77 Oil Companies Owing Nigeria N2.659trn Unremitted Funds - NEITI

As Nigeria continues to grapple with revenue shortfall and has gone borrowing to finance its huge budget deficit with debt service gulping as much as 98 per cent of its revenue, it has been revealed that 77 oil and gas companies operating in Nigeria are indebted to the country to the tune of N2.659 trillion.

This is just as the Nigerian National Petroleum Corporation (NNPC) is expected to once more make a huge deduction of N149.2 billion from the federation’s joint account when the Federation Account Allocation Committee (FAAC) meets next month, a document seen by Akelicious yesterday revealed.

The Nigeria Extractive Industries Transparency Initiative (NEITI) which disclosed that 77 oil and gas companies were indebted to the federal government, attributed the debt to their failure to remit petroleum profit tax, company income tax, education tax, value added tax, withholding tax, royalty and concession on rentals.

Speaking in Abuja during an interaction with the media on the status of the Extractive Industries Transparency Initiative (EITI) implementation in Nigeria, the Executive Secretary of the organisation, Dr. Ogbonnaya Orji, stated that when converted to dollar, the government was being owed $6.48 billion at today’s official exchange rate of N410.35.

He noted that a breakdown of the figures showed that a total of $143.99 million was owed as petroleum profit taxes, $1.089 billion as company income taxes and $201.69 million as education tax. According to him, others included $18.46 million and £972,000 as VAT, $23.91 million and £997,000 as withholding tax, $4.357 billion as royalty oil, $292.44 million as royalty gas, while $270.187 million and $41.86 million were unremitted gas flare penalties and concession rentals respectively.

In view of the government’s current search for revenues to address citizens’ demand for steady power, access to good roads, quality education, fighting insurgency and creating of job opportunities for the country’s teeming youths, Orji stressed that the monies needed to be recovered.

An analysis of what the sum of N2.65 trillion could contribute to economic development, he said, showed that it could cover the entire capital budget of the federal government in 2020 or even service the federal government’s debt of $2.68 billion in 2020.

“In 2021, if the money is recovered, the N2.659 trillion, it could fund about 46 per cent of Nigeria’s 2021 budget deficit of N5.6 trillion and is even higher than the entire projected oil revenue for 2021.
This is why NEITI is set to work with the government to provide relevant information and data to support efforts at recovering this money.

“The disclosure of this information is in line with NEITI’s mandate to conduct audits, disseminate the findings to the public to enable the citizen’s, especially the media and civil society to use the information and data to hold government, companies and even society to account.

“It is important that the process of recovering this humongous sum be set on course to support government in this period of dwindling revenues,” the NEITI helmsman said.

The executive secretary called on the companies to ensure that they remit the various outstanding sums against them before the conclusion of the 2020 NEITI audit cycle to the relevant government agencies responsible for collection and remittances of such revenue.

“NEITI will no longer watch while these debts continue to remain in its reports unaddressed. We will provide all necessary information and data to sister agencies whose responsibilities are to recover these debts into government coffers. We will do also share the information and data with our partner anti-corruption agencies with whom we have signed MoUs,” he added.

Within the short period the new management was appointed, Orji disclosed that his team had succeeded in ensuring the reconstitution and inauguration of the NEITI board and commencement of process of reviewing of NEITI Act to strengthen its powers and functions. In addition, he listed the timely publication and presentation of the reports; securing permanent office accommodation for the agency after 17 years of squatting on rent; sustained and diversified partnerships with key stakeholders and partners as part of the initiative’s achievement.

According to him, the appointment of NEITI into the implementation of the Petroleum Industry Act (PIA); commencement of the development of a five-year NEITI strategic plan (2022-2026); NEITI audit automation project and Nigeria’s involvement in opening extractives programme, were further modest strides made by the organisation.
He stated that NEITI’s had further been appointed to lead the global EITI contract transparency network; designing of a new, functional and interactive website and reconstitution of the civil society and communication sub-committee, among others.

Earlier in his welcome remarks, the Chairman of the NEITI board, Mr. Olusegun Adekunle, assured that a lot more needed to be done in the EITI implementation in Nigeria, especially under the new PIA regime. He maintained that the solid minerals sector was begging for coordination, noting that the civil society and the media, being the third leg of the EITI tripod have critical roles to play in the Initiative.

“To effectively undertake this task of ensuring prudent management of extractive resources, there is need for effective oversight of the implementation of the EITI standard by all relevant frontline agencies of government and companies.

“NSWG looks up to you for you to effectively monitor these guidelines and to ensure that the standards are mainstreamed in the covered entities’ daily operations”, he said.

He reiterated the commitment of President Muhammadu-led administration to EITI implementation in Nigeria, noting that the administration was passionate about the EITI process.

