Economy
NEITI Calls for Review of Oil Producing Agreements
By Modupe Gbadeyanka
The need to urgently review the Deep Offshore and Inland Basin Production Sharing Agreement between Nigeria and oil companies has been stressed by the Nigeria Extractive Industries Transparency Initiative (NEITI).
In a statement signed by its Director in charge of Communications and Advocacy, Dr Orji Ogbonnaya Orji, the agency explained that the urgency to review the obsolete legislation without further delay was in view of the revenue losses to the federation by the use of the old agreement in computation of revenues to be shared between the government and oil companies.
NEITI recalled that the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 provides for: “ a review of the terms when prices of oil crosses $20 in real term; and a review of the terms 15 years after operation of the agreement and five years subsequently.”
However, NEITI said it observes with concern that Nigeria was yet to adhere to this important provision even now that the price of oil was revolving around $70 per barrel.
In an Occasional Paper released by NEITI which reviewed three years of NNPC’s financial and operations reports, NEITI has noted that crude oil production under the Production Sharing Contracts (PSCs) has since overtaken production under the Joint Venture arrangements.
A careful look shows that the Production Sharing Contracts (PSCs) accounted for 44.8 percent of total oil production while the Joint Ventures (JVs) contributed 31.35 percent.
A historical analysis of this development by NEITI shows that JV Companies accounted for over 97 percent of Production in 1998 while PSCs contributed only 0.50 percent.
This trend continued until 2012 when PSCs accounted for 37.58 percent while JVs contributed 36.91 percent.
From the publication in 2013, PSCs contributed 39.22 percent while JVs contributed 36.65 percent, 2014: PSCs; 40.10 percent and JVs 32.10 percent; 2015: PSCs 41.45 percent and JVs 31.99 percent while in 2017 the contributions stood at PSCs 44.32 percent and 30.85 percent respectively.
The NEITI Occasional Paper further explained that: “Other companies, comprising Nigerian Petroleum Development Company (NPDC), Alternative Financing (AF), and Independent/ Marginal Fields contributed 2.39 percent to total production in 1998 and by 2017 this had risen to 24.83 percent.
“This figure clearly shows the changing structure of oil production in Nigeria, where PSCs (which contributed a mere 0.5 percent to total production 20 years ago) have dramatically overtaken JVs (which contributed 97 percent to total production 20 years ago)”.
Between 2015 and 2017 covered by NEITI’s Occasional Paper review of NNPC Report, Nigeria produced 2.126 billion barrels of crude oil and condensate.
A Further review of the NNPC Report shows that: “Production was highest in 2015 with 775.6 million barrels produced. Production was lowest in 2016 with 661.1 million barrels produced, while production in 2017 was 690 million barrels.
“The year 2016 was a difficult year for oil production because production was shut in a number of oil terminals”.
NEITI said its major concern is that now that the PSCs account for about 50 percent of total oil production and major source of revenues, the delay or failure to review and renew the agreement means that payment of royalty on oil production under PSCs would not be made while computation of taxes would be based on the old rates.
On lifting of crude oil, the NNPC Monthly Financial and Operations Report disclosed “international oil companies (IOCs) lifted more crude oil than the government.
“Total lifting of crude oil and condensates was 2.135 billion barrels. Of this sum, IOCs and Independents lifted a total of 1.367 billion barrels, while government’s lifting by NNPC was 721.16 million barrels.
“This means that the operators lifted 64.01 percent of total crude lifting’s, while government through NNPC lifted 33.76 percent. When expressed in monetary terms, total government lifting of oil amounted to $35.893 billion while the figure for IOCs and Independents was $68.591 billion”
The NNPC Report further disclosed that refineries received 15.15 percent of total domestic crude lifting out of which 41.32 percent was utilized under the Direct Sale Direct Purchase (DSDP) program of NNPC.
On Refineries and domestic crude utilization, the report disclosed that for the 3 years under review, Nigeria’s refineries recorded an average capacity utilization of 12.26 percent.
A further breakdown shows that Kaduna refinery had the lowest capacity utilization of 9 percent while Warri and Port Harcourt recorded 9.73 percent and 15.4 percent respectively.
One striking feature of the NNPC financial operations report is the disclosure that the corporation lost the sum of N547 billion in its operation between 2015 and 2017.
