• Wednesday, June 19, 2024
businessday logo

BusinessDay

Subsidy must end for Nigeria to stop crude oil theft, fuel scarcity – Orji

NEITI to publish data on use of 13% derivation, petrol consumption

ORJI OGBONNAYA ORJI, PhD, was appointed Executive Secretary/Chief Executive of the Nigeria Extractive Industries Transparency Initiative (NEITI) in 2021 by President Muhammadu Buhari. A broadcaster, communications specialist and political economist, his tenure in NEITI has brought sweeping reforms in the extractive industries sector of the economy. He spoke to OBINNA Nwachukwu, member, the BusinessDay Editorial Board in Abuja on a number of national issues. Excerpts:

When you assumed office as NEITI Executive Secretary precisely on February 19th 2021 what did you identify as the immediate challenges facing organization?

I will categorize the challenges into two: The first is what you need little or no money at all to do but simple leadership, while others were those that required money and some planning. Restoring clean, friendly working environment was number one. Unify our staff to the original NEITI family that I was part of where staff come to work early, approach their duties efficiently without coercion, with little or no supervision and sometimes stay in office far beyond closing time until assigned tasks are accomplished. That was the NEITI spirit our former Executive Secretary, Dr (Mrs) Zainab Ahmed now Hon Minister of Finance, Budget and National Planning left behind. And for me, it was quite urgent to restore friendly and productive work culture of that era. I followed this up through strategic meetings with management and staff to seek advice, support, set a new strong tone, unfold new agenda, new plans that pointed clearly to a new direction for our organization.

Were there other issues you faced?

The first one was office accommodation. Since inception of NEITI, over 17 years ago, we have operated from rented accommodation with its attendant problems. I considered this an issue that I must deal with to free NEITI and the government from the huge burden of paying rent. By February last year when I took over, NEITI was without a Board- The National Stakeholders Working Group (NSWG) thereby putting our country on the edge of suspension by the global (EITI). It is a requirement for which we were in violation. And so bringing this to the attention of our government with the urgency it deserved was for me another top priority. There is also the urgency to reconnect our multi-stakeholders and citizens with NEITI and vice versa through the scope and quality in terms of the content, context and comprehension of our reports. There was also the issue of staff welfare which was a matter of concern to our entire workforce. In addition, is the need to restore Nigeria’s leadership role among the 55-member EITI -global community. And finally, to anchor our actions on these and other issues on a new strategic plan that ensures that NEITI reports help government’s revenue drive while driving reforms in the sector.

So in a nutshell, can you outline what you have achieved within the last one year?

When I was appointed on Feb 19th last year, NEITI was under threat of ejection from our current rented accommodation here in Asokoro. We worked very hard to get the government to look for money to buy a permanent office complex for NEITI with more than half a billion naira. We got this done within 5 months of my assumption of office. It was a record and a huge legacy for this administration given the fact that the NEITI never had one in the last 17 years of its existence. When I took over, NEITI had no governing board, putting Nigeria’s membership of EITI at the edge of suspension or possible expulsion. We again, got our government to fix that within 5 months of my assumption of duty. By March 7th, we will be launching three reports which I inherited from infancy. We took up and completed these key projects working under the leadership of our Board. We also initiated and developed, with the leadership of our Board, and completed a five year strategic plan that sets policy direction for our organisation in the next 5 years. Inherited from infancy and completed NEITI information gathering and automation project called NEITI Audit management system- a World bank assisted project designed to transit our data gathering process from analogue to digital.

The project is now completed and ready for deployment. Under my leadership, we re-united our internal and external stakeholders many of whom are represented on our Board as well as re-established the Communications / Civil Society Steering Committee. Also we launched two new global initiatives within the global EITI support- Opening Extractives & Contract Transparency, re-built and reclaimed Nigeria’s leadership roles and position in the global EITI and I was elected to Chair the EITI global Contract Transparency Network made up of 20 Countries. I am assuming that position specifically on the 21st of March. And won a global Award for Nigeria on implementation of Beneficial Ownership, restored staff and stakeholders’ confidence, new work environment and culture in the Secretariat.

NEITI was appointed by Mr President to serve on the Steering Implementation Committee of the Petroleum Industry Act. We are on the Committee with NNPC, FIRS. We have also held several retreats, training programmes for our Board, our staff, CSOs, the media and companies on NEITI process. We have done quite a lot.

Last year, you started the development of a strategic plan that will guide the activities of NEITI, has this plan been concluded and what impact will the plan have in Nigeria’s implementation of the EITI, considering also that you have earlier stated that you had this as one of your top priorities.

The strategic plan is completed and approved by the Board. It is awaiting a national launch and deployment hopefully by this month (March) when the Board will launch the plan.

Nigeria’s is currently chairing the Global Contract Transparency Network. What are the task before this Committee and how well has the network fared amidst mounting resistance and bureaucratic bottlenecks?

