Nigeria: Amid Nass Probe – Neiti Uncovers U.S.$9.85 Billion Debts Owed Govt By Oil Firms, Others

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.

…Seeks audit of PMS subsidy payments, crude swap

Other copious recommendations made by NEITI in its 2021 report are that NNPC should transparently disclose details of the subsidy and the beneficiaries of the payments, render accounts on project eagle loans transaction and review and investigate all pre-export financing arrangements and other loan arrangements done in exchange for the nation’s crude oil and gas. NEITI also recommended that government should commission a comprehensive audit of the PMS subsidy-related financial transactions between NNPC and the Federation, determine all liabilities and ensure accurate and verified data.

NEITI also drew attention to the practice of computing 13% derivation on the balance of revenue after deductions from the total collections which it advised should be discontinued. Rather, the 13% derivation should be based on total collections for the relevant period in accordance with Section 162(2) of the constitution of the Federal Republic of Nigeria.

The report, which was reconciled on behalf of NEITI by an Independent Administrator, Messrs Taju Audu & Co., had a total of 69 companies and 13 government agencies, the NNPCL, the Nigeria LNG and Nigeria Sao Tome Joint Development Authority, with 23 revenue streams covered. One company, Lekoil Limited, did not submit any information for reconciliation, but was captured to have paid over $7.76million.

Dr. Orji urged policy makers to take seriously the findings and recommendations of the NEITI oil and gas report and use the data for economic planning and reforms of the sector. To the civil society, he stated that the information was to support their advocacy and public debates as well as tracking of reforms in the sector with a view to holding government at all levels and companies accountable, ensuring that the revenues from the sector is utilised for the benefit of the citizens.

LEADERSHIP reports that Speaker Abbas Tajudeen had set up the Adhoc Committee at the wake of the 10th House of Representatives following a motion sponsored by Rep. Philip Agbese (APC, Benue).

However, the Committee, which is headed by Hon. Kabiru Alhassan Usman Rurum (NNPP, Kano), was only inaugurated on September 7, 2023, due to alleged frustrations by some critical stakeholders in the oil sector.

Invitations were sent to the Ministry of Petroleum Resources NNPCL), Nigeria Upstream Petroleum Regulatory Commission (NUPRC), NIMASA, NIWA and other stakeholders several times but they failed to turn up.

At the inauguration of the Ad-hoc committee, Speaker Abbas, who was represented by former House Leader, Hon. Alhassan Ado Doguwa, decried that Nigeria had lost over N16tr to oil theft in 11 years.

It was alleged, during the Committee’s sitting last week, that most of the marginal field operators are aiding oil theft in order to compliment shortfalls in their productions.

LEADERSHIP gathered that the Committee has held extensive interactions with security agencies like the Nigeria Navy, Nigeria Security and Civil Defence Corps, Nigeria Police Intelligence Unit and others responsible for the security of oil and gas infrastructure.

The Committee has also extended invitations to the operators of the marginal fields, 14 production sharing contract operators and 57 joint venture operators for appearance.

…NNPCL suspected of collusion

One of the stunning revelations during the sitting of the Adhoc Committee was the seeming massive corruption and collusion of regulatory agencies at the export loading terminals.

Most of these thefts occur offshore and most of Nigeria’s export loading platforms are offshore.

The Committee is also investigating the allegation that many senior serving and retired officers of the Nigerian Upstream Petroleum Regulatory Agency (formerly DPR) may also be complicit as it is alleged that some of them may have vested interests in the marginal fields and the abandoned oil wells which litter the entire Niger Delta.

Submissions at the Committee also show that most of the abandoned and non-decommissioned oil wells and pipelines had escalated incidences of oil theft.

Circumstances surrounding the release of arrested and complicit vessels by prosecuting agencies are also being looked into by the Committee.

Although the chairman of the Ad-hoc committee, in his remarks at the continued investigative hearing last Friday, stated that his Committee would not jump into conclusion on any allegation as anyone or agency alleged to be involved in anything would have an opportunity to make their submission to the committee; it does appear the Committee would be short-lived, as indications abound that the House would soon disband the Adhoc Committee.

It was authoritatively gathered that there is general information that all Adhoc Committees should fold up and submit reports as the House reconvenes from its long vacation this week.

While this is a common tradition with the National Assembly to unwind Adhoc Committees when standing committees are inaugurated, there are, however, exceptional cases where Adhoc Committees, especially those with sensitive mandates and which scope are beyond the configuration of standing committees, are allowed to outlive others until their aims are achieved.

Already, there are rumours and unsubstantiated reports of serious and intense moves by critical stakeholders, who are already being exposed at the investigations, to thwart the efforts of Speaker Abbas and cause the miscarriage of the Adhoc Committee.

A source hinted to this newspaper that some complicit industry operators have boasted that nothing would come out of this House investigation, like the previous ones before it.

However, interactions with some members of the Committee at the weekend show that the committee enjoys the full support of the leadership of the 10th House of Representatives.

“I am telling you, in good confidence, that the Committee has made appreciable progress and there are more grounds to be covered. I know it is not easy finding corruption in this country, but I tell you, God will help us.

“By the time this Committee finishes and submits its reports, heads will roll and Nigerians will salute the chairman and the leadership of the House for finding a solution to this age-long corruption in the oil and gas sector”, one of the members told LEADERSHIP.

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