The House of Representatives yesterday promised to recover the sum of over $9 billion in fines imposed by the Federal Government on local and foreign oil and gas companies operating in the country over gas flaring.
Chairman of the ad hoc committee investigating gas flaring, Ahmed Munir, gave the assurance in Abuja, during the post-investigative hearing briefing which was attended by stakeholders drawn from the Federal Ministry of Environment, Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, and National Oil Spill Detection and Response Agency, NOSDRA, among others.
Speaking during the meeting, Munir expressed worries about the level of impunity being perpetuated by the operators, adding that the 10th Assembly would do all in its power to ensure the recovery of all unpaid levies as well as compliance with extant legislations and regulations.
He said: “I can assure you that we will not take this lying low. There are two ways to go about it, we have the issue of penalties that are not paid, amounting to about $9 billion, or thereabout, that one is there. We know how to recover it.
“Secondly, going forward, those that are still polluting, how do you ensure you get it down to zero and what are the penalties that are going to be out in place?
“Thirdly, the big difference between then and now is, we now have a Petroleum Industry Act, PIA, in place, so how do you implement it? Where we have loopholes that’s why we are here to hear from the people concerned. Is there any amendment that will be required?
“If you are going to bid for an oil bloc in Nigeria, and you see that out of the criteria, one is your gas master plan, how do you key into that? You can’t win a bid without ensuring you’ll be able to utilise that gas or evacuate the gas responsibly.
“The issue of how many people do FIRS run around and make them pay their taxes, if you’re a contractor and you are bidding, and you don’t have your FIRS certificate, you are not going to go anywhere if you don’t have certificates, whether BPP, BPE or whatever may be the case.
“If an establishment is going out to look for loan and you owe another bank, I believe there’s a central database of CBN that even if you owe N1 you’ll be declined.
“So, why shouldn’t we have a centralised database of defaulters owing, of the people who are not doing the right thing, they can’t further renege on these issues.”
In his address, RMAFC Chairman of, Gas Monitoring Committee, Mr. Patrick Mgbebu, disclosed that the gas flare penalty payment regime from 2013-2018 (2018 Jan-June) was US$0.30, while from 2018 (July-Dec) to 2023, it was pegged at $2.00.
”The penalties payable amounted to $3,465,299,226.55 and the value of gas would have been $12,403,000,001.20, if the gas was sold and not flared.
“The commission compared the data from NOSDRA with the data from the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, and the following observations were made that the volume of gas flared according to NOSDRA and NUPRC was $838,667,211 Mscf and $700,975,019 Mscf respectively.
”The difference, which is 137,692,192 Mscf, indicated that the federation account was shortchanged. It should be noted that the comparison covered three years from 2020 to 2022.
“That the value of gas flared according to NOSDRA and NUPRC is $320,583,355.48 and $43,325,050.76 respectively. As such, the variance indicated that the federation account was shortchanged by $277,258,304.72.”
Speaking also at the meeting, the Director of the Federal Ministry of Environment, Mr. Olubunmi Olusanya, underscored the need to give legislative backing to the use of oil trackers as part of measures aimed at ending the gas flaring menace in the country.
He said: “I also want to plead that the oil tracker should be given a legislative backing, so it can be used as benchmark for sanctioning of the 44 companies.
“Currently, a lot of companies are flaring because what they’re flaring is nothing compared to the investment in the utilisation of gas that is being flared.
“But when the penalty is adjusted appropriately and we are not depending on their meters and are using the gas flare meter developed by NOSDRA, and they are paying heavily for flaring gases, I’m very sure all of them will begin to think of alternative use of gas being flared unabatedly.”
While delivering his keynote address, the speaker, Tajudeen Abbas, who was represented by the Chief Whip, Usman Kumo, observed that gas flaring and venting had been a significant environmental, economic, health and social concern in the country for many years.
“Firstly, gas flaring represents a tremendous waste of valuable resources. Natural gas is a precious energy source that could be utilized for various purposes, such as electricity generation, heating, or industrial processes.
”By simply burning off this gas, we are squandering a valuable resource that could contribute to energy security and sustainability.”
In his presentation, NOSDRA Director General, Mr. Idris Musa, who earlier explained that the extant penalties on gas flaring were to serve as a deterrent, however, recommended that the penalties on gas flaring be increased.
While stressing the need for improvement on the penalty application process and procedure of the application and collection, he also harped on the need to abolish the dichotomy of penalty administration.
According to him, a total of $3.8 billion Mscf was flared between 2013 to date, while $7.6 billion penalties are payable.
To this end, the lawmakers resolved to investigate the rationale behind the $277,258,304.72 disparity in the gas flare penalties computed by NOSDRA and NUPRC.
The ad hoc committee also resolved to summon all the chief executive officers of 19 oil and gas companies and others to appear before it today.