• Thursday, December 07, 2023
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NEITI report unearths gaps in Nigeria’s oil revenue management

NEITI report unearths gaps in Nigeria’s oil revenue management

The recently released report by the Nigerian Extractive Industries Transparency Initiative (NEITI) highlights critical gaps depriving the federation of significant value from its oil resources including withheld remittances, taxes, and poor governance practices.

NEITI notes that the total unremitted revenues to the federation by some relevant government agencies and companies in the oil and gas sector in the year 2021 rose to over $9.85 billion. This is significant, considering the total revenues were N23 billion for the year.

The report also detailed outstanding financial liabilities due to the federation amounting to $13.591 million revenues payable to the Federal Inland Revenue Service as of July 31, 2023, while the Nigerian Upstream Petroleum Regulatory Commission had outstanding tax collectible revenues of $8.251 billion as at December 31, 2022. Over 80 percent of these outstanding financial liabilities are owed by the Nigerian National Petroleum Company Limited (NNPCL), it said.

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.

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

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 report pointed out that a total of 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 39.08 million barrels in 2020 to 37.57 million barrels in 2021 was generally due to the decline in crude oil production during this period.

NEITI also noted that some revenues were lost because some companies that won marginal field licences in 2021 did not pay signature bonuses while four companies whose names were not on the list of awardees made payment.

Hence, NEITI said the NNPCL should transparently disclose details of the subsidy and the beneficiaries of the payments, render accounts on Project Eagle loan transactions, and review and investigate all pre-export financing arrangements and other loan arrangements done in exchange for the nation’s crude oil and gas.

Read also: Nigeria generated N814.59bn from solid minerals in 15 years — NEITI

NEITI also drew attention to the practice of computing 13 percent derivation on the balance of revenue after deductions from the total collections, which it advised should be discontinued.

Rather, the 13 percent 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.

Orji Ogbonnaya Orji, executive secretary of NEITI, said that the relevant government agencies are now equipped to utilise the NEITI report, which is available to the public, for their purposes.

In an interview with ARISE News on Wednesday, Orji stated that NEITI lacks the authority of a law enforcement agency and does not possess full investigative powers.

“What we do is to provide empirical information and data in the public domain,” he said.

Read also: Nigeria lost N16.25trn to oil theft from 2009 to 2020 – NEITI

According to Orji, Nigeria’s commitment to the global Extractive Industries Transparency Initiative (EITI) standards mandates that once this information is made publicly available, it is the duty of citizens, the media, civil society, and the legislature to thoroughly analyse this data and utilise the resources provided to ensure government and companies are held responsible.

Orji said the government’s current focus is on decreasing the debt-to-GDP ratio in order to generate capital and facilitate resource mobilisation. This strategy aims to boost revenue, which can then be allocated towards addressing critical national challenges.

“NEITI has a torch. We are pointing to the way where some money can be generated locally,” he said.

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.