The Federal Government is owed N2.659 trillion ($6.48 billion) by 77 oil and gas companies, the Nigeria Extractive Industries Transparency Initiative (NEITI) has disclosed.
NEITI said the indebtedness is linked to failure to pay various taxes, including company income tax, which accounts for $1.089 billion, value added tax debt is $18.46 million and £972,000.
Further breakdown shows that withholding tax debt is $23.91 million and £997,000, petroleum profit tax $143.99 million, education tax $201.69 million, royalty oil and gas is $4.357 billion and $292.44 million respectively.
While debt attributed to concession on rentals is $41.86 million, and unremitted gas flare penalties account for $270.187 million.
NEITI Executive Secretary, Ogbonnaya Orji, made the disclosure during a media session on the implementation of the Extractive Industries Transparency Initiative (EITI) in Nigeria.
Impact of the oil firm’s debt on Nigeria’s revenue and debt issue
The N2.659 trillion debt attributed to the 77 oil companies in Nigeria comes at a time the Federal Government is struggling to expand its revenue, which is mostly gulped by debt servicing.
The oil firms’ debt would have solved one of many financial problems faced by President Muhammadu Buhari-led administration:
Ripples Nigeria had reported that 97 percent of revenue goes to debt servicing as of 2020 when N3.34 trillion was deducted from the N3.42 trillion revenue generated to pay debt.
The N2.659 trillion owed by the oil and gas companies could have resolved Nigeria’s debt servicing in 2020 if the government had recovered it, and the money is still in the grip of the companies.
Also, the Nigerian National Petroleum Corporation (NNPC) won’t be depending on the Federation Account Allocation Committee (FAAC) from which the government corporation is set to receive a bailout of N149.2 billion next month.
Note that this federal allocation is likely to lose over N1.64 trillion as Southern States in Nigeria are challenging FG’s right to demand and collect consumption tax from states in court.
Confirming the impact of the debt on government, Orji said, “In 2021, if the money is recovered, the N2.659 trillion, it could fund about 46 per cent of Nigeria’s 2021 budget deficit of N5.6 trillion and is even higher than the entire projected oil revenue for 2021.
“This is why NEITI is set to work with the government to provide relevant information and data to support efforts at recovering this money.”