Breaking News

Oil coy owe FG $5bn -NEITI report

ABUJA -THE latest report on oil and gas revenues released by the Nigeria Extractive Industries Transparency Initiative (NEITI) has uncovered financial discrepancies and outstanding payments totaling over US$5 billion from revenues generated by the sector in 2005.


The report also identified unprecedented financial discrepancies, mispaid taxes, and system inefficiencies in the financial, physical and process audit of the sector.

Presenting the report on Monday during the Stakeholders’ Roundtable on the Report of the 2005 Audit of the Oil and Gas Sector, in Abuja , the Chairman of the National Stakeholders’ Working Group (NSWG) of NEITI, Professor Assisi Asobie, said the report addresses the sensitive issue of the correctness of the underlying calculations that result in revenue flows.

For instance, the report showed over US$800 million of unresolved differences between what oil companies said they paid in taxes, royalties and signature bonuses, and what government said it received.

Of this amount, US$560 million was identified as shortfalls in taxes and royalties owed to the government and around US$300 mullion in payment discrepancies relating to signature bonuses, paynments of dividends, interest and loan repayments.

An estimated US$4.7 billion owed to the government by the Nigeria National Petroleum Corporation for payments of domestic crude, making it the largest single figure identified in the report.

According to Asobie, the 2005 audit was “quintessentially, a pro-poor audit, directed at helping the federation of Nigeria secure full value from its petroleum industry and thereby be in a stronger position to provide for the welfare of the people.”

Asobie noted that the report “identifies challenges confronting the industry, pinpoints deficiencies in its governance or management, and at the same time, recommends strategies to confront the challenges and remedies for the deficiencies.”

He said by this event, NEITI was kicking off a full blown national debate on the 2005 audit report, adding that the Initiative would soon commission the audit of the oil and gas industry for the years 2006, 2007 and 2008.

He added that the timing of the release of the report was momentous coming at a time when there was vigorous national debate on the Petroleum Industry Bill, which proclaims transparency and accountability as the basic principles underpinning the proposed reforms of the industry.

On its own part, the auditors of the report, Hart Group, lamented the lack of reliable data about gross production at the well heads as well as the non-cooperation of companies operating offshore in providing field data about the volume of oil produced by them.

A representative of the group, Mr. Sam Afemikhe, also expressed concern that the Department for petroleum Resources (DPR) provided data on the volume of production that differed from those provided by the oil companies.

He said, “As a result of these, it was difficult to determine precisely losses of oil occurring between the well head and the terminals.”
The auditors also stated that in 2005, the management of signature bonds, an important source of revenue for the country, was not transparent. Specifically, it asserted that the agencies concerned, DPR, OAGF, CBN, and PTDF were not able to confirm the signature bonus payable by the companies in 2005 vis-a-vis what was actually received in that year.

Afemikhe pointed out that in respect of royalties for the year 2005, there was no rigorous verification of the royalty computed by the companies, and that the oversight function of the DPR in respect to royalty payment was inadequately discharged.

He added, “In respect of the petroleum profit tax (PPT) in the year, the Federal Inland Revenue Service accepted the self-assessment made by the companies without verification and validation.

“The Office of the Accountant-General of the Federation (OAGF) did not in that year exercise sufficient management and control over the financial flows from the sector, and there was poor system interface between the office and the CBN, DPR and the NNPC.”

Furthermore, a statement from the Extractive Industries Transparency Initiative (EITI) Secretariat in Oslo , Norway , quotes the Chairman, Peter Eigen, as saying that the release of the 2005 audit of the oil and gas industry shows a strong signal by the Federal Government’s determination to increase transparency in the sector.

According to Eigen, “The 2005 NEITI report offers a great opportunity to inform the better management of Nigeria ‘s most important sector and bring benefits, rather than the harm, of these resources to ordinary Nigerian citizens. The findings of this report will serve as a wake-up call to address the fundamental problems of the industry.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.