The House of Representatives vowed on Monday to recoup a whopping $9 billion in gas flaring fines levied by the federal government on erring local and foreign oil and gas businesses.
Chairman, Ad-hoc Committee investigating gas flaring, Ahmed Munir gave the assurance in Abuja, during the post-investigative hearing briefing which was attended by various stakeholders drawn from Federal Ministry of Environment, Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), National Oil Spill Detection and Response Agency (NOSDRA), among others.
Concerned about the level of impunity maintained by the operators, Hon. Munir promised that the 10th Assembly would do everything in its ability to secure the recovery of all overdue levies as well as compliance with existing laws and regulations.
He said, “I can assure you that we will not take this lying down. There are two ways to go about it, we have the issues 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 PIA in place so how do you implement it. Where we have loophole 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 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 to.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 various certificates whether BPP, BPE or whatever may be the case.
“So, if don’t have that, you can’t win the bid, so are we going to go and look for you to pay your fees or you go yourself to pay your fees? So, we have to create a mechanism where the business environment requires that certain things need to be put in place.
“If an establishment is going out to go and look for loan and you are owing another bank, I believe there’s a central database of CBN that even if you’re owing 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,” Munir noted.
In his address, RMAFC Chairman 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 is 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 were 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 are $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.
While noting that Nigeria has a proven gas reserves of 201 trillion standard cubic feet and unproven gas reserves of 600 trillion standard cubic feet, yet production of gas remains very low and unstable, he called for drastic measures toward tackling the menace.
In his remarks, Director at Federal Ministry of Environment, Mr. Olubunmi Olusanya underscored the need to give legislative backing to the use of oil tracker 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 that it can be used as benchmark for sanctioning of the 44 companies.
“Presently, a lot of companies are flaring because what they’re are 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 we are using the gas flare meter developed by NOSDRA, and they are paying heavily for the flaring gases, I’m very sure all of them will begin to think of alternative use of gas being flared unabatedly,” he stressed.
While delivering his keynote address, Speaker Tajudeen Abbas who was represented by the Chief Whip, Usman Kumo observed that gas flaring and venting has been a significant environmental, economic, health and social concern in our 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.
“Moreover, gas flaring has led to substantial economic losses and revenue decline for the nation. The flared gas represents lost revenue that could have been generated through its sale or utilization. Official records indicate that we lose about $2.5 billion annually to gas flaring.
“However, the consequences of gas flaring extend beyond economic considerations. It also poses serious health hazards to nearby communities. The combustion of gases released during flaring produces various toxic substances which have detrimental effects on human health when inhaled or exposed to over an extended period. Affected communities often experience higher rates of respiratory diseases, skin disorders, and other health issues compared to areas without gas flaring
“As a major contributor to climate change and environmental degradation, gas flaring has direct and indirect impacts on soil, water, and wildlife. The atmospheric contaminants associated with it, acidify the soil, deplete soil nutrient and stunt the growth of crops, thereby affecting agricultural productivity.
“In addition to soil impacts, the aquatic ecosystems is equally destroyed owing to increased water temperatures in nearby rivers and oceans. As a result, fish stocks may decline or even collapse in our rivers and oceans. Environmental experts have equally discovered that the bright light, noise and heat of gas flares scare away wildlife, leading to their migration to more friendly environments.”
In his presentation, NOSDRA Director General, Mr. Idris Musa, who earlier explained that the extant penalties on gas flaring are to serve as deterrent, however recommended that the penalties on gas flaring should 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, total of 3.8 billion Mscf was flared between 2013 to date while total sum of $7.6 billion penalties are payable.
To this end, the lawmakers resolved to investigate the rationale behind $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 the Committee on Tuesday, 25th July, 2023.
They are: Total/Mobil JV Domestic Wing; Total/Oando JV; Total Energies; African Petroleum (AP) Plc. now Ardova PLC; Azman Oil & Gas Limited; Matrix Oil & Gas; A. M Shafa Ltd; Nigerian Electricity Regulatory Commission (NERC); National Council on Climate Change (NCCC); Nigerian Petroleum Development Company (NPDC); Yinka Folawiyo Petroleum Company (Aje Oilfield Offshore); Sterling Oil Exploration & Energy (SEEPCO); Belemaoil Production Limited; Walter Smith Petroman Oil Limited; Green Energy International Limited Millennium Oil and Gas Company Limited; Folawiyo Energy; Eroton Exploration and Production Nigeria Limited; and Niger Delta Petroleum Resources Ltd, respectively.