The House of Representatives on Tuesday flagged-off investigative hearing into over $6.479 billion debts owed Federal Government by oil and gas companies operating in the country.
As contained in the Nigeria Extractive Industries Transparency Initiative (NEITI) reports, the total outstanding liabilities of $638.090 million recorded in 2017 was due to DPR; while from the total outstanding liabilities of $6.207 billion recorded in 2018, the sum of $3.849 billion was due to DPR while $2.358 billion was due to FIRS.
In the 2019 NEITI report, the total outstanding liability stood at $6.479 billion out of which $5.002 billion was due to DPR while $1.477 billion was due to FIRS. In the same vein, the debt profile as of 31st December, 2020 stood at $3.171 billion out of which $3.094 billion was due to DPR while $77.097 million was due to FIRS.
For 2021, the status of the liabilities showed that $73.097 million was outstanding as of 30th September, 2021, with a Grand Total of $1,964,036,289.54 and 1,969,795.92 pounds owed by 84 oil companies operating in the country.
Speaking during the investigative hearing into the debts owed by the oil companies, Director General/Chief Executive of National Oil Spill Detection and Response Agency (NOSDRA), Idris Musa averred that Nigeria loses about $7.733 billion due to emission reduction charges, based on natural gas unit rate from US Energy Information Administration on the United States Natural Gas Industrial Price (in dollar per thousand cubic feet).
“According to the Gas Flare Tracker (GFT), Nigeria flared 1.1 billion Mscf. This amounts to a loss of about 2.2 billion dollars to the Nigerian economy for the period under review. Based on the National Gas Flare Commercialization Programme launched December 13, 2016, all gas flare points have been taken over by the Federal Government and are to be sold by Nigerian Upstream Petroleum Regulatory Commission (NUPRC). The programme waived penalties, as flared gas is now owned by the Federal Government rather than operators.”
He added that NOSDRA imposed a fine of $3.6 billion on Shell Nigeria Exploration and Production Company (SNEPCO) Bonga Oil Spill of December 2011 where 40,000 barrels of crude oil were spilt into the marine environment before the spill could be combated but noted the company appealed and the case is still ongoing.
Meanwhile, the FIRS record on the status of the money recovered from 38 oil companies as of 31st January, 2022 stands at $512,602,086.12 while NPDC records showed a total sum of $392,613.105.88, with a Grand Total of $905,215,192, while total outstanding liability was put at $467,691,568.67.
According to some documents submitted to the Committee, President Muhammadu Buhari approved a 50% waiver of a total sum of $880.139 million for Nigerian Petroleum Development Company (NPDC) in line with the special request made by the NNPC Group Managing Director, Mele Kyari.
President Buhari’s approval was conveyed via a letter with Ref. No: PRES/158/NNPC/85/87/MF/204 dated 9th July, 2021 signed by the Chief of Staff to the President, Professor Ibrahim Gambari, and addressed to the NNPC GMG and Minister of Finance, Budget and National Planning.
The approval was conveyed on the same day the NNPC Managing Director, Mele Kyari sent the 5-page letter titled: Special request for a waiver of fifty per cent (50%) outstanding of outstanding tax liabilities of the Nigerian Petroleum Development Company (NPDC)’, through which he urged “Mr President to kindly direct the Honourable Minister of Finance, Budget and National Planning to mandate the Federal Inland Revenue Service (FIRS) to i9mplement the above approval as provided in Sections 23(2) and 89 of the Corporate and Allied Matters Act (CITA) as amended.”
According to Kyari, NPDC which was involved in 34 concessions with an equity production of circa 200,000 bopd, supplies over 650 million standard cubic feet per day of gas to the domestic and export market.
“The company’s financial health is threatened by the growing level of receivables from the Federation and other critical stakeholders, especially in the power sector amounting to over Two (N2) Trillion naira. NPDC cannot exercise the typical option of declining the supply of gas to the power sector.
“The payment defaults by the power sector and other stakeholders have continued to impair NPDC’s ability to settle huge tax liabilities tied to unpaid gas delivered to the domestic market,” the letter read in part.
He observed that NPDC has made a significant contribution to the revenue profile over the past five years, worth an average of $1 billion per annum from its operations in form of royalties, taxes, including Petroleum Profit Tax (PPT), Company Income Tax (CIT) and Withholding Tax (WHT), and other sundry payments to the Federation and other arms of Government.
He added that the Company’s tax liabilities were assessed at $5,165,501,201.38 out of which over $4 billion has been paid.
According to him, “these tax liabilities arose mainly from gas sakes to power sector, while the gas revenue continues to be recognized and serves as the basis for computing the taxes. The liquidity in the power sector and the inability of the Nigerian Bulk Electricity Trading Plc (NBET) to settle power sales have continued to impact the ability for gas supply and are impacting NPDC’s cash position and ability to meet tax obligations.
