Nigeria’s Oil and Gas Firms Owe Government $6.1bn in Unpaid Revenues
Nigeria’s oil and gas operators owe the federal government a staggering $6.1bn in unpaid royalties, taxes, rents, and other statutory revenues, according to the Nigeria Extractive Industries Transparency Initiative (NEITI).
The debt, as of August 2024, poses a significant challenge for a government already grappling with revenue shortfalls. NEITI has urged authorities to prioritise recovering these funds to help finance the 2025 budget.
Speaking before the Senate Committee on Public Accounts, NEITI’s Executive Secretary, Dr. Ogbonnaya Orji, stressed the urgency of addressing outstanding liabilities in the sector.
“At a time when Nigeria is mobilising resources to meet its budgetary commitments, recovering these revenues will provide much-needed relief to the government,” Orji stated in a briefing issued by NEITI’s Director of Communications, Mrs. Obiageli Onuorah.
Oil Sector Gains Offset by Falling Revenues
Despite recent strides in reducing crude oil losses, Nigeria’s oil and gas sector continues to underperform. NEITI’s report highlighted a dramatic 78% reduction in crude oil theft, with losses falling from 36.6 million barrels in 2022 to 7.68 million barrels in 2023. This decline has been attributed to tighter security measures, improved surveillance, and coordinated interventions by the National Security Adviser’s office, the Armed Forces, and other security agencies.
However, the sector’s overall contribution to the economy remains underwhelming. Total revenues from oil and gas fell by 13.7% between 2022 and 2023, dropping from $35.78bn to $30.86bn. NEITI’s long-term data reveals that while Nigeria has earned $831.14bn from oil and gas between 1999 and 2023, its economic reliance on the sector is waning. The industry’s share of GDP has steadily declined, from 7.24% in 2021 to 5.48% in 2023.
Fuel importation also showed signs of contraction, with imports dropping by 3.5 billion litres between 2022 and 2023, a development largely attributed to the removal of petrol subsidies.
Structural Issues Persist Amid Calls for Reform
Orji pointed to systemic inefficiencies, warning that a continued decline in skilled labour due to indiscriminate layoffs could exacerbate security challenges. “Many of these workers, left with no means of livelihood, turn to pipeline vandalism and crude oil theft,” he cautioned.
The gas sector has also struggled, with production falling from 2.52 billion scf in 2022 to 2.49 billion scf in 2023. NEITI urged greater alignment between Nigeria’s gas commercialisation efforts, its energy transition agenda, and the Climate Change Act to drive investment in clean energy solutions.
Meanwhile, the solid minerals sector remains an underperforming outlier. Despite Nigeria’s vast mineral wealth, its contributions to national revenue remain negligible. Senator Aliyu Wadada, Chairman of the Senate Committee on Public Accounts, echoed concerns over the sector’s lacklustre performance, warning that it fails to reflect the scale of mining activities taking place across the country.
Senate to Probe Oil and Gas Debts
In a bid to enforce accountability, the Senate Committee on Public Accounts has announced plans to summon oil and gas companies with outstanding liabilities. A public hearing, driven by NEITI’s findings, will be convened to scrutinise these debts and compel compliance.
“This committee will ensure that every company owing the federal government appears before us,” Senator Wadada declared.
With Nigeria’s fiscal challenges mounting, the pressure is on for the government to recover lost revenues and implement long-overdue reforms in its extractive industries. Whether these efforts will yield results remains to be seen, but the urgency of the task is unmistakable.
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