Nigeria’s Speaker of the Federal House of Representatives, Hon. Tajudeen Abass has said that Nigeria loses $2.5 billion annually to gas flaring activities.
He said this during his keynote speech at a post-investigative hearing at the House on Monday, July 24.
Hon. Abass who was represented by the Chief Whip, Hon. Usman Kumo said that gas flaring and venting continues to be a significant environmental, economic, health and social concern in Nigeria and is a tremendous waste of valuable resources. He said:
- “The flared gas represents lost revenue that could have been generated through its sale or utilization. Official records indicate that we lose about $2.5 billion annually to gas flaring.
- “As a major contributor to climate change and environmental degradation, gas flaring has direct and indirect impacts on soil, water, and wildlife.”
He asked the Ad-hoc gas flaring committee to engage all parties involved in gas flaring activities and investigate the payment of gas flaring fines and 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, CSOs and experts as well as make recommendations for further legislative action.
Meanwhile, the Director General of the National Oil Spill Detection and Response Agency (NOSDRA), Idris Musa, identified the need for improvement in the penalty application process and procedure of the application and collection.
He said that a total of 3.8 billion million standard cubic feet (Mscf) was flared between 2013 and to date while a total sum of $7.6 billion in penalties is payable.
Federation Account has been shortchanged on flaring penalties payment
Patrick Mgbebu, the Chairman of the Gas Monitoring Committee at the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) told attendees that the Federation Account has been shortchanged on gas flaring penalties payment by over $277 million between 2020 and 2022.
According to him, the gas flare penalty payment regime from 2013-2018 (2018 Jan-June) was $0.30, while from 2018 (July-Dec) up to 2023, is pegged at $2.00.
He stated further that 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 as opposed to flared. He said:
- “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.”
Meanwhile, Olubunmi Olusanya, a Director at the Federal Ministry of Environment, said there is a need to give legislative backing to the use of oil tracker as part of measures aimed at ending gas flaring in Nigeria. He said:
- “I want to plead that the oil tracker should be given legislative backing so that it can be used as the benchmark for sanctioning of the 44 companies. Presently, a lot of companies are flaring because what they are flaring is nothing compared to the investment in the utilization 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. “
