51 Oil, Gas Companies Owe FG N1.32trn -NEITI Audit Report

2020 Audit Report of the Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that 51 oil and gas companies are owing the federal government a total sum of $3.17billion (N1.32trillion).

The latest NEITI 2020 oil and gas industry report which provided updates on oil and gas companies’ indebtedness to the Federation was released in Abuja today at the public presentation of the agency’s industry reports of the oil, gas, mining as well as the Fiscal Allocation and Statutory Disbursement.

TheFact Nigeria reports that the 2020 report also stated that the number of defaulting companies dropped from 77 reported by NEITI in 2019 to 51 in 2020.

Speaking, the Executive Secretary of the NEITI, Dr. Orji Ogbonnaya Orji, announced that companies’ liabilities to the Federation as at “December 31st 2020 was N1.32Trillion or $3.17billion compared to the N2.6Trillion owed in 2019”.

Dr. Orji described the current debts as collectable revenues that are due to the Federation by the Department of Petroleum Resources and the Federal Inland Revenue Service.

The NEITI latest reports outlined the specific revenue streams that accounted for the liabilities in question. These include royalty oil, royalty gas, concession rentals, Petroleum Profit Tax, Company Income Tax, Education tax, Value Added Tax, Withholding Tax among others.

Dr. Orji explained that “the courageous public disclosure of companies’ liabilities to the Federation by NEITI was in line with its national mandate and in fulfilment of its obligation as a member of the global Extractive Industries Transparency Initiative (EITI), and not in any way against the companies. “NEITI’s disclosure seeks to draw the attention of the oil and gas companies to their obligations to remit all revenues due to government, especially at this time that government is in dire need of revenues to rebuild the nation’s
infrastructure and improve the investment climate in the country’.

Dr Orji described the companies as the backbone of the industry. “Without the companies there will be no industry, no investments and no revenues to remit”. So NEITI will continue to support the companies and also expect that they live up to their obligations, as regard to payment of taxes, royalties and levies to the Federation, as they do in other jurisdictions of their operations.

The NEITI 2020 oil and gas report also revealed that Nigeria earned $20.43billion from thé jy and gas sector in 2020. The figure represents a decline of 40% compared to th 34. 22billion realized from the sector in 2019.

on remittances to the Federation Account from the oil and gas sector, the report aisg disclosed that $14.65Billion, representing 71.17% of the total earnings in 2020, was remitted to the account, while total aggregate financial flows from the oil and gas secto/ ro government in ten years (2011-2020) was $394.029 billion.

The report also revealed that the total crude oil production in 2020 was 646.7mmbbis, representing a 12% decrease when compared to the 735.24 mmbbls produced in 2019, out of the above total production in 2020, 648.48mmbbIs were lifted, and this was 11.85% jower than the 735.66mmbbIs lifted in 2019.

on domestic crude allocation and consumption, the NEITI report also disclosed that 107.746mmbls was managed by the NNPC under the Direct Sale Direct Purchase arrangement. It also revealed that the value of the crude exchanged under the DSDP arrangement was $6.7billion, while the value of the refined products received for local consumption was $6.03billion, indicating a variance of $134.78million.

As regard to fuel subsidy, the NEITI report further disclosed that NGN106.9billion was paid as subsidy between January and June 2020 to sustain product availability with an outstanding balance of N26.74Billion yet to be paid. NEITI also reported that 20.01billion litres of petrol, 52million litres of kerosene and 5.33billion litres of diesel were respectively imported into the country for domestic use during the period under review.

On oil theft and crude losses, the report made assessment based on the data provided to NEITI by 22 of the 69 covered companies. According to the result of the assessment, 39.16mmbls of crude valued at US$44.73million (N15.71billion) was stolen with 349 cases of pipeline vandalism recorded in 2020. This is an improvement when compared to the 1,387 cases of vandalism reported in 2019.

On Gas production, the report revealed that the gas sub-sector contributed over $1.5billion to the Federation account. According to the report, the total gas production in 2020 was 3.01million cubic feet. While 64% of this total quantity was sold, 8% was flared and 4% unaccounted for.

The NEITI report also showed that the oil and gas sector contributed only 8.16% to the total GDP in 2020. This represents a decline of 0.46% when compared to the 8.62% recorded in 2019. The report further revealed that the sector dominated the country’s export in 2020, contributing about 75% (N9.44Trillion) of the total export value of N12.52Trillion.

Furthermore, the report made far reaching recommendations including the urgent need for further investigations into the circumstances surrounding the transfer of the Federation’s stake in OML 24 operated by Pan Ocean and New Cross Energy. NEITI’s concern is on the value for money of the transaction, payment for the federation equity interest and recovery of the $309.1million that should have been paid for the asset.

The report also welcomed the Petroleum Industry Act and the prompt decision of President Buhari to set up a nine-member committee, including NEITI, to oversee its implementation adding that the courageous implementation of the reports of the Steering Committee when concluded will set the stage for a new oil and gas industry ready for competition and investment going forward.

This is the 13th cycle of independent oil and gas industry report by the Nigeria Extractive Industries Transparency Initiative (NEITI) in line with the NEITI Act 2007 and in fulfilment of Nigeria’s obligation to the global Extractive Industries Transparency Initiative (EITI). The report reconciled payments from eighty-three (83) entities. They included sixty nine (69) oil and gas companies, thirteen government agencies and the Nigerian Liquefied Natural Gas (NLNG). The audit was conducted by Taju Audu & Co. (Chartered Accountants), an indigenous accounting and auditing firm.

Meanwhile, the transparency agency stated that though it unveiled three reports this Monday, it will release the details of the reports for the solid minerals sector and the fiscal allocation and statutory disbursements at a date to be announced soon.

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