Nigerian Oil and Gas Firms Pay N71.6bn as Flaring Penalties

By Adedapo Adesanya

Data from the Central Bank of Nigeria (CBN) has revealed that oil and gas firms operating in the country paid N71.6 billion to the federation account in 2022 as penalties for gas flaring.

The CBN, in its economic report for 2022, disclosed that gas flare penalties accounted for 1.54 per cent of the federation’s gross oil earnings, irrespective of the fact that the country recorded zero revenue from gas sales in 2022.

Giving a breakdown of the revenue from the gas flaring penalties, the CBN stated that in January, February, March, April, May and June 2022, revenue from gas flaring penalties stood at N6.457 billion, N6.565 billion, N6.304 billion, N5.725 billion, N7.778 billion and N4.917 billion, respectively.

Meanwhile, N7.732 billion, N5.24 billion, N3.738 billion, N4.133 billion, N5.972 billion and N7.055 billion were received from the same source in July, August, September, October, November and December 2022, respectively.

In comparison, the CBN reported that the revenue earned from gas flare penalties in 2022 was 25.84 per cent lower than the N96.544 billion recorded in 2021, where in January, February, March, April, May and June 2021, N5.795 billion, N7.254 billion, N5.53 billion, N13.353 billion, N6.501 billion and N6.283 billion, respectively.

In addition, in July, August, September, October, November and December 2021, the financial sector regulator stated that revenue from gas flared penalties stood at N6.167 billion, N12.336 billion, N7.929 billion, N6.379 billion, N8.404 billion and N10.611 billion, respectively.

Furthermore, the central bank stated that banks’ credit to the Nigeria oil and gas industry appreciated by 30.2 per cent from N1.466 trillion as at the end of 2021 to N1.908 trillion at the end of 2022.

The CBN noted that credit to the oil and gas sector accounted for 6.48 per cent of the banks’ total credit to the private sector, valued at N29.446 trillion.

Also, the bank disclosed that banks’ credit to the power and energy sector in 2022 stood at N297.408 billion, dropping by 12.26 per cent compared with N338.945 billion recorded at the end of 2021.

According to the CBN data, credit to the power sector in 2022 accounted for 1.01 per cent of banks’ total credit to the private sector.

As of December 31, 2021, the total credit facilities advanced by the banks to the private sector stood at N24.378 billion, 20.79 per cent lower compared with the N29.446 trillion advanced to the private sector in 2022.