- $6bn, N66bn Debts, Unpaid Royalties, Taxes Saga Rock Industry
- EFCC Swings Into Action, To Probe Companies Fingered In Report
- Why FG Should Allow Independent Marketers To Lift Petrol From Dangote Refinery-Reps
- Despite Buying From Dangote Refinery, NNPC Ltd Still Subsidizing Petrol Price- PENGASSAN Claims
By Babajide Okeowo
The Nigerian oil and gas industry has again been rocked by fresh controversy.
While the industry is still to fully recover from the pricing controversy between Dangote Refinery and the Nigerian National Petroleum Company NNPC Ltd, the Nigeria Extractive Industries Transparency Initiative (NEITI) has added more fuel to the raging inferno.
READ ALSO: NEITI: Revenue Generating Agencies Remitted N14.38 trn to Federation Account in 2yrs
In its ‘2022/2023 Independent Oil and Gas Industry Report’ unveiled in Abuja on Thursday, the oil and gas industry watchdog claimed that the federal government is owed $6.071 billion and N66.4 billion, respectively, in unpaid revenue by oil companies operating in the country as of June 2024.
Giving a breakdown of the debt, NEITI said outstanding liabilities were $6.049 billion and N65.9 billion in unpaid royalties and gas flare penalties, due to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) as of August 31.
Also, outstanding Petroleum Profit Taxes (PPT), Company Income Taxes (CIT), Withholding Taxes, and Value-added Tax (VAT) amounting to $21.9 million and N492.8 million were due to the Federal Inland Revenue Service (FIRS) as of June 2024.
NEITI said among other key findings in the report, is a significant reduction in petrol importation — which fell from 23.54 billion litres in 2022 to 20.28 billion litres in 2023.
Also, NEITI said N15.87 trillion was claimed as under-recovery or price differentials between 2006 and 2023, with the highest amount, N4.71 trillion, recorded in 2022.
“On crude production, fiscalized crude production in 2022 stood at 490.945 million barrels, compared to 556.130 million barrels produced in 2021, representing an 11% decline,” the agency said.
“However, in 2023, NEITI’s independent report revealed total fiscalised production of 537.571 million barrels, a 46.626 million-barrel or 9.5 percent increase from total production recorded in 2022.
READ ALSO: NEITI, Stakeholders Meet to Review Nigeria’s 2023 Extractive Industries Report
“A 10-year trend (2014–2023) of fiscalised crude oil production in Nigeria shows the highest production volume of 798.542 million barrels was recorded in 2014, while the lowest, 490.945 million barrels, was recorded in 2022.”
According to NEITI’s data on crude lifting, in 2023, 534.159 million barrels were lifted, compared to 482.07 million barrels in 2022 and 551 million barrels in 2021.
“On oil theft and crude losses, a total of 7.68 million barrels of crude were either stolen or lost in 2023, representing a significant drop of 79% (29.02 million barrels) compared to 36.69 million barrels either stolen or lost in 2022,” the report said.
“On overall revenue generation in the oil and gas industry, the report showed that material companies accounted for US$15.549 billion (96%) and non-material companies for US$695.604 million (4%) in revenues generated in 2022.
“In 2023, material companies accounted for US$21.415 billion (95%), and non-material companies accounted for US$1.238 billion (5%). The revenues came from 17 identified revenue streams, including proceeds from taxes, oil and gas sales, dividends from NLNG, royalty payments, signature bonuses, gas flare penalties, and concessions.”
Reacting to the expose, Ola Olukoyede, chairman of the Economic and Financial Crimes Commission (EFCC), vowed to investigate and recover debts owed to the government, citing NEITI’s reports as crucial in the fight against corruption.
“Where NEITI’s work stops, EFCC’s begins,” Olukoyede thundered.
He said the EFCC will probe companies identified in the report.
“This demonstrates the effectiveness of NEITI’s reports in recovering public funds and promoting accountability,” Olukoyede said.
He also said as of Wednesday, over N1 billion has been approved for remittance to the federation account as a result of investigations sparked by NEITI’s previous report.
Olukoyede said additional investigations are ongoing and every recovered funds would be sent to the federation account.
Meanwhile, the House of Representatives has described the position of the Nigerian National Petroleum Company NNPC Ltd as the sole offtaker of premium motor spirit (PMS) popularly known as petrol from Dangote Refinery as spelling monopoly and akin to greediness.
This is even as the lower chamber flayed the state oil company for being unable to manage the country’s crude oil and refineries over the years.
Consequently, the green chamber called on the federal government to mandate the NNPC Limited and Dangote Refinery to allow independent marketers to lift petrol directly from the refinery.
