October 2, 2019

The Head of Gas Ventures, Neconde Energy Limited, Chichi Emenike, in this interview with ’FEMI ASU, says Nigeria needs to encourage more projects to monetise its huge gas reserves and boost domestic supply What are your thoughts on the Nigerian oil and gas industry? What we have seen with time is that there has been a renewed focus on local content, and we are beginning to see Nigerian businesses that can do better in the oil and gas industry than the international oil companies that we have known over the years. Here at Neconde, I have been given the mandate to drive the gas business; Neconde has huge gas reserves. Part of the immediate mandate is to develop and completely monetise our associated gas. We’ve also got huge reserves of non-associated gas, which we have to develop. It is a well-known fact that the country has huge gas reserves. Just last week, Italian oil major, Eni, announced that it had made a significant gas discovery in the Niger Delta. But there is still gas shortage in the domestic market. What is your view on this? This is something we have always talked about. Most of the gas reserves are still trapped below the ground. We don’t have sufficient gas infrastructure. We have a gas master plan but we haven’t fully optimised it yet. We’ve got an environment that is not clear to investors yet, whether you’re an international or a local investor. We don’t have policies that are completely clear; that is not acceptable. We’ve got a myriad of other issues. These are some of the issues that we are dealing with, and these are some of the things that have held the gas industry down for some years now. There are a couple of LNG projects that have been stalled. Given the growing competition in the global LNG market, do you think there is still prospect for these projects? Those are the projects we need to monetise our gas resources. We should have LNG plants like the one in Bonny in other places in the country. The focus really is not just on gas for export; we also have a lot we can do with the gas internally. You have many industries that need to run on gas. We have issues with power. We need to begin to look at the power sector. There are a lot of regulations regarding the power sector that need to be looked at. This is to encourage investors to develop more gas. There are other investment destinations in Africa. For instance, Ghana does not have as much gas reserves as Nigeria but they’ve done a lot of tidying up. Mozambique is talking of an LNG plant today. Cameroun has delivered its first LNG. So what are we saying? It is time we get our act together. We talk a lot. Our gas policy has a leg in the Petroleum Industry Governance Bill as it is. There are other bills too that are also important that are waiting to be passed. Time is ticking. We need to pass the Petroleum Industry Bill. What role is Neconde playing to ensure adequate supply of gas in the domestic market? What we are working towards now is to eliminate gas flaring. We’ve already commercialised some of the associated gas and we have buyers. The short-term plan is to maximise our associated gas. We are putting in place more gas infrastructure; we currently have a central processing facility. We’re also looking at the non-associated gas because that is where the main focus is; that is where the big business is. What is your company’s current gas production and what are your plans for the future? Neconde is developing Oil Mining Lease 42 currently with its joint venture partners. We have what is called an asset management team. Currently, we’re producing about 40 million standard cubic feet of gas per day. Our plan is to increase our associated gas production to 80 million scf per day, and that requires putting in place more gas infrastructure. We currently have a central processing facility, and that still requires additional infrastructure, probably additional pipelines. We have off-takers who have also indicated interest. They are currently discussing with us. In the long term, we’re looking at the non-associated gas. Neconde is also looking at putting in place Liquefied Petroleum Gas infrastructure. The business plan that we are developing and I’m looking at currently also has consideration for the LPG. We have a lot of the LPG in Nigeria but unfortunately the per-capital usage is small compared to other countries such as Ghana and Senegal. We shouldn’t have that; you know those figures. For a long time, most of the LPG Nigeria uses comes from the Nigerian NLG in Bonny to Lagos. I know the NLNG is committed to deepening the consumption of the LPG in the country; so, they deployed smaller vessels. There are so many things we are doing with our current operations to ensure that we maximise value for our shareholders and our lenders.   Source: Punch