The chairman assured members of the civil society and the media that the NEITI board under his watch would do all within its power to sustain the existing partnership and ensure a more robust and cordial relationship with civil society groups.

In his goodwill message, the Programme Manager, British Council/ Rule of Law and Anti-Corruption Programme (RoLAC), Mr. Emanuel Uche, commended NEITI under the current management for the modest achievements made within a short period.

NNPC Set to Deduct N149.2bn from October FAAC

Meanwhile, the NNPC will again make a huge deduction of N149.2 billion from the federation’s joint account when the Federation Account Allocation Committee (FAAC) meets next month, according to a document seen by Akelicious.

The NNPC FAAC presentation held on September 21, which detailed the corporation’s operations for the month of August, disclosed that as reported by THISDAY last month, the national oil company also withheld about N173.1 billion during the month to pay for what it terms under-recovery or value shortfall. An analysis of the document showed that net revenue to FAAC from the NNPC rose to N80 billion in August as against N67.280 billion in July, an increase of about N13.28 billion.

Year-to-date, the NNPC FAAC presentation showed that N714.7 billion had been paid as subsidy from January to August, with the eight month getting the lion’s share of N173.1 billion, while June came next with N164.3 billion, followed by May with N126 billion, then July in which N103.2 billion was spent on what the government terms under-recovery.

In the same vein, while no subsidy was paid in January, N24.3 billion was paid in February, N60.3 billion in March and N61.9 billion in April this year.

According to the NNPC, a pending N40 billion from June under-recovery would be subsequently subtracted from the federation account jointly run by the federal, state and local governments.

When the implementation of the Petroleum Industry Act (PIA) begins in earnest and the federal continues in its hesitation to stop payment of subsidy on petrol, it would be double jeopardy for the sub-nationals which would also be hugely affected by the deduction of the controversial 30 per cent frontier exploration fund.

“The value shortfall of N173,131,639,213.61, for July 2021 was charged. The balance of N40,000,000,000.00 for the June 2021 value shortfall will be deducted subsequently.

“The August, 2021 value shortfall of N149,283,084,869.20 is to be deducted from the September, 2021 proceeds due for sharing at the October, 2021 FAAC meeting,” the document disclosed.

In all, the overall NNPC crude oil lifting of 8.71 mbbls (export & domestic crude) in July 2021, recorded 0.87 per cent increase relative to the 8.66 mbbls lifted in June 2021, the corporation stated, with Nigeria maintaining 1.554 million bpd Organisation of Petroleum Exporting Countries (OPEC) production cut in July, 2021.

Crude Oil export revenue received in August 2021 amounted to $7.78 million, equivalent to N2.98 billion, while domestic gas receipts in the month was N5.69 billion.

According to the NNPC, feedstock valued at $64.66 million was sold to Nigeria LNG during the period, out of which $54.40 million was received during the month, the difference being Modified Carry Agreement (MCA) obligations, gas reconciliation and credit notes.

NLNG arrears amounting to $3.09 million was received during the period, while the sum of $151.26 million being miscellaneous receipts, gas and ullage (the amount by which a container falls short of being full) fees and interest income was received in August 2021.

In its July operations, for monies which were shared in August, NNPC had deducted a cumulative N215.3 billion from its contribution to joint Federation Account, being a combination of N175 billion value shortfall or subsidy and N40 billion Joint Venture (JV) cost recovery.

The data earlier obtained by THISDAY showed that NNPC paid N67.280 to the joint account in July, in contrast to the N47.162 in June. The July payment was about N20 billion higher than that of June.

Furthermore, in January, net revenue to FAAC was N90.8 billion, it was N64.161 billion in February, N41.184 billion in March, zero in April, N38.608 billion in May, N47.162 billion in June and N67.280 billion in July.

In June, the NNPC told the nation that Nigeria was losing about 42 million litres of petrol to the activities of smugglers across the country’s borders, increasing Nigeria’s estimated daily consumption of 60 million litres to 103 million litres, thereby worsening the subsidy payment regime.

Meanwhile, Brent oil, Nigeria’s crude benchmark, rose above $80 a barrel on Tuesday, the latest milestone in a global energy crisis, on signs that demand was running ahead of supply and depleting inventories.

The international crude benchmark hit the highest since October 2018, before paring some earlier gains to trade close to $80, while West Texas Intermediate (WTI) also climbed above $75.

However, the jump to $80 was adding inflationary pressure to the global economy at a time when prices of energy commodities are soaring, especially in Europe and America.

Other things being equal, oil has rebounded from its collapse last year amid record output curbs from the OPEC+ group and a global economic recovery that has boosted demand.

https://www.akelicious.net/77-oil-companies-owing-nigeria-n2-659trn-unremitted-funds-neiti/

source http://www.nairaland.com/6776956/77-oil-companies-owing-nigeria