BUSINESS

2021: NNPC in Retrospect

Published

3 years ago

January 11, 2022

In retrospect, the Nigerian National Petroleum Company (NNPC) Limited recorded some remarkable achievements in 2021 including the signing into law of the Petroleum Industry Act (PIA) by President Muhammadu Buhari.

There are other major achievements in the industry which had placed the country on the part of success since the first discovery of crude oil in 1956 at Oloibiri, in present day Bayelsa.

The oil and gas industry had since grown to become the bane bedrock of Nigerian economic and a major source of national development.

The industry contributes about 30 per cent of the nation’s gross domestic product, GDP, over 70 per cent of government revenue and 90 per cent of foreign exchange earnings.

With this steady beat over the past six decades and the attendant contribution to the national coffers, the Nigerian oil and gas industry has evolved; with Nigeria becoming the largest oil and gas producer in Africa.

According to the defunct Department of Petroleum Resources (DPR), Nigeria has a total of 159 oil fields and 1,481 operating wells.
Nigeria currently has the largest gas reserve in the African continent and the world’s fifth-largest exporter of liquefied natural (LNG).

According to the defunct DPR, Nigeria has a proven gas deposit of 206.53 trillion cubic feet; the gas reserve is projected to increase to 230 trillion cubic feet by 2030.
The new figure represented a major increase of 3.37TCF in proven natural gas reserves; a 1.66 per cent rise from the 203.16TCF recorded on Jan. 1, 2020.

Sarki Auwalu, who was Director of DPR, in a breakdown, said of the 206.53TCF, Associated Gas was 100.73TCF and Non Associated Gas 105.80TCF.
The impact of the unexpected emergence of the COVID-19 pandemic on the global oil and gas industry in 2020 brought huge losses to the industry; consequently, in the last two years, the global oil and gas industry suffered a two-pronged setbacks caused by the imbalance in oil supply/demand and price deflation.

This global issue of course did not happen without a reverberating effect on the Nigerian oil and gas industry and that has not put the nation’s economy in a good stead.

In January, Chief Timipre Sylva, Minister of State for Petroleum Resources, declared 2021 to 2030 as the Decade of Gas Development.
Sylva said the initiative was to transform Nigeria to a gas-powered economy by 2030.
“Our efforts will continue to focus on gas to transmute Nigeria from the conventional dependence on white products to a cleaner, more available, accessible, acceptable, and affordable energy use in gas.
“This will not only cushion the effects of current deregulation but also create enormous job opportunities for Nigerians”.

The NUPRC is in charge of upstream petroleum regulatory activities while the NMDPRA is responsible for oil and gas activities in the midstream and downstream sectors.
NNPC Ltd. was incorporated as a Companies and Allied Matters Act (CAMA) company on September 22 in line with provisions of the PIA.

The NNPC Limited and its subsidiaries would operate under CAMA 2020 without recourse to Government funds, declare dividends to its shareholders and retain 20 per cent of profits to grow its business.
The new company is to be the supplier of last resort for security reasons and all associated costs shall be for the account of the federation.
In October, the NNPC was given approval for the reconstruction of 21 federal roads across the six geopolitical zones of the country.
The approval was given at the FEC meeting presided over by Vice President Yemi Osinbajo at the Presidential Villa, Abuja.

Briefing State House correspondents at the end of the council meeting, the Minister of Works and Housing, Mr Babatunde Fashola said that the construction works on the 1804.6 Kilometers roads is a strategic intervention under the Federal Government Road Infrastructure and Refreshment Tax Credit Scheme.
He explained that the Executive Order 7 allows the private sector to deploy in advance the taxes they would pay for infrastructure development.

OTHER ACTIVITIES
The year 2021 witnessed intensified calls for global transition to cleaner sources of energy and reduction in investment in fossil fuels exploration activities which saw the major International oil companies divesting from crude oil to gas and other renewable resources of energy.
Many of the companies have changed their names from oil companies to energy companies to reflect their current positions as they move to become carbon neutral by 2045.

It is to this end that the world leaders gathered at the United Nations Climate Change Conference (COP 26) in Glasgow, Scotland in November with discussions on energy transition dominating the conference.
President Buhari who addressed the conference demanded for energy justice for Nigeria and other developing countries with hydrocarbon resources.

