The House of Representatives has summoned the chief executive officers of 19 oil and gas companies to appear before its ad hoc committee on gas flaring on Tuesday, 25th July, 2023.
This followed the revelation by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) that 44 companies had shortchanged the federal government to the tune of $277, 536 million in gas flaring between 2015 and 2017.
Chairman of the ad hoc committee, Hon. Ahmed Mohammed Munir who announced the summon at the inaugural sitting of the panel in Abuja also vowed to recover the over $9 billion gas flaring fines imposed by federal government on erring local and foreign companies operating in the oil and gas companies.
The companies invited 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) and National Council on Climate Change (NCCC).
The rest are the 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.
Munir said the affected companies must account for their lapses saying, “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 loopholes 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,” Hon. Munir noted.
In his presentation, chairman of the RMAFC committee on gas monitoring, 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 declaring open the investigation, Speaker Tajudeen Abbas observed that gas flaring and venting has been a significant environmental, economic, health and social concern in our country for many years.
Represented by the chief whip, Hon. Usman Bello Kumo, the speaker noted that “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 utilisation. 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
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.
