By: Ifeanyi Izeze
Nigerian Extractive Industries Transparency Initiative (NEITI) is a federal government agency that operates as part of a global EITI scheme set at improving transparency among extractive commodity producing countries.
The mandate of the contraption as stated in the enabling Act includes tracking of revenues earned in the extractive sector (in this case, oil and gas) and this should be done in the form of periodic fiscal audit. The idea of NEITI auditing was to match what the oil companies say they pay to the federal government against what the government actually agrees it received as earnings to see if it tallies.
But there is a very clear political undertone to the entire NEITI 2009-2011 Audit report which could best be described as diversionary and ghost huntingas it set out to divert attention from the real epicenters of the blurred accounting for the nation’s oil revenues.
The worrisome picture of the effects of crude oil theft on the Nigerian economy painted by the Nigeria Extractive Industries Transparency Initiative (NEITI)would have been hailed if not that it seemed to have been generated by the transparency organization in a manner that could best be described as cleverly opaque.
Is it not interesting that all that has been blown in the international news agencies about the NEITI findings were just the amount of crude oil lost to oil thieves in the Niger Delta and its effects on the Nigerian economy? Good as it sounded, that was a deliberate steer-away from what a NEITI audit was set out to achieve. The figures dangled by the auditors as monetary quantification of the loss to crude oil stealing activities were mere guesstimates and outright diversion from the obvious incompetence of the auditors.
By the way, where is NEITI domiciled for sustenance? Presidency! Where is the accounting problem of our oil revenue domiciled? Presidency! Who are the other suspects in this blurred accounting of our produced crude oil and gas? The NNPC’s foreign multinational joint venture partners! So while the cartel of International Oil Companies (IOCs) set out in the NEITI exercise to shift all the blames to the NNPC and by extension, the Presidency, the Federal Government (the sponsor of the audit report) because it cannot explain how what it claims it earned did not tally with what the IOCs claimed they paid, opted to shift the blame to oil thieves and pipeline vandals who are at best ghosts.
You see the tragedy of the Nigerian situation? Now, there is no tangible quarter to accuse rather the “spirit world.” Is it not an absurdity that NEITI whose mandate falls within the purview of reconciling what the IOCs say they paid or rather what they paid as they say†and the actual receipt into the Federation Account spent all the efforts, resources and time auditing oil thieves who at best has remained “ghosts†in the spirit world.
Very funny was it that the NEITI auditors left the human thieves in the house and chased the “ghost†thieves which they would never be able to catch and ofcourse were not even asked to catch. This bothers on integrity of not only the report but the entire exercise.
Interestingly, it was very clear that the NEITI auditors set out to clear the foreign multinational operators of any serious wrongdoing in saying what they pay or rather paying what they say,” while deliberately painting the NNPC and DPR as rogue government’s outstretched hands. Meanwhile both sides work as partners in almost all the existing joint ventures of fraud. Is this not suspicious? Just few days from the NEITI’s presentation, the Royal Dutch Shell, the parent company of Shell Petroleum Development Company of Nigeria (SPDC) came out to claimed it has been spending over $12 billion every year on crude oil theft and other related issues in Nigeria though they did not say the very year this expenditure started.
Is it not curious that the NEITI which cannot for certain and I mean for certain obtain any credible figure either for oil production or revenues from NNPC and its joint venture partners can flaunt definite figures of crude oil stolen by thieves? How did they obtain the figure because the credibility hinges on the source?
According to the organization, Nigeria lost over 136 million barrels of crude oil estimated at $10.9 billion through pilfering and sabotage from 2009 to 2011.
In addition to the total amount of products and revenue lost to crude oil theft by the country in the upstream sector, about 10 million barrels of products, valued at $894 million, were also lost to pipeline vandalism in the downstream sector within the period under consideration.
The figure of losses in crude oil theft by the country represents about 7.7 per cent of the total revenue accrued to the federation within the period.†The NEITI 2009-2011 Audit report as presented by the Chairman of the National Stakeholder Working Group (NSWG), Ledum Mitee, claimed over 136 million barrels of oil, estimated at $10.9 billion, were either stolen or sabotaged within the period under review.
A breakdown of crude oil production figures as presented show that the nation “recorded†a total crude oil production of about 780.9 million barrels in 2009; 894.5 million barrels in 2010; and 866.2 million barrels in 2011. The total as estimated under the period was about 2.5 billion barrels as recorded.
The question is: how did NEITI arrive at the figure of over 136 million barrels estimated at $10.9 billion lost to crude oil theft and sabotage?
 Was the over 136 million barrels figure gotten from the multinational operators; the Nigerian National Petroleum Corporation (NNPC); or the Department of Petroleum Resources (DPR)?
These questions are necessary to ascertain the integrity of this estimate flaunted as loss to the Nigerian economy.
If we don’t know how much oil the nation produces in a day/month/year, how can we know what we are losing to both corporate joint venture thieves and visiting thieves? Why are these multinational operators fiercely resisting the idea of wellhead and flowstation metering of our production activities? And why is the government not coming down heavily to decree that it should be done? Oyibo deceive papa, papa deceive people!
Truth be told, figures of crude oil lost to thieves depend on where you are getting it from. When the IOCs talk, they give you in geometric multiples of the actual loss; the NNPC on its own would even prefer not to accept that anything is being lost in the first instance; while the DPR would just sit down and wait for the NNPC and the joint venture partners to finish quarrelling so that they can collect the reconciled figure which is passed to the Presidency. And this is what we have been using for our economic play analysis/planning. Abi no bee so?
As posited by NEITI, the federation earned a total revenue of $143.5 billion from equity crude sales, royalty, signature bonuses and taxes. Either deliberately or mistakenly, we were not told how much of this money came from the sale of our share of the produced crude oil; how much was derived from signature bonuses and who paid what in the signature issue; and how much came in as taxes.
NEITI should tell us how much oil the federal government recorded as produced and how much of it was sold and the earnings thereof within the period under review. Does this match claims by the producing companies? And if didn’t tally, where and how did the shortfall disappeared to?
And if the organization fails to explain this, then we will take it up from there. God bless Nigeria!
(IFEANYI IZEZE is an Abuja-based Consultant and can be reached on:iizeze@yahoo.com;
2348033043009)