commodity trading transparency - oecd _commodity... · 2019-01-14 · eiti’s targeted efforts on...
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Mainstreaming the EITI
COMMODITY TRADING TRANSPARENCY
What oil and gas data should be disclosed by companies
active in trading
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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
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EITI guidance for countries reporting on the sale of the state’s share of oil
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EITI standard template for reporting on ‘first trades’ of oil
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EITI’s targeted efforts on commodity trading transparency
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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.)
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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
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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
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• 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
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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.
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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
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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
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• 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.
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• 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
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www.eiti.org@EITIorg
Thank you!
Ines Schjolberg Marques: [email protected]
Murjanatu Gamawa: [email protected]