Economy

Nigeria Lost N217bn to Gas Flaring in 2016 – NNPC

Published

8 years ago

February 23, 2017

Nigeria Lost N217bn to Gas Flaring in 2016

The country lost at least N217bn last year as oil and gas companies flared a total of 244.84 billion standard cubic feet of natural gas in that period, data from the Nigerian National Petroleum Corporation have shown.

The latest monthly report from the NNPC showed that 22.32 billion scf of gas was flared in January; 20.38 billion scf in February; 20.11 billion scf in March; 18.7 billion scf in April; 15.8 billion scf in May, and 14.8 billion scf in June.

In the second half of the year, the country recorded the highest volume of gas flared in November at 24.54 billion scf, up from 22.60 billion scf in October; 21.5 billion scf in September; 21.14 billion scf in August, and 21.79 billion scf in July.

A total of 21.15 billion scf of gas was flared in December, according to the NNPC data.

With the price of natural gas put at $2.90 per 1,000 scf as of February 16, 2017, the 244.84 billion scf flared translates to a loss of $710m or N217bn (using the official exchange rate of N305.25/dollar).

The NNPC said, “Total gas supply for the period, January 2016 to December 2016, stood at 2,581.42 billion scf, out of which 1,448.91 billion scf (307.16 billion scf and 1,141.75 billion scf for the domestic and export market, respectively) was commercialised while non-commercialised stood at 1,132.52 BCF.

“Out of the 788.11million scf per day of gas supplied to the domestic market in December 2016, about 480.64 million scfpd of gas, representing 60.99 per cent, was used for gas-fired power plants while the balance of 307.47 million scfpd or 39.01 per cent was supplied to other industries.

“Similarly, for the period of January 2016 to December 2016, an average of 839.70million scfd of gas was supplied to the domestic market, comprising an average of 517.92 million scfd or (65.72 per cent) as gas supply to the power plants and 321.77 million scfd or (40.83 per cent) as gas supply to industries.”

According to the draft of the National Gas Policy recently released by the Ministry of Petroleum Resources, the flaring of natural gas that is produced in association with oil is one of the most egregious environmental and energy waste practices in the Nigerian petroleum industry.

The draft policy states, “While gas flaring levels have declined in recent years, it is still a prevailing practice in the petroleum industry. Billions of cubic metres of natural gas are flared annually at oil production locations, resulting in atmospheric pollution severely affecting host communities.

“Gas flaring affects the environment and human health, produces economic loss, deprives the government of tax revenues and trade opportunities, and deprives consumers of a clean and cheaper energy source.”

The ministry said under the gas policy, the government intended to maximise utilisation of associated gas to be treated for supply to power generation or industry.

“To ensure that flared gas is put to use in markets, the government will take measures to ensure that flare-capture and utilisation projects are developed and will work collaboratively with industry, development partners, providers of flare-capture technologies and third party investors to this end,” it added.

According to the gas policy, the current gas flare penalty of N10 per 1,000 scf of associated gas flared is too low, having been eroded in value over time, and is not acting as intended, as a disincentive.

“Consequently, the low penalty has made gas flaring a much cheaper option for operators compared to the alternatives of marketing or re-injection. The intention of government is to increase the gas flaring penalty to an appropriate level sufficient to de-incentivise the practice of gas flaring, whilst introducing other measures to encourage efficient gas utilisation,” it added.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Economy

Nigeria Sees 9.11% Increase in VAT Revenue, Generating N1.56 Trillion in Q2 2024

Published

12 hours ago

September 9, 2024

Investors King

The federal government in the second quarter of 2024 generated a total of N1.56 trillion from Value Added Tax. This is a 9.11 percent increase from the N1.43 trillion in Q1 2024.

According to the National Bureau of Statistics report, local payments recorded were N792.58 billion, foreign VAT payments were N395.74 billion, while import VAT contributed N372.95 billion in Q2 2024.

“On a quarter-on-quarter basis, human health and social work activities recorded the highest growth rate with 98.44%, followed by agriculture, forestry and fishing with 70.26%, and water supply, sewerage, waste management and remediation activities with 59.75%,” NBS reported.

