The Federal Government is losing an estimated N22 trillion yearly to offshore oil rig tax evasion and capital flight resulting from the dominance of foreign firms in key oil and gas maritime services, according to maritime lawyer and Senior Partner at Olisa Agbakoba Legal (OAL), Olisa Agbakoba.

Agbakoba disclosed that offshore oil rig operators in the country’s waters do not pay taxes, which was confirmed by the Nigerian Maritime Administration and Safety Agency (NIMASA).

The maritime lawyer, who revealed this in a position paper to the Minister of Marine and Blue Economy, Dr Adegboyega Oyetola, said instead, they have formed a cartel to evade taxes, noting that OAL is representing NIMASA in a tax avoidance case instituted by oil rig companies.

He described the situation as a major gap in government revenue collection, noting that the loss from oil rig taxation alone is estimated at N6 trillion yearly, representing roughly 17 per cent of Nigeria’s national budget.

“NIMASA has confirmed that tax is currently not collected from oil rigs,” he stated.

The maritime lawyer stressed that urgent legal and policy reforms are required to enable the government to capture the significant revenue potential from offshore operations.

He said this requires the amendment of the NIMASA Act 2007 to expand the agency’s mandate beyond shipping regulation, marine labour and environmental protection to include marine conservation and blue economy oversight, while also establishing a comprehensive taxation framework for offshore oil rig operators.

Agbakoba said the reforms would also increase penalties for maritime pollution, illegal vessel operations and labour violations, while strengthening NIMASA’s role in coastal tourism development and renewable marine energy initiatives.

Agbakoba also called for the enactment of a Marine Pollution Control and Climate Adaptation Act to strengthen protection measures against growing environmental pollution threats such as oil spills, ship-based pollution and plastic waste in Nigerian waters.

According to him, the proposed legislation would compel offshore oil and gas companies to develop spill response and clean-up plans while supporting coastal communities with climate adaptation strategies, including shoreline protection and disaster response, and mandate green shipping initiatives such as reduced carbon emissions for vessels.

He also recommended amendments to the Petroleum Industry Act 2021 to strengthen regulations governing offshore oil and gas drilling to reduce environmental risks and introduce mandatory decommissioning funds that would ensure oil companies clean up offshore installations at the end of their operational life.

Other proposed measures include the creation of a Marine Pollution Task Force to monitor and enforce environmental regulations across ports, coastal industries and offshore platforms, as well as amendments to the Exclusive Economic Zone Act 1978 to update and expand Nigeria’s control over deep-sea mining and marine biodiversity conservation.

He said this will introduce provisions for sustainable offshore energy projects such as wind farms.

The senior advocate explained that implementing the reforms could unlock new revenue streams for Nigeria through royalties from offshore oil drilling and gas extraction, corporate taxes on deep-sea oil fields operators, pipeline installation fees, and seabed resource extraction rights.

Others include tax revenue from private-sector investments in fish farms and marine aquaculture, revenue from private investment in offshore wind farms and tidal energy projects, and carbon credit sales from clean marine energy initiatives.

Beyond taxation, Agbakoba said Nigeria is also losing about N16 trillion yearly from oil and gas maritime services as several key value chains are dominated by foreign interests.

The senior advocate noted that over $1 billion worth of legal services yearly is lost to foreign firms, while Nigerian shipping companies are largely excluded from the transportation of the country’s crude oil products.

Agbakoba further lamented that revenues generated from crude oil production are domiciled in foreign banks for extended periods before remittance to the Central Bank of Nigeria, while no local marine insurance company participates in underwriting insurance for the over 1,000 oil rigs operating in the country’s waters.

The senior advocate contrasted the situation with the successful In-Kingdom Total Value Add (IKTVA) programme implemented in Saudi Arabia, which mandates and enforces strong local content participation to retain value within the domestic economy.

Agbakoba said recapturing these losses requires amendments to the Merchant Shipping Act 2007 to regulate the shipping industry, ship registration, and safety and to review the legal framework for cargo shipment from the Free on Board (FOB) model to the Cost, Insurance and Freight (CIF) model, to support the growth of a national shipping fleet.

He also called for stricter enforcement of the Nigerian Oil and Gas Industry Content Development Local Content Act 2010 across all sectors where Nigerians remain excluded, including legal services, shipping, banking and insurance.