Out of this amount, the NNPC Corporate Headquarters recorded the highest revenue loss to the tune of N336.268 billion.
On the contrary, the report revealed that the Nigeria Gas company made a huge profit of N141.324 billion.
NEITI said while it applauds the monthly voluntary disclosures by the NNPC, it was important to note that NEITI through its auditors under the EITI framework has not independently verified the information and data from the NNPC reports.
“NEITI has not, except for the year 2015, independently validated the data from NNPC. This will be done in ongoing and future reconciliation reports. What has been done here is a preliminary analysis of the data that NNPC has made available for the three-year period. The figures examined here do not represent the sum total of all revenues from the sector, as other payment streams like royalties and taxes from JVs, signature bonuses, transportation rental fees, NESS fees, penalties and others are not covered by the NNPC financial and operational reports” the NEITI Report concluded.
NEITI however commended the NNPC for the reconciliation of the crude swap under-delivery transaction executed during the crude- for- product- swap.
NEITI also urged the corporation to sustain the new spirit of openness while encouraging the citizens to use the information and data from the NNPC’s disclosures to promote public debate required in implementing the on-going reforms in the extractive sector.
The NEITI Occasional Paper series which reviewed the 3 years of NNPC operations and financial reports is the third in the series. In the pursuit of EITI global Open Data Policy, NEITI has data set for the three years (2015 -2017) in excel format readily available on its website in support of public interest, analysis and debate.
By Adedapo Adesanya
Africa-focused fintech company PalmPay has joined the ranks of unicorn startups after attaining a valuation of more than $1 billion, as the digital payment platform prepares for a potential initial public offering (IPO) in Hong Kong.
According to a report by Bloomberg on Tuesday, citing people familiar with the matter, the Hong Kong-headquartered company is in advanced discussions to raise about $200 million in a new funding round that would cement its unicorn status and support its next phase of expansion.
The planned fundraising comes as PalmPay accelerates its growth strategy across Africa and Asia, while positioning itself for a public listing that could become one of the most significant fintech IPOs involving an Africa-focused company in recent years.
PalmPay’s move follows a period of rapid growth in Nigeria, where it has become one of the country’s largest digital financial services providers. Alongside OPay and Moniepoint, the company forms the trio that dominates Nigeria’s retail digital payments and agency banking market, a segment driven by millions of point-of-sale (POS) transactions processed daily.
With PalmPay’s latest valuation milestone, all three leading Nigerian fintechs have now achieved unicorn status. While OPay has previously disclosed plans to pursue a listing in the United States, Moniepoint has remained focused on expanding its banking and business services without publicly indicating IPO ambitions.
Founded in 2019 after securing a Mobile Money Operator (MMO) licence from the Central Bank of Nigeria (CBN), PalmPay has built one of the country’s fastest-growing fintech ecosystems. The company says it now serves more than 35 million registered users and over 600,000 merchants, supported by an extensive network of more than 500,000 mobile money agents nationwide.
The platform offers a broad suite of financial services, including peer-to-peer transfers, bill payments, airtime purchases, savings, credit products, merchant payment solutions and agency banking services. PalmPay says it processes as many as 15 million transactions daily, reflecting the increasing adoption of digital payments across Nigeria.
Beyond its home market, the fintech has expanded into Tanzania, Ghana, and Bangladesh, underscoring its ambition to become a leading emerging-market digital bank. Industry analysts view the expansion as part of a broader strategy to diversify revenue streams while replicating its Nigerian success in other underbanked markets.
PalmPay has attracted backing from prominent global investors, including Taiwanese semiconductor manufacturer MediaTek and smartphone maker Transsion Holdings, whose Tecno, Infinix and itel brands command significant market share across Africa. Their support has helped PalmPay leverage smartphone penetration to drive financial inclusion through mobile-first banking services.
As part of efforts to strengthen its leadership ahead of its next growth phase, PalmPay recently appointed Mr Samuel Oluyemi as Chief Operating Officer (COO) for its Nigerian business. Mr Oluyemi joined the company after more than two decades at the Nigeria Inter-Bank Settlement System (NIBSS), where he played key roles in developing the country’s digital payments infrastructure.
