Nigeria’s extractive sector, which comprises the oil, gas and solid minerals industries, contributed over ₦14 trillion to the federation account between January 2020 and December 2021, according to a report by the Nigeria Extractive Industries Transparency Initiative (NEITI).
The report, which was presented in Abuja on Thursday by the Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji, and the Auditor General of the Federation, Mr. Shaakaa Chira, examined the financial transactions and processes of four federal revenue-generating agencies and 11 beneficiary agencies in the extractive sector.
The revenue-generating agencies include the Nigerian National Petroleum Company Limited (NNPC Ltd), Nigerian Upstream Regulatory Commission (NUPRC), Federal Inland Revenue Service (FIRS), Ministry of Mines and Steel Development (MMSD), and the Nigeria Customs Service (NCS).
The report revealed that the mineral revenue accounted for ₦6.40 trillion, representing about 44.5% of the total remittances during the period, while other non-mineral revenue (excluding VAT) contributed ₦4.80 trillion, equivalent to around 33.37% of the total remittances.
The report also showed that the NNPC Ltd and the FIRS were the major sources of revenue for the federation account, with the NNPC Ltd remitting ₦5.67 trillion and the FIRS remitting ₦4.25 trillion.
However, the report also noted that the revenue performance of the extractive sector was affected by the global COVID-19 pandemic, which caused a sharp decline in the demand and price of crude oil in 2020. The report stated that the total revenue from the extractive sector in 2020 was ₦6.71 trillion, 30% lower than the ₦9.54 trillion recorded in 2019.
The report also highlighted some challenges and gaps in the revenue collection and remittance processes, such as delays, underpayments, non-remittances, and lack of reconciliation. The report recommended that the government and the industry adopt measures to improve transparency and accountability in the extractive sector, such as creating ethical standards, ensuring transparency and accountability, and fostering public awareness and education.
The report also urged the government and the industry to work together to ensure the safety and benefits of the extractive sector, especially in light of the new Petroleum Industry Act, which was signed into law by President Muhammadu Buhari in August 2021. The report stated that the new law provides an opportunity to address some of the longstanding issues in the oil and gas sector, such as fiscal terms, governance, host community development, and environmental protection.
The report was endorsed by various stakeholders, including civil society organisations, extractive companies, and state governments, who commended NEITI for promoting transparency and accountability in the extractive sector. They also expressed their commitment to supporting the report’s recommendations and collaborating with NEITI to achieve its mandate.
NEITI is the national agency responsible for implementing Nigeria’s global Extractive Industries Transparency Initiative (EITI). The EITI is a voluntary initiative that aims to improve the governance of natural resources by ensuring that the revenues from the extractive sector are disclosed and used for the benefit of the citizens.
Source: Nairametrics
