The program’s objective is to engage stakeholders in the private sector, in practising sustainability and transparency in their businesses (particularly businesses in the hydrocarbon industry) and environment.
The event was focused on transparency in the oil and gas sector with the aim to mobilise collective action of stakeholders in both the public and private spheres to tackle corruption. Participants included key stakeholders in the industry such as the Nigerian Extractive Industries Transparency Initiative (NEITI), Shell, Chevron, Department of Petroleum Resources (DPR), the Nigerian Financial Intelligence Unit (NFIU), the British embassy amongst others.
Identified as the largest earning sector in the economy, the importance of the Oil and Gas industry was highlighted and transparency, good governance and corruption were crucial concepts to be addressed if Nigeria was to maximise the benefits from the oil and gas industry. Mr E. O Shadiya, the Executive Director of Chevron was quoted as saying “If we can change the oil & gas industry, we can change the Nation”.
Some of the aspects of the oil and gas sector that would benefit from transparency were discussed including:
- Volumes reporting – It is essential that Nigerians know the actual volume of crude oil production and revenues derived from crude oil. This would translate into good fiscal management. It was also noted that the high levels of illegal bunkering needed to be addressed by the government.
- Bureaucracy – Nigerian businesses, including those in the Oil and Gas sector, are subject to many laws, guidelines and regulations that are often long and complex; thus giving room for opportunities for misconduct.
The regulations that govern transparency in the extractive industries were extensively discussed. Participants introduced the Extractive Industries Transparency Initiative (EITI) which was launched in 2002. The EITI is a global standard designed to improve transparency by publication of all taxes and fees paid to government by extractive industry companies (oil and gas, mining etc.) operating in EITI signatory nations. Governments are also to report all income from resource development. EITI was implemented in Nigeria through the enactment of the NIETI Act 2007. NEITI carries out the duties as specified by the EITI but also has the powers to conduct physical and process audits by tracking the extraction process from the oil wells to the export terminal or refinery.
Other relevant international regulations discussed include:
The European Union Transparency Directive – Adopted in 2013 and applies to the following categories of companies:
- Listed on EU stock markets and active in the extractive and logging industries.
- Large unlisted companies registered in the EU, active in the extractive and logging industries.
- EU listed or large unlisted parent companies with subsidiaries, active in the extractive and logging industries.
- Small and medium sized unlisted companies with subsidiaries, active in the extractive and logging industries.
Information to be disclosed include taxes on income, production and profits, bonuses, rental fees etc. It employs country by country reporting, making it easier to track payments for each country.
Dodds Frank Act United States – extractive companies listed on the US Securities and Exchange Commission (SEC) are to publish all payments made to the countries they operate in. This only applies to companies registered with the SEC. Benefits include:
- Local citizens have access to how much revenue is generated by the extractive industry.
- Local citizens know how much is being used for national development.
It was made clear that the Dodd Frank Act and the European Union Transparency Directive do not apply to Nigerian companies operating in the country.
The importance of regulators ensuring strict compliance to guidelines and policies on the calculation of all upstream taxes, rents and royalties due to the government and ensuring prompt remittance of the same was emphasised. This is in line with global trends calling for ethical accountability which has been accentuated by the effects of global warming and environmental degradation.
It was further re-iterated that it would be costly for Nigeria to retreat or withdraw from the growing ethical trend as there are increasing number of oil producers in Africa. Also investors are keener to put their funds in government that are supportive of the ethical regulations in their home countries.