Olisa Agbakoba, senior partner at Olisa Agbakoba Legal, and also a Senior Advocate of Nigeria (SAN) has lamented tax avoidance in Nigeria’s oil and gas sector, alleging that is costing the country N3 trillion annually. Agbakoba stated that oil rig companies form cartels to evade taxes, with the Nigerian Maritime Administration and Safety Agency (NIMASA) confirming non-collection from oil rigs.
“Oil rig companies have formed a cartel for tax avoidance, with the Nigerian Maritime Administration and Safety Agency (NIMASA) confirming they do not collect tax from oil rigs. This represents a massive loss of potential government revenue,” Agbakoba said on Tuesday in a chat with journalists.
This loss represents 15% of Nigeria’s 2024 national budget. Agbakoba stressed that this revenue shortfall hampers government funding for development projects and public services, urging for stricter regulations, comprehensive audits, and strengthened NIMASA capacity to curb tax avoidance.
“The loss of this revenue significantly impacts the government’s ability to fund development projects and public services,” The Business Day quoted him saying.
Agbakoba also pointed out the detrimental effects of corruption in the allocation of oil blocks and contracts, which has eroded public trust and created an uneven playing field. He criticized the lack of a legal framework for developing a national fleet for shipping crude oil, leading to significant revenue and job losses. Funds from crude oil production are often held in foreign banks, depriving the Nigerian economy of potential benefits.
To address these issues, Agbakoba recommended enhancing NIMASA’s tax collection capabilities, stricter industry regulations, a dedicated task force within the Federal Inland Revenue Service (FIRS) for oil and gas taxation, and completing the privatization of the Nigerian National Petroleum Corporation (NNPC). He also advocated for clarifying regulatory roles to improve efficiency and fully implement the Petroleum Industry Act (PIA) 2021.
Agbakoba emphasized that Nigeria could increase its oil and gas revenue by 30-40% within 5-10 years through improved efficiency, transparency, and local participation. Developing a national fleet could save $10-$15 billion annually in foreign exchange, and attracting top global talents could boost Nigeria’s industry participation from 30% to 70% in three years.
