NNRC Launches its 2017 Benchmarking Exercise Report (BER)

The Nigeria Natural Resource Charter (NNRC) presented the findings from its 2017 Benchmarking Exercise Report (BER) through a Policy Dialogue and Capacity Building Workshop for members of the media, civil society organizations (CSO) the academia, ministries, departments and agencies (MDAs) and stakeholders in the oil and gas industry on February 15th and 22nd of February, 2018 in Abuja and Lagos consecutively. The event which was organized with aim to engage the media and stakeholders on the outcomes of the 2017 BER, and to have the opportunity to ask questions on the various aspects of the Report findings they may have issues with. This is with the view to help disseminate the findings of the Report for deeper appreciation and as working tool for further engagements with the government officials and operators in the industry. Moreso, the need to breakdown some of the technical terminologies contained in the Report to help more people understand what is at stake and also appreciate the fact that every Nigerian is a stakeholder in how the country’s natural resource wealth is managed is the overriding aim of the workshop says Mr. Ademola Henry Adigun, Team Lead, Facility for Oil Sector Transformation (FOSTER). Nigerians need to take active participation in governance at different levels, he quipped. In her opening remarks, the Program Coordinator, NNRC, Ms. Tengi George-Ikoli, noted that the Charter is part of a global initiative designed to help governments and societies to effectively harness the opportunities created by natural resources. She explained that the NNRC proposes a tool that analyses the resource governance decision chain, from the discovery of natural assets through to their conversion into sustainably developed economy. Some of the highlights of the 2017 BER show that government has taken steps to improve transparency and accountability of public institutions and has put in place instruments to track public spending while information management systems have been deployed in government agencies with some recording significance improvements in service delivery. Equally notable from the Report are efforts by the government to implement the principles of the open government partnership by launching the Nigeria open contracting portal. The Report however, highlighted that public institutions in the oil and gas sector are yet to prioritize proactive disclosure of information and in places where this is available, it is quite limited, outdated and yet to meet internationally accepted standards. It further stated that oversight functions by requisite institutions are still ineffective yielding sub-optimal outcomes while accountability mechanisms expected to serve as a deterrent against fraud are not strictly enforced. The Report also notes that on issues of licensing, exploration and monitoring, that there has not been significant change since 2014. Nigeria, the Report notes still does not meet the natural resource charter benchmark. Laws, policies and practices reveal absence of strategic impact assessment and poor disclosure of exploration and licensing information. The power of discretion for licensing award still subsists and lies with the minister and the bidding rounds are still fraught with lack of transparency, open to abuse and marred by delays. Monitoring of operations across every stage of projects is ineffective as the government agencies responsible are deficient in technical capacity and not well resourced. Oversight institutions are weak, inefficient and in some cases, compromised. It is however expected that the Petroleum Industry Bill (PIB) will adequately address this when finally passed into law. But for the time being, not much has been achieved. Inspite of the relative achievements and other efforts of the government to improve on transparency, so much is still left to be done. The need for greater transparency in Nigeria’s oil and gas industry cannot be overemphasized if government’s efforts at growing the industry and packaging it to meet internationally accepted standards are to be achieved. The industry is still fraught with secrecy as companies financial statements make it easy to disguise corrupt deals, and impossible to be monitored. Many oil and gas companies don’t publish information country by country. This allows them to hide the royalties, taxes and fees they pay. But without this information, it is hard to hold governments to account for the money they receive. According to the Report, the fiscal terms are contained in legislations but several are negotiated separately into contracts with incentives which is a deviation from the overriding legislation. The fiscal regime the Report notes is not simple. It is characterized by self-assessment, upfront declaration, varied tax rates depending on the status of the company, depth of operations and terms that are not uniform. The tax administrators have capacity but are limited in number and not well resourced considering the complexity of the fiscal regime and the need to carry out tax audit after tax return filings. “Oversight of the fiscal regime is not strong. The administration is routine and oversight by any external body is conducted only where an infraction is highlighted and huge revenue loss is reported. “The country has exited the JVAs due to the funding challenge making the payment of cash calls difficult. The stalemate relating to the 1993 MOUs still persists and government is not able to collect taxes commensurate to the increase in and in the MOU having exceeded the 15-year mark.” Commenting on the Report’s findings, a member of the Expert Advisory Panel of the NNRC, Mrs. Ronke Onadeko noted that report discovered some worrying trends which policy makers and government should take seriously to avoid sabotaging ongoing efforts to reform the petroleum industry. She lamented the fact that the fiscal regime is not strong enough to attract investors as compared with other African countries, especially in the area of deep sea exploration. According to her, the fiscal regime in the sector is not flexible enough to respond to dynamic levels of production and profitability. “The findings equally highlighted the fact that the level of inter-agency coordination in the oil and gas sector was poor and this had limited the full realisation of government policies and plans. As a result, the strategic measures to enhance the oil and gas sector’s operational effectiveness are not well coordinated,” Onadeko noted. The Lagos launch and capacity building workshop offered stakeholders and participants opportunities to have a deeper understanding of the issues the Benchmarking Exercise Report seeks to highlight and address and also how they can use it as tool to engage the government on the management of the country’s natural resource wealth.

NULL