Oil operators’ indebtedness to FG hits $6.1bn – NEITI

The Nigeria Extractive Industries Transparency Initiative has disclosed that as of August 2024, operators in the oil and gas sector are collectively indebted to the Federal Government, with outstanding liabilities totalling $6.1bn.

It noted that the outstanding liabilities were made up of outstanding royalties, taxes, rents, and other collectible revenues due to be collected into government coffers.

The agency also advised the government to recover the outstanding liabilities in the oil and gas industry to finance the 2025 Budget.

The Executive Secretary of NEITI, Dr Ogbonnaya Orji, gave the advice while

interacting with the Senate Committee on Public Accounts on its industry reports for the oil, gas, and mining sectors covering years 2021, 2022, and 2023.

Orji in a statement on Wednesday by the Director of Communications and Stakeholders Management, Mrs Obiageli Onuorah, said the oil sector is yet to fulfill its potentials despite achieving recent milestones.

The statement read, “A total sum of $6.1bn as outstanding liabilities owned by the oil and gas industry to the federation as of August 2024. These are made up of outstanding royalties, taxes, rents, and other collectible revenues due to be collected into government coffers.

“At a time when the country is mobilising resources to meet its budget expenditures, recovering these revenues by the relevant agencies will be a huge relief to the government.”

While pointing out that Nigeria recorded some positive milestones in the 2023 oil and gas report, he said, “One of the significant progresses recorded in the oil and gas sector in 2023, was the drop in crude oil losses by 78 per cent. The NEITI report showed that Nigeria lost 36.6 million barrels of crude oil in 2022 while 2023 records indicated a significant drop to 7.68 million barrels”

Orji commended the Office of the National Security Adviser, the Armed Forces, and Security Agencies for coordinated policies that deterred crude theft, such as better surveillance of the nation’s pipelines, etc.

The transparency boss also recommended, “The ownership and buy-in of the host communities in order to curb crude oil theft”.

He underscored the dangers of indiscriminate laying off of skilled workers, who for lack of what to do and their level of technical know-how, engage in the vandalism of oil and gas infrastructure to survive.

Another positive indicator in the oil and gas report is the fall in importation figures. Fuel imports declined by 3.5 billion litres, from the 23.54 billion litres recorded in 2022 to 20. 28 billion litres in 2023. This was attributed to the removal of subsidy.

The NEITI reports, however, revealed a decline in revenues from the sector by 13.7 per cent between 2022 and 2023. “The oil and gas sector recorded a total revenue of $35.78bn in 2022 but dropped to $30.86bn in 2023. The NEITI report also showed that Nigeria earned a total of $831.14bn between 1999 – 2023 (25yrs),” Orji stated.

Similarly, the NEITI reports also showed that the sector’s contribution to Nigeria’s GDP consistently declined for the three years under review. It presented the figures of 7.24 per cent for 2021, 5.74 per cent for 2022 and 5.48 per cent for 2023 respectively.

On the same trajectory, gas production also declined during the period from 2.47 Billion scf in 2021, to 2.52 billion scf in 2022 and lower to 2.49 billion scf in 2023.

Orji called for clear alignment between Nigeria’s gas commercialisation and energy transition policies and the Climate Change Act to accelerate the country’s journey to affordable, clean, and renewable energy

He, however, lamented the abysmal performance of the solid minerals sector which he says does not mirror the vast mineral deposits in Nigeria and the potentials that the sector holds for the economy.

Chairman of the Senate Committee on Public Accounts, Senator Aliyu Wadada, stated that the committee would hold a public hearing which would be driven by the NEITI industry reports.

He emphasised that all companies with outstanding liabilities to the federal government must appear before the Committee during the proposed hearing.

Senator Wadada lamented the poor performance and contribution of the solid minerals sector to the economy, especially with the recorded remittances, which do not reflect the potential of the sector nor the quantum of activities and revenue that the sector is generating and can generate for the Nigerian economy.