The Nigeria Extractive Industries Transparency Initiative (NEITI), last week, revealed that oil majors operating in the nation’s oil and gas industry, including the Nigerian National Petroleum Company Limited (NNPCL) owed the Federal Government $6billion and N66billion, respectively. The Executive Secretary of NEITI, Orji Ogbonnaya Orji, who made the startling revelation before the House of Representatives Committee on Petroleum Resources (Upstream), said the agency is already partnering with the Economic and Financial Crimes Commission (EFCC) to recover the funds. NEITI is saddled to promote transparency and accountability in the Nigerian oil and gas and the mining sector, among other duties.
The figures revealed by NEITI represent unpaid royalties and gas flare remittances due to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The outstanding revenues include petroleum profit taxes, company income taxes, withholding taxes as well as Value Added Tax (VAT) payable to the Federal Inland Revenue Service (FIRS) totaling $21.926 million, and N492.8 million as of June, last year. The unremitted funds were contained in the NEITI latest report submitted to the National Assembly.
It is shocking that oil companies in the upstream and downstream sector of the economy owed the Federal Government such a humongous amount every financial year. Unfortunately, there are no stiffer sanctions in place to deter them from engaging in the financial malfeasance, especially at this time that the economy is at the crossroads. Nevertheless, it is commendable that NEITI and EFCC are working in concert to recover the outstanding revenues and remit them to government treasury. We urge them to expeditiously and diligently execute the exercise.
The outstanding debt could have been used to fix beleaguered health sector. It could also make the much-needed impact in the education sector, which is poorly funded. It can also go a long way in fixing the power sector. In 2020 and 2021, NEITI reportedly recovered over $3.7billion as outstanding liabilities from oil companies in the country. This time around, nothing should be left to chance to recover all the outstanding debts.
It has become expedient for the National Assembly to enact strong laws that will make non-remittance of revenue to the federation account an economic offence. The latest NEITI report is one infraction too many by the oil companies. It is worth pointing out that in 2021, NEITI disclosed that oil majors and other government agencies owed the government over $8.26billion in unremitted revenue as of financial year ending December 31, 2022.
Altogether, between 2021 and 2023, NEITI reported that 48 oil companies, including the NNPCL, did not remit $13.59billion to the treasury. Available statistics show that about 80 per cent of the outstanding revenue is reportedly owed by NNPCL. This is despite concerted efforts in recent years by the government through the relevant committees of the National Assembly to recover the debts. In 2017, the National Assembly committees on Petroleum Resources disclosed that it uncovered $15billion unremitted crude oil and liquefied natural gas revenue.
The amount was alleged to have been stolen and diverted to a foreign destination reportedly submitted by a government-owned company. This is contained in two separate documents submitted by the management of NNPCL to the relevant committees of the NASS. Government must rein in the defaulting oil companies forthwith. In 2016, the Federal Government ordered an oil company to refund the sum of N81.6billion ($408million) being unremitted revenue.
Only recently, NNPCL had clarified that there were discrepancies in the amount attributed to it as unremitted revenue to the Federal Government’s coffers in the NEITI’s report. From the report, the Federal Government earned a total of $23.46billion as tax revenue from oil companies in 2021. This is 13 per cent higher than the $20.43billion it realised in the corresponding period of 2020.
Government should put necessary measures to check the malfeasance in the oil sector and ensure that oil majors remit all revenues to government treasury. The withholding of such revenues borders on corruption. The practice is inelegant and opaque. Perhaps the most effective method is to leverage on NEITI’s mandates to conduct regular audits of all companies’ payments to government.
NEITI must also ensure that all discrepancies are duly investigated and all outstanding revenues recovered. Oil majors found culpable must be adequately sanctioned. We call on Nigerians, civil society organizations and other stakeholders to utilise NEITI reports to monitor the activities in the oil sector. In all, there must be transparency and accountability in the sector.