NEITI Uncovers Major Discrepancies in Nigeria’s Oil Revenue Management – The Nigerian Extractive Industries Transparency Initiative (NEITI) has recently unveiled a report identifying significant shortcomings in Nigeria’s oil revenue management. Key concerns revolve around unremitted revenues, untaxed sums, and governance lapses.
A staggering revelation from NEITI states that unremitted revenues from several government agencies and entities in the oil and gas sector totaled over $9.85 billion in 2021, a significant figure against the year’s total revenues of N23 billion.
Moreover, the report showcased substantial outstanding financial liabilities. As of July 31, 2023, the Federal Inland Revenue Service was owed $13.591 million, and by the close of 2022, the Nigerian Upstream Petroleum Regulatory Commission had yet to collect tax revenues amounting to $8.251 billion. Alarmingly, over 80% of these financial dues are attributed to the Nigerian National Petroleum Company Limited (NNPCL).
Further, despite an allocation of nearly N200 billion towards refinery rehabilitation between 2020 and 2021, no refineries were operational in 2021. This expenditure was subtracted directly from federation sales proceeds.
In terms of crude oil production and exports, 68.47 million barrels out of the 634.60 million barrels of total metered crude oil production were lost due to measurement inaccuracies, production adjustments, theft, and sabotage. The report also emphasized that 29 companies experienced theft and sabotage, resulting in a loss of 37.57 million barrels. The silver lining, albeit small, is the decrease in losses from 39.08 million barrels in 2020 to 37.57 million barrels in 2021, attributed mainly to reduced crude oil production.
Additionally, NEITI highlighted revenue losses stemming from companies that, after acquiring marginal field licenses in 2021, failed to pay signature bonuses. Surprisingly, four firms not on the awardee list did remit their payments.
For enhanced transparency and accountability, NEITI has urged the NNPCL to provide subsidy details and their beneficiaries, account for the Project Eagle loan transactions, and scrutinize all pre-export financing deals and other loan agreements made in return for the country’s crude oil and gas.
Moreover, NEITI has recommended a change in the computation of the 13% derivation based on total revenue collections for relevant periods, adhering to Section 162(2) of Nigeria’s constitution.
Orji Ogbonnaya Orji, NEITI’s executive secretary, emphasized the report’s public availability and urged relevant government agencies, media, and the public to utilize its findings. He acknowledged NEITI’s limitations, noting its lack of enforcement or full investigative powers, but highlighted its role in offering empirical data for public consumption.
According to Orji, the present government’s strategy revolves around reducing the debt-to-GDP ratio to bolster revenue, which would then be channeled to tackle pressing national issues.
While NEITI consistently releases yearly audits of the oil, gas, and solid minerals sectors, critics argue that these reports often surface too late, hampering timely actions against the indicted companies and government entities.
This report’s publication aligns with Nigeria’s national and global obligations under the EITI/NEITI framework, ensuring transparency in the country’s extractive sectors.