‘Many operators underpaying royalties, overstretching exploration licenses’

The Nigeria Extractive Industries Transparency Initiative (NEITI) has stated that many operators in the nation’s mining industry are underpaying royalties to the government, while also overstretching their exploration licenses.

The agency stated that under the mining law, operators with exploration licenses are not supposed to engage in mining as many companies are taking advantage of the unregulated mining industry.

The Director, Technical, NEITI, Dr. Dieter Bassi, stated this at the public presentation of the 2019 Oil, Gas and Solid Minerals audit reports to the media and Civil Society Organisations in Lagos.

“The major operators are unregulated and to trace these companies is quite difficult and some of the companies are operated by foreigners. Getting the report on this sector ready was quite difficult,” he added.

He said the report revealed that many companies in the sector have multiple Tax Identification Numbers (TINs), which suggest that they are not good corporate citizens and are not remitting to the Federal Government.

We also found out that many companies were operating under different licenses, saying that companies with exploration licenses are not supposed to mine.

“But we find companies that have overstretched their exploration licenses and have been mining and it means they are not remitting to the government’s purse,” he added.

Meanwhile, the Executive Secretary, NEITI, Dr. Orji Ogbonnaya Orji, said Nigeria needs to learn how to manage its natural resources effectively and efficiently in its quest to combat poverty.

According to the NEITI boss, the agency has conducted twelve cycles of audits in the oil and gas sector covering the periods 1999-2019 and has also conducted the first mineral sector audit from 2007-2010.

He added that NEITI has also conducted two cycles of audits that focus on the allocation, statutory disbursements and utilisation of revenues from the federation account to the three tiers of government.

“I am optimistic that if the contents of these reports are reviewed by various stakeholder groups of NEITI and the recommendations implemented by the covered entities concerned, Nigeria’s oil and gas industry will witness massive investments, with revenues from the sector maximised to uplift the standards of living of the citizens,” he said.

The Assistant Director, Oil and Gas, NEITI, Mr. George Abiye, while delivering the oil and gas report, said from the total 735.661mmbbls crude oil lifted, companies lifted 469.01mmbbls. He stressed that the remaining 266.65mmbbls was lifted by Nigerian National Petroleum Corporation (NNPC) valued at $17.441 billion.

He noted that of the $17.441 billion, $2.757 billion was sale receivables while the remaining balance of $14.684 billion was cash receipt from 2019 sales.

He added that in addition to the cash receipts, a total of $3.518 billion accrued as receipts from sales proceeds from federation equity crude, profit oil and in-kind payments.

“The $3.518 billion is made up of $1.249 billion undistributed balance from 2018 and $2.268 billion prior year receivables. A total of $18.202 billion was the aggregate cash receipts for 2019,” he said.

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