Nigeria assumed leadership of the global Contract Transparency Network comprising of 20 member countries with effect from January 2022. The implementing countries include Indonesia, Philippines, Mexico, Armenia, Cameroun, Chad, Democratic Republic of Congo, Ghana, Malawi, Guinea, Mongolia, Mozambique, Myanmar, Senegal, Sao tome e’ Principe, Togo, Zambia and Tanzania. I currently Chair this network on behalf of Nigeria. I took over from Alexandria Walls of Mexico who led the global body from inception in 2018. Nigeria’s tenure as the Chair of the network is for a period of 4 years.

On the local level we have established the Joint Inter-Agency Committee on Contract Transparency which is developing a National Roadmap and a Work-plan for the implementation of contract disclosure in the oil, gas and mining industries on December 2nd 2021. The contracts to be disclosed include the terms and conditions set out in the contracts for exploration and exploitation of Nigeria’s oil and gas assets under the Joint Operating Agreements, Production Sharing Contracts, Service Contracts and Sole- Risk Contracts.

The disclosures would also cover contracts in the solid minerals sector amongst others. The joint committee was carefully drawn from relevant government agencies with direct responsibilities in managing Nigeria’s interests in various funding arrangements in the sector governed by contractual obligations.

Read also: Oil theft, pipeline vandalism fuelling IOCs divestment in Nigeria downstream sector — NEITI

During the OGP Summit last December, Nigeria won the OGP Award for its implementation of the Beneficial Ownership transparency in the extractives. How will this award impact the disclosures of real owners of extractive assets in Nigeria?

Nigeria won the first position at the Open Government Partnership (OGP) Global Awards in Seoul, South Korea on December 15th 2021. Nigeria beat other countries in Africa and the Middle East that are implementing the OGP to win the award. Nigeria was considered for the honour following a pain-staking independent review of reforms embarked upon by implementing countries. The review tracked and assessed milestones achieved by the Nigerian government in setting up a Beneficial Ownership registry to end anonymous companies in the country.

The Nigeria Extractive Industries Transparency Initiative led the Extractive Industries Thematic Group that implemented Beneficial Ownership disclosures as part of President Muhammadu Buhari administration’s commitment to Open Government Partnership. In picking Nigeria for the global honour, The Summit considered the Buhari Administration’s overall commitment to reforms in the oil, gas and mining sectors and the governments support to NEITI to establish a beneficial ownership register of Companies in business in Nigeria’s extractive sector.

Also considered are the broader reforms in beneficial ownership disclosure by the Corporate Affairs Commission (CAC) through the amendment of the Companies and Allied Matters Act and the recent Petroleum Industry Act, which made specific provisions for Beneficial Ownership transparency. Other agencies that worked with NEITI were the NNPC, the defunct Department of Petroleum Resources (DPR), the Corporate Affairs Commission (CAC), Mining Cadastre Office (MCO) and Nigerian Civil Society representatives. The OGP Summit in Seoul also recognized Nigeria’s commitment to integrate Beneficial Ownership Information and use it as a tool to fight insecurity, illicit financial flows, tax evasion and money laundering.

Your previous reports threw up some critical findings about the extractive sector in Nigeria, what plan is NEITI putting in place to mitigate these remedial issues?

I believe you are referring to previous NEITI reports? Yes, we are reviewing the current remediation plans leveraging on support from British Council. We are also set to re-energize and re-constitute the Inter Ministerial Task Team (IMTT). This will be in addition to other direct adhoc interventions with relevant agencies and through the platform of Open Government Partnership and track progress through various thematic areas.

The NEITI report identified 77 Companies as being indebted to the Federal government. Have they paid the debt?

Our fundamental responsibility as NEITI under the EITI principles is public disclosure. From our reports we provided information and data that 77 companies were indebted to government to the tune of N2.6trillion. We placed that information openly in the public domain. The role of the media, the civil society and citizens is to use the information to hold the companies to account. NEITI is ready and available to provide more information and data. But for asking us how far, where is the money? NEITI does not collect or keep money. Relevant government agencies do.

QUOTE:

Since 2006 NEITI reports have underlined the need for the removal of fuel subsidy. But what NEITI has no control over is when and how subsidy should be removed

For taxes such as PPT, CIT and VAT, it is the FIRS that collects them while for royalty payments, DPR now part of the Nigeria Upstream Petroleum Regulatory Commission collects the payments. However, we are highly encouraged that the House of Representatives rose to the occasion; tabled the issue as a motion, passed it and set up an adhoc committee to investigate the issue. A public hearing on that disclosure from NEITI begins in March. I applaud the Speaker, the house leadership and the members for this exemplary role expected of the legislature in Section 4 (3) & (7) of the NEITI Act.

NEITI will be there to help the committee in this investigation. NEITI is also aware that following the public disclosure, many companies have been rushing to the relevant government agencies to either pay up or ascertain the status of their liabilities. This is our impact on revenue generation for the government. However, our 2020 report to be released this March will provide updates. I am in no position to speculate.

One issue on the front burner for Nigerians today is the availability of Petroleum products and payment of subsidy. What is NEITI’s position on this issue?

