FG generates N2trn from royalty recovery scheme

FEDERAL Government said it has generated almost N2trillion from royalty recovery scheme aimed at recovering royalty indebtedness by exploration oil firms in the country.

Oil and gas royalties refer to funds received from the production of oil or gas, free of costs, except taxes. Oil and gas royalties are also the cash value paid by a lessee (oil firm) to a lessor (Nigerian government) or to one who has acquired possession of royalty rights, based on a percentage of gross production from the property, free and clear of all costs.

Speaking during a Ministerial Briefing on the achievements of DPR on COLT and other automation initiatives at DPR office in Lagos on Monday, the Minister of State for Petroleum Resources, Dr Ibe Kachikwu stated that “the royalty indebtedness recovery which is largely pushed by the Presidency was aimed to recover a lot of royalty that was outstanding by most of the players in the field.

“The process of determining royalty in the past was largely driven by initiatives of oil companies that determine what they produce and we calculate the royalty based on their own figure. But now, we have been able to use the system we have now to see what the actual productions are. Under the rule, you don’t get your renewals unless the outstanding royalties are paid.

“For those that have shown the seriousness and mapped out how they intend to settle their indebtedness, we will review, but we won’t give out the final certificate until you have settled and this has generated about N2trillion so far as a result of this royalty recovery scheme.”

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“Another one is the Accelerated Lease Renewal Program (ALRP) which was put in place in 2015 for the purpose of creating revenue for the government. In 2015/2016, remember our revenue was very down and the whole idea was to find money and reduce loans. We reviewed the fees payable for renewals by 50-100 per cent, and we are able to renew quite a number of fields. It’s a voluntary scheme; it does not compel you before it is due for you to apply. It is simply saying it is nice for you to apply and most people have responded. By the time we finish, we would have generated income of about $1.5billion. This is perhaps the highest we have generated in terms of renewals,” he said.

He commended the Director of DPR, Mordecai Ladan, and his team for ensuring that policies of the federal government regarding oil sector reforms are duly complied with.

“It is one thing to set these policies, it is another to have the agency in charge to work assiduously within the time you set for them and achieve results. I congratulate Director of DPR and his team,” he said.

in his welcome address, the DPR Director, Mordecai Ladan, said the minister has been involved in the projects, “so we called him to engage the media in discussing and showcasing some milestones that have been achieved by the regulatory agency of the petroleum ministry, the DPR. Today is the D-day and you are highly welcome the honourable minister.

“As you have heard, several milestones have been scored by this department. We have had instances for which we showcase some of them but there are others that the minister has been very impressed with and we say we should come here and discuss these milestones with the media. Showcasing some of the aspirations of this government since inception and since the period he has become the minister of state for petroleum resources. He has challenged us and we equally have been challenged and in tackling the challenges, we ensured that we meet these aspirations to take the oil and gas industry to the next level.”