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Nigerian transparency initiative fizzles out

NIGERIA's Extractive Industries Transparency Initiative (NEITI) was once touted as a programme that would play a crucial role in eliminating corruption and clean up murky dealings in the country's energy industry. Instead, a new study finds, it has proved largely ineffective on both counts.

NEITI was one of the flagship programmes of the international EITI, so its failure could be regarded as a blow for the initiative in general, although Nigeria poses its own unique set of circumstances.

The report, published by think tank Chatham House, called Nigeria's Extractive Industries Transparency Initiative: Just a Glorious Audit? does highlight what it calls the "shining success" of audit reports on 1999-2004 oil-sector accounts. These were made publicly available and contributed to significantly better transparency in Nigeria's oil industry. "Nothing remotely like this has been done before, let alone published," author Nicholas Shaxon says.

However, changing government priorities relegated NEITI's importance. Then-president, Olesegun Obasanjo, focused instead on measures aimed at helping him win a third term in office; he stood down in 2007, before the election that brought President Umaru Yar'Adua to power. Although an audit was done for 2005, it was not published until August 2009 and there seems little sign of interest in the initiative reviving.

"Measured against EITI's and NEITI's broader goals of fostering better governance and accountability, the initiative has not shown impressive results and so far it is hard to see how better transparency has led, in turn, to better governance in Nigeria," the report says.

While some were expecting the audits to reveal malpractice involving oil deals, instead there seemed to be only "tiny discrepancies" in balancing what oil companies paid to the government and what appeared in government accounts.

Chatham House says that while EITI, as an international initiative, tends to look at financial flows between oil companies and host governments, it fails to take proper account of other costs, such as money paid to contractors, sub-contractors and those providing other items and services, such as helicopters, drillships, pipes, catering and offices.

"Unfortunately, it is inside the black box of 'costs' that much of the mischief lies. So EITI, in accounting terms, tends to ignore the most important part of the problem," the report says. "NEITI – by going further than EITI in many respects – has the potential to address this central deficiency. But it has not ventured very far in this direction yet."

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