NEITI – Where is Our Missing Oil and Gas Money? (II)

No Comments » November 10th, 2009 posted by // Categories: General Articles



NEITI – Where is Our Missing Oil and Gas Money? (II)

Nonetheless, between 2004 and 2007, Obasanjo comically allowed and guided NEITI to conduct audits of the activities of the oil sector from the period 1999 to 2004 in order to reassure his international friends that he is on board with EITI process. The audits were conducted and compiled by an unknown United Kingdom-based consultancy firm, the Hart Group that prides itself of bringing together professional expertise in its three core areas: a) social development consultancy; b) economic development consultancy and c) financial and business services. It has no previous expertise and or experience in oil, gas and mining activities, though.

The firm was partnered with another unknown Nigerian law firm also lacking in oil, gas and mining experience and expertise, S. S. Afemikhe and Company. They muddled through, improvised and probably outsourced third party expertise in order to accomplish the exercises.

The results of the audits were published in 2006. Like the investigation conducted in 2000 by Speaker Ghali Na’Abba’s House Ad-hoc investigative Committee mentioned earlier above, the audits identified several weaknesses related to the management of oil revenues and oil and gas sector governance more broadly. The Consultants were saying nothing different from what were already known as far back as 2000 following the bold investigation instituted by the legislative arm of the same administration.

Again, this time around, the same initiator and financier of the audit investigations rejected the Consultant’s final reports of findings. This was probably because the Presidency was among those found wanting in terms of ineptitude, nepotism, corrupt practices, circumvention of due process and a host of other malfeasances in the management of the nations petroleum resources. These findings were similar and even more extensive in size and scope in comparison to those discovered by the legislative investigation conducted in 2000 (the Speaker Ghali Na Abba’s investigation covered only the period: 1999 – May 2000 and the Committee was given only two months to finish its work).

The rejection of the audit reports by president Obasanjo notwithstanding, the same consortium was retained and awarded the subsequent second round of the audit exercises covering the period 2005 (albeit, without open and competitive tendering process – i.e. the proverbial “Due Process”), which report was released on 11 August 2009. According to the Consultants, their audits discovered yet again, in addition to other shortcomings:

“Unprecedented financial discrepancies, mispaid taxes, and system inefficiencies; over US$800m of unresolved differences between what companies said that they paid in taxes, royalties and signature bonuses, and what the governments said it received were identified. Of this amount, US$560m was identified as shortfalls in taxes and royalties owed to the government and around US$300m in payment discrepancies relating to signature bonuses, payments of dividends, interest and loan repayments. The largest amount owed to the government in the report is an estimated US$4.7bn by the state-owned, Nigerian National Petroleum Corporation (NNPC), for payments of domestic crude.”

Yet again, the third round of audits covering 2006-2008 has been commissioned to the same consortium of consultants by NEITI (yet again, without open and competitive tendering process). The report is being awaited. Nevertheless, the big question is: What has the National Stakeholders Working Group (NSWG) appointed by the President Umaru Musa Yar’Adua on 29 January 2008 been doing regarding these reports as far as recovery of the unaccounted huge sums of money, crude oil and petroleum products discovered by the Consultants? The nation expects recovery of these huge sums of money from those indicted by the findings and not extravaganzas in road shows and town hall meetings embarked upon by the NSWG of NEITI and its Secretariat of recent.

The NSWG, chaired by indefatigable veteran University activist Don and former President of Academic Staff Union of Universities (ASUU), Professor Humphrey Asobie has recently set out on a nationwide series of so-called ‘Road-Shows’ for the 2005 Audit Report and its first ever Town Hall Meetings scheduled to take place in the six geopolitical zones of the country; starting with the South-South region at Yanagoa, Bayelsa State.

By and large, concerned Nigerians are obviously worried and are doubting whether NEITI as presently constituted and institutionally structured is capable of taking on the very highly organized, extremely secretive and very tightly close knit ‘Mafia’-like international oil companies and their local Nigerian collaborators in terms of smashing out their opaque glasses and recover all the federation account’s money illegally withheld by these companies!

This issue goes beyond the legal and other statutory requirements as contained in the NEITI Act 2007 and other pre-NEITI existing petroleum sector governance structures and reporting requirements scattered in the various often conflicting Nigerian statutes. Put differently, do NEITI and other supervisory and regulatory agencies such as the Department of Petroleum Resources (DPR) of the Federal Ministry of Petroleum Resources (FMPR) and the Federal Ministry of Finance for example, have the technical, financial, human resources capacity, and the requisite political backing from the highest Nigerian authority to undertake the various tasks statutorily assigned to them?

The answer is definitely in the negative. For example, all the rounds of the audits (i.e. financial, physical and process) commissioned by NEITI since its inception were conducted by foreign consultants that lack extractive industries experience and expertise (the Nigerian partner firm only provides logistics and other local sundry services for the main foreign firm). Moreover, the international oil companies are still reticent and recalcitrant when it comes to full disclosure to the Nigerian authorities – including NEITI, which is fast becoming a toothless bulldog!!!

In Conclusion, we should admit that former president Chief Olusegun Obasanjo committed Nigeria into EITI process without adequate preparation for it. It was a golden opportunity he grabbed to launch yet another international publicity stunt for him to attract world attention to his constricted and flawed anti-corruption stance that characterized his presidency. That chapter is now history.

What is to be done? I am an ardent supporter of the ideals of EITI. But I have a different view of how these ideals should be institutionalized in Nigeria. For instance, my most favoured suggestion of contextualizing the EITI ideals in Nigeria is to locate them within the existing Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) institutional setting. That is to say, NEITI should be restructured and be made an integral part of RMAFC – i.e. its technical arm and civil society watchdog. This means NEITI Act 2007 should be amended to reflect this proposition.

Doing this will eliminate the duplicity of functions and roles that exists in terms of the mandates of these two organizations – one constitutionally established (i.e. RMAFC) and the other established by a legislative Act (i.e. NEITI). As a matter of fact, many of the functions assigned to NEITI by the NEITI Act 2007 are statutory functions of RMAFC, DPR, Nigerian Security and Intelligence Services (including the Economic and Financial Crimes Commission – EFCC) amongst others. Thus, there is an urgent need to streamline the Nigerian bureaucratic set up; to make it lean, efficient and effective, and eliminate duplications of functions.

Abubakar Atiku Nuhu-Koko

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