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Nigeria

Extractive Sector Transparency (NG0003)

Overview

At-a-Glance

Action Plan: Nigeria National Action Plan 2017-2019

Action Plan Cycle: 2017

Status: Inactive

Institutions

Lead Institution: Nigeria Extractive Industries Transparency Initiative (NEITI)

Support Institution(s): Central Bank of Nigeria (CBN), Federal Inland Revenue Service (FIRS), Nigerian National Petroleum Corporation (NNPC), National Assembly (NASS), Ministry of Niger-Delta, Federal Ministry of Mines and Steel, Federal Ministry of Petroleum Resources, Department of Petroleum Resources (DPR), Nigeria Content Development Board (NCDB), Revenue Mobilization, Allocation and Fiscal Commission (RMAFC), Office of the Accountant General of the Federation (OAGF), Corporate Affairs Commission (CAC), Raw Mineral Research and Development Centre (RMRDC). Natural Resource Governance Institute (NRGI), Civil Society Legislative Advocacy Centre (CISLAC), Publish What You Pay, Budgit, Public and Private Development Centre, ANEEJ, Miners Association, African Centre for Leadership, Strategy & Development (Centre LSD), Institute of Chartered Accountants of Nigeria, PENGASSAN, NUPENG, Nigerian Union of Journalists, WANGONeT, Nigerian Labour Congress

Policy Areas

Access to Information, Anti-Corruption, Beneficial Ownership, E-Government, Extractive Industries, Fiscal Openness, Legislation & Regulation, Legislative, Open Data, Private Sector, Public Participation, Public Procurement, Publication of Budget/Fiscal Information

IRM Review

IRM Report: Nigeria Design Report 2017-2019

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Yes

Relevant to OGP Values: Access to Information , Civic Participation , Public Accountability , Technology

Potential Impact:

Implementation i

Completion: Pending IRM Review

Description

Nigeria’s extractive industry has failed to deliver development and improve the well being of the vast majority of her citizens. The wide spread opacity in the industry has allowed corruption to thrive, thus, deepening issues of underassessment, underpayment and under-remittance/non-remittance of revenues due to government, thereby limiting what the government can deliver to improve the lives of citizens. A backlog of remedial actions to improve accountability across financial, processes and production has not been prioritized or implementation has been too slow leading to further leakage and loss in citizens’ confidence.

IRM Midterm Status Summary

3. Work together with all stakeholders to enhance transparency in the extractive sector through a concrete set of disclosures related to payments by companies and receipts by governments on all transactions across the sector’s value chain.

Language of the commitment as it appears in the action plan:

“Nigeria’s extractive industry has failed to deliver development and improve the well being of the vast majority of her citizens. The wide spread opacity in the industry has allowed corruption to thrive, thus, deepening issues of under-assessment, under-payment and under-remittance/non-remittance of revenues due to government, thereby limiting what the government can deliver to improve the lives of citizens. A backlog of remedial actions to improve accountability across financial, processes and production has been prioritized or implementation has been too slow leading to further leakage and loss in citizens’ confidence”.

Milestones:

3.1: Disclose oil, gas and mining contracts in the area of exploration and production, exports, off taking and swaps on a publicly accessible portal in both human and machine readable formats.

3.2: Quarterly disclosures by NNPC, its subsidiaries and PPMC of sale-level data on oil and gas sales.

3.3: Develop Beneficial ownership register for companies that hold exploration, production and export licenses and publish in publicly accessible formats that are human and machine readable.

3.4: Develop policy on custody transfer meters in the oil and gas sector.

3.5: Get all extractive sector companies to adopt Global Memorandum of Understanding as an approach to the CSR programmes.

3.6: Mandate all relevant players (government and private sector) to develop, disseminate and annually report on individual plans (including timelines) for treatment (clearing) of remediation plans (from the NEITI audits).

3.7: All key stakeholders responsible for remedial actions hold annual open briefing sessions for sector stakeholders and interested public (including CSOs).

Start Date: January 2017 End Date: June 2019

Action plan is available here:

Context and Objectives

This commitment seeks to increase access to information on extractive sector revenue and production, and enhance civic participation and accountability, including through technological innovation.

Petroleum (oil and gas) has dominated Nigeria’s extractives sector, with total revenue amounting to USD 17.055 billion in 2016 (65% of total revenue). [29] The Nigerian National Petroleum Corporation (NNPC) is the entity through which the Nigerian government regulates and participates in the petroleum industry. [30] The Products and Pipelines Marketing Company (PPMC) is a subsidiary of the NNPC and responsible for sourcing and distributing petroleum to all parts of Nigeria. [31] Since at least 2004, various reports have detailed NNPC’s acceptance of bribes and failure to remit the proceeds of crude oil sales to the government, with the missing funds amounting to billions of US dollars. [32]

Corruption and a lack of transparency have been addressed through Nigeria’s active participation in the Extractive Industries Transparency Initiative (EITI), a global initiative to promote transparency and accountability in the oil, gas, and mining sectors. [33] The Nigeria EITI claimed to have identified USD 9.8 billion owed to the federal government, of which USD 2.4 billion were recovered through its efforts. [34] In February 2019, the EITI Board validated Nigeria’s compliance with the EITI Standards, positioning Nigeria as the first anglophone country to have done so. [35]

This commitment is relevant to all four OGP values. Milestones 3.1, 3.2, and 3.3 are relevant to access to information; Milestone 3.6 relates to civic participation; Milestones 3.6 and 3.7 are relevant to public accountability as they incorporate a public-facing element to NEITI remediation plans; [36] and Milestones 3.1 and 3.3 address technology and innovation in support of transparency and accountability.

