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The Nigeria Extractive Industries Transparency Initiative (NEITI) has disclosed that the oil and gas sector has an outstanding amount of over $6.071 billion and N66.4 billion due to the federal government as of June 2024.
These figures were among the information contained in NEITI’s 2022 and 2023 Independent Oil and Gas Industry Report, conducted by the National Stakeholders Working Group (NSWG) with support from the Rule of Law and Anti-Corruption (RoLAC) Programme and released today, Thursday, September 26, 2024.
The Report reviewed all aspects of the regulatory framework for the oil and gas industry, including the legal framework, fiscal regime, roles of government entities and reforms, laws (PIA 2021), and regulations relating to addressing corruption risks in the oil and gas sector
Speaking at the public presentation of the Report, Secretary to the Government of the Federation, Sen. George Akume, reaffirmed “the unwavering commitment of the Federal Government of Nigeria to the principles of the Extractive Industries Transparency Initiative (EITI) being implemented in the country’s oil and gas sector by NEITI.
Akume, who also chairs the NEITI board, acknowledged that information and data provided by NEITI’s independent reports have consistently proven invaluable to the government. These reports have guided policy decisions, reforms, and measures that foster accountability, particularly in the oil and gas sector. In a sector where opacity could easily lead to leakages, inefficiencies, and corruption, NEITI has become an indispensable partner in ensuring that Nigerians are fully aware of how their commonwealth is managed.
“We consider the EITI not only as a global standard for promoting transparency in the management of revenues from natural resources but also as a tool to strengthen public trust, accountability, and economic growth,” the SGF stated.
He gave assurances that the government’s commitment to this process extends beyond simple endorsement. The Federal Government considers NEITI’s role as a beacon of transparency and accountability in the extractive industries, and the credibility of its reports serves as a foundation for formulating national policies, fighting corruption, revenue growth, and ensuring equitable distribution of revenues. The data contained in this report will inform critical government decisions moving forward, especially as we continue to prioritize resource management, revenue mobilization, and public accountability.
The SGF further emphasized, “As the Chairman of the NEITI Board, I stand before you today to underscore the Federal Government’s respect for NEITI’s independence. While my role as Chairperson is a testament to the importance the government places on NEITI, it also signifies the commitment to ensure that NEITI operates independently, without interference, as mandated by the EITI standard. It is our duty to safeguard this independence with great care and diligence, ensuring that NEITI can operate free from undue influence,” he concluded.
Presenting a summary of the report conducted by Adeshile Adedeji and Co Chartered accountants, it showed that the 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 as collectible revenues by August 31, 2024. The report also provides a detailed analysis of the information and data regarding who owes what in outstanding revenues due to the government.
A further breakdown showed outstanding petroleum profit taxes, company income taxes, withholding taxes, and VAT due to the Federal Inland Revenue Service, amounting to $21.926 million and N492.8 million as of June 2024.
On fuel importation, the 2022/2023, the NEITI report disclosed that a total of 23.54 billion litres of PMS (premium motor spirit) were imported into the country in 2022, while 20.28 billion litres were imported in 2023.
This represents a reduction of 3.25 billion litres, or a 14% decline, following the removal of the subsidy. A detailed 10-year trend analysis (2014–2023) in the NEITI report shows that the highest annual PMS importation into the country, 23.54 billion litres, was recorded in 2022, while the lowest, 16.88 billion litres, was recorded in 2017. The NEITI report also disclosed that a total of N15.87 trillion was claimed as under-recovery/price differentials between 2006 and 2023, with the highest amount, N4.714 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. However, in 2023, NEITI’s independent report revealed total fiscalised production of 537.571 million barrels, a 46.626 million-barrel or 9.5% increase from total production recorded in 2022. 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.
The NEITI report also provided detailed information and data on crude lifting. In 2022, total crude lifting was 482.074 million barrels compared to 551.006 million barrels lifted in 2021. In 2023, total crude lifting stood at 534.159 million barrels, representing an 11% increase of 58.08 million barrels.
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.
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.
In his welcome remarks, Orji Ogbonnaya Orji Executive Secretary/CEO of NEITI noted that the report is not just a document; it is an invitation to action. We must collectively ensure that the findings and recommendations are translated into policies that will drive change in Nigeria’s oil and gas sector, ensuring that the wealth derived from our natural resources benefits all Nigerians.”
He added “The 2022/2023 report covers the entire oil and gas industry, including upstream, midstream, and downstream operations. It delves into critical areas such as revenues generated, taxes and royalties paid, production volumes, and overall industry performance. In addition, it explores issues around corporate social responsibility, environmental impact, and governance reforms. The goal is to provide stakeholders with a complete and accurate picture of the sector’s performance and the challenges it faces.”
In his remarks, Ikenga Imo Ugochinyere, the chairman, of the Committee on Petroleum Resources (Downstream) House of Representatives, National Assembly, Abuja noted that this year’s report which is the 12th edition since the inception of NEITI is coming at a time when the government of the day is in search for workable solutions which will enhance the economic fortunes of Nigeria and increase her revenue generation from non-oil sectors, for national development.
Transparency in the oil and gas industry should be paramount to overcoming the present challenges we face. It is only through openness and accountability that we can unlock the full potential of these sectors and ensure that the revenues generated benefit all Nigerians.
Reports like this will come in handy to aid policymakers and Legislators in the direction to take. As a Committee, we are currently working on amending the NEITI Act to strengthen its legal framework and enhance its effectiveness. This we have demonstrated through a Bill seeking to amend the NEITI Act to provide that the NEITI Board shall not be subject to interference from the Government and for related matters (HB No. 1428). This Bill which I sponsored was read for the first time on Thursday 6th June 2024. We have also proposed a Bill which seeks to grant power to NEITI to recommend the prosecution of offenders (i.e, those who fail to cooperate with NEITI by providing documents, information and/or data required in the course of investigation) and be entitled to receive 4% of the monies it recovers from any investigation it carries out.
