Nigeria: Gas Flaring - House Probes Revenue Loss in Unpaid Penalties to Govt

(file photo).
22 April 2021

The House of Representatives at plenary Thursday mandated its Committee on Gas Resources to investigate the gas flare volume reported by the government and the National Oil Spill Detection and Response Agency (NOSDRA) Gas Flare Tracker to ascertain the amount of gas flared, extent of discrepancies and the amount of revenue due to the government from gas flare penalties.

The resolution, followed the adoption of a motion, titled 'Need to Check the Activities of Oil Companies Flaring Gas in Nigeria,' sponsored by Hon. Abdullahi Ibrahim Halims.

Moving the motion, Halims noted that Nigeria gazetted the Flare Gas (Prevention of Waste and Pollution) Regulations 2018 to reduce and eliminate gas flare in Nigeria through monetization and investment in the gas flare ecosystem.

He also noted that paragraph 12 of the Policy, increased penalties from $0.30 to $2.00 IMSCF (one thousand

standard cubic feet) on flared/vented gas volumes, while paragraph 21 stipulated a penalty of USD2.S0

IMSCF (per thousand standard cubic feet) against a producer, who fails to provide flare gas data or supply accurate and complete flare gas data.

The lawmaker expressed concerns that after the penalty regime started, the gas flare volumes reported by Nigeria was drastically reduced for 2018 and 2019 and created a huge discrepancy between the gas flared volumes reported by the National Oil Spill Detection and Response Agency (NOSDRA) Gas Flare Tracker (GFT) which is satellite-based and the volumes declared by the federal government for the period.

He is worried that the discrepancy will cost the government huge revenue loss from penalties estimated at $680 million & 98GWh for 2018 and 2019 and present a planning challenge in terms of inaccuracies in figures that may be presented for gas flare investments.

He said: "Aware that FOSTER (DFID Sponsored -Facility for Oil Sector Transformation) informed the Gas Resources Committee that the discrepancy as currently determined is 190bcf and IS0bcf in 2018 and 2019 respectively which potentially represents an aggregate revenue loss of $680 million in unpaid penalties to the Federal Government of Nigeria in 2018 and 2019.

"Alarmed that the loss to Nigeria may be higher when the penalties accrue from venting are determined and added to the money 'accruable' from flared gas discrepancies and other losses in terms of power generation which is now estimated at 98 GWH for 2018 and 2019 respectively."

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