The Nigeria Natural Resource Charter (NNRC) launched its flagship Benchmarking Exercise Report (BER) which has become the most incisive, well researched document on developments in Nigeria’s oil and gas sector. The Report which was presented to the public during the Launch and Policy Dialogue hosted by the NNRC in Abuja on the 15th of February 2018 at an event attended by public sector stakeholders, the media and a cross section of the academia, revealed that the Nigerian oil and gas sector has not made appreciable progress towards imbibing international best practices and creating a more conducive operational environment. The 2017 BER was launched through a joint presentation by members of the Expert Advisory Panel of the Nigeria Natural Resource Charter (NNRC) such as Prof. Ode Ojowu, Prof. Akpan Ekpo, Mrs. Ronke Onadeko, Dr. Otive Igbuzor, Dr Ukoha Ukiwo and Ms. Tengi George-Ikoli, Programme Coordinator, NNRC, along with NNRC’s research partners from the Centre for Public Policy Alternatives (CPPA); Centre for the Study of the Economies of Africa (CSEA); Centre for Social Justice (CSJ); Civil Society Legislative Advocacy (CISLAC) and Social Action. The Report which adopted the traffic light scoring system shows that while there are marginal improvements with 10 precepts recording an average performance with an ‘Amber’ on its scorecard, Precept 5 and 6 remain ‘Red’; performing poorly, thus the need for urgent interventions in those two areas. However, analysts noted that despite the marginal improvements made, there are many more gaps and areas for reform identified in the BER which must be addressed. Understanding the gaps is the first step to improving petroleum sector governance. The NNRC is eager for relevant agencies and organisations to collectively address them and monitor the details of implementation for the benefit of the Nigerian people. Accordingly, a key element of the benchmarking exercise is improving access to information for all stakeholders operating in the oil and gas sector, beginning with the dissemination of the findings from the BER. Engaging stakeholders on the BER will provide government with reform options necessary to improve its governance processes, while civil society and media can use it as a tool to assess the government’s implementation of proposed reforms and holding it accountable. A summary of the key findings of the Report shows that on Precept 1, which deals with securing the greatest benefit for citizens through an inclusive and comprehensive national strategy, clear legal framework and competent institutions, Nigeria’s performance was average. The Report reports that Nigeria’s resource strategy was strengthened in 2017 through the National Oil and Gas Policies approved by the FEC even though the law is yet to be implemented. Precept 2 requires decision makers to be accountable to an informed public. The findings show that efforts have been made to improve transparency and accountability of public institutions as instruments to track public spending are being put in place. Precept 3 enjoins government to encourage efficient exploration and production operations, and allocate rights transparently. The Report discovers that laws, policies and practices reveal absence of strategic impact assessment and poor disclosure of exploration and licensing information. Precept 4 posits that tax regimes and contractual terms should enable the government to realize the full value of its resources consistent with attracting necessary investment. The Reports noted that fiscal regimes remain unfavourable to Nigeria with IOC’s benefitting more even as the FEC has approved the National Tax Policy but taxes in the sector has remained complex with multiple agencies saddled with collecting diverse types of taxes. It posits that the passage of the Petroleum Industry Fiscal Bill will improve the fiscal regime; potentially increasing the government’s take and ensuring increased rate of return on investments. Precept 5 proposes government’s pursue opportunities for local benefits, and account for, mitigate and offset the environmental and social costs of resource extraction projects. The findings show there is an absence of meaningful participation by affected communities and the negative effects of extraction outweigh the benefits to the affected communities. Precept 6 requires nationally owned companies to be accountable, with well defined mandates and an objective of commercial efficiency. The Report identifies a muddling of NNPC’s business roles with its non-commercial and auxiliary regulatory functions. Moreso, the commercial decisions and operational activities of the Corporation are still subject to political interferences. Precept 7 urges the government to invest revenues to achieve optimal and equitable outcomes, for current and future generations. The Report found that the share of the recurrent expenditure remains disproportionately high while capital expenditure and net financial accumulation are experiencing declines. Precept 8 which examines government stabilize expenditure mechanisms suggests that Nigeria may have avoided the shocks to its economy if effective mechanisms had been established. The Sovereign Wealth Fund, inspite of being well managed is not adequately funded to mitigate expenditure shortfalls and the Excess Crude Account has no legal backing. Precept 9 expects the government to use revenues as an opportunity to increase the efficiency of public spending at the national and sub-national levels, the Report discovers that while more MDA’s have become Treasury Single Account (TSA) compliant, the budget has been without any specific calendar as the 1999 FRA stipulated. Precept 10 enjoins government to facilitate private sector investments to diversify the economy and to engage in the extractive industry. The Report notes that there is no appreciable ease of doing business over the last couple of years even though government is taking steps to ameliorate this situation. Precept 11 highlights the roles of multinational companies in committing to the highest environmental, social and human rights standards, and to sustainable development. The Report finds that while regulations mandating disclosures of contract agreements between IOCs and government are not fully adhered to, the companies have taken steps to engage with host communities and contribute to national development. Precept 12 calls on governments and international organizations to promote an upward harmonization of standards to support sustainable development. The Report notes that the repeal of the Frank-Dodds Acts seems to have eclipsed the positive development from Europe where regulations aimed at increased extractive sector disclosures has gained traction. According to the Report, there are established legal and institutional frameworks for the monitoring of operations of companies during each stage of the project life-cycle. At the moment, it stated that the regulatory authorities, especially the Department of Petroleum Resources (DPR), do not have sufficient capacity to verify all the various types of geological, geophysical and technical data periodically reported by the operating companies. It, however, noted that the responsible institutions should be strengthened to enhance their effectiveness. “The law stipulates that a Progress Report is submitted within 21 days after the end of each month through the Director, Petroleum Resources and Director of Geological Survey. Other reports are due every quarter and two months after the end of each calendar year, respectively.“This way, it collects data meant to be used to update the data in the DPR’s National Data Repository (NDR), which is responsible for maintaining data as provided for in the NDR Regulations 2007,” it stated. In addition, it averred that the Federal Government evaluates and approves development plans, noting, however, that there are typically notable delays. “The bureaucratic inefficiencies, weak inter-agency collaboration and the use of manual processes contribute to these undue delays, while the DPR works to ensure all interests are addressed. There is a need to stipulate specific timelines and enable the institutions to be more effective and keep to them,” the report stated. In the area of community development, the report noted that there are no requirements in Nigeria that provide for free, prior and informed consent with indigenous communities potentially displaced by project developments. It also disclosed that the government was yet to put in place legislation or framework to ensure consultation and meaningful participation of affected communities in decision-making about resource projects. According to the report, the failure to involve communities early enough by the government and limited effort to communicate and provide information to set reasonable expectations among communities had led to limited awareness about the costs and benefits of extraction. The BER has previously been published in 2012 and 2014. The 2017 assessment examined three years of oil sector governance, measuring changes and highlighting reforms, as well as identifying gaps in understanding and lapses in decision-making processes. For the 2017 exercise, the NNRC was able to update the BER using the revised Charter framework. The Report has been widely received and has formed a reference material for researchers, the media and government agencies on tracking developments in the oil and gas industry.