• Friday, July 12, 2024
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42% of Nigeria’s 2021 oil proceeds unavailable for federation

Nigeria risks missing out as $100 oil beckons

Nearly half of the oil and gas proceeds realised in 2021 was not available to be shared to states as they went to various deductions, the Nigerian Extractive Industries Transparency Initiative (NEITI) said in its audit report for 2021.

The Nigerian government generated total revenue of $23.04 billion from its activities in the oil and gas sector including oil and gas sales, taxes, NLNG dividends, gas flare penalties, signature bonuses and licence fees.

The total deduction before revenue was $9.8 billion or 42.72 percent of the oil income; hence the total remittance to Federation Account Allocation Committee was $13.2 billion or about 57.27 percent of total revenue.

Subnational payments to Niger Delta Development Commission and the Nigerian Content Development and Monitoring Board, among others, amounted to $963,629 or 4.18 percent of total revenue, while the Nigerian National Petroleum Company Limited (NNPC) failed to remit $1,951,115.

The large deductions meant that state governments received less allocation to run government expenditure including paying salaries and fixing public infrastructure.

The NEITI report covered a total of 69 companies and the Nigeria Liquefied Natural Gas (NLNG), 13 government entities and one state-owned enterprise, which is the NNPC.

Read also: Despite lawmakers; intervention, unremitted income from oil sales rises to $9.85bn; NEITI

This report provides information and data on Nigeria’s oil and gas sector with special attention on helping the government to recover resources that it needs to address the numerous national development issues, especially poverty reduction through resource mobilisation and deployment.

According to Ogbonnaya Orji, executive secretary of NEITI, the report reviewed processes that characterised all transactions within the sector. “It looked at independent assessment of financial transactions in the areas of revenue receipts and payments and how the processes weighed on the scale of transparency and accountability in the oil and gas sector during the period under review.”

“Other areas that NEITI focused on in this report were on investments made by the Federation or the Federal Government in the oil and gas industries, subsidy payments, company remittances and liabilities in terms of unremitted funds due to the Federal Government or the Federation,” said Orji.

NEITI publishes a yearly audit of the oil, gas and solid minerals sector. While the reports provide critical insights into the financial activities of the energy sector, they have been criticised for coming out too late for meaningful action to be taken against the companies and government agencies the report indicts.

The release of this report is a mandatory requirement in compliance with Nigeria’s national and global obligations of the EITI/NEITI process.