FG fails to recover N13.33bn gas flaring fines

 The Federal Government of Nigeria has experienced a revenue shortfall of N13.33 billion in gas flaring penalties issued against oil and gas firms in January and February 2023.

As previously reported, the Federal Government had planned to impose a fine of $49 million (equivalent to N22 billion) on onshore oil and gas firms for flaring 24 billion Standard Cubic Feet of gas valued at about N40 billion ($86 million) during the specified period. This penalty was based on data from the National Oil Spill Detection and Response Agency, which highlighted the companies’ violations of gas flaring regulations.

According to the agency’s data, onshore companies were accountable for flaring 24.5 billion SCF of gas, valued at $85.8 million, leading to a penalty of $49 million.

The report also revealed that the companies flared 19.14 billion SCF of gas in January and 14.04 billion SCF of gas in February 2023, contributing to 1.3 million tone’s of carbon dioxide emissions and having a power generation potential of 2,500 gigawatts hours.

For offshore operations, companies flared 25.8 billion SCF of gas, valued at $90 million, capable of generating 2,600 gigawatts hours of electricity and resulting in 1.4 million tone’s of carbon dioxide emissions.

Specifically, offshore companies flared 10.84 billion SCF and 13.09 billion SCF of gas in January and February 2023, respectively. However, NOSDRA (National Oil Spill Detection and Response Agency) did not specify the penalties that offshore companies would be required to pay for their flaring activities.

Contrary to the expected N22 billion in gas flaring penalties for January and February, data from the Central Bank of Nigeria’s quarterly statistical bulletin for the first quarter of 2023 indicates that the Federal Government earned N4.6 billion in January and N4.07 billion in February from gas flaring penalties.

The shortfall in revenue highlights the challenges faced by the Federal Government in enforcing penalties against flaring violations by oil and gas firms. The discrepancy in the expected earnings poses questions on the effectiveness of the current regulatory mechanisms and calls for more robust measures to curb gas flaring and optimize revenue generation from such penalties.