The Nigerian National Petroleum Company Limited (NNPCL) failed to remit a staggering $6.9 billion while engaging in crude swaps worth $7.1 billion under the Direct Sale Direct Purchase (DSDP) scheme in 2021. This alarming news comes amidst a borrowing spree by the Muhammadu Buhari administration and a significant decline in the country’s oil sector revenue.
The Nigerian Extractive Industry Transparency Initiative (NEITI) brought these distressing facts to light in its 2021 Oil & Gas Industry Report. According to the report, NNPCL, along with its exploration and production subsidiary, is responsible for over 70 percent of the outstanding liabilities, with an astounding $13.591 million owed in taxes to the Federal Inland Revenue Service as of July 31, 2023.
Furthermore, the report revealed that as of December 31, 2022, the total outstanding federation revenue payable to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) stood at a staggering $8.251 billion.
Even more concerning is the revelation that 47 other oil companies failed to pay a combined $1.342 billion to the government. NEITI’s report covered the activities of over 69 companies, with 22 of them meeting the criteria for reconciliation, accounting for 95.65 percent of total payments by companies, totaling $11,332,792.48.
The report also shed light on deductions made by NNPCL from the Domestic Crude Account, which amounted to N751.11 billion ($1.94 billion) before remittance to the federation in 2021. Additionally, an outstanding liability of N334.87 billion ($871.15 million) loomed as of December 2021.
Among the deductions, N1.20 trillion ($3.15 billion) was attributed to domestic sales proceeds as subsidy, while crude and product losses amounted to N16.20 billion. Pipeline repairs and maintenance consumed N22.05 billion, and strategic stock holding accounted for N6.15 billion.
In response to these alarming findings, NEITI called for a comprehensive investigation into the activities of NNPCL and the Nigerian Petroleum Development Company. Furthermore, NEITI urged other companies to promptly settle their outstanding liabilities, while government agencies were urged to intensify efforts to recover these debts.
NEITI also raised concerns about the interpretation of Section 64 (m) of the Petroleum Industry Act (PIA), which designates NNPCL as the supplier of last resort, potentially leading to misinterpretation and misuse, as was the case during the previous practice of revenue deductions.
This revelation sends shockwaves through Nigeria’s oil sector, highlighting the urgent need for transparency and accountability in managing the country’s valuable oil resources.