The process for a comprehensive independent audit of the oil and gas sector by the Nigeria Extractive Industries Transparency Initiative (NEITI) has commenced.
The independent audit, to be conducted in line with the principles and standards of the global Extractive Industries Transparency Initiative, will cover the period 2015 and 2016 respectively.
Executive Secretary of NEITI, Waziri Adio, announced this recently in Lagos at a workshop for major oil companies and relevant government agencies expected to participate in the exercise.
Mr. Adio explained that the workshop was designed to acquaint the participants with the structure and content of the template, the kinds of questions that NEITI would ask and the answers expected to be provided by the covered entities. “This workshop is to seek your views, suggestions and inputs as well as listen to your concerns on how to make the exercise hitch-free,” Mr. Adio added.
The workshop witnessed presentations on the EITI processes, methods, principles and standards including emerging issues on beneficial ownership and contract transparency. The benefits of implementing EITI in Nigeria also topped discussions at the interactive session.
The Executive Secretary announced that NEITI would introduce a ranking reward system to incentivise participation of covered entities. Under the ranking system, companies will be graded based on their efficiency in populating the audit templates including the quality and depth of information and data provided, quick response to set deadlines among other considerations.
He further explained that the ranking system will be shared with over 51 member countries of the global EITI and multi-lateral organisations to serve as reference points on adherence to business ethics for major investment decisions in Nigeria.
Adio stressed: “NEITI is committed to working closely with the companies under the EITI framework to create good business environment that is conducive for the inflow of more foreign direct investments into the extractive sector. For this to happen we encourage all companies to embrace transparency, accountability and corporate governance in conformity with the EITI standards.”
He however warned that NEITI would not hesitate to invoke relevant sanctions under the law on companies and other covered entities that fail to cooperate with it during the exercise.
All major international oil and gas companies operating in Nigeria were represented at the workshop. Also in attendance were relevant government agencies such as the NNPC, the FIRS, DPR, NDDC and NLNG. The event was also attended by a cross section of the media and the civil society.
While reviewing the templates, the representatives of the respective companies welcomed the objective of the workshop, describing it as a fundamental step in building partnerships and trust with NEITI in the execution of its mandate. They urged NEITI to note very carefully their observations and the issues they have raised at the workshop with a view to ensuring that the reviewed template suits the peculiar operations of the diverse covered entities slated to participate in the process.
NEITI has already commenced distribution of the templates to participating companies and government agencies. All populated templates with the required information and data are expected to be returned to NEITI on or before the 31st of May, 2017. NEITI is expected to conclude the independent audit and make its findings public by the end of the year.
The independent audit of the oil and gas sector by NEITI for the period 2015 and 2016 will examine the fiscal, physical and process issues from, within and among the companies and relevant government agencies.
The audit will therefore undertake special verification and validation of information and data on the payments made by the companies to government entities as well as government receipts. Other areas that the audit will cover will include quantities and volumes of crude produced, balances payable or receivable on certain financial transactions, taxes, royalties on project by project basis, social contributions and investment flows.
The overall goal is to ascertain if the fiscal, physical and process transactions in the oil and gas sector during the period under review were in line with the transparency and accountability standards as well as the principles of the global extractive industries transparency initiative which NEITI is implementing in Nigeria.