The new board should reverse declining openness within the state-owned company, argues TIJAH BOLTON-AKPAN
On May 21, 2024, President Bola Ahmed Tinubu inaugurated the governing board of National Stakeholders Working Group (NSWG) of the Nigeria Extractive Industries Transparency Initiative (NEITI), a multi-stakeholder group comprising representatives of government, companies, and civil society. NEITI is the Nigerian chapter of the global Extractive Industries Transparency Initiative (EITI), established to help countries institutionalize the transparent and accountable management of their oil, gas, and mineral resources.
This is the sixth board since Nigeria formally joined the Initiative as one of its earliest members in 2004, but this new board is unique in many ways. First, it is coming just three months after the 20th anniversary of the first NEITI Board (The pioneer NSWG was inaugurated on February 16th, 2004). The 20th anniversary of NEITI signifies the beginning of a new phase in the EITI's implementation in Nigeria and presents an auspicious moment for the board to pause, reflect, and document lessons. The board cannot afford to pass this opportunity by!
·Second, this board has Senator George Akume, the Secretary to the Government of the Federation, as its Chairman. This is actually the first time a serving top government official with supra-ministerial powers would be chairing the board. The last time it came so close was the pioneer board which had as its Chair, Mrs. Oby Ezekwesili, at the time head of the Due Process and Price Intelligence Unit, a reform coordinating role that gave her not just ample presidential access but also the inter-ministerial convening authority to energize the early years of NEITI. While expected outcomes are clearly different now from what they were then, there is a clear opportunity for the current board to leverage the high-level reach and influence of its Chairman's Office to bring back the political will that characterised that early era of NEITI.
Lastly, this is the board that moves NEITI into its third decade. The first decade was what I'd call the decade of transparency. NEITI grew itself into an institution in Nigeria, riding the wave of Obasanjo-era reforms to pry open for the first time in the country's history, a hitherto opaque and deeply corrupt sector. The second decade was the decade of transformation, characterized not just by more ambitious audits, but also disclosures in areas that were potentially transformative for Nigeria. These include the work around sub-national transfers, contract transparency, and beneficial ownership disclosures that marked the end of that decade, notwithstanding the gaps in their actual implementation. NEITI's third decade is what I would prefer to describe as the decade of transition - when NEITI needs to assert itself as an agenda-setter and enabler of a transparent, accountable, and just energy transition for Nigeria.
·I will now highlight five specific tasks that can help shape the agenda for new NEITI Board. The first two are part of the unfinished business from the decade of transformation, while the other three should be defining priorities for NEITI's decade of transition.
The first has to do with Nigeria's national oil company, the NNPC Ltd. It is expected that the new board will reinvigorate NNPC Ltd to return to the glory of its recent past with regard to data transparency. In the years leading up to the enactment of the Petroleum Industry Act (PIA), the Nigeria National Petroleum Corporation (NNPC), as it then was, achieved commendable feats in its proactive disclosures. The disclosures had become so routine for the corporation that it came as no surprise that it signed up to become an EITI supporting company in 2019. In fact, the NNPC was already taking the lead on "EITI mainstreaming" by having on its pre-PIA website monthly financial and operational data stretching as far back as January 2015!
·In June 2020, the company made history when it published the first audited financial statements in its then 43-year history. The NNPC (and now its successor the NNPC Ltd) has since continued to publish audited financial statements, despite delays, the latest being the statements for the 16-month period ending December 2022, which came in January 2024. However, a ton of previously available disclosures are no longer available on the NNPCL website. It appears that on becoming a public limited company, the NNPCL has rolled back on the transparency gains it chalked up in the pre-PIA years. Reversing this decline in openness within the state-owned company must therefore be a key priority for the new board.
·The second urgent task for the new board is to conduct a reality check on NEITI's relevance or Return on Investment for Nigeria. It is time to ask: In what definite ways have findings and recommendations from successive industry audits in Nigeria actually impacted socio-economic development? Is the transparency buzz finally translating to accountability? For instance, do we have sufficient contracts in the public domain to trigger a lift in demand-side pressure and has public knowledge of contract terms led to review of any past or ongoing deals thereby increasing revenue flows to government? Have data disclosures improved benefits to communities (in terms of compensation payments, jobs, gender-equity, or even environmental restoration)? Has knowledge of the beneficial owners of any companies involved in flagged transactions including flawed licensing deals led to the prosecution of any big names or major license withdrawals?
