Yemie Adeoye
16 December 2008
OIL companies that are indebted to the Federal Government may need to start preparing for the pay up time, following the pronouncement that the Department of Petroleum Resources (DPR) is reconciling its outstanding royalties with the oil producing companies.
According to the department, the move was in compliance with a presidential directive, that the department should reconcile and recoup government's royalty indebtedness with the producing companies from 1990-2006.
The Director of the DPR, Alhaji Aliyu Sabon Birni who disclosed this at an industry event in Lagos recently said the department is already getting closer to finalising the computations and the defaulted firms would be contacted soon.
Sabon Birni, who was represented by Mr. Wole Akinyosoye said, though globally acceptable, self_assessment system appears to be inefficient in Nigeria, the department has developed a robust and dynamic Royalty Management System designed to assess and compute the royalties payable to the Federal Government by the operators.
This system, which was designed to eliminate and replace the existing self_assessment used by companies, he said has manifested in prompt and more accurate payments that would help as Nigeria expands to new frontiers.
DPR made revenue contribution to the federation account through royalties, gas flared penalty, concession rentals and other miscellaneous oil revenues.
The director, who spoke on the 'Roles of the Regulator in the Oil & Gas Industry' said regulation is imperative in the industry to curtail the abuse of the strategic and depletion characters of hydrocarbon assets.
Stating that all the oil producing countries are engaged in regulation, which although varies according to some factors, he said regulation in Nigeria is high because of the high resource base that was characterised by low technology, fair local content participation among others. Sabon Birni said therefore regulation is needed as a result of the propensity of oil and gas activities to negatively impact on environment, high level of investment and technology required to meet industry standards.
Besides, he said there is need to ensure equity and fair practice among operators and ultimately control the strategic national assets.
However, he broadly explained the roles of DPR as to ensure compliance with laws, regulations and directives of government and ensure technical and operational integrity and maintenance of HSE standards.
Other strategic role played by the department are: Management and administration of open acreage regulation of operating concessions for optimum technical & HSE field practices, maintenance of reliable & independent databank for industry operations, determine/ collect Statutory fees, advise government on policy and regulate downstream activities for safety and efficiency.
Having strategically positioned itself to fully carry on these course, Sabon Birni said the department's activities are being hindered by some factors such as lack of requisite sanctions in operating laws and regulating instruments, sabotage, poor gas utilisation, insufficient fund and the dearth of infrastructure and steel which has remained a challenges for local content growth.
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