“On the other hand, activities of households as employers, undifferentiated goods and services producing activities of households for own use had the lowest growth rate with 46.84%, followed by Real estate activities with 42.59%.

“In terms of sectoral contributions, the top three largest shares in Q2 2024 were
manufacturing with 11.78%; information and communication with 9.02%; and Mining and quarrying with 8.79%.

“Nevertheless, activities of households as employers, undifferentiated goods- and services-producing activities of households for own use recorded the least share with 0.00%, followed by activities of extraterritorial organisations and bodies with 0.01%; and Water supply, sewerage, waste management and remediation activities with and real estate services 0.04% each.

“However, on a year-on-year basis, VAT collections in Q2 2024 increased by 99.82% from Q2 2023.”

Economy

Finance Minister Denies VAT Hike, Confirms Rate Remains at 7.5%

Published

13 hours ago

September 9, 2024

Investors King

Minister of Finance and Coordinating Minister of the Economy, Mr Wale Edun, on Monday, debunked reports doing the rounds that the rate for Value-Added Tax (VAT) has been upwardly adjusted to 10% from 7.5%.

The Minister, in a statement signed by him, affirmed that VAT rate as contained in relevant tax laws and chargeable on goods and services remains 7.5%.

“The current VAT rate is 7.5% and this is what government is charging on a spectrum of goods and services to which the tax is applicable. Therefore, neither the Federal Government nor any of its agencies will act contrary to what our laws stipulate.

“The tax system stands on a tripod, namely tax policy, tax laws and tax administration. All the three must combine well to give us a sound system that gives vitality to the fiscal position of government.

“Our focus as a government is to use fiscal policy in a manner that promotes and enhances strong and sustainable economic growth, reduces poverty as well as makes businesses to flourish.

“The imputation in some media reports on the issue of VAT and the opinion articles that have sprouted from them seem to wrongly convey the impression that government is out to make life difficult for Nigerians. That is not correct. If anything, the Federal Government has, through its policies, demonstrated that it is committed to creating a congenial environment for businesses to thrive.

“In fact, it is on record that the Federal Government, as part of efforts to bring relief to Nigerians and businesses, recently ordered the stoppage of import duties, tariffs and taxes on rice, wheat, beans and other food items.

“For emphasis, as of today, VAT remains 7.5% and that is what will be charged on all the goods and services that are VAT-able,” Edun said

Economy

Nigeria to Raise VAT to 10% Amid Revenue Crisis, Says Fiscal Policy Chairman

Published

6 days ago

September 3, 2024

Samed Olukoya

Taiwo Oyedele, Chairman Presidential Fiscal Policy and Tax Reforms Committee, has said the committee working on increasing the Valued Added Tax (VAT) from the current 7.5% to 10%.

Oyedele announced this during an interview on Channels TV’s Politics Today.

According to Oyedele, the tax law the committee drafted would be submitted to the National Assembly for approval.

He also said his committee was working to consolidate multiple taxes in Nigeria to ensure tax reduction.

He said, “We have significant issues in our tax revenue. We have issues of revenue generally which means tax and non-tax. You can describe the whole fiscal system in a state that is in crisis.

“When my committee was set up, we had three broad mandates. The first one was to look at governance: our finances as a country, borrowing, coordination within the federal government and across sub-national.

“The second one was revenue transformation. The revenue profile of the country is abysmally low. If you dedicate our whole revenue to fixing roads it will be insufficient. The third is on government assets.

“The law we are proposing to the National Assembly has the rate of 7.5% moving to 10% from 2025. We don’t know how soon they will be able to pass the law. Then subsequent increases are also indicated in terms of the year they will kick in.

“While we are doing that, we have a corresponding reduction in personal income tax. Anybody that is earning about N1.5 million a month or less, they will see their personal income tax come down. Companies will have income tax rate come down by 30% over the next two years to 25%. That is a significant reduction.

“Other taxes they pay are quite many: IT levy, education tax, etc. All these we are consolidating into a single one. They will pay 4% initially. That will go down to 2& in the next few years.”