Amid NASS Probe: NEITI Uncovers $9.85bn Debts Owed Federal Govt By Oil Firms, Others
By Nse Anthony - Uko, James Kwen and Chika Izuora
The House of Representatives ad-hoc committee investigating crude oil theft and loss of revenues from oil and gas companies has again insisted that agencies and other stakeholders in the industry evading the ongoing investigation appear before it unfailingly.
This is as the total unremitted revenues to the Federation by some relevant government agencies and companies in the oil and gas sector in the year 2021 have risen to over $9.85 billion.
The figure and other vital pieces of information and data about Nigeria’s petroleum sector were revealed in the 2021 Oil and Gas Industry Report unveiled by the Nigeria Extractive Industries Transparency Initiative (NEITI), in Abuja, yesterday.
LEADERSHIP reports that the investigative panel has insisted that the heads of the Nigeria National Petroleum Ltd, (NNPCL), Nigeria Maritime Administration and Safety Agency (NIMASA) and the Nigeria Inland Waterways Authority (NIWA), amongst others, must appear physically for the investigation.
This is even as the committee has continued to unearth stunning revelations of massive oil theft, suggesting grave collusion of regulatory agencies and their collaborators in the oil and gas sector.
A compilation of the outstanding financial liabilities due to the Federation by the NEITI report indicated that a total of $13.591 million revenues was payable to the Federal Inland Revenue Service (FIRS) as of July 31, 2023, while the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had outstanding tax collectible revenues of $8.251 billion as at December 31, 2022.
The report also showed that over 80 per cent of these outstanding financial liabilities are owed by NNPCL
Executive secretary of NEITI, Dr. Orji Ogbonnaya Orji, who presented the highlights of the report, stated that the information and data contained in NEITI’s latest report paid special attention to helping the government at all levels to shore up revenue, support national development and poverty reduction through resource mobilisation. The report therefore provided an update on the financial liabilities of the NNPCL and some companies to the federation.
He lamented that despite the concerted efforts made last year to recover some of the revenues through the Ad Hoc Committee set up by the National Assembly, the 2021 figures showed an increase.
The secretary to the government of the Federation, Senator George Akume, who was represented by the permanent secretary, Political and Economic Affairs, Mrs. Esuabana Nko, while unveiling the report, reaffirmed the federal government’s commitment to support and deepen the implementation of EITI in Nigeria.
The SGF said, “President Bola Tinubu’s administration is fully committed to the fight against corruption in the extractive industry in particular, and in other sectors of the economy. As an Administration, we are convinced that the revival of our economy and the eight-point agenda that we recently unfolded cannot yield the desired result if we do not support and strengthen anti-corruption and reform-oriented agencies like NEITI.
“The NEITI 2021 Industry Report being unveiled is quite timely, coming when the present administration is fully committed to shoring up revenues through priority attention to attracting investments to the key sectors of our economy, the oil and gas sector being one of them”.
On his part, the chairman, Senate Committee on Oil and Gas Host Communities, Sen. Benson Agadaga, reaffirmed the government’s commitment to implementing the recommendations of the NEITI oil and gas report.
“Be assured that the federal government will carefully study this important report and adopt it as a valuable working document as part of our overall reform programme for the oil and gas sector”, he stated.
Also, chairman, Senate Committee on Petroleum Upstream Sen. Eteng Williams commended the vital role NEITI is playing and urged NEITI to continue to ensure revenue mobilisation for the country now that subsidy is gone.
The chairman, House Committee on Petroleum Resources (Downstream) Hon. Ikeagwuonu Ugochinyere pledged to lay the report on the floor of the House for it to be debated extensively to ensure the implementation of the recommendations as enshrined in Sections 3 and 4 of the NEITI Act.
“Working together, we will ensure the realisation of the government’s desire to diversify the economy for the attainment of alternative source(s) of revenue and clean energy; that will bring about the realisation of the projected one trillion-dollar revenue for Nigeria in the next eight years.”.
The minister of budget and national economic planning, Sen. Abubakar Atiku Bagudu, represented by the permanent secretary, Nebeolisa Anako, said the data generated by NEITI would help the ministry in its planning mandate for the country.
“The budget outlay for the country for the current national development plan for five years is N348 trillion. A majority of this inflow is going to be from the private sector and the oil and gas sector is key to the realisation of this goal,” he said.
