FG adopts crude oil tracker, recovers N1.2tln in royalty arrears
The Minister of State for Petroleum Resources, Dr Ibe Kachikwu, has said that the newly adopted Crude Oil Liquefied Natural Gas Tracker (COLT) has already yielded results with the recovery of about N1.2 trillion in royalty arrears from oil companies operating in Nigeria.
COLT enables the Department of Petroleum Resources (DPR) to determine the status of every vessel loading crude and liquefied natural gas, and where it is heading to. The program can actually track those vessels to the point of destination and discharge. In that way, the DPR can track the royalties accruable to the Federal Government.
Speaking at the unveiling ceremony of COLT and other initiatives in Lagos on Monday, Kachikwu said hitherto the country had grappled with the inability to ascertain the exact quantity of crude oil being produced as well as the leakages for decades. Commenting on crude oil theft, he said the tracking would also help to address the gap between production and actual physical stock.
“Today, apart from tracking the production, we are also able to track the movement of the crude – the vessels that come in and go out of the country. Following those sorts of initiatives, we have launched a series of IT-based platforms and interventions. I am happy that now the DPR can give up-to-the-minute figures. We are also applying technology to the issue of gas flaring,” the minister said
He explained that before now the process of determining royalties in the past was largely driven by the initiatives of oil companies, which determined what they produced, and the DPR will be left calculate royalties on the basis of that. With COLT, the DPR is able to see what actual production volumes are to determine royalties. “All our fields are largely tracked online now and what it means is that we can actually feed the nation on what was our actual production and from which fields and what is the volume and also identify if there are leakages,” the minister said
He said in addition to the introduction of COLT, under the new rules, no oil company will get renewal unless the company paid its outstanding royalties. However, companies who show seriousness in mapping out how they intend to settle their indebtedness will have their licences renewed but their final certificate will not be issued to them until they have liquidated the outstanding royalties. “Clearly, when we finish, we will at least have a situation where everybody who is operating is current in terms of their payments,” Kachikwu said
In his 2019 budget speech to the National Assembly last December, President Muhammadu Buhari complained that the volatility in oil prices, and disruptions in oil production delayed the plans to recover past due oil licence and royalty charges as well as the restructuring of the joint venture oil assets. The minister said he has therefore directed that action on all government revenue initiatives be expedited.
“I have already issued a number of Presidential directives on the disposal of recovered assets, deployment of the National Trade Window as well as the immediate recovery of past-due oil royalties including by crude seizures, if necessary, ensuring transparency in operations and speed. Previously, it took almost forever for people to get licences for simple things like licensing of filling stations, plants and all that.,” he said
The ministry has also launched the benchmarking system to track expenses and see how government can continue in the process to try and reduce the cost of producing oil in Nigeria, which is said to be a major challenge.