NEITI pushes for contract transparency clause in PIB

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The Nigeria Extractive Industries Transparency Initiative (NEITI) has asked the National Assembly to insert a clause for contract transparency in key provisions in the Petroleum Industry Bill (PIB) that is before it.

Executive Secretary of NEITI, Mrs. Zainab Ahmed, in defence of the transparency agency’s position as contained in a memo it had earlier sent to the National Assembly, explained that the issue of contract transparency had already been enacted as a law in the United States through the recent signing of the Dodd-Frank Act by the US Congress.

Ahmed, at a public hearing on the PIB conducted by the House of Representatives, noted that while the Dodd-Frank Act was operational in the US, the European Union (EU) has also recently endorsed similar legislations for adoption by all its member-countries to push for greater contract transparency in the oil and gas industry and as such, Nigeria should not be left out.

“In conformity with the global trends and Extractive Industries Transparency Initiative (EITI) principles which Nigeria is a signatory, NEITI is proposing the creation of a register that will contain comprehensive information and data about holders of oil, gas and mining licences.

“Such a register should also contain information on corporate entities of all those that bid for or invest in the upstream sector of the oil and gas industry, the identities of the beneficial owners of oil blocks and licences, including all exploration and production contracts,” she said in a statement yesterday in Abuja.

Disclosing that the global EITI has recently aligned with the trend by formulating executive principles to promote openness in the award of oil, gas and mining licences, Ahmed added that the EITI principles also cover transparency in developing contractual obligations that guide businesses in the oil and gas industry.

Shedding light on the contentious issue of confidentiality clause, which determine the nature of information that companies can share with the public on their operations, she observed that section 174 of the PIB contains contradictory provision on the issue of confidentiality clauses.

She said: “This created mixed signals on what information shall or shall not be made public by the companies. NEITI is therefore of the position that the process of maintaining confidentiality of industrial information by the companies should be clarified in the legislation.”

On the growing public concern that Nigerians do not know the exact quantity of crude oil the nation produces, Ahmed referred the legislators to NEITI’s recommendations that the PIB should provide for installation of dependable metering infrastructure to guarantee accurate measurement of crude oil produced by the country, including at the oil flow stations and the crude export terminals.

She explained that this was the trend in developed countries such as the United States, United Kingdom and Norway, amongst others.

Ahmed also expressed concern that the PIB as presently drafted has no clear provision for installation of metering infrastructure for accurate measurement of the quantity of crude that Nigeria produces and requested for a redress.

She reaffirmed NEITI’s position that oil and gas companies in Nigeria should be compelled by the proposed legislation to embrace installation of metering measurement mechanism at identified critical points in the production chain.

Also speaking of NEITI’s position on allocation of oil blocks and mining licences, Ahmed clarified that NEITI supports the position being widely canvassed that the PIB should provide for transparent, open and competitive bidding process in the award and allocation of oil blocks and licences.

She however requested that NEITI should be empowered by the PIB to effectively monitor the exercise as well as scrutinise all contractual obligations and carry out other functions by widening and strengthening the scope of its responsibilities as already provided in section 190(6) of the draft legislation of the bill.

Ahmed also observed that the enthronement of competitive bidding process would attract wider business opportunities, capacity development, professionalism, efficiency and huge diverse foreign direct investments to the Nigerian economy in general and the extractive industry in particular.

 

Information from This Day was used in this report.