The Federal Government received N3.211 trillion as Petroleum Profits Tax (PPT) and Royalties from the third quarter of 2015 to the third quarter of 2017, according to the Economic Report of the Central Bank of Nigeria (CBN).
Breakdown of the revenue to the government showed that the country received N495.39 billion as PPT/royalties in the third quarter of 2015; N388.66 billion, in the fourth quarter of 2015; and N314.04 billion during the first quarter of 2016. The revenue from PPT/royalties declined in the second quarter of 2016 to N212.78 billion; later increased to N392.38 billion in the third quarter of 2016, and decreased to N273.13 billion in fourth quarters of 2016.
There was a rebound in revenue to N325.38 billion in the first quarter of 2017; N320.49 billion in the second quarter and N489.41 billion during the third quarter of 2017. The CBN report for the third quarter of 2017 released recently, revealed that N103.46 billion was allocated to the 13 per cent Derivation Fund for distribution among the oil-producing states.
Analysing the report, CBN disclosed that oil receipt at N1.27 trillion during the quarter under review was lower than the proportionate quarterly budget estimate by 6.2 per cent, but was above the receipts in the preceding quarter by 59.7 per cent. According to the CBN, the decline in oil revenue relative to the proportionate quarterly budget estimate was due to the shortfall in receipts from crude oil/gas exports, owing to the decline in crude oil production, arising from leakages and shut-ins/shut-downs at some NNPC terminals.
It disclosed that Nigeria’s crude oil production, including condensates and natural gas liquids, averaged 1.83 million barrels per day (mbd) or 168.36 million barrels (mb) in the review quarter. This, it noted, represented an increase of 0.17 mbd or 10.2 per cent, compared with 1.66 mbd or 151.06 mb recorded in the preceding quarter. The development was due to sustained peace in the oil production region.CBN said that crude oil export stood at 1.38 mbd or 126.96 mb, representing 14.0 per cent increase over 1.21 mbd or 110.11 mb in the preceding quarter.
The development, it hinted, was due, mainly, to reduced activities of vandals in the Niger Delta region. Allocation of crude oil for domestic consumption was maintained at 0.45 mbd or 41.40 million barrels in the review quarter.
Nigerian National Petroleum Corporation (NNPC) Chief Operating Officer, Upstream, Malam Bello Rabiu, proposed some key amendments to the Deep Offshore and Inland Basin Production Sharing Contract (PSC) Act to enable the Federal Government to optimize the collection of royalties and other revenue in deepwater oil production activities. He noted that it was imperative to effect increment in royalties across all categories to increase government take.
“It is our opinion that the proposal to increase the royalty rate for terrains beyond 1000 metres, from zero per cent to three per cent, is commendable but it is necessary to also make corresponding adjustments in other categories,’’ he said. He argued that in the alternative, the graduated royalty scale as provided in the Act should be removed while the Minister of Petroleum Resources should be empowered to intermittently set royalties payable for acreages located in deep offshore and inland basin production sharing contracts through regulations based on established economic parameters.
“It is our opinion that these incentives have outlived their usefulness and are now impediments to the Federal Government’s revenue collection efforts. The use of such incentives can be terminated by an amendment of section 4 of the Act,’’ the Corporation noted. He called on the National Assembly to seek relevant input from the Federal Inland Revenue Service, to resolve the divergent opinions regarding the methodology for the computation of the taxes which would arise as a result of the proposed royalty regime.