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Recover $22bn, N316bn From NNPC, NEITI Tells FG

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NNPC - Investors King
  • Recover $22bn, N316bn From NNPC, NEITI Tells FG

The Nigeria Extractive Industries Transparency Initiative on Tuesday called on the Federal Government to urgently recover the over $21.778bn and N316bn unremitted funds meant for the federation but allegedly held up by the Nigerian National Petroleum Corporation and its subsidiaries.

It stated that if recovered, the funds could be used to finance the country’s Economic Recovery and Growth Plan, adding that a summary of its independent reports of the extractive industry showed that outstanding remittances meant for the Federation Account running into several billions of dollars were sitting at the national oil firm.

In a policy brief, which focused on unremitted funds, economic recovery and oil sector reform, NEITI said the recovery of the unremitted funds was more than enough to jump-start the economy.

“It is not right for government agencies to withhold funds meant for everybody, no matter the excuse they provide,” the Executive Secretary of NEITI, Mr. Waziri Adio, said during a briefing at the agency’s office in Abuja.

The agency in its policy brief, stated, “Findings from a series of audits of the oil and gas sector carried out by NEITI show that the NNPC and its upstream arm, Nigerian Petroleum Development Company, have failed to remit $21.778bn and N316.074bn to the Federation Account.

“These are amounts due from three main sources: Federation assets divested to the NPDC and NPDC’s legacy liabilities; payments for domestic crude allocation to the NNPC; and dividends from investment in Nigerian Liquefied Natural Gas Company paid to but withheld by the NNPC. Recovery of these funds will significantly enhance government’s fiscal position in the short term.”

NEITI said the Federal Government should go beyond recovery of the funds to putting in place adequate measures to ensure the revaluation of the assets divested to the NPDC to determine the actual market prices, with a view to recovering the full value of the assets and securing optimal benefits from them.

It said the government should review the relationship between the NPDC, NNPC and the federation to determine and establish effective lines of accountability of the corporation’s subsidiaries, and determine optimal mode of operation in line with global best practices.

It added that the government should review the process of acquisition of Oil Mining Licences by the NNPC and NPDC to ensure that long-term net positive value was realised given the availability of alternative economic options.

A breakdown of the unremitted funds of the oil and gas industry over the years include outstanding payment of $1.7bn arising from the transfer of eight OMLs from Shell Petroleum Development Corporation and the sum of $2.2m from four OMLs by Nigeria Agip Oil Company to the NPDC.

NEITI said the NPDC had yet to pay for these major national assets that were transferred to it for its commercial operations.

Also contained in the breakdown of unremitted funds was the cash call paid on the transferred OMLs amounting to about $148.28m.

The agency stated that this was in addition to legacy liabilities amounting to $1.5bn and the sum of $15.8bn unremitted to the Federation Account from accrued NLNG dividends between 2000 and 2014.

The agency recommended a comprehensive review of the transactions to conform to EITI’s accountability principles.

It said, “NEITI’s review of transfer of the country’s oil assets to the NPDC also shows that these decisions were not underpinned by sound economic judgment. Although the NPDC was established to foster indigenous participation.” in the upstream sector, it is not really able to produce at substantial levels on its own.

“In mid-2006, total output from its wholly owned production was just 10,000 barrels per day. On the other hand, production from its service contract agreement with Agip was 65,000bpd. Reasons given for the NPDC’s disappointing performance include undue interference by the NNPC, inadequate financial structure, and inability to source project finances.”

On the NLNG dividends, NEITI stated that while there was evidence of payment of dividends from the NLNG to the NNPC, there was no similar evidence to show that the corporation remitted the dividends to the Federation Account as required by Sections 80(1) and 162(1) of the Constitution.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Economy

World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco

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The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.

Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.

Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.

The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.

The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.

Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.

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Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead

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In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.

This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.

In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.

That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.

To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.

In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).

Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.

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Nigeria’s Economy to Close 2021 at 2.5% Growth Rate

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The Lagos Chamber of Commerce and Industry (LCCI) has predicted that the Nigerian economy will close its growth rate for the year at 2.5%.

This was said by the President of the LCCI, Toki Mabogunje at the 133rd Annual General Meeting (AGM) of the chamber in Lagos on Thursday, as reported by the News Agency of Nigeria.

The LCCI leader advised that Nigeria’s monetary and fiscal aspects of the economy should encourage policies that enhance growth and build confidence which would invigorate private capital flows to the economy to achieve the growth. She also encouraged a medium-term recovery plan which is anchored on local productivity, attracting private investment, developing physical and soft infrastructure, and ease of business.

Mabogunje disclosed that Nigeria’s inflation would be maintained at its double digit level within the short to medium term, due to food supply shocks, foreign exchange illiquidity, higher energy cost, social unrest in the Northern region, possible removal of fuel subsidy, and insecurity. She stated that these structural factors will keep on mounting pressure on domestic consumer prices.

She also added that in spite of the non-oil economy’s growth by 5.4%, insecurity problems in some areas of the country may lead to shrinking in production and a disruption of the supply chain. She states that the important drivers of the non-oil sector growth were finance and insurance holding 23.2%, transport and storage 20.6%, trade carrying 11.9% and telecommunications 10.9%.

Others include manufacturing, construction, real estate and agriculture with 4.3%, 4.1%, 2.3% and 1.2% respectively throughout the year.

Speaking on the decision of the Central Bank of Nigeria’s Monetary Policy Committee’s decision to retain policy parameters, she mentioned that although the apex bank has been keen to extend credit to the real economy as a way of supporting it, it is a fact that the provision of credit recently has proven ineffective in improving output growth and stabilizing consumer prices.

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