When Victor AD composed, recorded, and released the song, “Wetin we gain”, he probably didn’t know that the title of his song will find meaning in the extractive sector, as it affects the community he hails from. Victor AD is an indigene of Warri, an oil-rich town in Delta State, Nigeria. Delta and other Niger Delta states play host to the majority of the oil and gas operations in Nigeria, but the poor living standards and environmental degradation in the region belie the billions of dollars derived from its extractive wealth. “Wetin we gain?” is a vernacular expression which means “what’s in it for us?”, and no industry typifies this question as much as the extractive sector.
With a song like that ruling the airwaves and its words dominating street-speak, we did not need to look elsewhere for inspiration for the latest Policy Alert campaign. The #WetinWeGain campaign seeks to promote greater disclosure on oil, gas and mining transactions in Nigeria. The idea is to mobilize and empower citizens with the information they need to ask the right questions and thereby benefit more fully from their natural resources.
For decades, it was almost impossible for members of the public to access the contract and fiscal terms that existed between the Nigerian government and oil, gas and mining companies. Similarly, there was very limited information in the public domain on the ownership structure of Nigeria’s extractive assets. While communities gave up their lands and livelihoods and suffered the negative social and environmental impacts due to extractive investments, they were often unsure of what to expect from the government and the companies in return, a situation that was partly responsible for much of the conflicts, especially in the Niger Delta.
Image Credit: Consensus Building Institute
Nigeria’s implementation of the Extractive Industries Transparency Initiative (EITI) in the past 15 years has contributed significantly to moving the paradigm in the extractive sector from secrecy to relative openness, including through the publication of audited data on the payments made by oil, gas, and mining companies to Nigerian government entities and the government’s financial receipts, and several other reports. But more still needs to be done. One issue is with the timeliness of the NEITI reports. The Nigeria Extractive Industry Transparency Initiative (NEITI) audit reports are released at best, two years late, the most recent being the 2016 NEITI Oil and Gas Audit Report and 2016 Solid Minerals Audit Report released last December. It has been argued that the timing of these important and revealing reports limits the effectiveness of multi-stakeholder engagement towards remediation of identified information gaps and poor governance of the sector; with particular implications for civil society, advocacy to enable communities to get full benefits from their natural resources.
But that time-lag is somewhat being bridged with Payments to Governments (PtG) reports. In recent times, the European Union—including—the UK—Canada, and Norway have established laws that mandate extractive companies incorporated or listed on stock exchanges in these countries to report payments made to foreign governments in countries where they operate. These annual PtG reports cover all cash or in-kind payments that companies make to host governments in relation to the exploration, prospection, discovery, development, and extraction of oil (including condensates), natural gas, minerals, and forestry. Specific payments covered by the reports include taxes, production entitlements, license and concession fees, and payments for infrastructure improvements. Companies must report payments made to all federal, state and local governments or their agencies, and payments must be reported for specific projects. Since the first PtG reports came public in 2015, there is now a growing mass of data available for use by communities, the media, parliamentarians, civil society, and concerned citizens to demand accountability from governments and companies.
Locally, institutions such as the Nigerian National Petroleum Corporation (NNPC) and the Department for Petroleum Resources (DPR) are complementing PtG data and NEITI reports by being more forthcoming and current with information on activities in the upstream, midstream and downstream petroleum sector of Nigeria.
The #WetinWeGain campaign aims to address some of the existing issues bordering on transparency in the oil and gas sector, improve public awareness on oil, gas and mining operations in various communities in the Niger Delta, provide more information on development opportunities and benefits to communities, and empower citizens to maximize the benefits that accrue to them. Cross-comparing the data from PtG reports with various in-country sources has been quite revealing. Three examples highlighted below, among others, illustrate the invaluable power of extractive data in extracting accountability:
- Disparities in the Reporting of Payments to GovernmentIn the PtG reports, TOTAL S.A reported that it paid $99,900,000 to the Niger Delta Development Commission (NDDC) for Infrastructure improvements in 2015, but the NEITI Oil and Gas Audit Report 2015 states that subsidiaries of TOTAL S.A, Total Upstream Nigeria Limited (TUPNI) and Total E&P Nigeria Limited (“TEPNG”) made payments of $50,952,751, and $18,054,680, totaling $69,007,431. Which is the correct figure, and what accounts for the difference, amounting to N11.12 billion at the current official exchange rate? The entire capital budget for Akwa Ibom State Ministry of Health was N11.41 billion.
- Discrepancies in Remittances to Government AgenciesAccording to the NEITI Oil and Gas Report 2016, Sterling Oil Exploration paid the Naira equivalent of $770,238 (mandatory 3% of Sterling Oil Exploration’s annual budget) to the Niger Delta Development Commission (NDDC), which couldn’t be traced to the NDDC bank account. Similarly, NEITI reported that the Nigeria Content Development and Monitoring Board (NCDMB) could not validate payment claims of $557,464 made by ExxonMobil to its Treasury Single Account (TSA) in the months of August and December 2016. If the companies did not lie about making the payments, did something fishy happen to the money at the NDDC and the NCDMB?
- Possible Undervaluing of Nigeria’s Oil and Gas AssetsAccording to the PtG reports for 2016, Shell’s production entitlement payment to the Nigerian government for the SPDC East project was made in kind of 67.3 million BOE (barrels of oil equivalent), which was valued at a market price as low as $15.75/barrel. Comparatively, the average value of other in-kind payments made to the Nigerian government by Shell in 2016 was $44.41/barrel. The big question is, why did the Nigerian government receive an undervalued payment for the SPDC East project from Shell in 2016? And why did Shell lump the payments it reported as “SPDC East”, rather than disaggregate it on a project-by-project basis?
Policy Alert’s #WetinWeGain campaign seeks to link the foregoing numbers and more to specific communities hosting or affected by the said projects. Working in partnership with Publish What You Pay (PWYP) Nigeria and PWYP UK, the campaign has the potential to put the power of data in the hands of citizens to enable them to demand that companies make fair payments to government and that government and its relevant agencies on their part judiciously manage and expend the revenues they receive on behalf of communities.
In the coming weeks and months, Policy Alert will use its campaign webpage https://policyalert.org/wetinwegain/ and other communication tools to publish a series of infographics providing information about which companies own and operate selected oil, gas and mining projects in Nigeria and the payments that these projects generate for the Nigerian government, and raising questions that we believe need to be answered.
Header Image Credit: Leadership Newspapers
Iniobong Usen is Programme Lead (Open Data/Extractives) at Policy Alert. He can be reached at [email protected]