Shell pays $4.5b to Federal Govt as production entitlements, royalties, others

By Akinola Ajibade

Shell  Companies in Nigeria ( SiN) have paid $4,521,134,915 to the Federal Government in the fiscal year ended 2022. 

The firms, in a reports titled Shell's  Sustainability, Cilmate & Energy Transition, Lobbying and Payments to the Federal Government, said that the money covers  production entitlements, royalties, taxes and fees expected of them as corporate institutions operating in Nigeria 

Published this week Tuesday, the reports give up-to-date financials plans and programmes of the multinational Oil Company ( IOC) in the country.

In the reports, which catalogued the activities of Shell Petroleum Development Company SPDC and Shell Nigeria Exploration and Production Company SNEPCO, a sum of  $3,035,996 was paid as production entitlement, $ 711, 850,070 as taxes $691, 648,502( royalties) and fees of $81,639,634. Altogether, Shell's companies have paid a total paid a total of  $ 4,521,134,915.

The reports added that the  money realised through Production Sharing Contract (PSC) — (OPL212/OML118, OPL219/OML135) was known as  production entitlement to the government ; while royalties are paid by oil companies operating in oil producing areas in the country.

The reports stated that said,production entitlement from the company’s West Asset amounted to $ 1,783,447,897. It was only tax that was paid in respect of PSC 1993 (OML133) and this amounted to$194,604,155. 

According to the Shell, its East Asset attracted a production entitlement of $713,234,993. While other royalties, taxes and fees paid by SPDC $510,881,687

The reports said: “Our operations generate revenue through taxes and royalties for governments around the world. These taxes and royalties are often used by governments to fund essential public services like education, transport and healthcare.

Adding that:“Since 2016 Shell has made mandatory disclosures under the UK’s Reports on Payments to Governments Regulations 2014 (amended December 2015). We have published the revenues that our operations generate through taxes and royalties on a voluntary basis since 2012. We believe that being open about our tax payments helps people to understand how much we pay and why.

In his introduction to the reports, Shell’s Chief Executive Officer, Wael Sawan,said:

“As we invest in the energy needed today, our target to become a net-zero emissions energy business by 2050 remains at the heart of our strategy. We are making good progress. By the end of 2022, we had reduced carbon emissions from our operations by 30% compared with 2016 on a net basis, more than halfway towards our target of a 50% reduction by 2030.

“This report shows what we have achieved so far in our work to be a sustainable business. We aim to do this work responsibly, with discipline and at pace to make a positive difference.

“Shell also published its new 2022 Climate and Energy Transition Lobbying Report. This is another step forward on our journey to increase transparency around our advocacy. It builds on the progress we have made since 2019 in reporting on the key industry associations we are members of, and in providing examples of our advocacy on our website.”