Gas flaring costs Nigeria big while treasury over-taxes citizens
By Jeph Ajobaju, Chief Copy Editor
Gas flaring costs Nigeria $2.5 billion yearly even as the country is crying about a lack of funds to provide infrastructure to boost economic growth and make life livable for citizens.
House of Representatives Speaker Tajudeen Abass disclosed the $2.5 billion loss in Abuja at a post-investigative hearing on the oil and gas industry
Abass, represented by House Chief Whip Usman Kumo, lamented gas flaring and venting continues to be a significant environmental, economic, health, and social concern as well as being a tremendous waste of valuable resources.
“Flared gas represents lost revenue that could have been generated through its sale or utilisation. Official records indicate that we lose about $2.5 billion annually to gas flaring,” he said.
“As a major contributor to climate change and environmental degradation, gas flaring has direct and indirect impacts on soil, water, and wildlife.”
Abass asked the Gas Flaring Ad-hoc Committee to engage all parties involved in gas flaring and investigate the payment of fines and the management of proceeds.
He also asked the committee to determine the extent of compensation to oil-producing communities in accordance with the Petroleum Industry Act (PIA), engage affected communities, civil society organisations (CSOs), and experts as well as make recommendations for further legislative action.
Idris Musa, Director General of the National Oil Spill Detection and Response Agency (NOSDRA), stressed the need for improvement in the penalty application process and procedure of collection.
He disclosed a total 3.8 billion million standard cubic feet (mscf) of gas was flared from 2013 and to date while the total penalties payable is $7.6 billion.
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Federation Account shortchanged by $277m
Patrick Mgbebu, Gas Monitoring Committee Chairman at the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), told the gathering the Federation Account was shortchanged on gas flaring penalties payment by more than $277 million between 2020 and 2022, according to Nairametrics.
He said the gas flare penalty payment regime from 2013-June 2018 was $0.30 and from July-December to 2023 is $2.00.
He disclosed 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 instead of flared.
Mgbebu added: “The Commission compared the data from the National Oil Spill Detection and Response Agency (NOSDRA) with the data from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the following observations were made:
“The volume of gas flared according to NOSDRA and NUPRC was 838,667,211 million standard cubic feet (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.
“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.”
Need for oil tracker to tackle gas flaring
Olubunmi Olusanya, a Director at the Ministry of Environment, canvassed for legislative backing to the use of oil tracker as part of measures to end gas flaring.
Said he: “I want to plead that the oil tracker should be given legislative backing so that it can be used as the benchmark for sanctioning the 44 companies.
“Presently, a lot of companies are flaring because what they 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 am sure all of them will begin to think of alternative uses of gas being flared unabatedly.”