The NEITI 2021 Oil and Gas report published yesterday in Abuja, with the theme: “NEITI Oil & Gas Industry Report 2021: Relevance Built On Revenue Growth And Impact”, also made several vital disclosures in line with the NEITI Act 2007 and the EITI 2019 Standard.
The report showed that Nigeria earned a total revenue of $23.046 billion from the sector in 2021, which is about 13 per cent higher than the corresponding total of $20.43 billion realised in 2020.
A breakdown of the earnings showed that about $8.67 billion, or 37.6 per cent of the revenue, was realised from the sale of crude oil and gas; $13.37 billion, or 58.02 per cent, from taxes and other specific revenue flows, and $1.01 billion, or 4.38 percent, went into payments to sub-national entities.
An analysis of the total revenue realised, the report stated, showed unremitted revenues and quasi-fiscal expenditure by the NNPCL of $1.95bn (8.47 per cent) and $6.93 billion (30.08 per cent) respectively.
Transfers to the Federation amounted to $13.2bn (57.27 per cent), while sub-national payments totalled $963.63 million, or 4.18 per cent. Available revenue for sharing by the federating units after the deductions, and in accordance with the revenue allocation formula, was $13.2billion which represented 57.27 per cent of the total revenue collected. This is lower than the 71.7 per cent shared in 2020.
The quasi-fiscal expenditure of $6.931 billion (equivalent of N2.651 trillion) was deducted from the Federation’s revenue before remittance without appropriation by the National Assembly. A breakdown of the $6.93 billion deductions showed payments of $3.52 billion or 15 per cent for Joint Venture Cost Recovery and $3.031 billion (about N1.16 trillion) or 13.15 per cent for products subsidy/value loss.
Other deductions are $258.43 million for government priority projects; $75.51mn for pipeline maintenance and holding costs and $42.40 million for crude oil and products losses.
The NEITI report also observed that none of the refineries was operational in 2021 despite spending about N200 billion between 2020 and 2021 on refinery rehabilitation which was deducted from the federation sales proceeds. These deductions, the report reiterated, remains a heavy cost to Federation Revenue remittances.
In addition, the report said about $1.95 billion, or 8.47 per cent of the total revenue, was not transferred to the Federation Account by the NNPCL during the year under review.
A breakdown of the withheld revenue included $722.6million for NLNG dividend; $871.15 million from domestic crude sales, $859,583 miscellaneous revenue and $286.42 million from export crude sales. $24.332 million and $45.76 million were withheld from transportation revenue and domestic gas proceeds.
A 10-year trend analysis of financial flows from the oil and gas sector from 2012 to 2021 showed earnings of $348.63 billion.
On crude oil production and exports, the NEITI report indicated that total metered crude oil production was 634.60 million barrels, out of which the nation lost 68.47 million barrels to production adjustment, measurement error, theft and sabotage. The figure showed a 13 per cent reduction from the production volumes of 2020.
The report pointed out that a total 29 companies suffered crude losses from theft and sabotage, amounting to 37.57 million barrels. The decline in crude oil losses due to theft and sabotage from 39.08million barrels in 2020 to 37.57million barrels in 2021 was generally due to the decline in crude oil production during this period.
On gas production and utilisation, the NEITI report said a total of 2.74million standard cubic feet of gas was produced during the year, with the volume about 8.96 percent lower than the 3,013,634mmscf produced in 2020. Total gas utilised in 2021 stood at 98 per cent, while 2% could not be accounted for by the companies based on the templates submitted.
With the nation’s gross domestic products put at about $434.17 billion, the report said the oil and gas sector contributed about 7.24 per cent to the GDP and $ 36.55 billion (N14.40 trillion) to total exports of $ 47.31 billion (N18.91 trillion). This represented 76.22 per cent of the total exports in 2021, 0.8 per cent higher than in 2020. 19,171 employees were said to be working in the sector in 2021.
Similarly, the total government revenue generated in 2021 was N10.75 trillion to which the oil and gas sector contributed N4.358 trillion. This represents about 40.55 per cent of the total revenue compared to 51 per cent in 2020. The higher export value in 2021 compared to 2020 was due to the increase in crude oil price in 2021 from $41.65 per barrel to $66.97 per barrel, the NEITI report disclosed.
Also, NEITI in the 2021 report observed that the majority of the oil and gas companies in Nigeria exhibit complex structures that shield the real identities of their owners, thereby limiting the impacts of efforts at beneficial ownership disclosures. It called on the NUPRC to implement fully the relevant sections of the PIA on Beneficial Ownership reporting.
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