“Also, the harsh economic realities occasioned by the COVID-19 pandemic has been adversely impacting on the operations of NNPC and its subsidiaries. We have experienced a huge decline in crude oil prices and a growing level of receivables from the Federation and other critical stakeholders, especially the power sector amounting to over Two Trillion Naira (N2 Trillion) which has remained unpaid and may be unrecoverable in the near time.
“To meet up with its obligations and support petroleum operations, NPDC entered into a Prepayment Agreement and raised One Billion United States Dollars (US$1 Billion) to offset overdue tax obligations to the Federal Inland Revenue Service (FIRS) and to fund growth plans across the Company’s assets.
“Out of the funds raised, the sum of Seven Hundred Million United States Dollars (US$700 Million) was paid to FIRS. This payment was significant and helped FIRS to achieve this set revenue target.”
According to the letter on the outstanding tax liabilities, Kyari observed that: “The Company remains committed to settling its tax obligations. It has conducted a tax reconciliation meeting with FIRS and continued to meet all due obligations in a timely manner since the conclusion of the exercise.
“However, the huge outstanding bill of Eight Hundred and Eighty Million, One Hundred and Thirty-Eight Thousand, Five Hundred and Fifty-Six United States Dollars and Ninety-Four Cents (US$880,138,556.94) continues to threaten the capacity of NPDC to meet its obligations as at when due.
“As part of our efforts to sustain a stable financial health for NPDC, we have appealed to FIRS to consider granting a waiver of the outstanding tax liability which has accumulated largely due to defaults by stakeholders in the Power Sector.”
According to him, “FIRS in their response letter, Ref: FIRS/EC/CWNPDC/21/002 dated March 8, 2021 (copy attached) conveyed the regulatory requirements for the waiver of twenty-five per cent (25%) of the outstanding liabilities. FIRS clarified that it does not have the authority to waive established liability of taxes outstanding against any company and such waiver can only be granted upon Presidential Approval.”
Speaking during the investigative hearing, the representative of Minister of Petroleum Resources, Timipre Sylva disclosed that some oil and gas companies have started paying outstanding liabilities after the House announced plans to investigate their activities.
While declaring the investigative hearing open, the Speaker, Hon. Femi Gbajabiamila observed that the 77 oil and gas companies owed excess of N2.600 trillion according to the NEITI report.
While noting that the amount was significant, “when the country is confronting significant revenue shortages, coupled with an overwhelming need to address longstanding developmental challenges, there is a greater obligation on the government to do all that is necessary to recover these sums.
“For these reasons, the House resolved to investigate these debts, conduct a proper reconciliation of accounts between the federal government and oil companies and urge the National Extractive Industries Transparency Initiative (NEITI), the National Oil Spill Detection Agency (NOSDRA) and the Federal Inland Revenue Agency (FIRS) to provide the data required to facilitate the recovery of debts owed to the Federal Government by the oil and gas companies.”
While soliciting the support and cooperation of all the regulators, industry operators and other stakeholders, the Speaker threatened to sign a warrant of arrest against anyone who fails to appear before the Ad-hoc Committee.
YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE
We Have Not Had Water Supply In Months ― Abeokuta Residents
In spite of the huge investment in the water sector by the government and international organisations, water scarcity has grown to become a perennial nightmare for residents of Abeokuta, the Ogun State capital. This report x-rays the lives and experiences of residents in getting clean, potable and affordable water amidst the surge of COVID-19 cases in the state…
Selfies, video calls and Chinese documentaries: The things you’ll meet onboard Lagos-Ibadan train
The Lagos-Ibadan railway was inaugurated recently for a full paid operation by the Nigerian Railway Corporation after about a year of free test-run. Our reporter joined the train to and fro Lagos from Ibadan and tells his experience in this report…
[ICYMI] Lekki Shootings: Why We Lied About Our Presence — General Taiwo
The Lagos State Judicial Panel of Inquiry probing the killings at Lekki Toll Gate, on Saturday resumed viewing of the 24hrs footage of the October 20, 2020 shooting of #EndSARS protesters by personnel of the Nigerian Army…
ICYMI: How We Carried Out The 1993 Nigerian Airways Hijack —Ogunderu
On Monday, October 25, 1993, in the heat of June 12 annulment agitations, four Nigerian youngsters, Richard Ajibola Ogunderu, Kabir Adenuga, Benneth Oluwadaisi and Kenny Razak-Lawal, did the unthinkable! They hijacked an Abuja-bound aircraft, the Nigerian Airways airbus A310, and diverted it to Niger Republic. How did they so it? Excerpts…
Sahabi Danladi Mahuta, a community mobiliser and APC chieftain. Mahuta spoke to select journalists at the sidelines of an Islamic conference in Abuja recently. Excerpts…
and then