Overview of Extractive Industries
Nigeria is the largest oil producer in Africa and among the top ten globally. Its effective pumping capacity is about 900 million barrels a year. Its recoverable reserves are estimated at 34 billion barrels. In recent years, the oil sector has accounted for over 40% of GDP, 95% of export receipts, and over 80 percent of government revenue. The sector is dominated by joint venture operations between the Nigerian government and six major international oil companies—Shell, Mobil, Chevron, Agip, Elf, and Texaco. Nigeria’s reserves of natural gas—an estimated 159 trillion cubic feet of proven reserves—are among the ten largest in the world, but gas production is less significant economically.
Status of EITI Implementation
Former President Olusegun Obasanjo committed to EITI in November 2003 and launched Nigeria EITI (NEITI) in February 2004. To give legal backing to the work of NEITI, a bill was introduced to the National Assembly in December 2004. This NEITI Act was passed into law on May 28, 2007. With this, Nigeria became the first EITI-implementing country with a statutory backing for implementing EITI. Nigeria was accepted as an EITI Candidate country on 27 September 2007. Nigeria has until 9 March 2010 to undertake Validation.
A first set of financial, physical and process audits for the period 1999-2004 undertaken by a consortium led by the London-based Hart Group was published in 2006. The audits identified several weaknesses related to the management of oil revenues and oil and gas sector governance more broadly. Following the release of the audits, an Inter-Ministerial Task Team (IMTT) was asked to put together a comprehensive remediation action plan which was subsequently approved for implementation by the Nigerian government.
The remediation action plan covered five key areas: developing a revenue-flow interface among government agencies; improving Nigeria’s oil and gas metering infrastructure; developing a uniform approach to cost determination; building human and physical capacities of critical government agencies; and improving overall governance of the oil and gas sector.
The second report covering 2005 was released on 11 August 2009. The report identified unprecedented financial discrepancies, mispaid taxes, and system inefficiencies. Over US$800m of unresolved differences between what companies said that they paid in taxes, royalties and signature bonuses, and what the governments said it received were identified. Of this amount, US$560m was identified as shortfalls in taxes and royalties owed to the government and around US$300m in payment discrepancies relating to signature bonuses, payments of dividends, interest and loan repayments. The largest amount owed to the government in the report is an estimated US$4.7bn by the state-owned, Nigerian National Petroleum Corporation (NNPC), for payments of domestic crude. However, the NNPC claims it is owed US$1.7bn in subsidies from the government.
This latest NEITI Report has highlighted numerous issues that call for urgent attention and action by all stakeholders. NEITI has Presidential and Ministerial approval for the implementation of the report's key recommendations. The report notes that "NEITI will ensure that the benefits due to the Nigerian government, agencies and above all the people of Nigeria, from the industry duly accrue to them, in accordance with the principles of transparency, accountability, and sustainable development... NEITI will facilitate this process of remediation, working in collaboration with all stakeholders".
A report covering 2006-2008 has been commissioned.
Governance of EITI Implementation
The governing body of NEITI is the National Stakeholders Working Group (NSWG) was appointed by the President Umaru Musa Yar'Adua on 29 January 2008. The NSWG is chaired by Professor Humphrey Asobie and comprises representatives from civil society, government, and extractive industry companies and representatives of communities (the six Nigeria geo-political zones), and the media.The day-to-day work is carried out by a NEITI Secretariat headed by an Executive Secretary, Haruna Sa'eed.
Chairman of the NSWG
Professor Humphrey Assisi Asobie
hasobie [at] yahoo [dot] com
NEITI focal point
Haruna Sa'eed, Executive Secretary, NEITI
hysaeed2002 [at] yahoo [dot] com
+234 803 311 3113.
Companies operating*
Oil & gas companies: BG Group*, Chevron Corp*, ConocoPhilips*, Eni*, ExxonMobil*, Petrobras*, Shell*, Statoil*, TOTAL*, CNOOC (China), CNPC (China), ONGC (India), Petronas, Sasol, Sinopec.
* EITI Supporting Company
* Note: Company list based on EITI research and is not conclusive
For further information, please contact Eddie Rich in the EITI International Secretariat.
