Orji: NEITI’s Job Incomplete Until It Improves Citizens’ Standards of Living

The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative, Dr. Orji Ogbonnaya Orji in this interactive session during a courtesy visit to THISDAY and ARISE NEWS CHANNELS spoke about his plans for the agency as he leads the organisation for the next five years. Peter Uzoho presents the excerpts:

What are the challenges of getting the Petroleum Industry Bill passed, and what can be done to ensure that the bill is finally passed?

I share the same concern like you for the fact that we have wasted a lot of time on the bill and that has also led to loss of a lot of revenue, because like we use to say, when you are going to change the law, investors will wait until they see a new law and as long as you haven’t brought out a new law, they will continue to wait, and sometimes, they will take the investment to other jurisdictions and that has caused Nigeria over $200 billion between 2004 when NEITI just started and now. We have a research report that we have done on that. But to answer your question, I think the major problem is divergent interests. There is a whole lot of debate on it. Government wants more take, companies want more profit, the host communities have their complete view of how the law should be couched in their interest, the civil society has a view, the National assembly themselves have theirs, then the global partners that represent the global community in Nigeria also have a position, the investors have a position.

So, harmonising these interests in one way or the other has been a very herculean task, especially on the financial regime that would govern the industry. That’s where the whole argument is: what kind of financial regime will be suitable to balance the interest of oil companies, balance the interest of government, balance the interest of host communities, and balance the interest of investors, who neither own oil assets? Some of them don’t even know where Nigeria is located but they invest in the Nigerian oil and gas industry and some of them have invested enormous resources. Remember, some have been drilling since 1957. And even the state actors in the sector have their own interest. Some agencies want to know what would become of us if the PIB is passed, are we still going to be where we are. So, complex divergent interests. Initially, the National Assembly thought out of passion they could pass it as a private member bill but the bill is so huge that it can’t go through private member sponsorship.

So, we, at NEITI always believed that the PIB should be an executive bill that carries the weight of the president and that’s where we are now. That has been done and I think we are very confident that between now and the end of the year it will be passed. But it’s just politics and divergence of interest that has held the bill these years. But those interests right now are being addressed. Discussions are ongoing and a lot of people are concerned, even the investors themselves know that time is running out because, when we started, neighbouring countries didn’t have oil.

Now, oil is everywhere. So, a lot of issues have changed that makes it imperative that Nigeria has a new petroleum law. But there is a special interest in Nigerian oil and Nigeria is different from others. So, our hope is that these interests should be harmonised and dialogue and constructive engagements will have its way. And we think that between now and September and November, the bill will be passed, from the information we have at our disposal, we have been following engagements with companies, civil society and the National Assembly.

NEITI has always placed considerable emphasis on the oil and gas sector, but very little is heard from it about solid minerals, and we do have quite a bit of solid minerals extracted in our country and very illicitly. Don’t you think it’s high time you began to focus some critical reports on mining?

Well, it could be traced also to how EITI emanated. The EITI began as an agitation by the civil society in Angola over how the government of that country was running the oil and gas industry. But like you said, EITI in Nigeria has also done a lot in the solid minerals sector. They may not have attracted the kind of interest that the oil and gas attracts. The first thing we did in solid minerals was to conduct a scoping study and mapping to know who is doing what in the industry because this kind of attention was not there. We did the first report 2007 and covered 2007 and 2010. As at now we have done about four reports on solid minerals. The next report on solid minerals will be released in September this year.

There is a report going on currently, and if you check our website you will see a lot of information. Solid minerals contributes just less than one per cent (0.8 per cent) to GDP. So, there are a lot of issues. We had worked with the Ministry of Solid Minerals, now Ministry of Mines and Steel, to develop a roadmap for the solid minerals sector but that has also not been effectively implemented. Since I came in I have sought audience with the Minister of Mines and Steel to know where we are on that. But from our end, we won World Bank’s support to also draw national and international attention to that sector. Solid minerals deposits are all over the country, we have done a research on that and it is not just a few.

Every part of this country has solid minerals deposits in gold, in diamond, in copper, in coal, in bitumen, in sand and in gravel and a lot of stealing, a lot of illegal mining is going on all over the country. NEITI has interest in the solid minerals, not just in oil and gas, but there is a lot of job. But it’s also a cultural thing now in the industry because the oil and gas industry has been developed and it’s a place that people can quickly go and make money. To invest in the solid minerals requires a long gestation period which so many investors are not very willing to wait.

But all extractive industries have the same gestation period, capital intensive and others challenges?

I agree with you that emphasis has always been on oil and gas than solid minerals, but there was a time solid minerals contributed over 40 per cent to our Gross Domestic Product when we had the mining in Jos and other associated mining areas with coal mining in Enugu, just like you said. The results are still there. We have gone through the process of enacting laws where government exited from active participation in mining to become regulator. That was when the mining corporation and the coal corporation assets were sold.

But when they left, mining has always been in the hand of artisanal miners and small scale miners. We use the term, ‘artisanal miners’ to encourage them to become formalise. We have active mineral buying centres where our gemstones are being sold and exported to the world. But like you said, it has not been properly regulated. Government has not been able to capture the resources because it is in the hands of the informal sector. So as NEITI, we are also constrained in the activity because we rely on information that is already available publicly or from the official channels. We have been able to go further to ask for export details of minerals.

