EITI International Secretariat Validation of Nigeria Report on initial data collection and stakeholder consultation by the EITI International Secretariat 16 September 2016 2 Validation of Nigeria: Report on initial data collection and stakeholder consultation Abbreviations API American Petroleum Institute (measurement for heaviness crude) BEPS Base Erosion and Profit Shifting BO Beneficial Ownership Bpd Barrels Per Day BTU British Thermal Unit CAs Carry Agreements CAC Corporate Affairs Commission CBN Central Bank of Nigeria CIT Corporate Income Tax CNL Chevron Nigeria Limited COMD Crude Oil Marketing Division COSM Crude Oil Stock Management DCA Domestic Crude Allocation DMO Debt Management Office DPK Dual Purpose Kerosene DPR Department of Petroleum Resources DSS Department of State Services ECA Excess Crude Account ECOWAS Economic Community of West African States EDT Education Tax EFCC Economic and Financial Crimes Commission EOI Expression of Interest EITI Extractive Industries Transparency Initiative EU European Union FAAC Federal Account Allocation Committee FCT Federal Capital Territory FGN Federal Government of Nigeria FIRS Federal Inland Revenue Service FMF Federal Ministry of Finance FMPR Federal Ministry of Petroleum Resources FOB Free on Board GDP Gross Domestic Product IMF International Monetary Fund IOC International Oil Company IPP Independent Power Producer JDA Nigeria - São Tomé and Príncipe Joint Development Authority JDZ Nigeria - São Tomé and Príncipe Joint Development Zone JV Joint venture KRPC Kaduna Refinery and Petrochemical Company LGA Local Government Area LGC Local Government Council LNG Liquefied Natural Gas LPG Liquefied Petroleum Gas MCA Modified Carry Agreement MMBTU Million British Thermal Unit MOU Memorandum of Understanding MT Metric ton NAPIMS National Petroleum Investment Management Services 3 Validation of Nigeria: Report on initial data collection and stakeholder consultation NBS National Bureau of Statistics NCDA Nigerian Content Development Act NCDMB Nigerian Content Development and Monitoring Board NCS Nigeria Customs Service NDDC Niger Delta Development Commission NEITI Nigeria Extractive Industries Transparency Initiative NESREA National Environmental Standards and Regulations Agency NESS Nigerian Export Supervision Scheme NGC Nigerian Gas Company NIMASA Nigerian Maritime Administration and Safety Agency NIWA National Inland Waterways Authority NLNG Nigeria Liquefied Natural Gas NNPC Nigerian National Petroleum Corporation NPDC Nigerian Petroleum Development Company NSE Nigerian Stock Exchange NSIA Nigerian Sovereign Investment Authority OAuGF Office of the Auditor General of the Federation OECD Organisation for Economic So-operation and Development OEL Oil Exploration License OML Oil Mining License OPA Offshore Processing Agreement OPEC Organization of Petroleum Exporting Countries OPL Oil Prospecting License OPTS Oil Producers Trade Section OSP Official Selling Price PAYE Pay As You Earn PEP Politically Exposed Person PHRC Port Harcourt Refining Company PIB Petroleum Industry Bill PMS Premium Motor Spirit PPMC Pipelines and Product Marketing Company, ltd. PPPRA Petroleum Products Pricing and Regulatory Authority PPT Petroleum Profits Tax PRSTF Petroleum Revenue Special Task Force PSC Production Sharing Contract PSF Petroleum Support Fund RDP Reserve Development Project RP Realisable Price RPEA Refined Product Exchange Agreement SAA Strategic Alliance Agreement SC Service Contracts SPDC Shell Petroleum Development Company SIR Société Ivoirienne de Raffinage SRMF Sole Risk Marginal Field STP São Tomé e Príncipe SURE-P Subsidy Reinvestment Program TOR Terms of Reference TUPNI Total Upstream Nigeria Limited USD United States Dollar VAT Value Added Tax UN United Nations 4 Validation of Nigeria: Report on initial data collection and stakeholder consultation UNDP United Nations Development Programme WAGP West African Gas Pipeline WHT Withholding Tax WRPC Warri Refining and Petrochemicals Company 5 Validation of Nigeria: Report on initial data collection and stakeholder consultation Table of Contents Abbreviations ......................................................................................................................... 2 Executive Summary ................................................................................................................. 7 Introduction ........................................................................................................................... 13 Part I – MSG Oversight ........................................................................................................... 20 1. Oversight of the EITI process ................................................................................................................ 20 Government engagement in the EITI process (#1.1) ................................................................................. 20 Industry engagement in the EITI process (#1.2) ....................................................................................... 24 Civil society engagement in the EITI process (#1.3) ................................................................................. 28 MSG governance and functioning (#1.4).................................................................................................. 36 Workplan (#1.5)......................................................................................................................................... 50 Part II – EITI Disclosures .......................................................................................................... 56 2. Award of contracts and licenses ....................................................................................................... 56 Legal framework (#2.1) .............................................................................................................................. 57 License allocations (#2.2)........................................................................................................................... 61 Contract disclosures (#2.4) ........................................................................................................................ 71 Beneficial ownership disclosure (#2.5) ...................................................................................................... 74 3. Monitoring and production .............................................................................................................. 93 Overview of the extractive sector, including exploration activities (#3.1) ................................................ 93 Export data (#3.3).................................................................................................................................... 100 4. Revenue collection ............................................................................................................................ 104 Materiality (#4.1) .................................................................................................................................... 104 In-kind revenues (#4.2) ........................................................................................................................... 116 Barter and infrastructure transactions (#4.3) ......................................................................................... 124 Transport revenues (#4.4) ....................................................................................................................... 127 Transactions between SOEs and government (#4.5) .............................................................................. 129 Level of disaggregation (#4.7) ................................................................................................................. 133 Data timeliness (#4.8) ............................................................................................................................. 135 Data quality (#4.9) .................................................................................................................................. 138 5. Revenue management and distribution ........................................................................................ 161 Distribution of revenues (#5.1) ............................................................................................................... 161 Sub-national transfers (#5.2) .................................................................................................................. 163 Additional information on revenue management and expenditures (#5.3) ............................................ 166 6. Social and economic spending ........................................................................................................ 168 Social expenditures (#6.1) ....................................................................................................................... 169 SOE quasi fiscal expenditures (#6.2) ...................................................................................................... 170 Contribution of the extractive sector to the economy (#6.3) ................................................................... 173 Part III – Outcomes and Impact........................................................................................... 178 7. Outcomes and Impact .................................................................................................................... 178 6 Validation of Nigeria: Report on initial data collection and