…Directive will be near impossible to implement — Madaki
…Senate must conduct thorough investigation into IOCs’ financial records — Bala
By Uthman Salami and Ariemu Ogaga
The Nigerian Senate has ordered the Federal government to stop international Oil Companies (IOCs) deemed to be evading payment of taxes from lifting crude.
The Committee on Finance at the Senate directed the Nigerian Upstream Petroleum Regulatory Commission (NUPRC ) to prevent the IOCs international oil companies from lifting oil from Nigeria.
Meanwhile experts in the oil and gas industry believe that such directives might be a one-too-many task to implement, noting that the Senate themselves should take a cursory look into the financial accounts of these IOCs before any decision is made.
While issuing the order, the Red Chamber insisted that all defaulting IOCs must pay the requisite tax to the Federal Inland Revenue Service (FIRS) before their directive would be properly review.
During an interactive session with the Senate Committee on Revenue losses in the Maritime Sector, the Chairman of the Senate Committee on Finance, Senator Solomon Adeola made this known while the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Gbenga Komolafe appeared before the panel yesterday.
According to Adeola, an audit of just one of such foreign companies known as TeeKay Group with 14 tankers paid about $10 million in tax liabilities to FIRS for a back duty investigation of five years only recently in 2020.
He added that at least over 100 of such entities have been continuously lifting crude oil in Nigeria paying zilch in taxes.
He further emphasised that, “Henceforth, NUPRC, unlike the way the defunct DPR operated, must ensure that any firm lifting crude oil must have a tax clearance from FIRS.
“We are going to investigate about 100 companies lifting our crude oil without paying any taxes as there is no record of such payment with FIRS. We must recover all our revenue from this source.”
Adeola said albeit the committee was not ruling out the existence of a cartel that may be behind tax evasion in Dollars, there should be collaboration and synergy between maritime agencies like Nigeria Ports Authority (NPA), Nigerian Maritime and Safety Agency (NIMASA), Nigeria Navy, NUPRC, NNPC and FIRS on the issue of tax revenue from the maritime sector.
Earlier, the CEO of NUPRC, Mr. Komolafe had explained the process for giving clearance to ships to lift Nigerian crude oil, adding that as a new agency, they are still in the process of unbundling from the old DPR.
Directive will be near impossible to implement — Madaki
Meanwhile, in his reaction to the directive, the Managing Partner, BBH Consulting, Barr. Ameh Madaki, said the directive will be near impossible to implement.
Madaki said tax evasion is a crime which must be established beyond reasonable doubt not on the basis of speculations.
According to him, “This is a rather confusing directive which will be near impossible to implement.
“For one, tax evasion is a crime which needs to be established beyond reasonable doubt. Allegations and conjecture alone will not do, unless there is actual prosecution and conviction. Also, the crude oil lifting rights are based on contractual obligations, which cannot just be bypassed by a National Assembly directive.
“The issue of taxes in the oil and gas industry is a highly technical one which requires deep knowledge of the industry to unravel. This directive will end up as one of the many such pronouncements which will be technically impossible to implement,” he stated.
Senate must conduct thorough investigation into IOCs’ financial records — Bala
Also, an Oil and Gas Expert, Zakka Bala in a chat with Nigerian NewsDirect said there is a need to cross-check the financial accounts, statements of the oil companies and further elobaration by the Senate Committee on the matter.
In his words, “When you talk about accounting, we have two concepts, that of tax evasion and tax avoidance. Tax evasion is criminal because what it does generally is to make invader to cook the books of account and falsify records. But when you talk about tax avoidance, it is not necessarily criminal.
“It is rather the person that is supposed to pay tax, whether individual or company taking advantage of the tax lacuna in the law to avoid paying.
“There is a need to cross-check the financial records and statements of the oil companies.
“It will not be unfair to talk against the oil companies or the Senate Committee without having a look at their financial statements. Could it be that the International Oil Companies are cooking their financial records, or they are taking advantage of the lacuna in the tax laws to avoid paying taxes?
“Most importantly it is from the International oil companies financial statements or audited book of account or further elaboration from the Senate Committee on finance, that will matter,” he stated.