This commitment’s activities are verifiable. The objects of Milestones 3.1, 3.2, 3.3, 3.4, and 3.5 are identifiable: a portal disclosing oil, gas, and mining contracts; quarterly disclosures by the NNPC, etc.; a beneficial ownership register; a custody transfer policy; and extractive sector companies’ adoption of the Global Memorandum of Understanding. The relevant players in Milestones 3.6 and 3.7 are also identifiable, through the NEITI remediation plans.

Commitment 3 continues an already established initiative. The milestones support the NEITI, and in some instances, go beyond. For example, the 2016 EITI Standard encourages countries to disclose contracts; [37] Milestone 3.1 mandates disclosure on a publicly accessible portal. EITI countries were expected to disclose the value and volume of production data for the fiscal year covered by the EITI report; [38] Milestone 3.2 requires quarterly disclosures by the NNPC and PPMC. The EITI Standard recommends that implementing countries maintain a publicly available register of beneficial ownership in the extractives sector, and from 1 January 2020, beneficial ownership information must be included in the EITI report. [39] In December 2016, Nigeria published a detailed roadmap on how it intends to disclose beneficial ownership in the extractives sector, which included a commitment to a register that is machine readable and in open data format (same initiative Milestone 3.3 supports). [40] Milestone 3.5, which extends Shell Nigeria’s approach to local civic participation to the rest of the petroleum sector, [41] goes beyond EITI support of civic engagement. Milestone 3.4, on custody transfer meters (instruments that record fluid measurements in the sale of oil) was not covered by the EITI standard but relates to a long-standing policy issue in Nigeria referenced in the new Petroleum Industry Governance Bill, 2017. [42]

The NEITI’s work in transforming the culture of opacity that previously characterised the Nigerian petroleum sector has been recognized [43] and eight cycles of EITI audits have been completed. [44] The OGP commitments largely extended and consolidated existing EITI commitments. [45] Further, Ejiogu and others challenged the assumption that transparency in the form of enhanced information disclosure inevitably leads to reduced corruption and enhanced accountability. [46] Finally, according to Dauda Garba of the NEITI, parts of the commitment were too ambitious to be achieved in the stipulated timeframe. However, according to Sarah Muyonga (Nigeria Officer, Natural Resource Governance Institute), the expectation was that if fully implemented the commitment would advance greater transparency in the extractive sector, as disclosure of contracts would create some level of trust and also increase the level of competitiveness in procurement process [47]. Kolawole Banwo (CISLAC) was also of the opinion that if implemented, the prospects of transforming the sector were high [48]. Therefore, this commitment was preliminary coded as having a moderate impact.

Next Steps

The IRM researcher acknowledges the importance of this commitment to Nigeria’s revenue. Future commitments in this area could include elements such as focusing on the quality, instead of the quantity, of data disclosures. Information could be clear, meet the needs of NEITI’s data users, and attest to NEITI’s independence.

