Sections
Poll: Power pledge
Is Mr. President's promise of additional 6,000 MW of electricity in 18 months achievable?
NNPC, other oil companies weak in revenue transparency
Font size:
The Nigerian National Petroleum Corporation (NNPC) has been adjudged weak on three of the four indices for measuring transparency among national and international oil companies.
Payment disclosure, anti-corruption programmes and regulatory and procurement procedures disclosure are three of the transparency indices where NNPC was adjudged weak. The fourth index, reporting on operations, is the only one where it was ranked in the middle.
Transparency International (TI), the Berlin-based anti corruption group, gave the verdict in its 2008 report on revenue transparency of oil and gas companies. Only the China National Petroleum Corporation (CNPC) which figured in the ‘low’ rung of all metrics fared worse than the NNPC in the report, which covered 42 leading oil and gas companies in 21 countries.
One of TI’s key findings is that revenue transparency is not yet a common practice in the industry. The survey measured the oil companies on four metrics of disclosure: revenue transparency, operations, anti corruption programmes and regulatory and procurement procedures.
An aspect of the report that reinforces long-held views on the status of the Nigerian oil industry is the finding that most oil companies are not reporting what they pay to host countries for the right to mine natural resources.
Similarly, the report notes that regulations of countries that host international oil companies, including Nigeria are too lax to ensure transparency. “Good practice in revenue transparency starts at home, where regulation has a strong influence on current company revenue transparency practices. If there are more demanding regulations at home, companies are more likely to report consistently in all their countries of operation. National Oil Companies (NOC) behaviour at home and abroad is different, further suggesting that host regulations are not enough,” the report stated.
On performance, the report noted that NOCs are weakest at reporting payments and in implementing anti corruption programmes while the International Oil Companies (IOCs) are weakest in reporting on payments to host governments even as they have better results for reporting on their operations and anti-corruption programmes.
According to the report which was released yesterday, among IOCs operating in Nigeria, Shell, scored “very high above country average scores” on disclosure. It was followed by Total which scored “above country average scores.” Chevron, Conocophillips and Eni are performing below Nigerian standards with “below country average scores” while ExxonMobil brings up the rear by performing “very below country average scores.”
Building on a 2005 report by Save the Children UK, the TI report noted that oil companies can do better given that there is a wide variation in the level of revenue transparency where there were some high flyers.
Regulations such as stock exchange listing regulations, accounting standards or reforms based on the Extractive Industries Transparency Initiative (EITI), the report said, have potentials for helping companies apply standards of disclosure across countries.
This can level the playing field even if they currently have a limited impact.
The report also found that disclosure of information on revenue transparency is hindered by diverse formats of reporting that are difficult to obtain, interpret and compare across companies and countries.
Among the recipes given by the TI report to improve the level of reporting transparency in IOCs and NOCs are:
*Oil and gas companies should proactively report in all areas relevant to revenue transparency on a country-by-country basis. This disclosure would provide civil society and other stakeholders with the information they need to hold governments to account for how revenues from extractive industries are spent.
*Home governments and appropriate regulatory agencies should urgently consider introducing mandatory revenue transparency reporting for the operations of companies at home and abroad.
*Governments from oil and gas producing countries should urgently introduce regulations that require all companies operating in their territories to make public all information relevant to revenue transparency.
*Regulatory agencies and companies should improve the accessibility, comprehensiveness and comparability of reporting on all areas of revenue transparency by adopting a uniform global reporting standard.
The report analyses reporting practices in three key areas for IOCs and a fourth for NOCs on payments to host governments on a country-by-country basis, especially in the areas of royalties, taxes, fees; operations on a country-by-country basis with emphasis on publicly making available information on scale of operations, contracts, production volumes as well as anti-corruption programmes.
The project is part of a growing international multi-stakeholder movement of governments, companies, investors and civil society that seeks to promote improvements in transparency and accountability in natural resource revenue management.
Participants of this movement recognise that revenue transparency improves broader governance, strengthens the investment climate in which businesses operate, and provides a necessary condition for achieving sustainable development. In the view of TI, it is a key step to eliminating corruption.
