THE decision of the Economic and Financial Crimes Commission (EFCC) and the Nigeria Extractive Industries Transparency Initiative (NEITI) to go after oil companies that failed to remit due revenues to the Federal Government is laudable. It is a step that must be painstakingly carried out and those found to have withheld such funds prosecuted. A recent NEITI audit report put the amount of unremitted funds at over $11 billion (more than N3 trillion). Only about $2.5 billion out of this amount was said to have been recovered. The unremitted funds arose mainly from under-assessment and under-payment of taxes, royalties and other requisite payments by oil companies operating in the country. Part of the unremitted amount is said to have been disputed by the oil majors over the pricing methodology used for a sum amounting to $599.8 million in 2013 alone. The unremitted revenue is besides the $12.9bn that the Nigerian National Petroleum Corporation (NNPC) is alleged to have failed to remit to the Federation Account in eight years.
Executive Secretary of NEITI, Mr. Waziri Adio, who disclosed the agency’s formal alliance with EFCC to recover the unremitted funds during his recent visits to media houses, said the probe would cover all the areas that financial crimes were committed against the nation. He said the collaboration with the anti-graft agency became necessary because the NEITI Act does not give it power to prosecute those who fail to remit their taxes and royalties.
Apart from the $12.9bn allegedly owed by NNPC, the NEITI boss also said that the corporation and its subsidiaries were yet to remit $3.787bn and another N358.3bn, as identified in the 2013 oil and gas industry audit. The management of NNPC had disputed the amount, while the Senate recently set up a nine-man ad hoc committee to look into the 2013 NEITI audit report. Nigeria is said to have lost at least $5.96bn and another N20.4bn to offshore processing arrangement, crude swap and oil theft.
We urge the EFCC and the Senate ad hoc committee to do a thorough job in all matters relating to unremitted revenue by oil firms. The sum said to be owed by the oil companies is high. The culprits should not be allowed to go unpunished. The probe should closely examine the NEITI audit report and recommend measures to stop the willful withholding of oil taxes and royalties. It is important to prosecute the culprits to serve as deterrent against future impunity.
It is disheartening that NNPC and its subsidiaries have been constantly indicted by NEITI and other audit reports, including the 2014 PricewaterhouseCoopers audit report on the non-remittance of various sums of money to the Federation Account as required by law. Yet, the corporation continues to act with impunity as if it is not accountable to anyone. This is the time to rein in those dodging the remittance of due payments in the oil industry. They ought to be stopped and brought to book as they are cheating the nation of revenue that the government needs for different developmental projects in the country.
Considering the fact that oil revenue accounts for over 70 percent of government’s total revenue receipts, it is important to ensure that all such payments are remitted to the Federation Account. This is a logical step towards the transparency and accountability that we desire in the oil sector. Oil firms, including NNPC, should no longer be allowed to act with impunity.
For example, a breakdown of outstanding revenues to the Federal Government in the NEITI report shows N351.87bn, representing unpaid domestic crude debt as at December 2013 after considering subsidy approved by Petroleum Products Pricing Regulatory Agency (PPPRA). This is in addition to another N2.17bn outstanding cash call refund on Oil Mining Licence (OML) 41 in the NNPC/SPDC divested assets.
During the immediate past administration, several questions were raised on NNPC’s management of revenues on behalf of the Federal Government, although the agency denied all allegations of wrongdoing. It is high time the NEITI report was taken seriously. This can be done by ensuring that its recommendations are implemented. The levity with which the report was treated in the past encouraged and entrenched impunity in the oil companies’ handling of monies due to the Federation Account. The relevant government agencies must begin to closely monitor the operations of oil companies. As the PWC audit report showed, NNPC’s opaque operations lend it to untoward activities, including non-remittance of revenue to the Federation Account in line with the provisions of the constitution and other extant laws. There is no reason why the NNPC and other oil firms operating in the country should act outside the powers setting them up.
Let the collaboration between NEITI and EFCC lead to the recovery of the unremitted funds and the diligent prosecution of those responsible for withholding the payments to send the strong message that such acts of impunity will no longer be tolerated in the country.