Arising from the intervention of the Nigeria Extractive Industries Transparency Initiative (NEITI), the Federal Government has recovered N2.6trillion from taxes and royalties from international oil companies in the country. However, there is still an outstanding $2.6billion debt yet to be collected from the oil companies. The Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji, disclosed this at its recent Civil Society Organisation’s and Media engagement forum, which holds every three years.
The forum serves as a quality assurance mechanism to ascertain the level of compliance and progress in implementing its standards among member countries, including Nigeria. According to NEITI, since such infraction will be treated as ‘economic crime,’ defaulting oil and gas companies may likely be prosecuted by the Economic and Financial Crimes Commission (EFCC).
In its 2019 Annual Report, 77 oil and gas companies were indicted for owing the Federal Government about $6.8billion. Later, the number was reduced to 51 firms after 26 companies remitted $3.2billion. These include taxes and Value Added Tax (VAT) collected by the Federal Inland Revenue Service (FIRS) and royalties collected by the Nigeria Upstream Petroleum Regulatory Commission (NUPRC). Others outstanding debts include education, company income tax and withholding tax.
Having lost an estimated 13.21 million barrels of oil worth N603billion between January and August 2022, and 470,000bpd to due to crude oil theft, a situation that has hindered Nigeria from meeting its OPEC quota, it is important that more effective measures should be put in place to recover all outstanding debts and remit them to the Federation Account. The Petroleum and Natural Gas Senior Staff Association of Nigeria protested recently against oil theft in Abuja, Lagos, Kaduna and Warri.
We call on the Federal Government to tackle the oil theft challenge with great urgency considering its deleterious effect on the economy. Let the oil thieves be apprehended and prosecuted. As the NEITI’s report has shown, beyond oil theft and pipelines vandalism, the unremitted revenues by the oil majors could address power supply crisis, fix our dilapidated roads, revamp the education and health sectors and create more jobs.
All taxes and royalties must be duly collected. The agencies in charge of these taxes must live up to expectation. NEITI should not allow the outstanding debt to remain unpaid before the next audit report. It can take advantage of the Memorandum of Understanding (MoU) it signed with the EFCC, the ICPC and the Nigerian Intelligence Unit, to recover all outstanding debts. The international oil companies should not operate as if they are above the laws of the land. For instance, oil companies have reportedly failed to take government officials and agencies seriously in paying fines as recommended by law on gas flaring.
Henceforth,government should strictly enforce the gas flaring law. As major players in the sector, the oil companies are enjoined to promptly pay their taxes and royalties. Therefore, we urge all oil companies to show transparency by evolving best sustainable business practices in their operations. The prudent management of the nation’s extractive resources cannot be over-emphasised.
Beyond the efficient collection of taxes and charges, the Nigeria National Petroleum Company Limited (NNPCL) can deploy technology to monitor oil pipelines and curb oil theft. Presently, Nigeria is ranked number one globally in oil theft. That is not good for the economy. Unfortunately, the concerned authorities could neither ascertain the quantity of crude oil produced in the country nor the amount stolen.
That is possibly why Nigeria is not benefiting from the current high price of crude oil in the international market. While the recovery of the debts owed by the oil companies is commendable, there is need to judiciously utilise the money to develop some critical sectors of the economy. In addition, let the four refineries be made to work again by December this year as promised by the government. Alternatively, new refineries can be built to augment the old ones. With functional refineries, Nigeria can effectively abolish the corrupt oil subsidy regime.