The project aims to raise awareness among all stakeholders of the various steps required for revenue transparency to be achieved, sustained and mainstreamed. To this end, it has three specific objectives of measuring revenue transparency performance and diagnose areas for improvement; to develop broad standards for revenue transparency and to support the use of the revenue transparency standards and measures of performance by companies, rating agencies, investors, government regulators and civil society.
Transparency International (TI), the Berlin-based anti corruption group, gave the verdict in its 2008 report on revenue transparency of oil and gas companies. Only the China National Petroleum Corporation (CNPC) which figured in the ‘low’ rung of all metrics fared worse than the NNPC in the report, which covered 42 leading oil and gas companies in 21 countries.
One of TI’s key findings is that revenue transparency is not yet a common practice in the industry. The survey measured the oil companies on four metrics of disclosure: revenue transparency, operations, anti corruption programmes and regulatory and procurement procedures.
An aspect of the report that reinforces long-held views on the status of the Nigerian oil industry is the finding that most oil companies are not reporting what they pay to host countries for the right to mine natural resources.
Similarly, the report notes that regulations of countries that host international oil companies, including Nigeria are too lax to ensure transparency. “Good practice in revenue transparency starts at home, where regulation has a strong influence on current company revenue transparency practices. If there are more demanding regulations at home, companies are more likely to report consistently in all their countries of operation. National Oil Companies (NOC) behaviour at home and abroad is different, further suggesting that host regulations are not enough,” the report stated.
On performance, the report noted that NOCs are weakest at reporting payments and in implementing anti corruption programmes while the International Oil Companies (IOCs) are weakest in reporting on payments to host governments even as they have better results for reporting on their operations and anti-corruption programmes.
According to the report which was released yesterday, among IOCs operating in Nigeria, Shell, scored “very high above country average scores” on disclosure. It was followed by Total which scored “above country average scores.” Chevron, Conocophillips and Eni are performing below Nigerian standards with “below country average scores” while ExxonMobil brings up the rear by performing “very below country average scores.”
Building on a 2005 report by Save the Children UK, the TI report noted that oil companies can do better given that there is a wide variation in the level of revenue transparency where there were some high flyers.
Regulations such as stock exchange listing regulations, accounting standards or reforms based on the Extractive Industries Transparency Initiative (EITI), the report said, have potentials for helping companies apply standards of disclosure across countries.
This can level the playing field even if they currently have a limited impact.
The report also found that disclosure of information on revenue transparency is hindered by diverse formats of reporting that are difficult to obtain, interpret and compare across companies and countries.
Among the recipes given by the TI report to improve the level of reporting transparency in IOCs and NOCs are:
*Oil and gas companies should proactively report in all areas relevant to revenue transparency on a country-by-country basis. This disclosure would provide civil society and other stakeholders with the information they need to hold governments to account for how revenues from extractive industries are spent.
*Home governments and appropriate regulatory agencies should urgently consider introducing mandatory revenue transparency reporting for the operations of companies at home and abroad.
*Governments from oil and gas producing countries should urgently introduce regulations that require all companies operating in their territories to make public all information relevant to revenue transparency.
*Regulatory agencies and companies should improve the accessibility, comprehensiveness and comparability of reporting on all areas of revenue transparency by adopting a uniform global reporting standard.
The report analyses reporting practices in three key areas for IOCs and a fourth for NOCs on payments to host governments on a country-by-country basis, especially in the areas of royalties, taxes, fees; operations on a country-by-country basis with emphasis on publicly making available information on scale of operations, contracts, production volumes as well as anti-corruption programmes.
The project is part of a growing international multi-stakeholder movement of governments, companies, investors and civil society that seeks to promote improvements in transparency and accountability in natural resource revenue management.
Participants of this movement recognise that revenue transparency improves broader governance, strengthens the investment climate in which businesses operate, and provides a necessary condition for achieving sustainable development. In the view of TI, it is a key step to eliminating corruption.
The project aims to raise awareness among all stakeholders of the various steps required for revenue transparency to be achieved, sustained and mainstreamed. To this end, it has three specific objectives of measuring revenue transparency performance and diagnose areas for improvement; to develop broad standards for revenue transparency and to support the use of the revenue transparency standards and measures of performance by companies, rating agencies, investors, government regulators and civil society.
Add to:
del.icio.us |
Digg
del.icio.us |
Digg
Email to a friend
Print version
Plain textRate this article
Comments ( posted):
Post your comment