PEOPLES DAILY, TUESDAY, DECEMBER 25, 2012
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Report of the Petroleum Revenue Special Task Force, Nov 2012 (XV) 4.12.2. Findings 4.12.2.1. Incomplete records of volumes of Gas Flared The volumes of gas flared were obtained from both the Revenue and Production Units of the DPR. The situation in respect of gas flare penalties is similar to that of gas production mentioned previously. The DPR is currently unable to independently track and measure gas volumes produced and flared. It depends largely on the information provided by the operators. There were no available records or information in respect of gas flare volumes for the years 2005 and 2011. This implies that the current records as they exist are incomplete. 4.12.2.2. Inconsistencies noted in gas flared information Differences were noted between the gas flared data provided by DPR’s two units. These differences are yet to be resolved as at the time of reporting. 4.12.2.3. Delayed gas flare volume reconciliations The DPR carries out periodic reconciliation meetings with the operators. It was noted that of the 36 operators in their listing, reconciliations have been completed for only 6 of them. This implies that the Nation may have made losses due to the delay in confirming the amounts due and enforcing payments in line with the laid down statutes. 4.12.2.4. Outstanding Gas Flare penalties due to the government CBN statements and reports of inflows were also obtained in order to corroborate the payment information received. Per the information obtained from DPR, total revenue from gas flaring during the review period was $175million. The balance outstanding as unpaid was approximately $58million. This indicates that $115million had been received in respect of gas flare penalty by the DPR. The Task Force however reviewed CBN statements and noted that $137million was received between 1 January 2005 and 31 December 2011. The DPR was not able to reconcile the $115 million to the $137million. 4.12.2.5. Non – compliance with the new gas flare penalty regime The Minister issued a directive which was signed on
NNPC Towels, Abuja 15 August 2011 increasing the gas penalty fee from N10.00 to $3.50. However, the oil companies have failed to comply with the directive and have continued to flare gas without compliance with the new rate as communicated in the Minister’s directive. Using the DPR gas flare information (irrespective of the inherent errors arising per the factors earlier stated) to compute the potential revenues for the relevant years at the rate of $3.50 per scf is $4.1billion versus the $177million computed by the DPR using the N10 per scf. The records at the DPR reveal that none of the companies have paid any gas penalty fee in 2012. 4.12.2.6. T h e detrimental effect of gas flaring Although there has been a steady decline in the amounts of gas flared, the numerous deadlines to implement the Zero gas flaring policies and fine for oil companies have been repeatedly postponed, with the most recent deadline, being December 2012. In 2009, the government developed a Gas Master Plan that should promote new gas-fired power plants to help reduce gas flaring and provide a source for the much- needed electricity generation. However, progress is slow largely due to the lack of infrastructure to produce and market gas. Gas flaring has both environmental and economic impacts. The value of gas flared over the 10 year period is estimated at about US$44 billion. Environmental
Committee member, Steve Oronsaye impacts resulting from gas flaring include: • Environmental pollution • Adverse climate changes • Food insecurity • Diseases • Unemployment • Deforestation 4.13. Miscellaneous Oil Revenues 4.13.1. Overview Miscellaneous Oil Revenues are all other revenues due to Nigeria through the DPR which do not fall into any of the other major types of revenue classes documented above. Examples include
drilling permits/licenses, fuel station permits, renewal of licenses etc. 4.13.2. Findings 4.13.2.1. N o c o m p r e h e n s i v e miscellaneous oil revenue schedule The Task Force was unable to obtain a comprehensive miscellaneous oil revenue schedule from the officials of DPR. Our reference point for the purpose of determining the amounts earned in respect of miscellaneous oil revenues was the schedule of revenues presented by the DPR to the members of the Special Task
Force on 13 April 2012. The presentation indicated total miscellaneous oil revenues for the period 1 January 2005 to 31 December 2011 to be approximately N102.5billion. Receipts issued for the various licences and permits were initially provided by the DPR as a basis for determining the total revenues received and only N640million worth of receipts were made available. Subsequently, CBN statements (Miscellaneous Oil Revenue Account statements) for the period were provided N102.3billion was traceable. Upon conclusion of the review there was an unexplained reconciliation difference of N151million. Lack of transparency of license-level earnings and costs inhibits oversight and enables manipulation. The record keeping of the DPR calls to question the completeness and accuracy of reports generated as there was no way to determine if there were miscellaneous oil revenues due to the Federation which were yet to be collected. Also, the DPR has not provided an analysis of the miscellaneous revenues by type and amounts due. 4.13.2.2. Outdated oil licensing fee regimes The amounts due in respect of the various fees relating to the miscellaneous oil revenues are not reflective of the current economic realities. For example, the fee to apply for the operation of a petrol station ranges from N5,000 to N250,000 and the license to operate a drilling rig costs between N20,000 to N100,000.