of $2.6 billion in revenues and the refusal by oil firms to pay $9.9 billion in royalties.

Although the EITI Standard comes with obstacles, mainly as a result of its broader requirements, which some is disclosure for licensing and production, sub-national payments and transfers, timely reporting and independent validation, as it stands today, the standards appear to be the only globally accepted framework for transparency in the extractive. Which is why Nigeria joined the EITI standards.

In spite the challenges, Nigeria has made some remarkable effort to ensuring EITI implementation. By 2004, Mr. Olusegun Obasanjo, the former Nigerian President launched NEITI, as a result of that Nigeria started demanding all oil companies to publish what they pay and also government officials to make public where the money goes. A pointer case is the state application for the requirement to the 2004 agreement for a joint development zone with Sao Tome and Principe.

The state gave Mrs. Obi Ezekwesili the mandate to lead in the NEITI implementation process, thus, a National Stakeholders Working Group (NSWG) was created. The NSWG is a multi-stakeholder group selected from government, corporations’ civil society organization, media, the private sector, and the National and State Houses of Assemblies.

One of the outcomes of this engagement is the 1999-2004 audit reports. The standard of the report was optimum that it exceeded the international EITI standards. The audit had three components, (1) the Financial Audit; it reconciled payments and revenue, and also identified the money flows in the oil and gas sector, and identified the factors that impede transparency and accountability. (2) Physical Audit; this tracked the actual movement of oil and gas from extraction through refinement and export. (3) Process Audit; this reviewed the procedure affecting financial flow throughout the entire extractive industry.

This was the first comprehensive audit of the oil and gas industry in Nigeria. Although the audit was very thorough, the Nigerian state did not show the political will to address issues and recommendations made.

A big milestone was the NEITI Act, which inputs the provisions of EITI into Nigerian legislation and was passed on the 28th day of May 2007. This made Nigeria the first nation to put in place a legal framework backing EITI implementation.

In spite the audit report and the legal backing; Nigerian has witnessed low acceleration in the EITI implementation. Periodic change of government, lack of political will, capacity deficit, lack of funding etc, are some of the challenges that impede EITI implementation in Nigeria.

Audu Liberty Oseni, Publish What You Pay-Nigeria