NEITI Unveils Nigeria Oil and Gas Report, Says $9.85bn Unremitted in 2021

The Nigeria Extractive Industries Transparency Initiative (NEITI) on Monday unveiled its oil and gas report, disclosing that total unremitted revenues to the federation by some relevant government agencies and companies in the oil and gas sector in the year 2021 rose to $9.85 billion.

The Executive Secretary of NEITI, Dr. Ogbonnaya Orji, while presenting the highlights of the report, stated that it provided an update on the financial liabilities of the Nigerian National Petroleum Company Limited (NNPC) and some other companies in the sector to the federation.

The report showed that Nigeria earned total revenue of $23.046 billion from the sector in 2021, which was about 13 per cent higher than the corresponding total of $20.43 billion realised in 2020.

A breakdown of the earnings showed that about $8.67 billion, or 37.6 percent of the revenue was realised from the sale of crude oil and gas; $13.37 billion, or 58.02 per cent from taxes and other specific revenue flows, and $1.01 billion, or 4.38 per cent, went into payments to sub-national entities.

An analysis of the total revenue realised, the report stated, showed unremitted revenues and quasi-fiscal expenditure by the NNPC of $1.95bn (8.47 per cent) and $6.93 billion (30.08 per cent) respectively.

Transfers to the federation amounted to $13.2 billion (57.27 per cent), while sub-national payments totalled $963.63 million or 4.18 per cent. Available revenue for sharing by the federating units after the deductions and in accordance with the revenue allocation formula was $13.2 billion which represented 57.27 per cent of the total revenue collected. This was lower than the 71.7 percent shared in 2020.

“The quasi-fiscal expenditure of $6.931 billion (equivalent to N2.651 trillion) were deducted from the federation’s revenue before remittance without appropriation by the National Assembly.

“A breakdown of the $6.93 billion deductions showed payments of $3.52 billion or 15 per cent for Joint Venture Cost Recovery and $3.031 billion (about N1.16 trillion) or 13.15 per cent for products subsidy/value loss.

“Other deductions are $258.43 million for government priority projects; $75.51 million for pipeline maintenance and holding cost and $42.40 million for crude oil and products losses,” it stated.

The NEITI report also observed that none of the refineries was operational in 2021 despite spending about N200 billion between 2020 and 2021 on refinery rehabilitation which was deducted from the federation sales proceeds.

These deductions the report reiterated, remained a heavy cost to federation revenue remittances.

In addition, the report said about $1.95 billion, or 8.47 per cent of the total revenue was not transferred to the Federation Account by the NNPC during the year under review.

A breakdown of the withheld revenue included, $722.6 million for NLNG dividend; $871.15 million from domestic crude sales, $859,583 miscellaneous revenue and $286.42 million from export crude sales. $24.332 million and $45.76 million were withheld from transportation revenue and domestic gas proceeds.

A 10-year trend analysis of financial flows from the oil and gas sector from 2012 to 2021, it stated, showed earnings of $348.63 billion.

On crude oil production and exports, the NEITI report indicated that total metered crude oil production was 634.60 million barrels, out of which the nation lost 68.47 million barrels to production adjustment, measurement error, theft and sabotage. The figure showed a 13 per cent reduction from the production volumes of 2020.

The report pointed out that a total 29 companies suffered crude losses from theft and sabotage amounting to 37.57 million barrels. The decline in crude oil losses due to theft and sabotage from 39.08 million barrels in 2020 to 37.57 million barrels in 2021 was generally due to the decline in crude oil production during this period.

On gas production and utilisation, the NEITI report stated that a total of 2.74 million standard cubic feet of gas was produced during the year, with the volume about 8.96 percent lower than the 3,013,634 mmscf produced in 2020.

Total gas utilised in 2021 stood at 98 per cent, while 2 per cent could not be accounted for by the companies based on the templates submitted.

With the nation’s gross domestic products put at about $434.17 billion, the report noted that the oil and gas sector contributed about 7.24 per cent to the Gross Domestic Product (GDP) and $36.55 billion (N14.40 trillion) to total exports of $47.31 billion (N18.91 trillion).

NEITI stated that this represented 76.22 per cent of the total exports in 2021, 0.8 percent higher than in 2020. 19,171 employees were said to be working in the sector in 2021.

Similarly, the total government revenue generated in 2021 was N10.75 trillion, to which the oil and gas sector contributed N4.358 trillion. This represents about 40.55 per cent of the total revenue compared to 51 per cent in 2020.

The higher export value in 2021 compared to 2020 was due to the increase in crude oil price in 2021 from $41.65 per barrel to $66.97 per barrel, the NEITI report disclosed.

NEITI also drew attention to the practice of computing 13 per cent derivation on the balance of revenue after deductions from the total collections which it advised should be discontinued.

Rather, the 13 percent derivation, it said, should be based on total collections for the relevant period in accordance with Section 162(2) of the constitution of the Federal Republic of Nigeria.

It noted that Lekoil Limited did not submit any information for reconciliation, but was captured to have paid over $7.76 million.

The Secretary to the Government of the Federation, Senator George Akume, represented by the Permanent Secretary, Political and Economic Affairs Mrs. Esuabana Nko, while unveiling the report reaffirmed the federal government’s commitment to support and deepen the implementation of the EITI in Nigeria.

 “President Bola Tinubu’s administration is fully committed to the fight against corruption in the extractive industry in particular and in other sectors of the economy.

“As an Administration, we are convinced that the revival of our economy and the 8-point agenda that we recently unfolded cannot yield the desired result if we do not support and strengthen anti-corruption and reform oriented Agencies like NEITI,” Akume said.

The Chairman Senate Committee on Oil and Gas Host Communities, Senator Benson Agadaga, reaffirmed the government’s commitment to implement the recommendations of the NEITI oil and gas report.

The Chairman Senate Committee on Petroleum Upstream Senator, Eteng Williams, commended the vital role NEITI was playing and urged the organisation to continue to ensure revenue mobilisation for the country now that subsidy is gone.

Also, the Chairman, House Committee on Petroleum Resources, (Downstream) Ikeagwuonu Ugochinyere pledged the support of his committee to lay the report on the floor of the House and debate it extensively to ensure the implementation of the recommendations made therein, as enshrined in Sections 3 and 4 of the NEITI Act.

The Minister of Budget and National Economic Planning, Senator Atiku Bagudu represented by the Permanent Secretary, Nebeolisa Anako, stated that the data generated by NEITI will help the ministry in its planning mandate for the country.

“The budget outlay for the country for the current national development plan for five years is N348 trillion. Majority of this inflow is going to be from the private sector and the oil and gas sector is key to the realisation of this goal,” he said.

Emmanuel Addeh in Abuja and Peter Uzoho in Lagos

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