NEITI recently released its 2014 Oil & Gas and Solid Minerals reports in compliance
with the EITI standards. The reports were released on 30th December 2016.
The highlights of the reports show that Nigeria earned $55.5 billion from the oil and gas
sector and N55.82 billion from the solid minerals sector in 2014.
The 2014 oil and gas audit report indicate that a total of $4.7 billion and N318.2 billion
that should have gone to the Federation Account were not remitted by NPDC and its
parent company, NNPC. Losses from crude-for-product swap and Offshore Processing
Arrangements (OPA) were put at $198.7 million in 2014.
At the close of the 2014 oil and gas audit, NPDC had not paid the outstanding $1.7
billion for the eight OMLs under the Shell JV divested to it by NNPC. NPDC had also not
paid for the four OMLs under the NAOC JV divested to it by NNPC. Those four assets
were recently valued by DPR at $2.25 billion; NPDC had sought clarification for the
basis of the valuation.
According to the reports, the total revenue flows for the oil and gas sector fell from
$58.07 to $55.5 billion between 2013 and 2014, a decline of about 5%. However,
revenue flow for the solid minerals sector in 2014 showed a marked improvement over
the previous year, with a 48% rise from the N37.676 billion of 2013 to N55.8 billion in
2014.
Forty-one (41) oil and gas companies and 16 government agencies were audited for the
2014 Oil and Gas Audit cycle. These were the producing companies that made material
payments of $5 million and above to the federation in 2014 and the government
agencies that received funds on behalf of the federation.
109 producing assets were active in the year, comprising: 59 Joint Venture (JV)
licenses; 26 Sole Risk and Marginal Field Operating (SRMF) licenses; 23 Production
Sharing Contract (PSC) licenses; and one Service Contract (SC) license.
The 2014 oil and gas audit, which was conducted by SIAO and Co., a Nigerian
accounting and auditing firm, also reveals the following: 22 billion litres of petroleum
products were imported as against the 20 billion litres imported in 2013, with 950 million
litres of the products locally produced in 2014 as against the 2.6 billion litres locally
produced in 2013; N1.2 trillion was processed as subsidy claims in 2014 as against the
N1.3 trillion processed for subsidy in 2013; and N426.6 billion was distributed in 2014
under the Subsidy Re-investment Programme (SURE-P), same as the SURE-P figure
for 2013.
Other major highlights of the 2014 Oil and Gas Audit report include the following:
1. Unremitted Funds by NPDC
N68.28 billion was the outstanding liabilities from NPDC for PAYE, WHT, EDT, VAT and
NDDC Levy while $3.3 billion was the outstanding liabilities for Royalty Oil, Royalty Gas,
PPT and Gas Flare Penalty. (Breakdown of the outstanding liabilities of NPDC is in
Table 1 below)
2. Shortfall of N250 billion in Remittances to Federation Account by NNPC
The value of crude oil allocated to NNPC for domestic use in 2014 came to $15.67billion
or N2.44trillion.Only N1.36trillion was received in the year 2014 in respect of domestic
crude oil; while the total deduction from domestic crude sales was N830 billion. This
therefore leaves an unremitted balance of N250billion from the domestic crude sales.
3. $1.42billion NLNG Dividend for 2014 Not Remitted by NNPC, totaling $15.8
billion not remitted between 2000 and 2014
NLNG paid $1.42 billion to NNPC as dividends, loan and interest repayments for
2014 but the amount could not be traced to the Federation Account.
Between 2005 and 2013, there was an outstanding of $12.92 billion of dividends,
interest and loan repayment made by NLNG to NNPC but not remitted to the
Federation Account;
The 2014 audit uncovered evidence of $1.5 billion paid by NLNG to NNPC between
2000 and 2004 but also not remitted.
This brings the sum of unremitted NLNG dividends, interest and loan repayment to
$15.8 billion as at the end of 2014. (Year-by-year breakdown in Table 2 below).
The audit of the solid minerals sector which was conducted by Amedu Onekpe and Co,
a Nigerian accounting and auditing firm, had the following highlights:
Total of 498 companies covered, out which only 39 met the materiality threshold
payments of N3 million and above. But these 39 companies accounted for
90.89% of total payments for the sector.
Dangote Cement accounted for 32.18% of the total N1.2 billion paid as royalties
for the sector;
Of the 36 million tons produced in the sector, limestone and granite accounted
for 56.68% and 30.59% respectively;
An increase of about 20% in coal production from 106,456 tons in 2013 to 127,
467 tons in 2014;
The value of exports of solid minerals in 2014 was $26.14 million out of which
Lead/Zinc accounted for 90.13% with Free on Board (FOB) value of $23.561
million.
Exports figures reported by companies were different from those declared by
Government Agencies.
Multiplicity of taxes, fees and levies imposed by the three tiers of government on
extractive companies makes the environment unsuitable for business.
Inefficiency in the system of record keeping and reconciliation process by
Government Agencies result in the huge variances between company payments
and government receipts.
The poor monitoring and regulation by regulatory agencies in the sector result in
gross under-declaration and misstatement of production volumes, leading to
significant revenue loss to the government.
A total of N9.9 billion that accrued up to 31st December 2014 was shared in July
2016 among the three tiers of government. This is the first time revenue from this
sector would be disbursed.
The solid minerals sector accounted for 4% of total national export earnings for
the year 2014; this disclosure reconfirmed Nigeria’s over dependence on oil and
gas and marginal interest in the solid minerals sector in spite of the infinite
opportunities.
On the whole the two reports reveal that most of the remedial issues flagged in previous
NEITI audits reports have remained unresolved. NEITI therefore urges the legislature,
media, civil society groups and citizens at large to use the information and data
contained therein to trigger informed debates, strengthen the demand for reforms, and
hold governments and companies to account.
The release of these reports by NEITI is in accordance with the global Extractive
Industries Transparency Initiative (EITI) standards which encourages implementing
countries to release their independent industry audit reports at most two years in
arrears.
The detailed information and data, findings and recommendations contained in the
comprehensive reports are available on the NEITI Website www.neiti.gov.ng
| No | Un-remitted Funds | Naira (million) | Un-remitted Funds | Dollar (million) |
| PAYE | 42 | Royalty Oil | 451.4 | |
| WHT | 17,1000 | Royalty Gas | 15.2 | |
| EDT | 15,700 | PPT | 991 | |
| VAT | 7,000 | Gas Flare Penalty | 1820 | |
| NDDC LEVY | 28,300 | |||
| TOTAL | 68.2 million | 3.3 billion |
Table 2: Breakdown of NLNG Dividends from 2000 to 2014
| Year | USD’000 |
| 2000 | 211,341.00 |
| 2001 | 322,077.00 |
| 2002 | 226,562.00 |
| 2003 | 436,272.00 |
| 2004 | 280,095.00 |
| 2005 | 207,282.00 |
| 2006 | 332,980.00 |
| 2007 | 842,957.00 |
| 2008 | 2,613,170.00 |
| 2009 | 879,839.00 |
| 2010 | 1,427,512.00 |
| 2011 | 2,537,503.00 |
| 2012 | 2,795,531.00 |
| 2013 | 1,289,592.00 |
| 2014 | 1,420,000.00 |
| Total | 15,822,713.00 |