Has shining the light on the details of Nigeria's controversial crude swaps led to any convictions of officials who were in charge of the years of losses Nigeria suffered due to under-reported volumes, substandard and sometimes toxic refined products imports, and tax leakages? What is being done to achieve redress on the estimated $46.16 billion lost to crude theft from 2009 to 2020? How are the lessons from the oil and gas industry informing deal-making in solid minerals, including the recent rush in transition minerals? With revenue-to-GDP ratio at a dismal ten per cent and public debt racing over N100 trillion, can NEITI step up to the plate as a force for addressing the country's gaping revenue deficit so that hitherto hemorrhaged resource revenues can finally translate to greater fiscal space for social and development spending?
·Thirdly, NEITI's relevance to national priorities will remain limited if implementation stays stuck on collecting and churning out data. While significant progress has been made over the years on refining reporting templates and reconciling gaps between payments and receipts, NEITI needs to embrace the urgent, next-level task of migrating towards EITI mainstreaming and data analysis so that it is no longer perceived by some as just an "accounting" or "reconciliation" exercise. EITI mainstreaming is the systematic and routine disclosure of much of the current content of NEITI audit reports by government agencies and companies without prompting from the EITI. NEITI would thus be able to free up time and resources from routine data collection for deeper analysis beyond current efforts - investing meaning into the numbers to trigger real policy change. This would not only lead to more cost-effective NEITI operations, it would also make audits more timely. Granted, the current two-year time-lag for audits meets the minimum expectations of the EITI, but Nigeria's unique complexity demands a more ambitious and timely publishing of audit reports to be more relevant to demand-side actors.
·The fourth task has to do with how NEITI reconciles its twin role of governing a declining fossil fuel sector while simultaneously defining take-off parameters of transparency and accountability for Nigeria's energy transition, including the country's nascent critical minerals sector. I do not envy the board on this task. Nigeria is clearly running out of time to improve the utilisation of hydrocarbon revenues to address urgent development needs, drive economic diversification, fix broken host communities and environments, and enable a transition to a cleaner energy future. As global demand for critical minerals grows, the country's significance on the supply radar is growing but realizing this potential requires responsible extraction practices, value addition initiatives, and open and equitable beneficiation that NEITI can take the lead on.
While on the one hand, the PIA had a huge blind spot with regard to the energy transition and potentially drives fossil fuel expansion, the country has on the other hand, committed to international efforts to combat climate change by signing the Paris Agreement and has adopted an Energy Transition Plan (ETP) that commits to decarbonize the country by 2060. In the midst of mostly skeptical policy attitudes regarding the urgency of the transition, NEITI is burdened with the task of championing disclosures and courageous analyses that will clarify what Nigeria (including its sub-nationals) really stands to lose or gain from developing its current oil, gas and critical minerals reserves based on different market and domestic scenarios. Given declining investor appetite for fossil fuels, how risky is Nigeria' s further gamble on fossils as clearly expressed in the PIA and the ETP? I am curious to see how NEITI will link the PIA's host community provisions to a just energy transition especially in view of current wave of divestment. Do we look forward to transformational disclosures on the payments into the Host Communities Development Fund, Decommissioning and Abandonment Fund, gas flare fines, and other payments targeted at communities?
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·Finally, NEITI has an opportunity to rework its enabling legislation to be fit-for-purpose with regard to the agenda for the next decade. The proposed review of the NEITI Act 2007 must finally give NEITI biting teeth to prosecute individuals and entities that contravene the Act. There are confidentiality provisions in the extant Act that contradict NEITI's transparency objectives and these need to be removed. The review must also provide legal backing for NEITI to launch a major replenishment of its fund for the next phase such as by retaining a portion of the extractive revenues it recovers, and must contain deliberate provisions for strengthening civil society voice and agency which remains the soul of the EITI process.
·Of course, the priorities outlined above are by no means exhaustive or even novel. Big deal is that they speak to some of the key commitments already contained in NEITI's strategic plan for the 2022 to 2026 period while a few also overlap with gaps already identified for correction from the 2023 EITI final validation report. This means that NEITI would not be veering off course in the short term to address the foregoing. Interestingly, the proposed agenda also ties in with related commitments in Nigeria's third National Action Plan for the Open Government Partnership (OGP), which presents opportunities for creatively linking and mutually reinforcing implementation and outcomes. Evidently, the sixth National Stakeholders Working Group of NEITI has a daunting but potentially rewarding job cut out for it. As it settles in to steer Nigeria's extractive sector towards a more open, accountable, and prosperous future, the point should not be lost that the ultimate test of its success will be in how much the EITI process actually contributes to real improvements in the lives of everyday Nigerians.