The Executive Chairman, Federal Inland Revenue Service, (FIRS) Babatunde Fowler has warned the nation’s accountants not to support tax evaders but to assist in building a larger revenue base for the nation. At the 49th Annual Conference of the  Institute of Chartered Accountants of Nigeria, ICAN, where Fowler was the keynote speaker at a panel discussion on “FIRS Power of Substitution. Critical Review and Matters Arising”, accountants and lawyers scoffed at Fowler’s admonition, alleging that he was employing strong tactics in getting taxpayers to be tax compliant. They told Fowler to abide, in strict terms, with the processes and stipulations of the FIRS Establishment Act 2007, which the FIRS Chairman maintained, is the source of his powers to place lien on the bank accounts of defaulting taxpayers. Fowler should collect taxes by abiding with the Rule of Law, the accountants charged. At the event chaired by former Executive Chairman, FIRS, Ifueko Omoigui Okauru, Fowler explained the dynamics involved in the Substitution of Accounts, and urged accountants at the conference to partner with FIRS to improve the revenue collection efforts of all tax authorities. “You play a very important role in this cycle. Without you, the chartered accountants, it will be very difficult to ensure that adequate taxes are being paid. Talking about corruption, corruption is not only when you do something wrong. Sometimes, corruption borders on when you do nothing at all. When you review the books that are brought to you, you do your own internal assessment on what your clients should pay, you are truthful, you drop accounts that are not willing to do the right thing”. “We should realise that the revenue collected by the FIRS is distributed among the three tiers of government: the Federal, State and Local Governments. Today, well over 30 states rely on that monthly collection. Without that monthly collection, you can imagine what life would be in those states”. “We are all here for this conference, certain that chartered accountants came from various states across the nation. If in your state, we were not able to support your revenue drive, what level of security would you have in your state? “I went to deliver a speech in one West African country. I was asked to come and encourage tax compliance, and I used a very simple example, an example I had used in Lagos, an example that you and I may not have thought about. Under the Joint Tax Board, JTB I went on a visit to a hospital in Lagos. The nurse complained about the highmortality rate of children under five. And I asked what was the main cause, she said ‘malaria’. And I said, so we have malaria medicine,she said ‘yes’. But I found out on that visit that for children, when malaria gets to a certain stage, it becomes irreversible and almost impossible to save that child. “The cost of that medicine for prevention is N2000. There are people in this country who do not have N2000 to treat malaria. Some pray and hope that the fever will break. But for some, they have no choice and they lose those children. They lose potential presidents. They lose potential political leaders. They lose potential inventors among others. This is endless. But with N2,000 you could save a life. “For those books that you look at, think about this. If you look at those books, you should know that for every additional N1billion or N2 billion that is collected, even if it is shared at the ratio of 52 per cent, your state and your local government will get the balance. N1 billion could build 10 medical facilities in those states. That is the impact and power that you have.” “”I am sure you wont allow those not paying taxes to go scot free “Before FIRS voted for lien on bank accounts of defaulting taxpayers, the Service granted a waiver of penalty and interest for three years (2013-2015), followed by the Voluntary Assets Income Declaration Scheme, VAIDS. It was when  millionaire and billionaire taxpayers with turnover of between N11 million and N1 billion did not take the opportunity to pay their taxes, that FIRS  decided to place lien on the accounts of defaulting taxpayers “All defaulting taxpayers were considered, provided that such taxpayers came forward to declare their indebtedness, pay at least 25% of the outstanding amount and present a payment plan on the outstanding tax liability that was acceptable to the Service. This window was opened from 5th October to 24th November, 2016. A total of 2,400 companies took advantage of the window, from which FIRS realized about N98.8 billion. “ The last speakers spoke about integrity and vision in public service. You may have the integrity, you may have the vision, but without the revenue, it remains a dream. Most of us here like to complain about what the government has done and what the government has not done, but even with the best vision and leadership, we still require revenue and the revenue certainly will come from taxes. “The Voluntary Assets Declaration Scheme (VAIDS) commenced on 1st July, 2017 to be run for a period of nine months was formally launched on the 29th of June, 2017 by the then Acting President, H.E. Yemi Osinbajo. VAIDS was an initiative designed to encourage voluntary disclosure of previously undisclosed assets and income for the purpose.   Source: Inside Business    

Nigeria may face a fiscal crisis following its inability to collect more taxes, a BBC report has said. The report by BBC’s Reality Check Team found that government expenditure “has doubled and debt servicing costs have grown, but revenues have missed their targets by at least 45 percent a year since 2015.” The report noted that despite increase in the number of taxpayers, there had not been a corresponding increase in the country’s tax revenue. In 2018, for instance, the report noted that about 19 million Nigerians paid into federal or state coffers out of the country’s population currently standing at 201 million. Based on the World Bank records, the report put the country’s economically active population at 65 million, out of which 19 million paid their taxes in 2018 By implication, the report observed that even with rising numbers of taxpayers in recent years, only about 29.23 percent paid their taxes in 2018. The report noted that the federal government “has been going after individuals that it believes are liable for tax and have not been paying. “Two years ago, the country offered a 12-month amnesty for Nigerians to declare and pay taxes on all previously undeclared income and assets to avoid penalty payments and possible prosecution.” In 2018, a World Bank report said this was only partly successful with just 8 percent of the target achieved by the end of the amnesty period. However, the report noted that many Nigerians “will be reluctant to pay taxes because of concerns the money raised may be siphoned off instead of being spent on health, education and other public services.” The report cited statistics from the Organisation for Economic Co-operation and Development (OECD) that highlighted the status of ratios of tax to GDP globally. According to some estimates, Nigeria has one of the world’s lowest ratios of tax to GDP. That is the total amount of tax collected as a proportion of GDP – the value of the country’s goods and services. In 2016, for example, the report revealed that Nigeria’s tax-to-GDP ration was at 6 percent. Other African countries, according to OECD statistics, performed better than Nigeria. The tax-to-GDP ratio in South Africa was 29 percent, Ghana 18 percent, Egypt 15 percent and Kenya 18 percent. However, the report said average for OECD members, which includes all the advanced economies, was 34 percent. The report said the World Bank “uses a slightly different measurement of tax take, which does not include most social security payments. This puts Nigeria’s tax-to-GDP ratio in 2016 lower at just 3.4 percent. “In 2017, the ratio did improve to 4.8 percent, according to figures provided to us by the Nigerian authorities. “We do not have a figure for 2018, but it is worth pointing out that 15 percent is the level necessary to achieve economic growth and poverty reduction. “Many other developing countries have a low tax-to-GDP ratio and recent data indicates that about 60 countries fall below the 15 percent threshold.” An Assistant Director in the International Monetary Fund (IMF), Bernardin Akitoby, suggested useful approach to improve tax collection in the country. Akitoby recommended the need to improve the country’s tax-to-GDP ratio, saying a typical advanced country “has a tax to GDP ratio of around 40 percent.” Akitoby said there “is no one-size-fits-all solution to increase the tax take. But there are a few lessons that can be drawn from countries that have been successful in the past.” He outlined the lessons to include clear political mandate to tackle low levels of tax payment; simpler tax system with a limited number of rates and exemptions; using taxes on goods and services and boosting tax collection by using new technology In its case, the IMF canvassed more comprehensive tax reform in Nigeria, which it believed, could help increase the tax-to-GDP ratio by about eight percentage points.   Source: Daily trust