He said there was need to exploit the available resources as a pathway to attain the net-zero carbon objectives by 2050.
The president noted that even though Africa accounted for only about three per cent of the global carbon emission, the continent still had the responsibility to join the world in combating climate change.
According to him, Nigeria has identified its abundant gas resources as its fuel for energy transition which informed the declaration of the 2021 to 2030 as the “Decade of Gas” by the government.

He also said that the enactment of the PIA would attract investment for the enhancement of gas utilisation. This is in alignment with the various incentives granted to investors.
In November, the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, announced that government would remove subsidy on Premium Motor Spirit from 2022.
The minister said that government plans to replace it with a monthly N5,000 transport grant to about 40 million poor Nigerians.

Analysts believe that removal of subsidy would make the price of petroleum products in Nigeria, be at par with its African neighbours which would discourage smuggling.
He said that the 2022 deadline is realistic as the impact of the subsidy removal might be mitigated with the coming on stream of the 650,000bpd Dangote Refinery, Bua Group Refinery, Waltersmith Refinery and other modular refineries.
Nigerians also witnessed an unprecedented hike in the price of Liquefied Petroleum Gas (LPG), also known as cooking gas, in 2021.

The increment forced some low-income families to go back to the use of firewood and stove, which was a setback to the government’s aspirations to deepen gas utilisation in the country.
As at January, the price of cooking gas ranged from N4,500 to N5,000 depending on the location, but in a few days to the end of the year in December, the marketer sold the LPG for between N8,500 and 10,000.

Marketers attribute the hike to global supply challenges, high international prices, limited availability of foreign exchange and high exchange rates.
The GMD/CEO of NNPC, Kyari gave reasons for the increase and assured the nation of NNPC’s commitment to bring down the prices.
On Nov. 5, Well head 1 in Nembe, Bayelsa operated by AITEO Exploration and Production spilled its contents, causing serious damage to the environment.

The company, working with local and international experts, was able to stop the leakage on Dec. 8, while clean up and investigation into the incident was carried out.
Also, NNPC presented a symbolic tax credit cheque to the Minister of Works and Housing Mr Babatunde Fashola, in his office in Abuja.
At the event, the minister dispelled insinuations that the NNPC was taking over road construction from the ministry. (NAN)

Economy

FIRS Chairman seeks Review of Tax Incentive Schemes.

Published

15 hours ago

April 15, 2025

Editor_01

By Tony Obiechina Abuja.

The Executive Chairman of the Federal Inland Revenue Service (FIRS) Zacch Adedeji, on Tuesday, revealed that revenue lost to tax expenditure remains difficult to quantify due to poor data availability across relevant government agencies.
According to him, tax incentives are not properly weighed against their real economic benefits, making it difficult to know their true cost which eventually creates room for unverified tax expenditure figures in different quarters.

Adedeji made the revelation while delivering a keynote address at the 2025 Tax Expenditure Workshop organized by the Tax Expenditure Management Unit of the FIRS Corporate Services Group in Abuja.

