There are no records to account for this country’s massive but haphazard importation of petroleum products, according to an official survey carried out last week.
The survey, carried out by a Federal Government team led by engineers from Telemetry Nigeria Limited, consultants to the Nigeria Extractive Industries Transparency Initiative [NEITI] and the British Department for International Development [DFID] on oil measurement survey, found that the downstream oil sector operates completely in the dark. No records are kept for the total amount of oil being imported into the country or distributed by the different depot, the survey found.
The survey, which was intended to investigate oil measurement in both the downstream and upstream oil sectors, was sponsored by NEITI and DFID.
Speaking to newsmen at the weekend, Managing Director of Telemetry Nigeria Limited Engineer Yabagi Yusuf Sani said the team made two shocking discoveries during the 14-day tour, which was concluded last week.
According to him, the downstream oil sector is in a complete mess and nothing is working as far as oil measurement is concerned. He said “there is no standard way of doing things, and we don’t have metres of what comes into the country as import while in the upstream sector, all the facilities are world-class but the measurement is not accurately reported to government agencies such as the Federal Inland Revenue Service (FIRS) and the Office of the Accountant General of the Federation (OAGF).”
The team, which had representatives of the OAGF, FIRS and Telemetry visited Brass Terminal of the Nigeria Agip Oil Company (NAOC), Shell’s Bonga FPSO off-shore terminal, Atlas Cove Jetty in Lagos and Chevron’s Escravos Terminal. Other places visited by the team include Oando’s facilities in Lagos, Nigeria Liquefied Natural Gas [NLNG] in Bonny Island, Port Harcourt Refinery, Port Harcourt Depot and the Jetty.
Sani said government is the least informed as far as oil records in the country are concerned, adding that all the Joint Venture Agreements [JVAs] run by the Nigeria National Petroleum Corporation [NNPC] are poorly recorded and that it is only what the JV partners declare that goes to government coffers. He said unless the sources of crude oil output are measured, the country will continue to lose billions of Naira a day.
Engineer Sani blamed regulators in the oil sector such as NNPC and the Department of Petroleum Resources (DPR) for not doing their jobs properly by enforcing regulations that will compel the oil companies to measure their production wells. He said what is provided to the government as oil proceeds do not match the physical output in the sector, and that the country will continue to go with this system if it is left unchecked.
Sani said the revenue agencies such as Central Bank of Nigeria [CBN], FIRS and OAGF are at the receiving end because they rely on the data given by other agencies, saying the DPR and the NAPIMS are understaffed and have poor equipment.
He said from what the team discovered, even with the passage of the Petroleum Industry Bill, if necessary equipment is not in place, the problems will remain. He urged government to ensure that no matter how much it will cost, accurate measurement is ensured in the oil sector.
Presenting the 2005 NEITI audit report of the Oil and Gas Sector during the Stakeholders’ Roundtable recently in Abuja, Chairman of NEITI’s National Stakeholders’ Working Group (NSWG) Professor Assisi Asobie said the report showed that there was $800 million of unresolved differences between what oil companies said they paid in taxes, royalties and signature bonuses and what government said it received.
Of this amount, he said, $560 million was identified as shortfalls in taxes and royalties owed to the government while $300 million was payment discrepancies relating to signature bonuses, payments of dividends, interest and loan repayments.
An estimated $4.7 billion is owed to the government by the Nigeria National Petroleum Corporation for payments of domestic crude, making it the single largest figure identified in the report. According to Asobie, the 2005 audit was “quintessentially a pro-poor audit, directed at helping the federation of Nigeria secure full value from its petroleum industry and thereby be in a stronger position to provide for the welfare of the people.”
Engr. Sani said the survey carried out is a follow up to the NEITI audit and will help the country attain an accurate measurement system.