NEITI: Nigeria Earned $268bn from Oil in Five Years

•  Says NNPC’s inconsistent pricing method caused $90m loss in 2015

Chineme Okafor in Abuja

Between 2011 and 2015, which represented an auditing period of five years, Nigeria earned a total of $268.8 billion from mining and sales of oil and gas from her fields in the Niger Delta, Nigeria Extractive Industries Transparency Initiative (NEITI) has said.

According to NEITI, which disclosed this in its 2015 oil and gas audit report, released last Friday in Abuja, in 2011, Nigeria made $68,442,328 billion from oil sales, and earned $62,944,356 billion in 2012, recording about eight per cent drop, and another $58,079,681 billion in 2013 with a similar eight per cent drop.

In 2014, the report said Nigeria earned $54,555,279 billion and recorded a six per cent drop in oil revenue, while in 2015, it earned $24,791,173 billion but recorded the highest drop in revenue by 55 per cent. All the earnings, the report noted, amounted to $268,812,817 billion.

The audit report pointed out that oil revenues earned by the country within these periods recorded some steady percentage decline from about eight per cent in 2011 to 55 per cent in 2015.

These, it explained, were occasioned by drastic reduction in the unit price of crude oil in the global market from $101.91 per barrel in 2014 to $52.16 in 2015.

Similarly, the NEITI report, which highlighted some operational anomalies in the industry, explained that due to an inconsistent pricing methodology adopted by the Nigerian National Petroleum Corporation (NNPC) in its sales of Nigeria’s domestic crude oil share and remittance of revenue from same to an appropriate account with the Central Bank of Nigeria (CBN), the nation lost about $90.176 million.

It explained: “At the point of remittance into the CBN-NNPC domestic crude oil (Naira) accounts by NNPC, NNPC based remittance on another valuation report that used a revised pricing option, which was often lower than the initial valuation.

“By implication, the pricing methodology was not consistently applied, leading to a revenue loss of $90.176 million. Therefore, Nigeria failed to realise revenues from crude sales in a manner consistent with market conditions with respect to sales to NNPC and its subsidiaries.”

Also, it noted that about 153.92 million barrels (mb) of crude oil were allocated for domestic consumption at an established rate of 445,000 barrels per day (bd), and within which 56.11million barrels (or 37 per cent) were exported by the Pipeline and Products Marketing Company (PPMC) of the NNPC, while 89million barrels (or 57 per cent) were utilised in the defunct Offshore Processing Arrangement (OPA) and 8.74million barrels (or 5.6 per cent) were sent to the three refineries owned and operated by the NNPC.

NEITI said that eight entities in the sector – Shoreline Natural Resources, Neconde Energy, ND Western, Platform, Newcross, Elcrest, ORIENTAL, and NDPR were granted tax holidays for five straight years instead of the normal three years at first instance, and thereafter additional two years after satisfying conditions set by the Nigerian Investment Promotion Commission (NIPC) for the first grant. This, it noted, would lead to revenue loss for the country.

The audit further established that there was an outstanding liability of $65,574,833.37 for royalty on gas counting against eight covered companies and which include Eroton, Chevron, AITEO, SNEPCO, Nigerian Petroleum Development Company (NPDC), Frontier, Pan-Ocean and SEPLAT.

The outstanding liability for royalty on oil, it explained, was $393,756,482, which was as a result of under assessment or late payment.

The report revealed that the Niger Delta Development Commission (NDDC) got a total of $345,390,279, as statutory contributions from the covered entities for the year under review, but there was an unreconciled sum of N175, 000,000 or $890,902 being payment made by Sterling Oil Exploration which could not be traced to NDDC’s bank account.

NEITI informed that the audit report was approved by its National Stakeholders Working Group (NSWG) chaired by the Minister for Mines and Steel Development, Dr. Kayode Fayemi, while an indigenous audit firm, Haruna Yahaya & Co. carried out the audit exercise.