The event, themed “Tax Expenditure and Its Effect on Government Revenue,” was aimed at examining whether tax incentives are genuinely driving economic growth or quietly draining the nation’s revenue base.
The FIRS chairman, who was represented by the Coordinating Director, Corporate Services Group, Bolaji Akintola, said the policy directive was designed to support critical sectors such as industrialisation, employment creation, innovation, infrastructure, and foreign exchange earnings.
However, the lack of proper data management and impact assessment has made it difficult to evaluate the true cost and benefit of these incentives.
He said, “Tax expenditures have serious direct and indirect impacts on the citizenry, especially based on equity and fairness. We all know that the Fiscal Responsibility Act of 2007 mandates that Agencies of government provide an evaluation of the budgetary and financial implications of any proposed tax expenditure each year.
“Tax expenditures, like direct expenditures, affect the government budget as it is an expenditure that is spent indirectly by the government through tax exemption, tax deduction, tax offset, concessional tax rate or deferral of tax liability.
” It is granted for several reasons, among which are to encourage industrialisation, creation of employment, provision of infrastructure, foreign exchange earnings, positive balance of trade, encouragement of innovations and reaching the underserved locations.
“It has been argued that the government is losing revenue through tax incentives, which have been difficult to quantify due to limited data availability. In granting tax incentives by the government, there are expected benefits to be derived from the entities that enjoy these incentives, such that if adequately quantified when analyzing the Tax Expenditures in terms of socio-economic impact will show that the actual financial cost to government vis – a viz benefits will be minimized, and a positive developmental curve or growth curve will be observed.
“It is the lack of this adequate monitoring tool on impact assessment that gives room to the ‘IFs’ and ‘Buts’ which create room for these unverified tax expenditure figures in different quarters.”
Adedeji further lamented that many stakeholders operate in silos, with no central coordinating framework for tax incentives, and highlighted the absence of a dedicated tax committee in the National Assembly.
Other challenges he identified include conflicting incentive schemes, Base Erosion and Profit Shifting, and politically motivated tax policies.
He noted that the Fiscal Responsibility Act 2007, which mandates all government agencies to evaluate the financial implications of proposed tax expenditures annually, is often poorly implemented.
To resolve this, the FIRS boss disclosed that the Service has empowered its Tax Expenditure Management Unit to evaluate and monitor all tax incentives, adding that the unit is now supported by the integrated digital tax administration system (TaxPro Max).
“While some abuses have been noticed in tax expenditure management, there is also the question about the continued relevance of some of the Tax Incentives. It is, therefore, important that innovative strategies are adopted to achieve efficiency in tax expenditure management,” he added.
Adedeji called for amendments to the various laws underpinning tax expenditures, saying this has become necessary to prevent abuse and ensure the system is flexible enough to keep pace with global reforms, such as the OECD’s Pillar II global minimum tax rule.
He advocated for a centralized framework to regulate and monitor tax incentives, stressing the need for consistent cost-benefit analyses to determine which incentives should be sustained.
This, he said, would also help eliminate duplication and overlap among Ministries, Departments and Agencies.
Adedeji noted that while the FIRS is currently focused on extracting and computing tax expenditure data, the responsibility for assessing their impact still lies largely with administering agencies such as the Nigerian Investment Promotion Commission, the Nigeria Export Processing Zones Authority, and the Oil and Gas Free Zones Authority.
He also called for stronger inter-agency collaboration and emphasised the need to regularly assess the continued relevance and impact of tax incentives on national development.
“We believe that data is life in tax expenditure reporting. That is why the Service will continue to collaborate with the ECOWAS, IMF, World Bank, and the Addis Tax Initiatives to build a robust tax expenditure value chain,” he stated.
Speaking further, Adedeji revealed that the FIRS is currently contributing over 60 per cent of monthly inflows to the Federation Account, a result of several reform initiatives.
Despite these milestones, he said the FIRS is challenged by increasing demand for greater tax revenue amidst declining direct contributions by some Ministries, Departments and Agencies.
He said, “The FIRS is currently challenged by the ever-increasing demand for greater tax revenue collection by the government at all levels, especially in the face of dwindling direct revenue contributions by some MDAs. Under this current dispensation, the Service is contributing an average of over 60 per cent monthly to the Federation Account.
“This is due to several proactive and reformative steps adopted by the Service. In 2024, we recorded a collection figure of N21.6tn, and in the current year, we are targeting a revenue collection of N25.2tn.”

economy

Council Chairman Commends FG on Coastal Highway Project in Cross River.

Published

17 hours ago

April 15, 2025

Editor_01

From Ene Asuquo, Calabar

The Executive Chairman of Akamkpa Local Government Area, Hon. Felix Akposi has commended the Federal Government for the commencement of the Cross River State axis of the Lagos–Calabar Coastal Highway, describing the project as a monumental infrastructural breakthrough with vast potential for economic transformation across the state.

In a statement released to the press, Hon.

Akposi noted that Akamkpa, being among the host local government areas of the coastal highway, will strategically leverage the project to advance its developmental frontiers.

He envisioned a rapid transformation in the area marked by the emergence of new towns, urban conurbations, and epicenters of agricultural and social tourism.

