Nigeria Extractive Industries Transparency Initiative

One of the desired outcomes of the NEITI series of roundtable discussions is to ensure that the Audit results are comprehensible, accessible and user friendly to the different publics, particularly the Nigerian public and community groups.

The NEITI invited experts from Government, Civil Society, the Extractive Industries, the Organised Private Sector and the general public to participate at the first in a series of roundtables on the Audit Reports and strategies to communicate the audit findings.

The roundtable discussions began with a welcome address and background speech on the NEITI by Obiageli Ezekwesili, Minister of Solid Minerals Development and Chairperson, NEITI. The Minister:

Took the participants through a historical overview of the NEITI since it was established by President Obasanjo in Feb 2004.
She threw light on the selection process of the auditors as well as the scope of the audit work.
She stated that the first financial interim report was extensively discussed and issues highlighted to create entry points for positive advocacy by civil society.
She also stated that the challenge therefore is for civil society particularly the press to develop capacity to understand and disseminate the audit report in a comprehensive and comprehensible manner to the average Nigerian.
She stated that this 2 nd public presentation and roundtable discussions is a continuation of the ongoing process of opening the books of government, its agencies and revenue streams to public scrutiny.
The NEITI audit reports are not witch-hunting tools; rather they are a clarion call for remedial action and appropriate advocacy.
There are plans to set up mechanisms that will follow up the findings of the audit report with active participation of civil society to ensure that the recommendations are translated into positive action.
She also stated that these activities will soon be mandatory as the Senate will soon pass the NEITI Bill into law, which will make theses audits obligatory annually.
She also stressed that it was imperative that the Nigerian media and civil society respectively develop the kind of understanding and capacity to utilize the information provided to ask the right questions and shape good governance and agenda.
She informed the gathering that procurement formalities are being concluded to train media and civil society representatives with a view of scaling up their capacity for research, analysis, public debate and engagement around specialized figures.
The Independent CSO sub committee has started developing their own communications strategy to break the audit reports in a manner readily available and accessible to Nigerians.
She categorically emphasized that the collective goal must be to work towards dismantling the climate and opaqueness in Nigeria 's extractive industries and institutionalizing a regime of preventive transparency, which requires commitment, consistency and partnership from all facets of society.

The Chairperson then called upon Mr. Chris Nurse to give the presentation on findings of the audit report. He stated that this report is the second interim report

Summary of Findings
The main points are highlighted below:
The Nigeria Extractive Industries Transparency Initiative (NEITI) Physical Audit aims to present a clear mapping of volumetric aspects of: production; exports; imports; inland consumption; unaccounted oil, if any; and other relevant streams during the period 1999 - 2004. The audit will develop a report aggregating Nigeria 's hydrocarbon volumes produced and fiscalised, including discrepancies, during the period under review utilizing multiple sources.

The findings of the physical audit will be correlated with the findings of the parallel financial audit as regards the equity sharing of production.

This is the first report of the Physical Audit and presents a schematic mapping of upstream crude oil hydrocarbon flows for the major producers and a number of independent companies. Subsequent reports will add further detail on well information; complete the mapping of natural gas and liquefied natural gas production, imports and inland consumption and other relevant streams.

Comments by Roundtable Participants
Comments were then called from discussants, participants and the audience on the contents of the report. These are highlighted below;

There are inadequate and in some cases absent accounting processes and procedures conducive to accountability of industry operators and regulators to the nation.
There are also inabilities to reconcile differences due I revenue receipts arising from differences in accounting procedures between public sector and private sector (accrual vs. cash accounting).
Here are difficulties in understanding applicable regulations on assessment procedures.
There is alack of consensus among all concerned on the format and variables required for assessments of taxes and royalties payable to the nation.
There is an inability or unwillingness on the part of the regulatory agencies to fully discharge their duties to the nation.
Deterioration of the public funds control system.
Inadequate information flow and lack of knowledge sharing among the various players.

There should be efforts to document the scope of problems within each, and among interacting parties within the industry, to ensure the design and implementation of appropriate remedial measures.
Agencies should be given the chance to respond to audit queries.
The freedom of Information act currently pending in the National Assembly is key to the desire for transparency and accountability as it will ensure Nigerians having access to information on all aspects of the nations oil and gas industry.
It still remains imperative that the Office of the Accountant General should be the primary recipient of all originating documents bearing on financial flows within the Oil industry. The Office should have primary responsibility for effecting payments out of all revenue accounts of the federation, especially with respect to the oil proceeds account.
CBN appears to be the only agency that receives original documents about financial flows within the sector. This is not ideal. Other agencies should as a matter of routine also receive information from the source. These include the Accountant Generals office as well as the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC).
It is imperative to enhance the capacity of all relevant agencies to enable them discharge their duties effectively.
Efforts should be made to ensure immediate adoption of standard accounting procedures and processes in all agencies of government.
Civil societies need to be empowered to enable them perform as informed partners in the promotion of transparency and accountability.
Every identifiable stakeholder group should be involved in the efforts of the NEITI in order to promote mutual trust and a sense of genuine commitment towards achieving the NEITI goal.

The Chairperson concluded by thanking the participants as well as stressing the need to move forward and not getting defensive with the various issues raised. She underscored the importance of admitting that the procedures were flawed as a first step to finding ways and measures to improve revenue administration within the various Government entities. She also implored on participants to look forward to the release of the final report in April 2006 and to endeavor to attend the roundtable session at that time.