Senate Considers Giving NEITI a Percentage of Recovered Revenue

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Waziri Adio

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Nigerian legislators consider ways to improve funding for the Nigeria Extractive Industries Transparency Initiative

By Anayo Ezugwu  |  Oct 31, 2016 @ 01:00 GMT  |

THE National Assembly is considering giving the Nigeria Extractive Industries Transparency Initiative, NEITI, the powers to retain certain percentage of the revenues recovered from defaulters in Nigeria’s extractive industries as part of measures to improve the agency’s financial capacity.

Senator Omotayo Alasoadura, chairman, Senate Committee on Petroleum Resources (Upstream), stated this when he led his colleagues on a recent oversight visit to the NEITI Secretariat in Abuja. Alasoadura stated that as part of measures to address the funding challenges experienced by NEITI, the Senate might review the NEITI law to enable it retain a percentage of revenues recovered from the extractive companies.

A statement from NEITI, stated that Alasoadura also explained that the issues raised by the NEITI industry audit report which is receiving at the attention of the Senate, and expressed dismay over poor funding of the agency. Through its audit of operations and financial flows from Nigeria’s extractive industries – oil, gas and solid minerals, NEITI uncovers several underpayments and irregularities perpetrated by operators in the industries.

NEITI also flags them off for the relevant agencies of government like the Federal Inland Revenue Services, FIRS, to recover. With Alasoadura’s disclosure, NEITI may be allowed to take part of the recovered funds to augment its operational finances.

Waziri Adio, executive secretary NEITI, had in his welcome remarks, identified the need for a new law for the petroleum sector as one priority area that the Senate needs to pay immediate attention. Adio advised that a piecemeal rather than an omnibus approach to the passage of the law be adopted, and underlined the need for the law to have robust transparency, accountability and efficiency measures.

He also said that as an agency saddled with the responsibility of ensuring transparency and accountability in the extractive industries, NEITI has a legitimate interest in the bill, and therefore urged the Senate to work with all the relevant stakeholders to ensure that a new petroleum law is prioritised, enacted and used as one of the strategies for economic recovery.

Adio equally informed the committee that NEITI is currently confronted with serious financial challenges capable of hampering its core mandate, and appealed to them to do everything within their powers to rescue the agency.

Earlier this year, NEITI had stated that an independent audit of the operational processes and financial payments to Nigeria from companies that mine her solid mineral resources has shown that more of the country’s minerals were exported from her shores without legal permits.

The report explained that while it is statutory that companies obtain regularly permits from the country’s ministry of trade before they can export her solid minerals, most of the companies that engage in the export trade have overtime sidestepped this requirement, thus costing the country revenues in export duties amongst others.

It also revealed that the country’s Mines Inspectorate Department, MID, cannot accurately account for how much solid minerals were mined and taken out of the country at any period, saying that the MID mostly provided inaccurate production data when requested. These data according to the report for the sector’s operations in 2013 have often conflicted with what producers provided.

The MID, it explained does not also use its procedures or systems to determine production data or volumes but frequently relied on sales volume of operators. This development, industry operators say, squeals of corrupt processes and regulatory incompetence. “The Nigerian Minerals and Mining Act 2007 require that any exporter of solid minerals must request for permit to export. The audit could not be provided with any evidence of request for permit to export minerals by the exporters.

“The audit has observed the incessant smuggling of solid minerals out of the country by middle men and smugglers. The audit has observed persistent activities of some foreign nationals operating in the sector that constitute significant buyers of the solid minerals that are mined by artisanal and small scale miners, illegal miners,” said NEITI in the report, which was presented by Kayode Fayemi, minister of solid minerals development and chair of NEITI board.

NEITI said the implications of such anomaly was reduced value addition; opportunity for revenue leakages; and inaccurate production transaction records. It said on production volumes and revenue: “We understood that the production data provided by the Mines Inspectorate Department was based on self-declarations submitted from the extractive companies in the solid minerals sector.

“The Mines Inspectorate Department does not use its own procedures and systems to collect and control production data reported by mining companies. In fact, we noted that for commodities such as sand, companies report sale volumes and not production data. Some of the quantities reported by the Mines Inspectorate Department do not match the corresponding royalty amounts,” the report added.

Similarly, NEITI disclosed that up to N2, 037,594,163.80 which accrued from the solid minerals sector for the year ended 2013 were not yet reallocated to about 26 beneficiary states. This it explained was confirmed by the Revenue Mobilisation and Fiscal Allocation Commission as being in existence. The monies it said represent 13 percent derivative benefits to states where minerals are mined.

“The NSWG and the government should take quick action to ensure fiscal allocations and statutory disbursements to beneficiaries from the proceeds that accrued from the mineral resources. This will lead to a more transparent and prudent management of public revenues from Nigeria’s extractive industries by various beneficiaries.”

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