Mainstreaming the EITI
COMMODITY TRADING TRANSPARENCY
What oil and gas data should be disclosed by companies
active in trading
EITI’s targeted efforts on commodity trading transparency
• 55 SOEs reporting in 35 EITI countries
• Targeted efforts in Albania, Cameroon, Chad, Cote
d’Ivoire, Ghana, Indonesia, Nigeria and Mauritania
• EITI working group on commodity trading transparency
• Key outcomes so far:
• More granular disclosures on oil sales using reporting
template
• Innovative reporting on buyer selection process
• Reporting on non-conventional trades (e.g. oil-backed loans)
• Findings and follow-up in country
EITI guidance for countries reporting on the sale of the state’s share of oil
EITI standard template for reporting on ‘first trades’ of oil
EITI’s targeted efforts on commodity trading transparency
EITI’s targeted efforts on commodity trading transparency
• Disclosures by buyers through EITI reporting in Albania,
Chad, Ghana, Iraq and Nigeria
• Some challenges identified: Administrative challenges
related to how data is recorded and identifying SOEs and
third parties acting on behalf of a government
• Some information may need to be disclosed by seller
(contract/invoice #, payment receipt date, etc.)
Commodity Traders vs. SOEs
• Clarity on the objectives is key
• Is the rationale for collecting data from traders just to
corroborate with data from SOEs?
• Adapted framework may be needed for reporting on oil,
gas and mineral sales by sellers and buyers
Work done by Nigeria EITI: Crude sales disclosures: 2015 Oil & Audit
• NEITI reports typically include information on cargo-by-cargo
lifting, bill of lading date, trading company, crude type, crude
volumes sold, unit price, crude value, LC number, pricing option
selected, API and Destination.
• Confirm that federation crude was sold to accredited customers,
correclty invoiced and payment made into JP Morgan.
• Match values from the sales with values swept into Federation
and cash call accounts
• Non-remittance of N490.5 billion from the sales of
domestic crude: Crude and product oil losses,
pipeline repairs and maintenance and subsidy
deduction.
• Pricing methodology was not consistently applied,
leading to a revenue shortage of $90.176 million.
• Inconsistent application of Central Bank exchange
rate leading to underpayment of N4.024 million
Some of the major findings
Lessons learned for disclosures by traders: Identity of Buyer
• NNPC annually publishes a list of approved buyers.
Disclosure of information by buyers could help to
confirmed that federation crude was sold to
accredited customers.
• Understanding more about the companies buying
crude can help to ascertain if they are
inexperienced “briefcase companies”.
• Middlemen who serve no commercial function
creates a marketplace with greater commercial,
reputational and legal risks for its legitimate
participants.
Beneficial ownership and PEPs
• NNPC awards crude oil term contract to local companies.
Beneficial ownership disclosure will show the real owners
behind the companies.
• Information on ownership and involvement by politically
exposed persons (PEPs) can expose risks of intermediaries
facilitating tax avoidance.
• Challenges: Different definitions of
beneficial ownership and PEPs, lack of
awareness and legal framework
mandating disclosures
Payment information
• Fees, charges and credits: Helps validate the actual
payment and compare with balance in the account.
• Invoice amount and sales amount: Establishes if there
are any variance
E.g TEMPO ENERGY NIGERIA LTD -
• Invoice value $47,612,248.33
• Sales value $44,763,749,59
• Difference - $2,848,498.73
Source: NEITI 2015 Oil and Gas Audit Template
• Payment Account: shows that payments are lodged
in the appropriate account. NB: Only the name of the
bank.
• Bill of Lading date and payment due date: Helps
establish when the sale took place, important if
prices change frequently.
Payment information
• Receipts date: Shows adherence to
payment due date, although may need
to be disclosed by seller.
• Moving towards systematic disclosures of sales data
by implementing countries/SOEs and buyers
• Updating disclosure requirements and guidance
based on lessons learned
• Addressing reporting challenges faced by buyers
• Results of targeted efforts to be
launched in March 2019
Next steps for EITI
www.eiti.org@EITIorg
Thank you!
Ines Schjolberg Marques: [email protected]
Murjanatu Gamawa: [email protected]