Nigeria stands at the forefront of those countries implementing the EITI. The Nigeria Extractive Industries Transparency Initiative (NEITI) is recognized internationally as the benchmark by which such nations are measured in terms of securing transparent reporting of financial transactions within the oil and gas sectors. This landmark reform initiative, launched in 2004, has yielded the first-ever comprehensive audits of Nigeria’s oil and gas sectors.
The audits represent a key pillar in Nigeria’s ongoing reform of its energy sector, thereby increasing the integrity of practices by industry participants, assessing compliance with Nigerian law and ensuring that the Federal Government of Nigeria has received full and fair financial value from the exploitation of its natural wealth. The audits met the global EITI standard and international auditing standards, have come to define the international benchmark for integrity and reliability (i.e., by achieving a level of 99.99% financial reconciliation of data audited), and have involved persistent and meaningful participation by all stakeholders, including Nigeria’s Civil Society.
The audits were designed in 2004 by the NEITI Secretariat and National Stakeholders Working Group with the counsel of their international advisor, Goldwyn International Strategies. Through the conduct of an international competitive tender for auditors and consultants to fulfill the audit tasking in 2005, the NSWG of the NEITI retained the Hart Nurse Ltd (Chartered Accountants, England & Wales), and its subcontracted auditor, S.S. Afemikhe & Co (Chartered Accountants, Nigeria). The final reports for the 1999-2004 audits were made available in late 2006, and are available to the public at www.neiti.org.
The audits have recently been extended to cover activities within Nigeria’s oil and gas sectors for calendar year 2005, with the team of Hart Nurse Ltd. and S.S. Afemikhe & Co providing the relevant auditing and consulting services.
The NEITI Secretariat and National Stakeholders Working Group are now seeking to further extend the breadth and depth of their efforts to enhance transparency and integrity in Nigeria’s oil and gas sectors. Two separate, but related, initiatives are currently being tendered:
- The Financial & Physical Audit for calendar year 2006 (hereinafter, the 2006 Audit) represents a continuation of the NSWG’s audits covering fiscal years 1999 through 2005, as referenced above. The purpose of tendering for the forthcoming phase of this audit stream is to assess qualified competitive providers which may be able to provide such services including utilization of current methodologies for executing such audits in a manner meeting international audit standards, the global EITI standard, and the high standards already established for such audits by the NEITI. This tender also provides an open competitive opportunity to assess the qualifications of international and Nigerian personnel to provide such services, as well as currently available pricing for rendering such services.
- The Value-for-Money Audit (hereinafter, VFM Audit) will audit the terms, procedures, and practices associated with joint ventures and production sharing contracts between Nigeria and commercial oil companies. The objective of this audit is to ensure that: (i) The financial accounting pertaining to such JVs and PSCs fairly represents the actual costs incurred in exploring, extracting, and transporting oil, among other such aspects of oil production in Nigeria; and (ii) Such costs associated with oil production in Nigeria are reasonably consistent with the costs associated with comparable international operations.