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From Uche Usim, Abuja
The Nigeria Extractive Industries Transparency Initiative (NEITI) on Monday released its 2020 audit report which shows that 51 oil and gas companies owe the federal government $3.17 billion (N1.32 trillion).
This also follows plans by the Nigerian National Petroleum Company Limited (NNPC) to release its 2021 Financial Statements by June this year.
The NEITI report also noted that revenue in the year under review dipped by 40%.
The NEITI 2020 oil and gas industry report, which is the latest, was unveiled in a public presentation of the agency’s industry reports of the oil, gas, mining as well as the fiscal allocation and statutory disbursement.
The report further highlighted 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 N1.32 trillion or $3.17 billion compared to the N2.6 trillion owed in 2019.’
He 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.
The NEITI boss 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.’
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,’ he said. ‘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 $20.43 billion from the oil and gas sector in 2020. The figure represents a decline of 40% compared to the 34. 22 billion realised from the sector in 2019.
On remittances to the Federation Account from the oil and gas sector, the report also disclosed that $14.65 billion, representing 71.17% of the total earnings in 2020, was remitted to the account, while total aggregate financial flows from the oil and gas sector 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% lower than the 735.66mmbbIs lifted in 2019.
On domestic crude allocation and consumption, the NEITI report also disclosed that 107.746 mmbls 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 $6.7 billion, while the value of the refined products received for local consumption was $6.03 billion, indicating a variance of $134.78 million.
As regards fuel subsidy, the NEITI report further disclosed that N106.9billion was paid as subsidy between January and June 2020 to sustain product availability with an outstanding balance of N26.74 billion yet to be paid. NEITI also reported that 20.01billion litres of petrol, 52 million litres of kerosene and 5.33 billion 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 an 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$44.73 million (N15.71 billion) 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 $1.5 billion to the Federation Account. According to the report, the total gas production in 2020 was 3.01 million 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% (N9.44 trillion) of the total export value of N 12.52 trillion.
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 $309.1 million 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.
Commenting on the report, Umar Ajiya, the Chief Financial Officer of the Nigerian National Petroleum Company Limited (NNPC) in his goodwill message said the Company sees NEITI as a partner in the urgent task of enthroning transparency.
‘No need to hide anything in the oil and gas sector. We have seen the demerit of doing that as we’re members of NEITI and EITI. We will publish accounts of 2021 before mid-year. We have automated our processes and procedures. No more paperwork. The spirit of transparency is high. We’re committed to providing information and data for anybody. We are accountable to Nigerians and payment of 80% dividend to every Nigerian as enshrined in PIA 2021.
‘We’ve worked with the Auditor General of the Federation, public accounts department of the National Assembly, the AGF, etc. We can be sued and we can sue. We’re transparent but we can’t be naked,’ he said.
Also giving his goodwill message, the FIRS Chairman, Muhammad Nami said through collaboration with NEITI, FIRS collected N6.4 trillion as revenue last year.
‘We learnt a lot sitting on the NEITI board and got data and statistics to boost our work,’ he said.
In his keynote address, the Chairman, National Stakeholders Working Group and Board Chairman of NEITI, Mr Olusegun Adekunle, said the unveiling of the oil and gas, solid minerals and fiscal allocation audit reports was a soothing development.
