74. The DPR is supposed to be an independent regulator, but it has not been able to play this role in practice. Its mandate includes supervising all petroleum industry operations in the country; enforcing environmental and safety regulations; keeping accurate records on operations (reserves, production, and exports of products); processing applications for licenses, ensuring timely and adequate payments of all rents and royalties; and monitoring the local content policy. In reality, DPR has been treated just like another arm of the NNPC subject to its directives, those of the Ministry, and the presidency. It also is hampered by human and financial capacity constraints. As a result, DPR often fails to perform its functions effectively.

75. The National Petroleum Investment Management Services (NAPIMS), a subsidiary of NNPC, also plays a major role in oil sector governance. NAPIMS is responsible for monitoring and rationalizing the budgets of JVs, promoting Nigerian content, and ensuring that all partners in Joint Ventures (JVs), Production Sharing Contracts (PSCs), and (Service Contracts (SCs) comply with their contract terms. NAPIMS processes JV contracts for approval by the NNPC and the government. In this role, like the DPR, the subsidiary is subject to pressures from the IOCs, NNPC, government officials, and politicians chasing contracts.

# **Taxing Resource Wealth**

## **a. Collection of Taxes and Royalties**

76. Nigeria remains highly dependent on petroleum revenues (Okauru 2008, 8). These revenues are composed of crude oil sales receipts, petroleum profits tax (PPT), royalty, upstream gas sales, Nigeria liquefied natural gas, flared gas and pipeline fines, domestic crude, and signature bonuses. Revenue from crude oil sales and PPT and royalties are the most important sources of revenue, contributing to almost 42 percent and 40 percent of total revenues in 2005, respectively.<sup>24</sup> 77. Three key institutions are involved in oil revenue collection, specifically the NNPC, Federal Inland Revenue Service (FIRS), and the DPR. The NNPC receives and markets government‘s share of crude production from IOCs, which amounts to nearly 60 percent of the crude produced in the country. It also receives allocations for the declining local refineries, most of which it also sells. The NNPC allocates lifting contracts, which, as NEITI audit reports have shown, do not always follow advertised criteria or guarantee competitive pricing. The NNPC‘s handling of crude sales and remittances of proceeds have pitched it against the Revenue Mobilization, Allocation, and Fiscal Commission (RMAFC), which monitors accruals into the Consolidated Revenue Fund (CRF). RMAFC alleges that NNPC does not remit all revenues, an accusation supported by relevant national legislative committees.

78. FIRS is responsible for collecting petroleum profits tax from oil companies; DPR is responsible for royalties, gas flare penalties, rents, and other levies; and NNPC is responsible for revenue from crude oil sales. These institutions, however, demonstrate a persistent lack of coordination. According to the NEITI audits, collaboration between physical measurement and financial assessment is weak.

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