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NEITI

NEITI

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Published by adeoye1042
This paper reviews the disclosure requirements for US oil and gas companies in the new Dodd - Frank Wall Street Reform & Consumer Protection Act and the potential impact of these requirements on the extractive industries transparency initiative in Nigeria.
This paper reviews the disclosure requirements for US oil and gas companies in the new Dodd - Frank Wall Street Reform & Consumer Protection Act and the potential impact of these requirements on the extractive industries transparency initiative in Nigeria.

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Categories:Types, Research, Law
Published by: adeoye1042 on Jul 30, 2010
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07/02/2012

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NEITI
 
&
 
THE
 
DODD
-
FRANK 
 
WALL
 
STREET
 
REFORM
 
 AND
 
CONSUMER
 
PROTECTION
 
 ACT
 
(HR
 
4173)
 
2010
 
By Aderemi Ogunbanjo An interesting development in recent United States (“US”) financial reformlegislation is a disclosure obligation contained in amiscellaneousprovision of the Dodd-Frank Wall Street Reform and Consumer Protection Act which wassigned into law by President Obama on Wednesday, July 21, 2010. The Actwas approved by the US House of Representatives on June 30, 2010 and bythe Senate on July 15, 2010. According to section 1504 of the Act, titled “Disclosure of Payments by Resource Extraction Issuers”, “Not later than 270 days after the date of enactment of the Dodd-Frank WallStreet Reform and Consumer Protection Act, the Commission
1
shall issue finalrules that require each resource extraction issuer to include in an annualreport of the resource extraction issuer information relating to any paymentmade by the resource extraction issuer, a subsidiary of the resourceextraction issuer, or an entity under the control of the resource extractionissuer to a foreign government or the Federal Government for the purpose of the commercial development of oil, natural gas, or minerals,
2
including—(i)
 
the type and total amount of such payments made for each project of the resource extraction issuer relating to the commercial developmentof oil, natural gas, or minerals; and(ii)
 
the type and total amount of such payments made to eachgovernment.” 
1
 
 The US Securities and Exchange Commission (“SEC”).
 
2
 
 The term ‘commercial development of oil, natural gas, or minerals’ include ‘exploration, extraction, processing,export, and other significant actions relating to oil, natural gas, or minerals, or the acquisition of a license for any suchactivity.
 
 
The term ‘resource extraction issuer’ is defined as an issuer of securities thatis(i)
 
required to file an annual report with the SEC; and(ii)
 
engages in the commercial development of oil, natural gas, orminerals.
3
  As this provision also relates to payments made to foreign governments by asubsidiary or entity under the control of the issuer, the implication forNigeria is that all major payments made by IOCs whose parent companies areregarded as “issuers” or who are controlled by “issuers” to the Nigeriangovernment or its agencies to further the commercial development of oil,natural gas, or minerals would, after the issuance of the proposed final rules,be required to be included in the annual report of such companies to be filedwith SEC.This provision supports the Extractive Industries Transparency Initiative(EITI) which aims to strengthen governance by improving transparency andaccountability in the extractives sector.
4
 In 2007, Nigeria enacted theNigerian Extractive Industry Transparency Initiative (NEITI) Act 2007 as asubset of the global EITI aimed at following due process and achievingtransparency in payments by Extractive Industry companies to governmentsand government linked entities and in the revenues received and reported bythose governments and entities.
5
 In line with the objective of NEITI and the global EITI, the governmentthrough its oil and gas industry institutions and the NNPC is bound by theprinciples of the NEITI Act, 2007. Of particular relevance is one of thefunctions of the NEITI Act
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i.e., to “disseminate by way of publication of records, report or otherwise any information concerning the revenue received
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This automatically includes most of the major IOCs.
4
See the EITI website at http://eiti.org/eiti
5
See the NEITI Handbook on Transparency and Reform in the Oil, Gas and Solid Minerals Sector.
6
See Section3(h). 

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