If completed, the fundraising and eventual Hong Kong listing would further underscore growing international investor confidence in African fintech companies despite a more cautious global venture capital environment. The proceeds are expected to support PalmPay’s geographical expansion, deepen its product offerings, invest in technology infrastructure and strengthen its competitive position in Africa’s rapidly evolving digital financial services industry.
By Adedapo Adesanya
Market bellwethers, Central Securities Clearing System (CSCS) Plc and FrieslandCampina Wamco Nigeria Plc, lifted the NASD Over-the-Counter (OTC) Securities Exchange by 2.08 per cent on Monday, August 3.
CSCS Plc, the Nigerian securities depository company, gained N10.00 to close at N112.00 per share compared with the previous session’s N102.00 per share, and FrieslandCampina Wamco Nigeria Plc advanced by N4.71 to quote at N152.64 per unit versus last Friday’s N147.93 per unit.
As a result, the NASD Security Index (NSI) added 92.14 points to finish at 4,523.85 points compared with the preceding session’s 4,431.71 points, and the market capitalisation appreciated by N55.31 billion to N2.715 trillion from N2.659 trillion.
Business Post reports that the price of MRS Oil Plc crashed during the trading day by N12.00 to N120.00 per share from N132.00 per share, and UBN Property Plc dipped by 3 Kobo to N1.90 per unit from N1.93 per unit.
Trading data showed that the volume of securities exchanged rose by 113.1 per cent to 1.5 million units from 690,990 units, and the number of deals climbed by 19.2 per cent to 31 deals from 26 deals, while the value of securities slid by 13.1 per cent to N65.2 million from N75.0 million.
Great Nigeria Insurance (GNI) Plc remained the most traded stock by value on a year-to-date basis, with 3.4 billion units valued at N8.4 billion, followed by Infrastructure Credit Guarantee (Infracredit) Plc with 2.3 billion units sold for N6.5 billion, and CSCS Plc with 76.8 million units traded for N5.5 billion.
GNI Plc also closed the session as the most traded stock by volume on a year-to-date basis, with 3.4 billion units worth N8.4 billion, followed by Infracredit Plc with 2.3 billion units exchanged for N6.5 billion, and Resourcery Plc with 1.1 billion units transacted for N415.7 million.
By Adedapo Adesanya
The Nigeria Revenue Service (NRS) has introduced a 1.5 per cent stamp duty on eligible virtual asset transactions, with the tax deducted directly from the cryptocurrency purchased before it is credited to the buyer’s wallet.
According to the new guidelines issued on Monday, anyone buying Bitcoin (BTC), USDT or other cryptocurrencies in Nigeria will receive fewer digital assets due to the deduction.
This requires registered crypto exchanges and other Virtual Asset Service Providers (VASPs) to withhold the levy in the digital asset being traded and remit it to the government, marking Nigeria’s most comprehensive move yet to bring cryptocurrency transactions into the country’s tax net.
Unlike traditional taxes deducted from a customer’s bank account, the 1.5 per cent charge will be taken from the cryptocurrency itself, meaning buyers will receive less Bitcoin, USDT or other tokens than they paid for.
The tax body stated that “income tax deducted at source and stamp duty shall be remitted to the service in the originating token of the transaction.”
Besides the new stamp duty, the guidelines also clarify how income tax, Value Added Tax (VAT) and other tax obligations will apply to virtual asset activities such as trading, staking, mining and other crypto-related transactions.
To illustrate the new rule, the tax authority said a buyer who pays N1 million for one Bitcoin will receive only 0.985 BTC after 0.015 BTC is deducted as stamp duty and remitted to the government. When that Bitcoin is later sold, the next buyer will also have 1.5 per cent deducted from the cryptocurrency credited to their wallet.
The NRS said the guidelines are intended to provide clarity for taxpayers, crypto exchanges, peer-to-peer (P2P) marketplace operators, financial institutions, tax consultants and all participants in Nigeria’s virtual asset ecosystem.
According to the guidelines, the 1.5 per cent duty applies to eligible virtual asset transactions facilitated through registered exchanges and other recognised intermediaries. Where a cryptocurrency is used to complete a transaction that already attracts stamp duty under the law, the applicable duty on the underlying instrument will also be payable.
For crypto users, the implication is higher transaction costs, as eligible purchases will attract the 1.5 per cent stamp duty, while VAT on exchange service fees and income tax on taxable gains may also apply, depending on the nature of the transaction.
