31 January 2013

Nigeria: NEITI Begins Audit of ECA, 13 Percent Derivation

The Nigeria Extractive Industries Transparency Initiative (NEITI) has promised that it would going ahead with its planned audit of the fiscal allocation and statutory disbursement of funds from the country's Excess Crude Oil Account (ECA), ecological funds and 13 per cent derivation allocation which are shared between the country's three tiers of government.

NEITI also disclosed yesterday in Abuja that this intended audit of revenue allocation, disbursement and application from these revenue sources will also cover key government agencies such as the Niger Delta Development Commission (NDDC), Petroleum Technology Development Fund (PTDF) and the Central Bank of Nigeria (CBN) with respect to the latter's management of funds for the development of natural resources.

The Executive Secretary of NEITI, Mrs. Zainab Ahmed, explained at the signing of the contract for the commencement of the audit process by indigenous audit, tax and assurances firm (SIAO) professional services, that the audit which will cost the agency N148 million to execute, will cover revenue allocations and disbursement in this regard from the period 2007 to 2011.

Ahmed noted that the exercise was approved by the Federal Executive Council (FEC) in November 2012, and has also gained the support of the Nigerian Governors Forum (NGF), a dominant bloc within Nigeria's three tiers of government that has often contested the management and distribution of revenue from the various accounts.

She stated that the audit process was not intended in any way to witch-hunt any of the covered entities but to provide baseline information required for planning and development amongst the three tiers of government while reducing lingering frictions between parties to the funds.

Accordingly, the nine-month duration audit exercise will seek to establish "who gets what and how they get" funds accrued to the federation account from the oil and gas sector. The Federal Government, states such as Bayelsa, Cross River, Rivers, Edo, Delta, Akwa-Ibom, Ondo, Abia and Imo as well as their local governments will majorly come under the searchlight of the audit exercise.

"Under Section 2 of the NEITI Act, 2007, we have a responsibility of ensuring transparency and accountability by governments in the allocation, disbursement and application of revenues earned from oil, gas and mining sector.

In line with this provision, the decision by NEITI to implement this part of the law is not only legal but imperative in view of the mutual suspicion and distrust that have existed among the federal, state and local governments over who gets what and how," Ahmed said.

She stated further: "The scope of the audit is expected to cover actual disbursements of funds accrued to the federation account from the oil and gas sector to beneficiaries such as federal, state, local government councils and relevant agencies as well as tracking actual application of these funds. The audit will also examine the issues surrounding 13 per cent derivation to benefitting states."

When asked about the body language of the three tiers of government to the planned audit with regard to possible cases of misappropriation, Ahmed said: "The contract for the exercise was approved by FEC in late November and previous engagements we have made have shown that the governors are very clearly interested in the audit that will report on how disbursement of funds that are pooled in the federation account is made.

"They are interested in the report because there is always an allegation that states are not getting what is due to them and so there is the support but we know very well that a lot of the states resist such exercise but we are planning a consultation to mitigate that and we do not plan to cover the 36 states of the federation because it is an inaugural exercise.

"We are mindful of the challenges that we will face but NEITI being a multi-stakeholder mechanism and the nature of the NEITI process itself is what gives us the courage to embark on this and we are going to be asking for support from the media and civil society.

"It is about reporting facts as they are and gaps that could be improved upon, we are going to use a lot persuasion because we cannot coerce the governments."

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