We have done reports that showed that minerals are being exported but without considerate value of royalty being paid on this minerals. So, where are they going to? All these things are there – the reports are there, but interest has not been much on the reports because people decided to look at the low handing fruits, which is the oil and gas sector, where they can see billions being lost, but this one, you must do analysis to determine how much is being lost so that you can track it. When we started the study that we did initially, even the revenues streams were scattered. Nobody knows what the governance structure of the sector was, record keeping was very poor. If you look at projections from the revenues that we had from the beginning, solid minerals is not contributing up to N34 billion now to the coffers.

The only actors that we have in solid minerals as reported then are only the limestone and granite, those are industrial minerals that they have to prepare their records because they are tied to their production data. So, these are how you got information. But with time, the sector has been improving in terms of revenue generation growing up. I think it will be interesting for you to go to our website and see our reports, right from beginning till now. You can see that the revenue profile has been increasing for the solid minerals sector.

But even though the figures are going up, it’s still very insignificant?

We have taken this as a new challenge. This question has been persistent and the concerns are real and the gap is there, huge gap is there, even those whom you think have an answer don’t have any idea of what to do. So, a lot of advocacy, an aggressive advocacy needs to go into that, not just from the media but from point of policy engagements. So, we will look at that. The only very major challenge that we are dealing with as a nation is security, because you know that mining sites are not located in the cities, they are located in very difficult terrain.

But oil and gas too is in difficult terrain –swamp, sea, all sorts?

Yes, but when you go to oil and gas installations the security there is something else. The investors have already come in. This one, you are asking investors to come. You need to build confidence that there would be security. If you go to where Dangote is building his refinery, once you are approaching there, the security is in place. But it’s (what you said) is a very real observation and it’s a real challenge and we will take it up. Maybe by the time I come here next time, there will be some new impacts that we need to report.

What do you intend to do differently in terms of making your reports more visible and also ensure that these findings are implemented?

What we mean by making our reports, I just gave an example of PIB. A lot of people do not see the connection between our reports and the PIB. There are more like that. For instance, I mentioned recovering revenues, the revenues that have been identified, we don’t just outline a report, make a disclosure and nothing happens. That’s why we are going through those who have very clear powers of enforcement to say, this company is owing us about this, and then we mobilise them to investigate. If those revenues are recovered, government will be able to narrow the budget deficit, they will be able to build road, provide water, electricity, provide jobs, and we would be able to say, as a result of NEITI intervention, we have recovered this amount of money and this is where they have been spent, and then, we will also have to follow the money.

I have mentioned the law, I have mentioned in terms of institutional procedures and processes, a lot of reforms have been going on under NEITI’s support, but we need to celebrate them, we need to highlight them. Then, we need to get the citizens to understand what kind of work we are doing, what is their role when a report is released, do they have any role play? How do they consume the report? How do they understand that the report has connection with their standard of living, which they use to check the quality of their lives? We don’t want a situation where the citizens see our report as something is distributed at academic institutions or used for debate on television. Except and until our job leads to increased revenue that are prudently managed to provide roads, water, electricity, provide jobs, improve security, and then give Nigerian a meaningful means of livelihood, then our job is not done. It’s not just about publishing report. We want that report to make a meaningful in the lives and minds of Nigerians, and it’s a challenge. How that will happen in my tenure is a challenge and it’s something that we have to work out.

What do you intend to achieve with your recent partnership with the Corporate Affairs Commission (CAC)?

Well, the CAC partnership is timely because we are implementing what the global EITI calls beneficial ownership. We want to know the owners of oil assets. We want to know the real owners, not just owners that are on the books. Who are the people that are ultimately benefiting from oil assets, not just the names in the papers? So, we are interrogating the names and facts we find in the CAC register because the CAC register does not actually represent the real owners from our experience as Nigerians.

And if you succeed in lifting the veil, will you make it public?

We’ll do, it’s on our website. We have the portal, it’s on our website. And why do we need to do that, beneficial ownership disclosure will help check tax evasion, it will help also check terrorism financing, it will help to check illicit financial flows, how people use anonymous companies and courier money out of the country, and a lot more. It’s more than just this three I mentioned. It’s a security issue. And it’s also a global movement now to be able to know who owns what in the extractive industry. And we are collaborating with CAC because CAC has the custodian of all companies that do business directly or indirectly in the oil and gas industry, and then we are saying, is there any way you can change your template for registration to be able to compel people to reveal their real identities, not just registering a company you put name of children that are almost two three years and say is the owner of a company that runs into billions.

So, I met with the Registrar General of Corporation Affairs Commission and we are working out an arrangement for this to happen. We are also working with the Department of Petroleum Resources, I have a meeting with them also on that. And we are working with mining Cadastral Office for the solid minerals sector. The problems we have in Zamfara is not just ordinary mining, there are a lot that are going there including security that also has a lot of implication for security. So, those are the kind of things that beneficial ownership will give you a lead and an idea. We are also working with NNPC on contract transparency. How do you draft oil, gas and mining contract in such a fair and transparent manner? Because sometimes, our own people don’t read and we sign contract that by the time implementation comes up, it’s not in our favour. So, when you draft those contracts, is it possible to make those contracts public for the public to critique it, to make inputs, because there must be somebody who will pick a hole in the contracts.

Confidentiality agreement will not allow that to happen?

Yes, confidentiality agreement must have a limit. Confidentiality in our definition is: the level of disclosure that is permissible, that would not jeopardise your business. And then, the debate now is, what should you disclose and what should you not disclose? Like those us in the media, when they say, no, don’t disclose because of national security, and the media has been arguing, what is national security? When did it start? When will it end? So, what should you disclose?