According to the Chairman, “The intersection of the coastal highway with the Calabar–Ikom Highway will be a commercial hub, hence we are proposing an organized layout within the area. Accordingly, the Works and Infrastructure Unit of the Local Government Council is to synergize with the State Government and the Federal Ministry of Works to plan the layout within the axis.”

He further added, “We know that the demand for land within this axis will be very high in the coming days, hence it’s best to have a neatly planned layout before people will deface the area.”

Hon. Akposi used the opportunity to express deep appreciation to the Governor of Cross River State, His Excellency Sen. (Apostle) Prince Bassey Edet Otu, for what he described as proactive and pragmatic leadership. He described the governor as a strategic leader under whose watch the state has witnessed remarkable developmental strides.

“Just recently, the Vice President of the Federal Republic of Nigeria, Sen. Kashim Shettima, was here for the groundbreaking ceremony of the Special Agro Processing Zone in Adiabo. Today, we have yet another Federal presence in the groundbreaking ceremony for the Cross River State axis of the Lagos–Calabar Coastal Highway,” Akposi stated.

Business News

Bank Recapitulation ‘ll Enable Nigeria Achieve $1trn Economy — CBN

Published

2 days ago

April 14, 2025

Editor_01

By Tony Obiechina, Abuja

The Deputy Governor, Corporate Services, Central Bank of Nigeria (CBN), Emem Usoro, says the bank recapitalisation exercise being implemented by the apex bank is a critical step towards achieving Nigeria’s ambition of building a $1tn economy.

Usoro stated this at the opening session of the 36th edition of the Finance Correspondents Association of Nigeria and Business Editors (FICAN) seminar held in Abuja on Monday.

The event had as its theme “Banking recapitalisation towards a $1tn economy.”

The CBN had announced an upward review of Nigeria’s minimum capital requirements for commercial, merchant, and non-interest banks.

The minimum capital base for banks with international authorisation was increased to N500bn.

The minimum capital base for commercial banks holding national authorisation is N200bn, and for those with regional authorisation, it is N50bn. Merchant banks will also require a minimum capital requirement of N50bn, while non-interest banks holding national and regional authorisations must adhere to new minimum requirements of N20bn and N10bn, respectively.

Usoro said, “As you may know, the global financial system and architecture have assumed a new dimension even before the new administration of Donald Trump in the United States of America. Globalisation has broken the limits of financial flows, and investors have inadvertently taken full advantage of the opportunities.

“However, countries and their financial systems must be prepared and ready to utilise opportunities created by financial globalisation through appropriate policy support and actions.

“As you are aware, the Nigerian banking system has also undergone reform, including bank recapitalisation and consolidation exercises. The 2004 banking sector consolidation and recapitalisation exercise, which set the limit of ₦25bn minimum capital fees for banks, brought the banks from 89 to 25. It was a noble idea that the Central Bank of Nigeria implemented in line with the emerging developments at that time.

“As we work towards building a $1tn economy, we must consider the recapitalisation of our banks to be able to fund, finance, and power the economy and favourably compete with its peers globally.

“We should particularly pay significant attention to bank recapitalisation to ensure that our banks are strong, resilient, and stable enough to carry out financial intermediation and the much-needed financing of development projects and programmes.

Although Usoro admitted that building a $1tn economy is not an easy task, she added, “it should require careful planning, robust and clear policy direction, dutiful implementation, and a wide commitment to stakeholders that will galvanise the various sectors of the economy.”

The deputy governor pointed out that discussions at the seminar, which include regulatory, industry, and media perspectives, are crucial in charting the way forward.

“As we aspire to build a $1tn economy, all hands must be on deck to achieve this. This gathering is essential to bring to the fore the bank’s effort and policy direction.

“The push for the capitalisation of banks will no doubt improve the strength and health of the financial system, deepen financial intermediation, and promote healthier competition that will strengthen our payment system.

“Therefore, it is my sincere expectation that at the end of your deliberation at this seminar, participants will better appreciate the rationale and ideas behind the goal of attaining a one trillion economy and its operational mechanism.”

Daily Asset Online

2021: NNPC in Retrospect

BUSINESS