AN ADDRESS BY THE MINISTER OF SOLID MINERALS DEVELOPMENT, OBIAGELI EZEKWESILI AT THE OPENING OF THE SOUTH-WEST ROAD SHOW OF THE NIGERIAN EXTRACTIVE INDUSTRIES TRANSPARENCY INITIATIVE (NEITI) IN LAGOS ON THURSDAY, DECEMBER 1, 2005.

I am very pleased to be here with you at the Lagos Road Show of the Nigerian Extractive Industries Transparency Initiative, NEITI.

As you are probably aware, the first Road Show was held in Port Harcourt for the South-South Zone in July 2005. The second was held in Kaduna for the Northwest in October 2005.

This, Ladies and gentlemen, is the third in the series and looking at the array of stakeholders here present, I can safely observe that the ideals for which NEITI was conceived are gaining momentum as they, through constructive engagement at each session are beginning to emerge from the realm of the abstract to that of the demonstrable and indeed the achievable.

The focus of each Road Show reflects the domestic realities and comparative advantage within the region in line with the scope of work of the NEITI.

Here in Lagos, we shall be focusing on the theme:  "Building Capacity and Deepening Awareness of the Nigerian Extractive Industry Transparency Initiative with Civil Society Groups."

One very obvious challenge we had in the course of our work in the National Stakeholders Working Group is the fact that many Nigerians have limited knowledge of the operations of the oil  and gas as well as mining sectors, a situation that has led to skepticism and apathy. It became obvious that we needed to embark on aggressive sensitization, knowledge sharing and perception reengineering.

Let me therefore say that it is in line with this objective that the civil society steering committee worked with the NSWG for the Road Show, which has brought us here today.  The vibrancy of civil society is central to realizing the goals of NEITI.  Thus far, we have been very encouraged by the level of participation of civil society groups in the two road shows held in Port Harcourt and Kaduna.

In previous Road Shows we have benefited from the robust interaction among participants of divers backgrounds and interests. We are eager to learn from people of the South West as we have from the preceding two zones in continuance of the work of NEITI.  As hotbed of mass media and civil society activism, the southwest can indeed support the awareness creation.  The nature and extent of such engagement must however be situated on empirical evidence.

Interestingly, the NEITI, hopes to initiate a program next year that would help build the capacity of civil society groups towards better understanding of the operations of the extractive industries and consequently, engender more constructive engagement.

The work of the NEITI extends beyond the oil and gas sector to the solid minerals and as such has been often referred to as EITI-plus.  The current reform efforts in the Mining sector, aimed at allowing the private sector drive growth.  These efforts therefore are drawing lessons from the mistakes of the oil and gas in the matter of environmental sustainability as well as transparency in operations.

Towards realizing its objective, the NSWG has engaged the services of an international audit company, the Hart Group, after a thorough international tender’s process – to execute an audit of all oil companies at three levels: a   process audit, a financial audit and a physical audit.
 
The audit will critically review and challenge, where appropriate, the annual accounts and tax filings of the oil companies.  The same auditors would be in a position to prepare a credible annual statement, on both a disaggregated and aggregated basis, of all revenues received by the Government. 

It involves looking at the books of relevant Government agencies that have a role in collecting the sector’s revenue in the form of royalty, taxes, etc, as well as the Central Bank where the monies are deposited in government accounts. 

In the end¸ standard templates would be developed, which would be the basis for a framework for future reporting.

In the context of Financial Audit, the NSWG would ensure regular public reporting of the payment and revenue data.  The statements prepared by the independent auditors would be regularly and automatically published, on a timely basis in formats and through media easily accessed by the public, in Nigeria and internationally. 

To enhance accountability, statements on payments to, and revenues received by government, would be disaggregated, with payments going into the Federation Accounts separated into their federal, state and local components by applying existing constitutional sharing formulae and payments to agencies such as the NDDC clearly identified.

The Process Audit would concentrate on the process by which the affairs of the sector is handled and whether this provides an adequate basis for protecting the interest of the federal government in such matters.

The physical audit is expected to comprehensively report the amount of crude oil lifted, produced exported, lost etc.

So far, I am pleased to report that there has been considerable cooperation from the private sector as well as government agencies.  The release of the report of the comprehensive audit, which we are carrying out, on the extractive sector in Nigeria, is expected to be a very important milestone in our work in the NEITI. This report will come out very soon.

In the New Year, the NEITI plans to begin the hosting of state-level road shows.  This would bring to the fore, the matter of decentralization.  However, decentralization must be seen from the purview of ensuring greater transparency and accountability at the lower tiers of government.  Consequently, we must broaden our vision on the matter of decentralization beyond the issues of fiscal autonomy.

The better management of resources, a key component of NEITI goal would permit more investment in such areas as education, health and other similar human development initiatives.  The resulting pool of human resources would therefore become the primary source of growth in the nation.  This is the direction for the future where knowledge and innovation become central elements in ensuring economic growth.  We are hopeful that the NEITI would have played its part in this regard.

Once again let me welcome you to Lagos, a city I love so much and wish you fruitful deliberations.

Obiageli Ezekwesili
Minister of Solid Mineral Development
Chairperson, NEITI