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The 2019 independent audit report of companies in the oil and gas sector has revealed that 77 oil companies operating in the country failed to remit N2.66trillion (about $6.48 billion) to the Federation Account as required by the constitution. It is disheartening that the Federal Government allowed these companies to owe such a humongous amount while the country is lobbying some financial institutions abroad for loans and debt forgiveness as President Muhammadu Buhari did at the recent United Nations General Assembly (UNGA), in New York, United States (US).
The report of the indebtedness of the oil and gas companies to the Federal Government is contained in a recent release by the Executive Secretary of Nigeria Extractive Industries Transparency Initiative (NEITI), Dr. Orji Ogbonnaya Orji, in Abuja. A breakdown of the figures shows that a total of $143.99billion is owed as petroleum profit taxes, $1.089billion as Company Income Taxes, and $201.69million as education tax. Others include $18.46million and £972,000 as Value Added Tax (VAT), $23.9 million and £997,000 as withholding tax, $4.35billion as royalty gas, while $270.187million and $41.86million were unremitted gas flare penalties and concession rentals respectively. As the NEITI boss observed, the revelation about the oil companies’ indebtedness has become very important at this time in view of government’s binge borrowings. The unremitted revenue would be enough to address the nation’s power sector challenge, ensure quality education, healthcare and road infrastructure. It can also help in addressing insecurity and creation of more jobs for unemployed Nigerians. Besides, the amount owed by these oil and gas companies is enough to service the debt of N2.68trillion in the 2020 budget. The N2.66trillion owed by the oil firms could fund about 46 per cent of the budget deficit of N5.6trillion. The debt is also higher than the entire projected revenue for the 2021 financial year. Nothing should be spared to recover the money and remit it to government treasury. Government should no longer watch while the debt is not recovered. The recovery will, no doubt, enable the government implement some of its projects, especially at this period of acute dwindling revenues. The debt should not be allowed to remain unpaid before the conclusion of the 2020 NEITI audit cycle.
Failure to pay the outstanding debts, the Economic and Financial Crimes Commission (EFCC) must wade in. What the oil companies have done amounts to economic sabotage. We urge NEITI to take advantage of the recent Memorandum of Understanding (MoU) it signed with the EFCC and the Independent Corrupt Practices and Other Related Offences Commission (ICPC), and the Nigerian Financial Intelligence Unit to recover all outstanding debts. It is good news that the Office of the Attorney General of the Federation is working with NEITI on the matter. There is need to improve on our tax recovery from oil firms. Very often, oil and gas companies operating in the country seem to cash in on Nigeria’s vulnerable tax processes to fleece the country. It is unacceptable that of the 69.5 million taxable population, only 19 million persons are reported to be paying their taxes. This reflects the failure in our tax system and neglect of the obligation of the citizens to the government. Till now, the collection of debt from oil companies operating in the country is lax.
There is need for the government agencies to show seriousness in its tax collection processes and read the riot act to the oil and gas firms to sit up. For a long time, these companies have taken Nigeria for a ride. For instance, in the area of gas flaring, oil companies have reportedly failed to take government officials and agencies serious in paying fines as recommended by law on gas flaring. Henceforth, proactive enforcement of tax laws has become imperative. We, therefore, urge all oil companies to evolve best sustainable business practices and pay all outstanding debts owed to the Nigerian government. We also advise for the prudent management of extractive resources of the country, which will go a long way in improving the nation’s fortunes.