At the moment, the NNPC and the Nigeria Midstream and Downstream Regulatory Authority have done a good job in their sustained interventions to restore normalcy. I was in touch with top managements of the relevant organizations and I am aware of the amount of work and pressure that have gone into this.

But let me say this, fuel scarcity is just a mere symptom, subsidy is the main disease. Why it’s a disease is because the symptoms will continue to manifest until you cure the disease. Indeed, since 2006 NEITI reports have underlined the need for the removal of fuel subsidy. But what NEITI has no control over is when and how subsidy should be removed. This is the area that government has overall control especially in terms of the social impact it will have on the populace

The issue of oil theft is a recurring decimal in NEITI’s Audit Report and a serious blackhole that has depleted the Nation’s revenues and attracted serious environmental consequences. What is NEITI doing to tackle the menace caused by oil theft?.

This is a huge problem that is currently impacting very negatively and seriously especially on our downstream and midstream operations. For example, many IOCs and big firms are gradually divesting in the downstream sector because the problems of oil theft, vandalism, and deliberate sabotage have been quite difficult to manage.

This is in spite of the efforts by various security agencies to secure these huge investments. Many that can afford it, because it is very capital intensive, are moving into upstream. And that’s why you see revenues from PSCs outstripping returns from JV. Let me tell you from our reports in the last 5 years (2015 – 2019), Nigeria has lost about 260.15mmbbls to crude theft.

NEITI, as part of our monitoring functions, is reviewing the situation very critically and will soon be sending our policy advice on this to the government. Our Board is already discussing the implications as well as possible short, medium and long term interventions. But for us, it is an issue of major concern.

What do you think NEITI can do to improve transparency and accountability in the management of revenue flows from the extractive sector?

We need to widen the scope of our investigations and engagement with the covered entities on process, physical and fiscal issues that underpin oil, gas and mining operations and governance value chain to enthrone honesty, competition, efficiency, cost effectiveness and value for money. We need to implement emerging issues with the letters and principles of EITI standards.

We need to broaden the spectrum of stakeholder’s engagement especially with companies, government, the civil society and the media with effective communication strategy. These stakeholders must understand that in transparency and accountability everyone wins. Robust implementation of the Petroleum Industry Act is also key, because the PIA will create a new positive business environment for the sector if we allow consistency, trust and vision to drive the process.

You will realize that most companies and government agencies often appear to be reluctant in disclosing information and data to NEITI. Do you experience any resistance or push backs? And how have you addressed these challenges?

I can say that compliance to NEITI process by companies and relevant government agencies over the years have remained quite high. It has been over 95%. We are working to make it 100%. But remember, refusal to comply is a violation of the law for which there are consequences. For now, I commend the companies for their cooperation.

We understand NEITI would soon release about three of its audit reports, what are the plans towards making the reports easily comprehensible and reader friendly? Should we expect something innovative?

Yes, we don’t want our reports to be just a document. We are set to release reports whose information and data will be simple in meaning, easy to understand and user-friendly as tools by the civil society, companies, government, and investors to shape policy decisions.

Can you give us snippets of these reports, starting with the oil and gas report?

I think we better wait till next week when the reports will be out.

What about Solid Minerals?

Our next major focus is on solid minerals and we will in due course commence discussions with the Ministry of Mines & Steel Development on the scope, priority areas and direction of our engagements going forward in the sector. The 2020 report on Solid Minerals, to be released soon will be a useful guide.

In the last one year, NEITI has signed series of MoUs with Anti-Corruption Agencies like the EFCC, ICPC and NFIU what progress have you made towards activating these MoUs. Has any covered entity been sanctioned for infringements or non-compliance to remedial actions as recommended in the report.

Yes, we are now set to activate the MoUs once we release the 2020 reports. The time has now come, and going forward it will ever remain active because it is very essential to sustain compliance, sanctions and even incentives.

Last year, the Federal Executive Council approved the purchase of a permanent office building for NEITI, I am surprised that you are still in Asokoro. Why have you not moved?.

Yes- We are again very grateful to President Muhammadu Buhari for breaking that barrier and our immediate boss, the SGF for providing the shoulder that took the matter to Mr President. It is a legacy like no other for which history will be kind to this administration.

We equally thank our former Executive Secretary Dr (Mrs) Zainab Ahmed for her support and all members of FEC. Our Board – the NSWG – has also been exceptional. Now, getting the building was the most important step, the next stage is securing the necessary funds to put the place in shape for us to move in. That’s what we are waiting for. We hope this happens in or before June this year. And so we have killed the snake, but until we park the snake into the bag, the task is not over.

After your tenure at NEITI, how would you want to be remembered?

I want to be remembered as an Executive Secretary that worked closely with the Board to give NEITI, the best infrastructure, conducive working environment, skilled, well equipped staff and motivated staff.

I would also like be an ES whose tenure re-positioned NEITI to deliver more impactful results on its mandates of ensuring that revenues from oil, gas and mining benefit all Nigerians not just a few, support our national development and reduce poverty.