NEITI Exposes $1.4bn in Unpaid Gas Royalties, Flare Penalties

NEITI reveals $1.4 billion in unremitted gas royalties and flare penalties in latest oil and gas sector report. Executive Secretary Ogbonnaya Orji calls for focused investment in key areas to address energy transition and climate change, commending President Tinubu's commitment to green economic solutions.

The Nigeria Extractive Industries Transparency Initiative (NEITI) has unveiled a staggering $1.4 billion in unremitted gas royalty payments and unpaid gas flare penalties in its latest report on the oil and gas sector. This revelation was made by NEITI's Executive Secretary, Ogbonnaya Orji, on Thursday, June 13, at a roundtable event hosted by BudgIT Foundation in Abuja.

According to Orji, the latest audit reports for the oil, gas, and mining sectors, which cover the year 2021, highlight the significant amount of unpaid royalties and penalties. NEITI had earlier announced that its 2022 and 2023 audit reports for the oil, gas, and mining sectors would be released in September this year, providing further insights into the industry's financial transactions.

In a statement released in Abuja, NEITI's Executive Secretary, Ogbonnaya Orji, commended President Bola Tinubu's dedication to enhancing Nigeria's climate change initiatives, energy transition efforts, and green economic solutions. Orji acknowledged the President's commitment to addressing these critical issues.

Orji highlighted several key areas that require focused investment in the country's budget to effectively respond to energy transition and climate change. These priority areas include strategic investments in the solid minerals sector, gas infrastructure and commercialization, technology and research innovation, human capital development, transportation, food security, and the utilization of low-carbon hydrogen. By targeting these areas, Nigeria can effectively address the challenges posed by energy transition and climate change.

“These opportunities come at a cost that requires commitment to compute them in terms of human and material resources,” he stated.

Ogbonnaya Orji emphasized the crucial role of gas commercialization in helping Nigeria navigate the challenges of climate change and energy transition. He stressed that commercializing gas is a vital pathway for the country to reduce the economic risks and impacts associated with these global phenomena.

Gas commercialization is a crucial pathway for Nigeria to minimize the risks and economic impacts of climate change and energy transition, Ogbonnaya Orji emphasized. By harnessing its gas resources, Nigeria can reduce its vulnerability to the economic shocks of climate change and energy transition, while also creating new opportunities for economic growth and development.

“NEITI's recent report of the oil and gas industry disclosed a total unremitted revenue of gas royalty payments of $559.8 million and another unremitted sum of $828.8 million from unpaid gas flare penalties.

“A close look at these figures indicated that more gas was flared during the period than utilized, thereby posing serious dangers to the global zero emissions agenda, Orji stated.

By commercializing its gas resources, Nigeria can effectively mitigate the risks and economic impacts of climate change and energy transition. This strategic move can help the country adapt to the changing energy landscape while minimizing the economic costs of transitioning to a low-carbon economy.

Ogbonnaya Orji called for a revision of Nigeria's gas commercialization policy to align with President Tinubu's commitments to addressing climate change and promoting green economic solutions. This update is crucial to ensure the country's policy framework is coherent and effective in tackling the challenges of energy transition.

NEITI, with the support of international partners like the Ford Foundation, has initiated a comprehensive research study on the implications of energy transition for Nigeria's economy. This study aims to provide a detailed analysis of the impacts on revenue, employment, livelihoods, environmental sustainability, food security, gender dynamics, and emission management, ensuring the country is well-prepared for the transition.

Minister of State for Environment, Ishaq Salako, announced that the Federal Government has begun implementing the National Climate Change Policy and Climate Change Act under the Ministry of Environment. These initiatives will establish a robust policy framework and roadmap for Nigeria's national climate action, emphasizing the importance of transparency in climate budgeting.

The Minister also launched the National Green Bond Programme, a pioneering initiative in Africa aimed at issuing sovereign green bonds to fund projects that reduce greenhouse gas emissions and promote sustainable development. This programme will play a crucial role in mobilizing financing for climate-friendly projects and supporting Nigeria's transition to a low-carbon economy.

“So far Nigeria has issued two sovereign green bonds, raising a total sum of N25.69bn to finance 39 projects cutting across afforestation, renewable energy, transportation, agriculture, and water resources.

“The process for the issuance of the third sovereign green bond is ongoing and has reached advance stage,” Salako stated.