NEITI Pegs Nigeria’s Revenue Loss at $9.8 Billion



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By Danlami Nmodu

Mr Ledum Mitee,Chairman of the Board of NEITI has reaffirmed his organization’s resolve “to  place greater emphasis on our powers under  Section 3(f) of the NEITI Act that requires us to monitor and ensure that all payments due to the Federal Government from all extractive industry companies, including taxes, royalties, dividends, bonuses, penalties, levies and such like, are duly made. This necessarily includes all outstanding cases of under-payments and under assessments discovered and publicly reported by previous NEITI Audit Reports”.

The NEITI board chairman made this declaration in Uyo Akwa –Ibom state capital today at the end of a special retreat for members of the board  and its directors.NEITI’s chairman said the country has been losing a lot interms of revenue.He recalled that “previous NEITI audit reports have identified potential revenue loss due to under-assessments/underpayments by covered entities amounting to over $9.8 Billion or N1.3 trillion naira by the existing exchange rate.”

He thus said, “NEITI can no longer sit down and watch and allow these recoverable funds  in the hands of the  companies at a time the Federal Government is searching for funds to finance the deficits in the annual budgets”

Read the full text of his speech below:

SPEECH BY CHAIRMAN,  NATIONAL STAKEHOLDERS WORKING GROUP  OF NIGERIA EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE ( NEITI BOARD) LEDUM MITEE AT THE END OF THE  SPECIAL RETREAT FOR MEMBERS OF THE BOARD AND NEITI DIRECTORS HELD IN UYO, AKWA IBOM STATE NOV 19TH – 24TH 2012.

It is my pleasure to welcome you to this press conference by the National Stakeholders Working Group (NSWG) which is also the  Board of NEITI.

As you may well be aware, when in 2003, Nigeria voluntarily signed up to the global Extractive Industries Transparency Initiative (EITI) it was based on the premise that sustainable development and poverty reduction would be brought about by more transparency in the extractive industry sector of our economy. The underlying principle is also based on   the conviction that public understanding of the management of national revenue and public expenditure, over time would facilitate public debate and inform legitimate plural choices of appropriate options and strategies on the application of the resources to achieve sustainable development.

Nigeria was thus  the first country among the 45 member nations globally  to  back the implementation of the EITI process with an ACT- the NEITI Act of 2007 which, amongst others, empowers with the responsibility  of ensuring transparency and accountability in the management of the investment of the Federal Government in all extractive industry companies as well as ensuring  that all payments due to the Federal Government from the extractive companies, including taxes, royalties, dividends, bonuses, penalties, levies are duly made.

By its approach and methods the NEITI conducts independent audits which basically involves a reconciliation of what the covered extractive companies claimed that they have paid against what the government declared it has received which is then reconciled by the independent auditors appointed by NEITI. The result of the reconciliation is then published to enable the legislature, civil society and the larger public use the information and data to hold both government and companies to account.

Since 2004, NEITI has conducted different cycles of audits in the oil and gas sector covering a period of 10 years. They include 1999-2004, 2005, and 2006- 2008 Audit Reports. Each of these Audits contained graphic findings, far-reaching recommendations in facts and figures but with little or no attention to implementation.


Concerned that mere publication of these Audit Reports may not necessarily have  sufficiently translated to the desired impact of the enormous revenues from the nation’s extractive resources on the citizens  and the overriding need to evolve appropriate strategic policy direction that will enable NEITI actualise these mandates, objectives and functions through effective implementation of its statutory mandate a special Retreat was convened in Uyo, AkwaI bom State from November 19th to 24th 2012.

It is with a gratifying note of excitement that we applaud the fact that the President, Federal Republic of Nigeria, Dr. GoodLuckEbele Jonathan, GCFR felt it sufficiently important to personally open the Retreat with a commitment not only to give NEITI the needed unequivocal and unrestricted political support to carry out its statutory functions but to charge us to do everything to realise the objectives of the institution.

Strengthened by this Presidential support and charge, let me announce to you that the NEITI Board, chaired by me, have resolved at the end of this Retreat, appropriately themed-‘From Transparency To Accountability’ to stoutly execute and fully carry out its statutory functions in the direction that would deliver results and impacts in the extractive industry leading to ultimate improvement in the lives of Nigerians.

To this end, we have resolved henceforth:

-To place greater emphasis on our powers under  Section 3(f) of the NEITI Act that requires us to monitor and ensure that all payments due to the Federal Government from all extractive industry companies, including taxes, royalties, dividends, bonuses, penalties, levies and such like, are duly made. This necessarily includes all outstanding cases of under-payments and under assessments discovered and publicly reported by previous NEITI Audit Reports . For example, previous NEITI audit reports have identified potential revenue loss due to under-assessments/underpayments by covered entities amounting to over $9.8 Billion or N1.3 trillion naira by the existing exchange rate.  NEITI can no longer sit down and watch and allow these recoverable funds  in the hands of the  companies at a time the Federal Government is searching for funds to finance the deficits in the annual budgets.

– To invoke relevant  sanctions under Section 16 of the NEITI against any company found  to  have  rendered false information or failed to provide statements of accounts as at and when due  to  NEITI Industry Auditors especially in the reported cases where this resulted in under-payments  and under- assessments and huge revenue loss to the Federation Account.

– To commence the process of identifying all public officers whose acts or inaction resulted in the under-payments, under assessments and avoidable leakages thereby short-changing the Federation of its derivable revenues.  Similarly we shall invoke the statutory sanctions against relevant government agencies identified to have willingly frustrated the implementation of remedial issues in NEITI Audit Reports over the years.

In the pursuit of these `steps NEITI will seek the support and collaboration of the relevant law enforcement agencies.

This strategic direction we have chosen to embark on is driven by the overarching felt concern for the looming threats to our oil-centric dependent economy by the reality of the stated and observable movement towards energy independence and decreasing need for our oil imports by some of our major oil importers. Placed against the backdrop of the fact that most of our neighbours have now found oil, this makes a compelling urgent case for us as a country to take steps to block all oil revenue leakages and improve accountability whilst making determined steps to robustly develop other sectors of the economy, especially the solid mineral sector.

In NEITI’s view therefore the time for Nigeria to fully embrace the effective development of the solid minerals sector of the extractive industry is now.  NEITI’s scoping study in the solid minerals sector confirms that   availability of valuable solid minerals in commercial quantities in all the states in the country. These include gold, diamond, salt, coal, iron ore, lime stone, bitumen, lead, zinc, name it. The solid minerals sector promises even more revenues to our country than oil if given the needed attention. NEITI therefore calls for government’s urgent deliberate intervention policy in the sector by strengthening the Mines and Steel Ministry and its affiliate agencies to open up the sector for private investments.

I thank you. I am also ready to take your questions.


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