Overview and role of the EITI
Nigeria is world’s 12th largest producer of oil and the largest in Africa. It also holds the largest natural gas reserves on the continent. The oil and gas sector plays a significant role in the economy, contributing about 65% of government revenue and over 85% of total exports. Nigeria also has a largely underdeveloped mining sector, which makes up less than 1% of the country’s GDP.
However, the extractive sector has had a limited impact on socio-economic development in the past, in part due to weak governance and corruption. In this context, EITI implementation has helped to improve transparency of the sector’s management and highlight areas in need of reform. In August 2021, Nigeria enacted the Petroleum Industry Act (PIA), thereby introducing new arrangements for the governance, administration and management of the sector, including stronger oversight of host communities.
Economic contribution of the extractive industries
- to government revenues
- to exports
- % GDP
- % to employment
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- Nigeria EITI, through several recommendations from its reports and MSG dialogue, has supported and sustained national debate contributed to the enactment of the Petroleum Industry Act of 2021.
- A 2017 NEITI policy brief – which highlighted that over USD 20 billion government revenue from the Nigerian National Petroleum Corporation (NNPC) was not remitted – generated a national dialogue. NEITI’s regular policy briefs, occasional papers and quarterly reviews have informed policy and public debate on aspects of Nigeria’s extractive sector.
- A 2019 financial modelling study, conducted by NEITI and OpenOil estimated a revenue loss ranging between USD 16 billion to 28 billion due to the government not triggering a 15-year review of the 1993 PSCs. The findings of the study contributed to a review of the terms and royalty rates of Product Sharing Contracts (PSCs) in 2019.
- In 2019, NEITI organised a national dialogue on the revenue loss of about USD 42 billion to oil theft over a period of 10 years.
Nigeria’s constitution vests the ownership of the country’s natural resources with its government. The oil and gas industry is governed by the Petroleum Industry Act of 2021 which sets out the legal, regulatory and fiscal framework for the sector. The sector is primarily regulated by the Ministry of Petroleum Resources, the Nigerian Petroleum Upstream Regulatory Commission, and the Nigerian Midstream and Downstream Petroleum Regulator Authority.
The mining sector is governed by the Nigerian Minerals and Mining Act 2007. The sector is primarily regulated by the Ministry of Mines and Steel Development and the Mining Cadastre Office.
Nigeria’s Ministry of Petroleum Resources grants petroleum prospecting licenses and mining leases in accordance with regulatory guidelines. The Nigerian Petroleum Upstream Regulatory Commission is responsible for granting exploration licenses. The Petroleum Industry Act mandates the sector regulators to establish and maintain a public register of leases, licenses, permits and authorisations.
In the mining sector, the Mining Cadastre Office is responsible for granting licenses and for maintaining a record of all license applications. Licenses are granted according to the Guidelines on Mineral Titles Applications.
In 2020, the government amended the Companies and Allied Matters Act (CAMA), which provides a legal framework for collecting beneficial information from oil, gas and mining companies and for establishing a beneficial ownership register. NEITI is coordinating with regulatory agencies to strengthen the collection of beneficial ownership data. It is also working with the financial intelligence unit to improve data verification and is establishing a committee to advance the process of implementing ownership transparency.
In 2019, NEITI established a register containing ownership data for extractive companies covered by its 2012-2018 audit reports. In 2021, Nigeria became a participant in Opening Extractives, a global five-year programme that aims to improve the availability and use of beneficial ownership data.
Nigeria’s Constitution stipulates that all extractive revenues accruing to the government should be allocated as follows:
- 52.68% to the Federal Government;
- 26.72% to the states;
- 20.60% to the local government areas.
The Constitution also assigns 13% of oil revenues to derivation funds for the benefit of oil producing regions. NEITI previously examined the allocations, deductions and use of funds for selected states and government agencies from 2007 to 2016.
The NEITI Act of 2007 establishes NEITI as an agency of government under the Presidency. The Nigeria Multi-Stakeholder Group (MSG), also called the National Stakeholders Working Group (NSWG), serves as the board of NEITI. It is chaired by Mr Olusegun Adeyemi Adekunle, a retired Permanent Secretary in the Office of the Secretary to the Government of the Federation.
Government announces commitment to join the EITI
Candidature application is submitted
Multi-stakeholder group is formed
1999-2004 (O&G) Reports published
2005 (O&G) Reports published
First validation completed – designated Compliant Country
2006 -2008 (O&G) Reports published
2009-2011 (O&G) Reports published
2007 -2010 (Solid Minerals) Reports published
2011 (Solid Minerals) Reports published
2012 (Solid Minerals) Reports published
2012 (O&G) Report published
2013 (O&G) Report published
2013 (Solid Minerals) Reports published
2014 (Solid Minerals) Reports published
2014 (O&G) Report published
First validation (under 2016 EITI Standard) found to have made ‘meaningful progress’.
2015 (Solid Minerals) Reports published
2015 (O&G) Report published
2016 (Solid Minerals) Reports published
2016 (O&G) Report published
2017 (Solid Minerals) Reports published
2017 (O&G) Report published
2018 (O&G) Report published
2018 (Solid Minerals) Reports published
First validation of (under 2019 Standard) of Requirement 2.5 on Beneficial Ownership – found to have made ‘meaningful progress’.
2019 (Solid Minerals) Reports published
Next Validation is expected to begin
Next EITI Reports expected to be published
Nigeria was found to have made satisfactory progress in implementing the 2016 EITI Standard in February 2019, following its second Validation. Nigeria fully addressed the corrective actions identified in its previous Validation. The next Validation is expected to commence in October 2022.