By Dr Orji Ogbonnaya Orji
The international development community was excited by the recent decision of the Nigeria National Petroleum Corporation (NNPC) to join the global Extractive Industries Transparency Initiative (EITI) as a supporting company. The decision followed a request by the Nigeria Extractive Industries Transparency Initiative (NEITI) and its international partner (the EITI) arising from series of engagements with the company for reforms under the Mele Kyari leadership as Group Managing Director.
Kyari, a known technocrat, industry professional and good governance advocate was indeed attending the EITI global conference in Paris, France in June last year when President Muhammadu Buhari surprisingly offered him the job. And so to the EITI community, he was an ally, champion of its principles and standards. Industry watchers therefore received the news as progressive, bold, remarkable development and a window of opportunity to improving governance in the industry.
By the decision, the NNPC became the first within the sub Saharan Africa to join a group of over 65 other reputable leading extractives companies. Already, many state-owned enterprises (SOEs), commodity traders, financial institutions and industry partners around the world are within the EITI supporting group. And unknown to many, becoming an EITI supporting company can help state-owned companies make progress on the journey to transparency.
A recent example is Qatar Petroleum, which became an EITI supporting company since October 2019. And this has brought fundamental positive changes in their business modules, boosted the company’s investment profile, and corporate reputation in the global oil, gas and mining industry.
But the new status has put varied responsibilities on the shoulders of NNPC in several ways. One of the demands would be for the NNPC to comply fully to EITI’s supporting company requirements. These are public disclosure, transparency, accountability and corporate responsibility in its operations. Notably, since that decision was made, the global image that the NNPC instantly attracted to itself and the country within the oil and gas industry around the world is more than phenomenal.
For instance, within the EITI community of 54 member countries spread across under-developed, developing and developed nations, the NNPC is now seen to be wearing a new cap of an institution ready and willing to reform and conform to global best practices. For instance, reacting to the development, the EITI global chair and the former Prime Minister of New Zealand Rt. Hon. Helen Clark remarked “NNPC plays a vital role in Nigeria’s economy. Joining the EITI as a supporting company is a welcome step in the NNPC’s journey towards achieving greater transparency to ensure that Nigeria’s citizens benefit from their natural resource wealth.”
Nigeria’s Minister of Finance, Budget and National Planning and former member of the EITI International Board, Dr Zainab Shamsuna Ahmed also hailed the decision “increased transparency of Nigeria’s national oil company revenues will contribute to improvements in the country’s domestic resource mobilisation efforts” Dr Ahmed who was the immediate past NEITI Executive Secretary and EITI National Coordinator in Nigeria added “The NNPC decision is a landmark development in the implementation of EITI in Nigeria”.
The NEITI Executive Secretary, Waziri Adio remarked: “NNPC joining the EITI as a supporting company is a major inflection point in the quest for transparency – for the company, for Nigeria's oil and gas sector, and for the country as a whole. This is so given how critical NNPC is to the sector and to the country. NEITI welcomes this bold commitment. We will continue to work and walk with NNPC to translate its espoused commitments to transparency and accountability into concrete and sustained actions and results.”
The Group managing Director of NNPC and the man at the center of the decision, Mele Kyari, “becoming an EITI supporting company aligns with NNPC’s corporate vision and principles of transparency, accountability and performance excellence. Our partnership with NEITI and EITI strengthens our commitment towards commodity trading transparency, contract transparency and systematic disclosure of revenues and payments. We are on a journey towards greater transparency and look forward to deepening our collaboration with the EITI and NEITI to further this work.”
Nigerians are aware that prior to Nigeria’s membership of the extractive industries transparency initiative (EITI), the oil and gas industry in Nigeria was opaque with information and data from the sector shrouded in ingrained secrecy. During this era, Nigerians were in no position to ascertain easily either the quantity of crude produced, sold, exported, revenues earned or quantity of crude reserved for domestic consumption. The attendant consequences were visible in frustration on the part of the citizens, the media and the civil society through poor access to information, data and crucial facts required to hold the companies and the government accountable. The situation equally narrowed civic space for constructive debate and engagement required to promote demand for reforms.
