Nigeria’s Oil Liabilities Soar to $6.175bn as Subsidy Costs Reach N15.8tn Over Last Decade
The liabilities owed by oil companies to Nigeria have reached $6.175 billion as of June 2024, according to a new report from the Nigerian Extractive Industries Transparency Initiative (NEITI). The report also reveals that the Federal Government has spent N15.8 trillion over the past decade on petrol subsidies, raising fresh concerns over the financial management of the nation’s oil and gas resources.
The 2022/2023 oil and gas industry report, presented by NEITI on Thursday, outlined that the highest yearly subsidy payment occurred in 2022, amounting to N4.714 trillion. NEITI’s Executive Secretary, Dr. Orji Ogbonnaya, framed the report as a call to action, urging greater transparency and accountability in the sector. “This report provides vital insights to guide policy and promote robust debate on governance of our natural resources,” he said.
The data reveals the escalating cost of Nigeria’s fuel subsidies between 2014 and 2023, a period that saw petrol imports surge and the government spend heavily to maintain artificially low pump prices. In 2023, for instance, the government spent N3.01 trillion on subsidies for the importation of 20.28 billion litres of petrol, down from the record N4.71 trillion for 23.54 billion litres in 2022.
Beyond subsidy costs, the report sheds light on substantial unpaid debts owed by oil companies. By August 2024, oil firms owed $6.071 billion and N66.4 billion in unpaid royalties and gas flare penalties. In addition, the Federal Inland Revenue Service is still owed $21.926 million and N492.8 million in taxes.
Responding to the report, the Chairman of the Economic and Financial Crimes Commission (EFCC), Olanipekun Olukayode, pledged to recover the outstanding $6 billion and N66 billion. He confirmed the recent transfer of over N1 billion, recovered from past audits, into the Federation Account.
The report’s findings come at a critical moment for Nigeria’s oil sector, which has long been a pillar of the economy but also a source of immense financial strain due to subsidies and inefficiencies. NEITI’s findings reinforce the need for reforms, with calls for better compliance with regulatory frameworks and a crackdown on revenue leakages in the industry.
Secretary to the Government of the Federation, George Akume, affirmed the government’s commitment to ensuring NEITI’s independence in its role as a watchdog over Nigeria’s extractive industries. “We must safeguard NEITI’s independence with great care and diligence,” Akume stated, underscoring the administration’s resolve to promote greater transparency.
As Nigeria continues to grapple with the consequences of subsidy payments and oil company liabilities, the NEITI report offers a stark reminder of the need for urgent reforms in the governance of its oil and gas sector.
