NUPRC, MoF, Mum about Irregularities Flagged in NEITI Report - Africa’s premier report on the oil, gas and energy landscape.

NUPRC, MoF, Mum about Irregularities Flagged in NEITI Report

By Lukman Abolade, Senior Correspondent

Nigerian Upstream Petroleum Regulatory Commission and Ministry of Finance have declined to comment on the recently published 2021 audit report of the Nigeria Extractives Industries Transparency Initiative (NEITI) on the country’s oil and gas sector which detailed a Pandora’s box of irregularities and non-compliance.

The audit report highlights alarming financial discrepancies within the sector. It reveals that as of July 31, 2023, there was a total outstanding tax debt of $13.591Million owed to the Federal Inland Revenue Service (FIRS). Additionally, as of December 31, 2022, $8.251Billion in Federation revenue was still unpaid to the NUPRC. This non-payment, says the report jeopardizes the timely flow of revenue to the Federation, which has significant implications for the country’s economic stability and hinders development in the sector.

NEITI, as an independent agency mandated to promote transparency and accountability in the management of Nigeria’s oil and gas resources, conducts regular audits and publishes reports to shed light on the financial transactions within the sector.

The latest report also flags a lack of transparency in financial transactions involving the Economic and Financial Crimes Commission (EFCC) and the Niger Delta Development Commission (NDDC). While there was a collaborative effort to recover outstanding NDDC levies, the absence of independent records from the NDDC regarding payments made to the EFCC raises questions about the integrity of these financial transactions. The report calls for further investigation to determine the exact amounts recovered and any outstanding sums.

NEITI states that the Nigerian Petroleum Development Company (NPDC), has failed to remit $7.61Million to the Federation from the operations of the Oil Mining Lease (OML) 116.

The report points out that the calculation of the 13% derivation, intended to benefit oil-producing states, is being done in a manner contrary to the provisions of Section 162 of the Nigerian Constitution. The PIA stipulates that 13% derivation revenue goes to the oil producing states as a first line charge before revenue sharing amongst the three tiers of government, prior to deductions and not on balance of revenue, after deductions.

However, the audit report found that the 13% derivation was being computed after deductions from total collections.

This departure from constitutional provisions raises concerns about fairness and equitable distribution of oil revenues.

Africa Oil+Gas Report contacted Stephen Kilebi, the Federal Ministry of Finance’s Director of Press & Public Relations, he asked for time to respond to questions about the 13% derivation but failed to respond as at press time.

The audit report further highlights a lack of transparency in corporate ownership information. Several covered companies failed to provide information about the natural person(s) who own or control interests in these entities. Moreover, these companies did not link their ownership information to public listings on the NEITI or Corporate Affairs Commission (CAC) portals, casting doubt on the legitimacy of their operations.

Another significant finding from the audit report is the stark contrast in production figures among Production Sharing Contract (PSC) blocks. Shockingly, only 12 out of the total 35 PSC blocks, representing 34%, recorded any production in 2021. This glaring disparity underscores the need for a closer examination of the allocation and utilization of these blocks.

The inactive producing blocks PSCs are operated by GEC Petroleum Development Company Limited (OPL 2009, OPL 2010), Nigerian Agip Oil Company (OPL 135, OPL 282), Monipulo Limited (OPL 231), Esso Exploration and Production Limited (OPL 226).

The other Non-Producing PSC contractors that did not produce crude from selected blocks included Esso E&P, Nigerian Agip Exploration, Shell Nigeria Exploration and Production Company, Texaco Nigeria Outer Shelf Limited, Star Deep Water Petroleum Limited, Statoil Nigeria Limited. Others are Newcross Petroleum Limited, Sahara Energy Exploration and Production Limited, Conoil Producing Limited, Continental Oil and Gas Limited, Enageed Resources Limited, Nig-Del United Oil Company Limited, Sterling Oil Exploration and Energy Production Company Limited.

The audit report discloses that production from the PSCs amounted to 242.96Million barrels, representing 42.92% of the total oil production, which stood at 566.13Million barrels in 2021.

When Africa Oil+Gas Report contacted Olaide Shonola, the Head of Public Affairs Unit at NUPRC, regarding the Commission’s lack of action on unproductive PSCs, she requested an email.

However, 72 hours later, when this report was filed, she had not answered any of the questions posed to the Commission.

Like the NUPRC, an email was sent to the Iyabode Ayobami-Ojo, NNPCL Head of Corporate Communications Division, but she failed to respond to questions.

The recently published NEITI audit report on Nigeria’s oil and gas sector has once again highlighted the deep-rooted problems plaguing this industry. The findings of this report indicate what simple monitoring by regulators can do and how much basic record keeping can help, to improve the revenue flow into the National treasury.

Share Article


No comments yet.

Leave a comment

Comment form

All fields marked (*) are required

© 2024 Festac News Press Ltd..