In two years, Nigeria realized $143.5 billion from the oil and gas industry but lost over 136 million barrels of crude, amounting to $10.9 billion, to oil theft within the same period.
This was revealed yesterday by the Chairman, Nigeria Extractive Industries Transparency Initiative, Ledum Mitee.
Nigeria signed up to the global Extractive Industries Transparency International in 2003 and passed the NEITI Act in 2007.
In two years, Nigeria realized $143.5 billion from the oil and gas industry but lost over 136 million barrels of crude, amounting to $10.9 billion, to oil theft within the same period.
This was revealed yesterday by the Chairman, Nigeria Extractive Industries Transparency Initiative, Ledum Mitee.
Nigeria signed up to the global Extractive Industries Transparency International in 2003 and passed the NEITI Act in 2007.
It requires NEITI to publish on a regular basis audit reports to acquaint the citizens with current information and data on what extractive companies paid to governments in terms of royalties, taxes, levies, signature bonuses, rents, etc.
Presenting the 2009 to 2011 reports of the oil and gas industry to the public on Monday in Abuja, Mitee said the reports covered key areas such as mapping of hydrocarbon flows, volumetric analysis, technical assessment of hydrocarbon streams and examination of procedural systems.
The audit, which was carried out by an indigenous firm, Sada Idris & Co, also involved data collection, aggregate reporting of hydrocarbon produced and computation of financial implications as well as value analysis during the period under review.
The NEITI chairman said: “Nigeria recorded a total crude oil production of over 2.5 billion barrels, an increase of 4.8% over 2006-2008 periods. This is made up of 780.9 million barrels in 2009
This figure rose to 894.5 million barrels in 2010 and slightly declined to 866.2 million barrels in 2011. From this production, the Federation earned total revenue of $143.5 billion from equity crude sales, royalty, signature bonuses and taxes.”
Mitee also said Nigeria made total subsidy payments of N3 trillion to importers of refined petroleum products.
It shows N1.4 trillion fuel subsidy claims by the Nigeria National Petroleum Corporation for the period 2009-2011 and a total of N1.60 trillion paid to other marketers during the same period.
However, NEITI discovered disparity between subsidy claims paid from the Federation Account and that made by the Petroleum Products Pricing Regulatory Agency, which was N175.9 billion during the same period.
It cited a particular instance where a marketer claimed N2.56 billion as fuel subsidy but the PPPRA recorded just N1.5 billion, thus leaving an un-reconciled difference of N1.04 billion.
According to the report, the subsidy payments made through NNPC increased from N198 billion in 2009 to N416 billion in 2010 and rose significantly to N786 billion in 2011.
Also, subsidy paid through PPPRA increased from N208 billion in 2009 to N278 billion in 2010 and skyrocketed to N1.12 trillion in 2011.
In the same vein, the sum of N4.423 billion, being over-recovery collected from some marketers, is yet to be remitted to the Federation Account while the NNPC and two other companies are yet to refund N3.715 billion, being over-recovery for the period under review.
NEITI said during the period under review, over 136 million barrels of crude oil, estimated at $10.9 billion, was lost to theft, lamenting: “This amount, which was 7.7% of the total revenue accrued to the Federation in the audit report, is considered significant.
“This was in addition to a loss of about 10 million barrels valued at $894 million as a result of pipeline vandalism in downstream operations.”
Other key highlights of the reports are: decline of government crude oil productions, crude lifting and revenues accruable to the federation; refineries operating below capacities resulting in a situation where 80 per cent of crude oil allocated to local refineries is exported for off-shore processing, crude oil and product exchange.
Mitee said the report also examined the payments on OPL 245 and established that Shell made a payment of $207 million, which the company (Shell) claimed was a balance of payment as Signature Bonus on the said oil block OPL 245.
He however, said NEITI could not get additional information from the Department of Petroleum Resources on the level of transparency over the actual value of OPL 245.
The report also made far reaching recommendations on how to remedy the situation, urging urgent need for the Federal Government’s intervention to review existing agreements in the industry with the companies.
Also, the report recommended that the PPPRA should remit all funds amounting to N4.423 billion, arising from the “over-recovery” collected, to the Federation Account.
Other recommendations include the need to install inlet metering devices to measure production from the flow stations to the tank farms.
It also urged the Federal Government to set up a committee to review and agree on a new fiscal regime and governance framework for the oil and gas industry and define clear roadmap for implementation while pushing for the passage of the Petroleum Industry Bill.
Speaking at the presentation, which was attended by the Minister of Solid Minerals, Mohammed Sada; and the Group Managing Director of the NNPC, Andrew Yusuf.
The Executive Secretary of NEITI, Zainab Ahmed, said: “The NEITI audit reports remain current, comprehensive in content, reliable, readily available and serves as important reference documents in the hands of governments, companies, civil societies, media and the larger public.”
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