The lower chamber also urged the management of Dangote Refinery to build, acquire, or partner to establish tank farms or depots across the geo-political zones of the country, to ease access to petroleum products for the public to make the products readily available and cheaper.
This call followed a motion of urgent public importance moved on Thursday by Oboku Oforji (PDP, Bayelsa) during plenary.
According to Oforji the exclusion of independent marketers threatens competition in the sector.
He noted that competition is essential for reducing costs, adding that some marketers may resort to importing products to survive in the market.
NNPCL and the major marketers being the exclusive off-takers spells monopoly, which is tantamount to greed. This is the same NNPCL that has failed to manage our crude and refineries for decades,” the lawmaker said.
Continuing, he said: “In view of the high demand by millions of Nigerians for PMS, and the ordeal they go through to obtain it, NNPCL should allow independent marketers to lift the product from the Dangote refinery.
READ ALSO: NNPC Ltd, Dangote Refinery’s Face-Off: Federal Government Distances Self
“Allowing NNPCL and major marketers to lift PMS from the refinery, to the exclusion of independent marketers, is not acceptable.”
In the motion, Oforji also commended the refinery for its impact on energy sovereignty of the country.
“Nigeria is driving towards energy self-sufficiency, cost and foreign exchange savings, meeting the increasing demand for fuels, attraction of foreign capital investment, generation of Forex through export of finished product,” he said.
The motion was adopted without debate, and it was unanimously passed when Speaker Abbas Tajudeen put it to a vote.
In a related development amid the ongoing debate on why the Independent Marketers were excluded from lifting petrol directly from Dangote Refinery, the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has disclosed that despite Buying locally, the state oil company was still subsidising the product.
Festus Osifo, president of the association, during a press conference in Lagos recently, said one of the reasons is that petrol prices will rise beyond the current level, as oil marketers will sell without subsidy.
Speaking on the issue, Osifo said the NNPC was the sole buyer of petrol from Dangote refinery because the company was “putting some form of subsidy” on the product.
Hear his explanation, “NNPC takes the product at N950 per litre. They would now offer it to marketers around over N700 because if they offer it at N950, we will be buying premium motor spirit (PMS) today at about N1,100 to N1,200 official price, even across NNPC retail stations,” he said.
“What that means is that NNPC buys it at a cost, but they would go back and put some level of subsidy in it.
“That is the reason why other marketers can not go today to Dangote refinery to buy.”
He said the national oil company is not preventing other marketers from lifting the product from the refinery.
“If NNPC is buying at N950 per litre from Dangote with all the cost inputed in it and they are now selling at N700 plus to marketers, it means that there is a shortfall that NNPC is managing,” Osifo said.
“But if you ask TotalEnergies, for example, to buy from Dangote, TotalEnergies would buy from Dangote at almost the same price but TotalEnergies would sell to marketers at maybe N1,000 plus.”
He said this means that petrol sold by NNPC to other marketers would be cheaper and that from TotalEnergies, much more expensive.
“That is why they (marketers) are staying away. It is not that NNPC wants to be monopolistic,” he said.
Continuing, he held that indigenous oil companies do not have the financial strength to fund the assets they acquired from international oil companies (IOCs).
Osifo said there are practical cases of local companies that bought some assets from IOCs but the assets depleted because “they can not manage them very well”.
“These companies are practical cases of local companies that bought over some of the fields hitherto managed by the IOCs. But they could not operate because all they were doing was extracting oil from wells till it got dry,” Osifo said.
He said the oil and gas business is not cheap, and is a petrodollar business, which is highly capital-intensive.
“TotalEnergies built one field alone with $16 billion. How many banks in Nigeria would be able to fund a project of that magnitude? If you join all the banks’ capital bases together, I am not sure they can fund a $16 billion project. That shows you how capital-intensive the projects are,” Osifo said.
Speaking further, he said most IOCs have strong technical and financial partners all over the world, giving them easy access to funds.
“An ExxonMobil can come and bring a business of $20 billion and put it in Nigeria, and they will get partners because ExxonMobil is listed on the New York Stock Exchange, the London Stock Exchange, and all great exchanges in the world,” he said.
“They can easily attract funding because, over the years, they have developed that partnership. They have developed their creditworthiness, but it will be difficult for a local company to go to Bank of America or go to Bank of China to attract funding.”
According to Osifo, the union supports the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) efforts in running a check on prospective investors.
He said part of what the NUPRC is doing that “made us adopt their six cardinal frameworks” is that before they “allow you to come into the field, they will check if your finances are able to develop this field”.
Osifo stressed that the union wanted the companies to do well to employ more workers instead of retrenching.