[30] The NNPC, established in 1977, has powers and operational interests in oil refining, petrochemicals and product transportation and marketing. Nigerian National Petroleum Corporation, “About NNPC,” https://www.nnpcgroup.com/About-NNPC/Pages/Corporate-Information.aspx#.aspx.
[31] Pipelines and Products Marketing Company, “Welcome to PPMC,” https://ppmc.nnpcgroup.com/pages/home.aspx.
[32] See PriceWaterhouse Coopers, Auditor-General for the Federation: Investigative forensic audit into the allegations of unremitted funds into the Federation accounts by the NNPC (Feb. 2015), http://www.wgei.org/wp-content/uploads/2015/10/Full-report-20billion-dollars-missing-oil-money_SAI-Nigeria.pdf, For an overview of reports and allegations, see Wikipedia, “Nigerian National Petroleum Corporation” (accessed Nov. 2019), https://en.wikipedia.org/wiki/Nigerian_National_Petroleum_Corporation.
[33] The EITI principles and the EITI Standard (latest version is 2016), promote payment transparency throughout the extractives value chain, beneficial ownership, and civic engagement. Nigeria joined the EITI as a candidate country in 2003 and became the first country in the world to domesticate the EITI with the passage of the Nigeria Extractive Industries Transparency Initiative Act (NEITA) in 2007 (see Nigeria Extractive Industries Transparency Initiative, 2016 Oil and Gas Industry Audit Report (2016), 13).
[34] EITI.
[35] EITI Board, “Nigeria Validation: Decision reference: 2019-20/BM-42” (27 Feb. 2019), https://eiti.org/scorecard-pdf?filter%5Bcountry%5D=32&filter%5Byear%5D=2018.
[36] Extractive 360, “NEITI Audit Reports and Mounting Remedial Issues” (17 Apr. 2018), https://extractive360.com/2018/04/17/neiti-audit-reports-and-mounting-remedial-issues/.
[37] EITI, The EITI Standard 2016 (24 May 2017), standard 2.4 (a), https://eiti.org/document/eiti-standard-requirements-2016#r2-4.
[38] Id. standard 3.2.
[39] Id. standards 2.5(a) and (c).
[40] NEITI, Roadmap on the Implementation of Beneficial Ownership disclosure in Nigeria (Dec. 2016) page18, https://eiti.org/files/documents/neiti-bor-281216.pdf.
[41] See Shell Nigeria, “Global Memorandum of Understanding” https://www.shell.com.ng/sustainability/communities/gmou.html.
[42] Senate of the Federal Republic of Nigeria, Report of the Senate Joint Committee on the Petroleum Industry Governance Bill, 2017, http://www.petroleumindustrybill.com/wp-content/uploads/2017/05/FINAL-COPY-OF-PETROLEUM-INDUSTRY-GOVERNANCE-BILL-2017-May-15.pdf.
[43] Agency Reporter, “EITI rates Nigeria’s oil, gas, extractive sector high” (The Independent, 6 Mar. 2019), https://www.independent.ng/eiti-rates-nigerias-oil-gas-extractive-sector-high/.
[44] Extractive 360.
[45] Dauda Garba (NEITI Consultant, NEITI), interview by IRM researcher,15 Nov. 2018.
[46] Amanze Ejiogu, Chibuzo Ejiogu, and Ambisisi Ambituuni, “The dark side of transparency: Does the Nigeria extractive industries initiative help or hinder accountability and corruption control?” (The British Accounting Review, Oct. 2016), https://www.researchgate.net/publication/328312022_The_dark_side_of_transparency_Does_the_Nigeria_extractive_industries_transparency_initiative_help_or_hinder_accountability_and_corruption_control.
[47] Sarah Muyonga, (Natural Resource Governance Institute, NRGI), interview by IRM Researcher, 27 Feb. 2019.
[48] Kolawole Banwo, (CISLAC), interview by IRM researcher, 27 Feb. 2019.

Commitments

  1. Participatory Budgeting

    NG0015, 2019, Anti-Corruption

  2. Implement Open Contracting and the Open Contracting Data Standard

    NG0016, 2019, Access to Information

  3. Transparent Tax Revenue Reporting

    NG0017, 2019, Legislation & Regulation

  4. Open Contracting and Licensing in Extractives

    NG0018, 2019, Access to Information

  5. Implement EITI Standard

    NG0019, 2019, Anti-Corruption

  6. Establish Beneficial Ownership Registry

    NG0020, 2019, Access to Information

  7. Strengthen Asset Recovery Legislation

    NG0021, 2019, Anti-Corruption

  8. Implement National Anti-Corruption Strategy

    NG0022, 2019, Anti-Corruption

  9. Improve Compliance with Freedom of Information Act with Focus on Records Management

    NG0023, 2019, Access to Information

  10. Improved Compliance with Mandatory Publication Provisions Requirement (FOIA)

    NG0024, 2019, Access to Information

  11. Implement Permanent Dialogue Mechanism

    NG0025, 2019, Dispute Resolution & Legal Assistance

  12. Aggregate Citizens' Feedback on Programs

    NG0026, 2019, E-Government

  13. Freedom of Association, Assembly, and Expression

    NG0027, 2019, Civic Space

  14. Enhance Participation of the Vulnerable

    NG0028, 2019, Capacity Building

  15. Implement New Computer Program in 6 Government Ministries to Improve Service Delivery

    NG0029, 2019, Capacity Building

  16. Legal Instrument to Strengthen SERVICOM

    NG0030, 2019, Legislation & Regulation

  17. Citizen Participation in Budget Cycle

    NG0001, 2017, Access to Information

  18. Open Contracting

    NG0002, 2017, Access to Information

  19. Extractive Sector Transparency

    NG0003, 2017, Access to Information

  20. Tax Reporting Standards

    NG0004, 2017, Fiscal Openness

  21. World Bank Doing Business Index

    NG0005, 2017, Infrastructure & Transport

  22. Beneficial Ownership Register

    NG0006, 2017, Anti-Corruption

  23. Anti-Corruption Informationi Sharing

    NG0007, 2017, Anti-Corruption

  24. Asset Recovery Legislation

    NG0008, 2017, Capacity Building

  25. Anti-Corruption Activity Coordination

    NG0009, 2017, Anti-Corruption

  26. FOIA Compliance for Annual Reporting

    NG0010, 2017, Access to Information

  27. FOIA Compliance for Disclosure

    NG0011, 2017, Access to Information

  28. Permanent Dialogue Mechanism

    NG0012, 2017, Fiscal Openness

  29. Joint Governmnet-Civil Society Legislation Review

    NG0013, 2017, Fiscal Openness

  30. Technology-Based Citizens' Feedback

    NG0014, 2017, E-Government

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