The Nigerian National Petroleum Corporation (NNPC), has entered into partnership with the Extractive Industries Transparency Initiative (EITI) in a bid to promote more transparency and accountability in the Nigerian oil industry.
This is aimed at ensuring that Nigerians benefit from the wealth derived from their natural resource.
The partnership was announced Tuesday morning by EITI and NNPC in a joint statement. According to the statement, the NNPC joins over 65 extractive companies, state-owned enterprises (SOEs), commodity traders, financial institutions, and industry partners committing to ensuring global standard to promote the open and accountable management of oil, gas, and mineral resources
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— NNPC Group (@NNPCgroup) August 18, 2020
EITI Chief, Rt Hon. Helen Clark, praised the partnership, saying that the NNPC is an important institution in Nigeria’s oil-based economy. She also noted that the partnership will be a “welcome step in the NNPC’s journey toward achieving greater transparency and to help ensure that Nigeria’s citizens benefit from their natural resource wealth.”
Finance Minister, Zainab Ahmed, was also quoted in the statement to have said that improving transparency in Nigeria’s oil industry will contribute positively to the country’s domestic efforts to mobilize resources.
Also commenting on the partnership, NNPC’s GMD, Mele Kyari said “becoming an EITI supporting company aligns with NNPC’s corporate vision and principles of transparency, accountability and performance excellence. Our partnership with NEITI and EITI strengthens our commitment towards commodity trading transparency, contract transparency and systematic disclosure of revenues and payments. We are on a journey towards greater transparency and look forward to deepening our collaboration with the EITI to further this work.”
EITI said the partnership demonstrates NNPC’s commitment to becoming a more transparent resource company. Compliance to EITI standards would enable NNPC reach its targets on transparency and accountability.
The areas where both parties are expected to work on transparency include revenues and payments to government, contracts governing petroleum exploration and production, and consolidated group-level financial statements. A good example of such is Qatar Petroleum’s partnership with EITI which has seen the Gulf state-owned company publish its annual and sustainability report for the first time.
The EITI Standard requires the disclosure of information along the extractive industry value chain, from the point of extraction to how revenues make their way through the government, and how they benefit the public. By doing so, the EITI seeks to strengthen public and corporate governance, promote understanding of natural resource management, and provide the data to inform reforms for greater transparency and accountability in the extractive sector.
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Recall that the NNPC recently published its audited financial reports, which drew public backlash especially in view of revelations of its loss-making yet costly refineries. Joining the EITI global standards, which promotes open and accountable management of extractive resources, would enable the NNPC ensure accountability to Nigerians on its operations through its regular publications of activities.
FG committed to ending estimated electricity billing – Deputy Senate President
The Deputy Senate President has said that the FG is committed to increasing economic productivity through power.
The Deputy Senate President, Ovie Omo-Agege has assured Nigerians that the federal government is committed to ending the era of estimated electricity billing, citing the mass metering programme initiated by the government.
The Senator disclosed this at the breaking ceremony of the Power Sub-Station in Orogun constructed by Niger Delta Power Holding Company (NDPHC) and National Integrated Power Project (NIPP), Ughellli North Local Government Area of Delta, on Saturday.
What the Senator said about ending mass metering
“I remind the Benin Electricity Distribution Company (BEDC) of its obligation to customers and the government regarding the mass metering initiative of the Federal Government aimed at ending the era of estimated billing syndrome,” he said.
“That is what President Muhammadu Buhari and members of the National Assembly want.
All over the world, you pay for the energy you consume. The only obligation government has is to provide the enabling environment for it to be made available,” Omo-Agege said.
He disclosed that the FG will introduce more power-related policies when the implementation of the 2021 budget begins, as the FG is committed to increasing economic productivity through power.
“The objective has been to ensure that the number of people who use modern energy should increase to reduce social cost than to increase social benefits. The establishment of this power sub-station is one of the several initiatives of this administration aimed at addressing the energy poverty in our nation,” he added.
What you should know
Recall Nairametrics reported in March that the Central Bank of Nigeria (CBN) has disbursed N123.34 billion to Distribution Companies (DisCos) to boost electricity supply in the country for the procurement of meters and other equipment needed to improve power.
CBN disbursed N33.45 billion to nine DisCos for the procurement of 605,852 meters, while N89.89 billion was disbursed under the Nigerian Electricity Market Stabilisation Facility (NEMSF 2) to 11 DisCos to improve electricity supply in the country.
What FGN Free Meter Program means for the power sector
Without effective penalties for erring DisCos and consumers, progress may still remain very slow.
According to news reports, the Minister of Power, Mamman Saleh on Wednesday said the distribution of the four million free electricity prepaid meters pledged by the Central Bank of Nigeria would soon begin across the country.
According to him, the government is wrapping up the distribution of its initial one million meters, which he labelled phase zero, and would soon begin the distribution of the four million sponsored by CBN, which he tagged phase two. He also noted that the Federal Executive Council approved N3bn for the execution of six major electricity projects in the country to upgrade Nigeria’s electricity facilities and improve power supply across the country.
Ineffective metering remains a major drawback to the success of power sector reforms in Nigeria. While some consumers avoid paying for power consumed through meter bypass, some other consumers are made to pay for what they have not consumed through estimated billing by DisCos.
DisCos have been largely unsuccessful with metering their customers.
As far as inadequate metering is concerned, DisCos over time, have used this situation to their advantage via estimated billings. It appears that fully metering customers are currently being viewed as a disincentive, given that estimated bills can easily be manipulated.
According to a report by the Nigerian Electricity Regulatory Commission (NERC), only 4,234,759 (40.27%) of the total customer population of 10,516,090 were metered as of 30 June 2020. Clearly, this validates the widely held view that there are a wide number of customers on estimated billing which gives room for illegal connection to the networks and in turn corrupt practices. NERC further revealed that only three out of 11 Electricity Distribution Companies in the country had metered more than 50% of electricity customers under their coverage areas as of June 2020.
Effective metering in our view is one step ahead in solving the myriad of problems embattling the Nigerian power sector. Though supposed to be unpaid for, many customers in a bid to avoid the bureaucracy associated with getting meters have paid to get their own meters. We believe the provision of meters to all end-use customers will go a long way in ameliorating the liquidity squeeze in the power sector whilst also providing cashflow to the DisCos for investment in equipment needed to evacuate unused electricity to consumers nationwide.
We laud the FG’s efforts at distributing meters freely to end-users, but we note that without effective penalties for erring DisCos and consumers, progress may still remain very slow.
CSL Stockbrokers Limited, Lagos (CSLS) is a wholly owned subsidiary of FCMB Group Plc and is regulated by the Securities and Exchange Commission, Nigeria. CSLS is a member of the Nigerian Stock Exchange.
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