The independent Audit of the Oil and Gas industry by Nigeria Extractive Industries Transparency Initiative (NEITI) which commenced earlier in the year has reached advanced stage. The Audit is investigating all payments streams made by oil companies against receipts by government agencies into the Federation account from 2009 to 2011.
The audit will examine the basis for computation and calculation of those payments, fees, taxes, royalties owed by companies and what government receives, the process of remittance into the federation account.
The NEITI audit 2009-2011 also covers investment flows involving governments’ payments by way of joint venture investments, loans, including repayments procedure, equity investments, cost and profit oil transactions. This involves downstream businesses such as subsidy payments. As part of the process of the Audit, all government agencies, oil and gas companies participating in the NEITI Audit process are to appear before NEITI Auditors to validate all payments made by companies against the receipts declared by relevant government agencies for the period 2009-2011.
The process which begins from the 19th and ends on the 28th of September, 2012 will involve reconciliation of payments made by companies with raw data collected by NEITI Independent Auditors.
Over 30 oil and gas companies including Shell, Mobil, Chevron, Conoil, Addax are part of the audit. The government agencies include NNPC, CBN, Department of Petroleum Resources (DPR), Federal Inland Revenue Service (FIRS), Office of the Accountant General of the Federation (OAGF) amongst others are required to participate in the exercise which is statutory and obligatory. The reconciliation and validation exercise includes verification of system documentation on crude production and financial flows with regards to payments and receipts of such flows by relevant government agencies on behalf of the federation during the period.
All companies and government agencies involved in the NEITI Audit process are also expected to return outstanding templates completed with required information and data to NEITI Auditors. During the exercise, a team of experts from NEITI and the independent auditors will be at Best Western Island Hotel, Lagos venue of the reconciliation exercise to guide the process.It is important to stress that participation in the NEITI Audit process is both mandatory and legal in line with section 16 of NEITI Act 2007.
Meanwhile, the conduct of similar audits in the solid mineral sector is nearing completion, a similar reconciliation and validation of data by NEITI Solid minerals Auditors is planned to hold in Enugu, Abuja and Lagos respectively between the 3rd and 10th October,2012.The conduct of the on-going industry audits of the oil gas and mining sectors is consistent with the primary objectives of NEITI as provided in section 2 of NEITI Act 2007.
The mandate empowers NEITI to ensure that there is due process, transparency and accountability in what companies doing business in Nigeria’s oil and gas industries, solid minerals and others in the extractive sector pay to government of Nigeria in the form of tax, royalty, bonuses, levies etc. Besides, NEITI is also to ensure that due process, transparency and accountability is strictly applied in what government receives, ensure that government receives what it is expected to receive and that companies pay what they are expected to pay to government as at when due.
The purpose of the audit is for the public, the media and civil society to use the information and data to hold government to account on prudent use of these resources to provide social services like roads, water, electricity, education, security, health services and poverty reduction.