January 5, 2015 | Filed under: Exclusive,main story | Author: PATRICK ATUANYA

More light is set to be shed on Nigeria’s murky oil sector as a new anti-corruption rule comes into force this week in the U.K.

The UK is the first member state to implement the EU Directive on Extractive Industries, which requires detailed disclosure of a range of payments, including taxes, royalties and dividends made to governments on a country and project basis as of January 1, 2015.

Directors at UK oil and gas companies could face criminal conviction and unlimited fines if they fail to properly disclose payments made to overseas governments, under the rules, which is part of a pan-European drive for greater transparency of dealings between operators in extractive industries and foreign governments.

Other EU member states are set to follow the UK in July.

The new laws would be a welcome development in Nigeria whose NNPC is adjudged to have the poorest transparency record out of 44 national and international energy companies, according to Transparency International and Revenue Watch Institute.

Last year, the former Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi, alleged that up to $20 billion in oil revenues were ‘missing’.

A 146 – page report by Nuhu Ribadu, the former head of the anti-corruption agency EFCC, covering the years 2002 to 2012, released in 2013 concluded that oil majors, Shell, Total and Eni, made bumper profits from undercutting Nigeria on gas prices.

“The estimated cumulative of the deficit between value obtainable on the international market and what is currently being obtained from NLNG, over the 10 year period, amounts to approximately $29 billion,” the report said.

The report also alleges that NNPC had short-changed the Nigerian treasury of billions dollars over the last 10 years by selling crude oil and gas to itself below market rates.

The rollout of tougher sanctions against companies that fail to abide by transparency requirements comes weeks after the UK was accepted as a candidate country for the Extractive Industries Transparency Initiative (EITI).

States which belong to that the Oslo-based initiative commit themselves to audited scrutiny of how they disperse funds gained from the licensing of oil and other extractive concessions to their citizens.

The EITI argues the tightening of transparency rules allows it to “name and shame” host countries that fail to use concession money to benefit their populations.

The Nigerian arm of EITI or Nigerian Extractive Industry Transparency Initiative (NEITI) in its audit of the petroleum industry from 2009 – 2011 found that the (NNPC failed to remit  $4.84 billion dividend payments over a two year period from the Nigeria Liquefied Natural Gas (NLNG) to the Federation Account.

That was uncovered by comparing the monies reported to have been paid to its government and its agencies and the funds Nigeria reported receiving.

In November, commodities trader, Trafigura became the latest company to back the EITI initiative. Other supporting companies include BP, Royal Dutch Shell, BHP Billiton, ExxonMobil, Glencore and Chevron.

Nigeria is Africa’s largest crude oil exporter, shipping more than 2 million barrels per day (bpd), and is also home to the world’s ninth biggest gas reserves and one of the world’s largest LNG export terminals.

PATRICK ATUANYA

Source: http://businessdayonline.com/2015/01/new-european-law-may-expose-nigerias-corrupt-oil-deals/