The World Bank and the Extractive Industries Transparency Initiative (EITI), the global standard for the promotion of openness in the oil, gas and mineral resources management, have said Nigeria has so far recovered about $3 billion as a result of more transparency in the sector.
A report released by the World Bank’s Extractives Global Programmatic Support (EGPS) Multi-Donor Trust Fund and EITI, at the weekend, noted that through the work being done by the Nigerian Extractive Transparency Initiative (NEITI), about $20 billion in revenues could still be retrieved.
This was coming as the Department of Petroleum Resources (DPR), Nigeria’s oil sector regulator, has released what it described as the strategic plan and policy for the survival and success of the industry post-COVID-19.
While acknowledging that the country still faces developmental issues, including the need to reduce economic dependence on oil and rebuild social infrastructure, both organisations, however, noted that Nigeria has made improvements in the governance of its oil sector.
“Reports, policy briefs and other knowledge products published by the Nigeria Extractive Industries Transparency Initiative (NEITI) have been a catalyst for ongoing reforms and have helped the country to identify about $20 billion in recoverable revenues, and to recover approximately $3 billion into government coffers to date,” the global bodies stated.
Having enacted the Nigeria EITI Act in 2007, the World Bank publication noted that though there’s still much work to do, the country has made some progress in terms of reducing the opacity in the extractive industries.
“Previously, the industry was opaque, with little reliable public information on production levels, crude oil losses, government investment in the upstream projects or downstream information.
“The EITI in Nigeria encountered some initial hurdles in publishing accurate and timely reports on key sector data, such as production, revenues and governance processes.
“Some reports were delayed by several years, meaning that those who could hold the state accountable for oil revenues – such as investors, companies, civil society organisations and the media – received data only several years after the reporting period.
“With the help of the World Bank’s Extractives Global Programmatic Support Trust Fund, NEITI has now succeeded in producing its reports in a much more timely and efficient manner,” the report noted.
Describing the country as having made satisfactory progress in implementing the EITI standard, the report added that Nigeria remains one of the eight countries that achieved this assessment, among the EITI’s 53 member countries.
Both organisations commended NEITI for working hard to release prompt reports on the extractive industries, including the one on the Nigerian National Petroleum Corporation (NNPC), which succeeded in drawing the attention of the Nigerian authorities.
“A 2017 policy brief on unremitted funds highlighted more than $20 billion, which the national oil company, the Nigerian National Petroleum Corporation (NNPC), should have contributed to government revenues, highlighting the urgent need for oil sector reform. The brief received widespread attention, generated a national dialogue and caught the attention of decision-makers.
“Another policy brief highlighted the failure of the federal government to adjust the royalty in production-sharing contracts in line with the price of oil and inflation, as provided in the Deep Offshore and Inland Basin Production Sharing Contract Act. The brief contributed to an amendment to the law, which was then enacted eight months later,” they said.
According to the two bodies, stakeholders, across the legislature, presidency and national oil company, have embraced the spirit of transparency and reform inherent in the EITI process, sparking a wider change in the country and driving forward oil sector governance and policy reform.
The World Bank and EITI explained that as a result of progress being made, the Senate Committee on NEITI Reports was established, following the organisation’s presentation of its key findings and remedial issues for legislative action.
“A joint committee between NEITI and the NNPC was set up. The committee is addressing pending remedial issues relating to public disclosure (involving NNPC and its subsidiaries) and developing time-bound strategies to improve transparency as part of its reform agenda.
“The federal government has now reconstituted the Presidential Committee on Revenue Monitoring and Reconciliation, of which NEITI is a member. The work of the NEITI has set in motion broader transformations across government and the oil industry.
“Such advocacy sets the stage for the people of Nigeria to benefit fully and equitably from the country’s resources at a time when they most need it.
“Nigeria now has the highest number of people lacking electricity access in the world, at a total of 85 million Nigerian citizens. Greater transparency and accountability should contribute to an overall reform process that helps Nigerians gain crucial access to electricity and accelerates the government’s economic recovery and growth plan,” the global bodies said.
DPR Releases Strategic Plan for Oil Industry Survival
The Department of Petroleum Resources (DPR), Nigeria’s oil sector regulator, has released what it described as the strategic plan and policy for the survival and success of the industry post-COVID-19.
DPR Director, Mr. Sarki Auwalu, at a webinar organised by Future Energy Leaders Nigeria (FEL) entitled: “Nigeria Oil & Gas Sector: Surviving and Thriving Post COVID-19,” underscored four key areas the sector is deploying to stay afloat despite troubles and threats posed by the pandemic to the economy.
“There is no better time for strategic repositioning and business optimisation. There are four ways this can be achieved. The first, which is cost control and management, has to do with realignment of cost of production per barrel as well as corporate, business and financial stewardship.
“The second is portfolio rationalisation and asset optimisation. For this, there would be project screening and maturation; and contract renegotiation,” a statement at the weekend by the agency quoted Auwalu as saying.
According to him, the third step to achieving strategic repositioning and business optimisation is a “new business and operational resilience, which include vertical integration model covering the refineries; operational excellence; and compliance.
“The last in that stage is strategic partnership; contracting models; service provider open access; and shared risks and returns.”
Auwalu noted that for surviving and thriving beyond COVID-19, DPR has embarked on marginal field bid round, policy and regulations, business environment and investment drive as well as making 2020 ‘the year of gas.’
COVID-19, according to DPR boss, caused a shutdown of markets globally with impact on all key sectors of global economy, including global tourism, travels, hospitality, energy sector and transportation.
He noted that for instance, on April 20, WTI crude oil slumped into negative for the first time, while the United States unemployment rate in April and May reported as 14.7 million and 13.3 million respectively.
On oil and gas and the Nigerian economy, DPR director stated that the sector oils the wheels of the Nigerian economy as it contributes approximately 10 per cent of the Gross Domestic Product (GDP).
He said: “The sector is also responsible for about 80 per cent of government revenues as it is also the principal source of foreign exchange earnings and Foreign Direct Investments (FDIs).
“There are, expectedly, direct impacts of falling oil prices on the country, which include change in budget benchmark as well as the revised 2020 budget.
“These have brought about a new normal also known as a new reality which is that COVID-19 may be with us for some time. The world would have to learn to work and live around it.
“The global economies gradual easing of lockdown; slow, sustained growth in the economy and changing work environment and work processes are signs that the world will need to work and live around it.”
Auwalu urged businesses in the sector to deploy online resources, work tools and electronic media resources, noting that businesses must swim to remain afloat or drown without innovating.