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From Uche Usim, Abuja
The Nigeria Extractive Industries Transparency Initiative (NEITI) has released its 2021 oil and gas industry report with a startling revelation that the Nigerian National Petroleum Company Limited (NNPCL) and 47 other companies operating in the sector owe the Federal Government $9.85 billion. It was $8.265 billion as at 2021.
The money springs from collectible revenue due to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Federal Inland Revenue Service (FIRS).
NEITI said the 47 companies owe $1.342 billion while that of the NNPCL stands at $6.923 billion as at 2021.
The Executive Secretary of NEITI, Dr. Orji Orji, made the disclosure while giving a highlight of the 166-page report in Abuja on Monday.
According to him, NNPC and its subsidiary, the Nigerian Petroleum Development Company (NPDC) should be thoroughly investigated while other debtor companies are encouraged to promptly pay their outstanding liabilities.
He called on agencies to intensify efforts to recover the debt. The report, Orji noted, captured the activities of 69 companies and the Nigeria Liquefied Natural Gas (NLNG) as a standalone entity. He added that the report also covered 13 government entities and one state-owned enterprise which is the NNPCL.
Dr. Orji also revealed that the outstanding cash-call liabilities payable by the Federation stand at N330.007 billion.
On deductions made from the NNPCL account before remittance to the federation, Dr. Orji revealed that N751.11 billion ($1.94b) was not due for payment as at December 2021.
“N334.87 billion ($871.15m) was outstanding liability as at December 2021 and N1.20 trillion ($3.15 billion) was deducted against the domestic sales proceeds as subsidy. Crude and product losses was N16.20 billion. Pipeline repairs maintenance stood at N22.05 billion and strategic stock holding was N6.15 billion,” he said.
The NEITI boss advised that NNPCL should first remit revenue to the federation account before applying for its entitlements and not the current practice of making deductions before remittance.
Dr. Orji added that out of the 69 companies selected, Lekoil Limited did not submit any information for reconciliation but made payments. The total payments by Lekoil, he said, amounted to US$7,756,000, representing 0.03365 per cent of the total revenue.
The report recommended that NEITI should take measures to ensure compliance of covered entities with the annual audit process, in view of revenue implications to the government.
The report also it is necessary for NEITI to activate its sanctions mechanisms and observed that in 2021, 12 (34 per cent) of the production sharing contract (PSC) blocks recorded production, while 23 other blocks, representing 66 per cent of total numbers of PSC blocks did not produce. Total production from the PSCs, which was 242.96 mmbbls represents 42.92 per cent of total production of the 566.13mmbbls.
The PSC arrangements, which contributed highest to the total production volumes operated only 34 per cent of the total allocated blocks.
To this end, the report recommended that the NUPRC and NNPCL should speedily review the technical, operational and other constraints limiting production from the idle PSC blocks with the view of optimizing production from the PSC arrangements.
“Where these issues cannot be resolved, consider revocation of licenses and subsequent allocation to other interested parties”, it added.
The report also reviewed processes that characterized all transactions within the petroleum 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 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.
