Nigeria: House Moves to Recover $6.479bn Debts Owed By Oil Companies

The House of Representatives has begun moves to recover the $6.479 billion debts owed federal government by oil and gas companies operating in the country as they commenced investigative hearing on the matter.

According to the Nigeria Extractive Industries Transparency Initiative (NEITI) reports, the total outstanding liabilities of $638.090 million recorded in 2017, was due to the DPR, while from the total outstanding liabilities of $6.207 billion recorded in 2018, the sum of $3.849 billion was due to DPR while $2.358 billion was due to FIRS.

In 2021, the status of the liabilities showed that $73.097 million was outstanding as at 30th September, 2021, with a grand total of $1,964,036,289.54 and £1,969,795.92 owed by 84 oil companies operating in the country.

The Director General/Chief Executive of National Oil Spill Detection and Response Agency (NOSDRA), Idris Musa while speaking during the investigative hearing yesterday, affirmed that Nigeria loses about $7.733 billion due to emission reduction charges, based on natural gas unit rate from US Energy Information Administration on the United States Natural Gas Industrial Price (in dollar per thousand cubic feet).

“According to the Gas Flare Tracker (GFT), Nigeria flared 1.1 billion Mscf. This amounts to a loss of about 2.2 billion Dollars to the Nigerian economy for the period under review.

“Based on the National Gas Flare Commercialisation Programme launched December 13, 2016, all gas flare points have been taken over by the federal government and are to be sold by Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The programme waived penalties, as flared gas is now owned by the Federal Government rather than operators.”

Adding to that, NOSDRA imposed fine of $3.6 billion on Shell Nigeria Exploration and Production Company (SNEPCO) Bonga Oil Spill of December 2011 where 40,000 barrels of crude oil were spilled into the marine environment before the spill could be combated but noted the company appealed and the case is still ongoing.

Meanwhile, the FIRS record on the status of money recovered from 38 oil companies as at January 31, 2022, stood at $512,602,086.12 while NPDC records showed total sum of $392,613.105.88, with a grand total of $905,215,192, while total outstanding liability was put at $467,691,568.67.

According to documents submitted to the Committee, President Muhammadu Buhari approved 50 per cent waiver of total sum of $880.139 million for the Nigerian Petroleum Development Company (NPDC) in line with the special request made by the NNPC Group Managing Director, Mele Kyari.

The President Buhari’s approval was conveyed via a letter with Ref. No: PRES/158/NNPC/85/87/MF/204 dated 9th July, 2021 signed by the Chief of Staff to the President, Professor Ibrahim Gambari, and addressed to the NNPC GMG and Minister of Finance, Budget and National Planning.

The approval was conveyed on the same day the NNPC Managing Director, Mele Kyari sent the 5-page request titled: ‘Special request for a waiver of fifty percent (50%) outstanding of outstanding tax liabilities of the Nigerian Petroleum Development Company (NPDC)’, through which he urged “Mr. President to kindly direct the Minister of Finance, Budget and National Planning to mandate the Federal Inland Revenue Service (FIRS) to implement the above approval as provided in Sections 23(2) and 89 of the Corporate and Allied Matters Act (CITA) as amended.”

According to Kyari, NPDC which was involved in 34 concessions with equity production of circa 200,000 bopd, supplies over 650 million standard cubic feet per day of gas to the domestic and export market.

“The company’s financial health is threatened by the growing level of receivables from the Federation and other critical stakeholders, especially in the power sector amounting to over Two (N2) Trillion naira. NPDC cannot exercise the typical option of declining supply of gas to the power sector.

“The payment defaults by the power sector and other stakeholders have continued to impair NPDC’s ability to settle huge tax liabilities tied to unpaid gas delivered to domestic market,” the letter read in part.

He observed that NPDC has made significant contribution to the revenue profile over the past five years, worth an average of $1 billion per annum from its operations in form of royalties, taxes, including: Petroleum Profit Tax (PPT), Company Income Tax (CIT) and Withholding Tax (WHT), and other sundry payments to the Federation and other arms of Government.


Leave a Reply

Your email address will not be published.