Chineme Okafor in Abuja
The Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that the Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC),owed the federation N68.2 billion and $3.3 billion in taxes and royalties from its oil and gas operations, respectively.
NEITI made this known in its 2014 annual audit report of activities in Nigeria’s oil and gas sector which was published on Friday in Abuja.
The report also stated that the NNPC was yet to reimburse the Petroleum Products Pricing Regulatory Agency (PPPRA) up to N3.9 billion it claimed for subsidy on importation of petrol in 2012, but which was eventually found to be an over-recovery by the corporation and expected to be repaid.
Covering activities in the sector for 2014, the report indicated that Nigeria earned $55.5 billion from the 797million barrels (mb) of oil, which it produced in the year under review, but noted that there were operational anomalies it discovered in the activities of the NPDC.
Besides, the NEITI report noted that, of the total volume of crude oil produced in the country for the period, NNPC lifted 350 million barrels (mb) for export and domestic utilisation on behalf of the federation, while the balance was lifted by various contractual arrangement producers.
Flagging off the NPDC’s activities it considered unwholesome and which it said resulted in revenue loses to the country, the report said, total outstanding balances of unremitted funds by the company (NPDC) were N68.2 billion and $3.3billion for taxes and royalties respectively.
This, it pointed out, comprised $451.4 million and $15.2 million royalty on oil and royalty on gas respectively. It also includes $991 million for PPT (petroleum profit tax), PAYE (pay as you earn) of N42 million, WHT (withholding tax) of N17.1 billion, education tax of N15.7 billion, VAT (value added tax) of N7.0 billion, NDDC (Niger Delta Development Commission) levy of N28.3 billion and $81.0 million.
The NEITI said while the failure of NPDC to remit these revenues amounted to short-changing the country especially in terms of funds for development, the NNPC, which is NPDC’s parent company did not respond to requests for further information on this by its auditors.
It also stated that the Department of Petroleum Resources has conducted a ‘Good and Valuable Consideration’ in respect of the four divested Oil Mining Leases (OMLs) 60, 61, 62 and 63, which was assigned to the NPDC in 2012 in the Nigeria Agip Oil Company (NAOC) joint venture, and placed their financial values at $2.225 billion, however, adding that the NNPC was contesting it.
“The Good and Valuable Consideration in respect of the divested OMLs 60, 61, 62 and 63 was received from DPR in the third quarter of 2016 valued at US$2.225 billion. NNPC has accordingly written to DPR requesting further engagement to ascertain the basis and assumptions that went into the valuation as to the reasonableness of the amount taking cognisance of all associated risks and assess its impact on the NNPC bottom line.
“While waiting for the determination of the Good and Value Consideration, NNPC has already remitted about US$1.3 billion straight to the Federation Account from the gas revenue derived from the assigned assets from January 2013 to date,” it noted.
On the fuel subsidy over-recovery by NNPC, the report stated: “N3.981 billion of debts as a result of over-recovery under Petroleum Support Fund Scheme (PSPF) in 2012 was outstanding. NNPC has been in contact with PPPRA on the issue and acknowledge the amount as being due for payment, it has remained outstanding due to challenges with the corporation’s liquidity. NNPC management has also informed the PPPRA of its commitment to settle the said amount.”
According to NEITI, publishing the annual report was in accordance with the global Extractive Industries Transparency Initiative (EITI) standards which encourage implementing countries to release their independent industry audit reports at most two years in arrears. Nigeria is signatory to the EITI ideals.