The Nigerian National Petroleum Corporation’s refusal to make separate payments for royalty and petroleum profit tax (PPT) on joint venture assets held on behalf of the federal government violates several petroleum industry regulations and laws, the Department of Petroleum Resources (DPR) has said.
The petroleum industry regulator said opting to remit lump sums into the federation account and not separate royalty and PPT from other revenues makes it difficult for the government to determine whether it was making profit or not with its investments. It also makes it difficult to know if the NNPC is actually paying royalty and PPT.
Royalty is meant to be paid by licensees of Nigerian oil wells and blocks, including the NNPC, for the continuous use of the oil resources. It is determined as a percentage of the crude oil lifted. Similarly, PPT is levied on the income of companies operating in the upstream sector of the petroleum industry.
The DPR expressed its views on the illegalities by the NNPC in documents circulated among Federation Account Allocation Committee (FAAC) members. The FAAC consists of the finance commissioners of the 36 states and is headed by the Minister of Finance, Kemi Adeosun.
Source: Premium Times