The Board agreed that Nigeria has made meaningful progress in implementing Requirement 2.5 on beneficial ownership of the 2019 EITI Standard.

The Board's decision

Following the Validation of Requirement 2.5 on beneficial ownership that commenced on 1 January 2021, the Board came to the following decision on 10 June 2021:

Nigeria has made “meaningful progress” in implementing the initial criteria for Requirement 2.5 on beneficial ownership of the EITI Standard. The Board commends the government, extractive companies and civil society for working together to establish an appropriate legal framework and reporting practices for beneficial ownership disclosures. An interim public online register has been established by NEITI, pending a permanent register by the Corporate Affairs Commission, and beneficial ownership data has been requested from all companies holding extractive licenses, although not yet of companies applying for licenses. Although beneficial ownership disclosures to date have included legal entities rather than natural persons and the MSG has not yet published an assessment of the comprehensiveness and reliability of disclosures to date, the NEITI secretariat has undertaken stakeholder consultations as a basis for providing comments on the Validation assessment of beneficial ownership disclosures. In the second phase of implementing Requirement 2.5, Nigeria should ensure that all companies holding or applying for an extractive license disclose their beneficial owners. Information on the legal owners of all company form should be comprehensively disclosed. Progress will be assessed in Nigeria’s next Validation, commencing on 1 October 2022. In accordance with the EITI Standard, Nigeria’s MSG may request an extension of this timeframe or request that Validation commences earlier than scheduled.

Background

Following Nigeria’s second Validation, the EITI Board concluded on 27 February 2019 that Nigeria had made “satisfactory progress” in implementing the 2016 EITI Standard (see Board decision 2019-20/BM-42).

In June 2019, the EITI Board agreed a framework for assessing Requirement 2.5 on beneficial ownership. To ensure that progress on Requirement 2.5 would be assessed in all countries within a reasonable timeframe, the Board agreed that any country that had achieved overall “satisfactory progress” in a Validation that commenced or was concluded in 2019 would undergo a beneficial ownership Validation on 1 January 2021. The Board upheld this decision when agreeing on the transition to a new Validation model. The decision applies to four countries: Armenia, Germany, Nigeria and Norway.

The assessment follows the Board-agreed framework for phase 1 of assessing beneficial ownership disclosures. The Board agreed that between January 2020 and December 2021, the Validation would focus on whether the implementing country had met a set of initial criteria and provide recommendations for strengthening beneficial ownership disclosures. The progress in meeting other EITI Requirements has not been assessed as part of these Validations. Due to the transition to the new Validation model, the Board agreed an assessment on Requirement 2.5 only and did not agree an overall assessment of progress in implementing the 2019 EITI Standard.

The Secretariat’s draft assessment was shared with the Nigeria EITI national secretariat and stakeholders on 8 February 2021. Nigeria does not currently have an EITI multi-stakeholder group due to a change of government. The national secretariat requested an extension of the deadline to provide feedback until Monday 22 March, citing challenges in consulting with stakeholders as a result of the COVID-19 pandemic, an ongoing leadership transition in the national secretariat and efforts to reconstitute the MSG. The NEITI secretariat organised a stakeholder consultation to gather comments on the draft assessment. In accordance with the 2019 Validation procedure, the NEITI secretariat provided feedback on behalf of stakeholders on the draft assessment on 30 March 2021. The Secretariat’s assessment was then finalised for review by the Validation Committee.

Corrective action

The EITI Board agreed the following corrective action to be undertaken by Nigeria. Progress in addressing the full set of criteria of Requirement 2.5 will be assessed in the next Validation commencing on 1 October 2022:

1. In accordance with Requirement 2.5 and the Board-agreed framework for assessing progress, Nigeria is required to disclose the beneficial owners of all companies holding or applying for extractive licenses by 31 December 2021. To achieve this target, the following measures are recommended:
   1. The MSG should continue to work with DPR, MCO and CAC, and other relevant stakeholders to ensure that extractive sector beneficial ownership information is comprehensively and publicly disclosed for all companies that apply for or hold a participating interest in an oil, and or mining license or contract.
   2. The MSG is encouraged to work with DPR on its commitment of ensuring all applicants of oil and gas licenses disclose their beneficial owners at the application stage. An assessment of the comprehensiveness and reliability of this information should be integrated into the licensing procedures followed by DPR.
   3. To strengthen implementation, Nigeria is encouraged to follow up on the steps identified by stakeholders in the gap analysis undertaken in March 2021, and to continue reviewing the comprehensiveness and reliability of beneficial ownership disclosures by government and companies.
   4. The MSG is encouraged to review the comprehensiveness of publicly available information on legal owners from the online register of the CAC.
   5. NEITI may also wish to expand its review of beneficial ownership disclosures to other segments of the upstream extractive value chain, for instance through collection and disclosure of beneficial ownership information from extractive-sector service providers or commodity traders, to enable monitoring of adherence to local content provisions and to manage corruption and tax evasion risks.