The one thing that is very clear about Nigeria’s oil industry figures is that they don’t just add up. Take production volumes for instance. NNPC production figures from 1997 to 2011 differ from BP Statistical Review, EIA and OPEC figures. OPEC figures differ by an average of 11% while the closest figures to that of the NNPC are EIA figures (4% disparity), and BP Statistical Review figures (3% disparity).
These disparity trends are also present in crude oil exports data, petroleum products imports and consumption data, and indeed sales of crude oil and gas data.
Core oil and gas financial flows to the federation have been audited within the country by NEITI since 1999. These reports have provided a view into the data sets that were previously shrouded in secrecy. The known financial remittances to the Federation Account from the oil and gas industry comprise of
Sales of equity crude oil and gas,
Payments- signature bonuses, concession rentals, gas flaring penalties,
Oil and gas royalty payments,
Others- Withholding Tax, PAYE, dividends & repayments of loans by NLNG, contributions to NDDC and Education Tax
Taxes- Petroleum Profits Tax, Companies Income Tax, Value Added Tax
The NEITI audit of 2009-2011, revealed some interesting information. At average oil prices of $112 per barrel, total revenue paid to the Federation and other entities was $143.5billion.
Apparently there is a difference between the derived average conversion rate used by NNPC and the annual average rate used by CBN for sales of domestic crude. This difference has resulted in a loss of N98.3billion. Another highlight is that the sum of $4.84billion received from NLNG as dividends and loan repayments by NNPC have not been remitted to the Federation Account.
It is a fact that we can’t control what we don’t measure. A country that is over ninety percent dependent on crude oil revenues to run its economy should equally prioritize the importance of how it measures and controls this resource and the revenues gotten from it.
According to NEITI, the industry has no consistent practice regarding the point at which production is measured. The lack of automation of the accounting system for equity crude, creates difficulties for reconciliation and fund interface.
In the midst of these discrepancies, the quest for transparency and good governance continues to push for change in the way this elusive industry manages Nigeria’s oil resources.