Ibe Kachikwu, minister of state for petroleum resources, says the federal government has recovered N1.2 trillion in royalty arrears from oil companies operating in the country.
Kachikwu was speaking during the Crude Oil and LNG Tracking (COLT) and other automation initiatives, launched by the ministry through the Department of Petroleum Resources (DPR), in Lagos on Monday.
The minister said the launch of new automation processes that track production and shipment of crude oil was what helped in “aggressive royalty recovery”.
“The process of determining royalties in the past was largely driven by the initiatives of oil companies, which determined what they produced, and we calculate royalties on the basis of that,” he said.
“Now, we are able to, using the systems we have, see what actual production volumes are to determine royalties.
“Apart from tracking the production, we are also able to track the movement of the crude – the vessels that come in and go out of the country.
“We have raised N1.2 trillion so far as a result of this aggressive royalty recovery.
“Clearly, when we finish, we will at least have a situation where everybody who is operating is current in terms of their payments.”
Kachikwu said oil firms yet to remit outstanding royalties to the government at the expiration of the agreed deadline, may lose their operating licences.
“Under the rules, you will not get renewal unless you pay your outstanding royalties,” he said.
“What we have done is that for those who have shown the seriousness in mapping out how they intend to settle that, we will renew (licences) but we won’t give them the final certificate until they have liquidated the outstanding royalties.”
The minister said a “benchmarking system” has been launched to track expenses and ultimately reduce the cost of producing oil in the country.
“Given the oscillating price of oil globally, unless we are able to do this, you will produce oil and not make money out of it. So, this is very helpful for us.”