Oil and Gas Sector and its Financial Indebtedness to the Nation

A total of N6.14 trillion is owed to Nigerian banks by oil and gas operators and power companies in Nigeria.  The debt rose to this amount in June, 2021, from N5.94tn at the end of 2020. This represents about 28% of the N21.89 trillion loans advanced to the private sector by the banks as of June 2021. The bulk of this loan, N5.32 trillion is owe by Oil and gas firms, while the rest, N823.28billion is owed by power firms. Further analysis of the indebtedness shows that the oil firms operating in the downstream, natural gas and crude oil refining subsectors owed N3.99 trillion, while those in the upstream and services subsectors owed N1.33 trillion. The greater part of the power sector loans, amounting to N482.30billion, is owed by power generation firms and independent power producers, while transmission and distribution firms owed banks N340.98billion.

In another angle, seventy-seven international and Nigerian oil and gas companies are currently owing the Nigerian government about $6.48 billion (over N2.6 trillion). The indebtedness comes from the companies’ failure to remit petroleum profit tax, company income tax, education tax, value-added tax, withholding tax, royalty, and concession on rentals. A breakdown of the figures shows that a total of $143.99 million is owed as petroleum profit taxes, $1.089 billion as company income taxes and $201.69 million as education tax, $18.46 million and $972,000 as Value Added Tax (VAT), $23.91 million and $997,000 as Withholding Tax, $4.357 billion as royalty oil, $292.44 million as royalty gas, while $270.187 million and $41.86 million were unremitted gas flare penalties and concession rentals, respectively.