When Nigeria joined the global extractive industries transparency initiative in 2003, began implementation in 2004 and became the first country in the world to support the initiative with a specific law in 2007, the public expectations were quite high that enthroning transparency and accountability in the sector would be achieved immediately. Nigerians also expected that under the EITI regime, transparency in the sector will automatically translate to accountability. And that both would instantly result to visible impacts in improved infrastructure, creation of jobs, and poverty reduction.
Looking back, sixteen years after, (2004 -2020), the Nigeria Extractive Industries Transparency Initiative (NEITI) strongly believes that the cup is more than half full than half empty in spite of challenges. Although a lot has been achieved but a lot more needs to be done.
One major break-through is in the area of timely availability of current reliable information and data in the public domain. The gamut of information include but not limited to company payments and government receipts, crude production, data on lifting, export and on local consumption.
NEITI reports also disclose information on crude theft, loses and the cost to the economy. NEITI reports have so far disclosed huge revenue earnings. For instance, between 1999 to 2018, NEITI reports show that Nigeria earned $666.22 billion as revenues from oil and gas alone and about $1.18billion from solid minerals between 2007 and 2018. NEITI reports go further to breakdown the revenue earnings in aggregated and disaggregated formats. It also breaks down the data in info-graphics that speak directly to physical and governance processes and the wider implications to poverty issues in the country. NEITI has also made information easily available on contracting and governance arrangements, commodity trading, beneficial ownership, revenue remittances, process, physical and fiscal issues that govern the sector.
As a result of NEITI interventions, Nigerians and investors now easily access information on commodity trading, beneficial ownership and other merging issues. NEITI’s renewed focus on emerging issues is in line with EITI 2019 revised standards. NEITI reports have also helped to recover revenues to the tune of over $2.3 billion and disclosed potential recoverable revenues of over $20 billion.
Another major striking feature of NEITII reports over the years is on identification and public disclosure of key remedial issues. A plan to support relevant covered entities to fix the problems has also being developed and currently a major tool for civil society engagements with relevant companies and relevant government institutions.
Sixteen years of EITI in Nigeria has shown that improved citizen’s access to reliable information and data is key in promoting and shaping public debate. It also galvanizes public demands for reforms of the sector in Nigeria. This is no doubt one major real impact of EITI in Nigeria. And this has become an on-going dialogue for which NEITI continues to invest time, energy and resources.
NEITI’s engagements with the state oil company, the (NNPC) on remediation were in the past characterized by mutual suspicion. It has been quite a huge challenge securing the buy-in of the NNPC into the NEITI process as a key partner in the EITI process. And the bulk of issues for remedy lie on the door-steps of the NNPC. However, under the new leadership of the Corporation, a new engagement approach based on regular but effective –round-table-communication has emerged.
Under new approach, NEITI and the NNPC recently established a joint committee on remediation. The committee examined all issues outlined for remedy in NEITI Reports and advised on a plan to implement them within the short, medium and long term. This development helped to restore institutional trust, opened fresh opportunities for sustained dialogue, inter-agency partnership and stakeholders’ collaboration. The report of the joint committee is on its final stage of approval for implementation. NEITI’s hope is that the impact of the joint initiative on the ongoing reform in the industry will be quite huge.
It is also on the strength of the new approach that NEITI requested, the NNPC to publish its audited accounts. Notably, in June this year, the NNPC released its audited financial statement for the first time in 43 years. For us in NEITI, it was` a major milestone in efforts to enthrone transparency and accountability in operations of the Corporation.
As an EITI member and supporting company, the NNPC is required to widen its doors for public scrutiny. This involves commitment to timely and regular publication of its annual audited accounts, contract transparency, beneficial ownership disclosures, open, fair and competitive process in commodity trading, care for the environment as well as full commitment to corporate governance.
The NNPC needs to urgently initiate remarkable transformation programmes to meet the new global standards. This will require redefining its strategies and corporate values in the areas of operational efficiency, integrity, responsibility to Nigerian laws and her citizens. It would also involve comprehensive review of its corporate institutional ethical behaviour. In this process, the NNPC can be assured that NEITI and the global EITI are ready, willing and available to provide vital guides.
Dr Orji Ogbonnaya Orji, a natural resource governance expert and NEITI’s Director, Communications wrote from Abuja.