Should Nigeria be worried that an increasing volume of its oil and gas production is being undertaken by home-grown independents?
As the yearly reports of the Nigeria Extractive Industries Transparency Initiative increasingly show, they are the more likely to default in payment of Taxes.
In the release of its 2017 audit report on the oil and gas industry, the agency identified the Nigerian Petroleum Development Company, NPDC, ND Western, Frontier, Dubri Oil, Newcross E&P, Platform, Pan Ocean, Shoreline and Yinka Folawiyo. NPDC, ND Western, and Frontier were fingered for underpayment of $11.585Million, $6.595Million and $1.807Million gas royalty respectively; while Dubri Oil, NPDC, Newcross, ND Western and Platform were also implicated for the underpayment of oil royalty of $228,569.87, $22.835Million, $13.715Million, $9.366Million and $529,430.87 respectively.
NEITI had disclosed earlier, in its audit report of 2016 that Pan Ocean, Shoreline and Yinka Folawiyo defaulted in payment of royalty in that year.
In the same 2016 audit report, Aiteo, Allied Energy, Belemaoil, Brittania U, Dubri Oil, Energia, Midwestern Oil and Gas, Pan Ocean, SAPETRO and Yinka Folawiyo were reported to have defaulted in payment of Petroleum Profit Tax.
What’s consistent is that international Oil Companies rarely show up on the list of tax defaulters.
As these companies divest their assets, a key challenge that the Nigerian state may grapple with, is recovery of taxes from companies that will soon become the largest crude oil and gas producers in the country.
But the biggest defaulter is a state hydrocarbon company, so the place that government needs to start from is itself. NEITI’s audit reports come two years late, and the agency claims that NPDC, the operating subsidiary of NNPC, accounts for 73% of a total underpayment of $677.087Million from seven revenue streams as at 31st December, 2017.
