NNPC Explains Where About Of N3.8 trn It Alllegedly Pocketed Between 2012 and 2015
The Nigerian National Petroleum Corporation, NNPC, has clarified the allegation that it pocketed N3.8trillion of the N8.1trillion it generated as oil revenue between 2012 and 2015.
The country’s oil giant said there was no iota of truth in the claims, adding that the allegations are all borne out of a denial of the reality of dwindling petroleum earnings arising from the global fall in prices.
The Federal Economic Council Meeting inaugurated by President Muhammadu Buhari, on June had accused the NNPC of generating about N8.1trillion between 2012 and May 2015, but paid only N4.3trillion to the federation account.
Governor of Edo State, Adam Oshiomhole, who spoke on behalf of the council, alongside the governors of Kaduna state governor, Nasir El-Rufai, and Zamfara governor, Abdulazeez Yari, said about N3.8trillion — was withheld and spent by the NNPC unilaterally without approval or National Assembly appropriation.
“This has never happened before and for us this is profound. We are talking about transparency, we are talking about change. And what we saw from those numbers I believe that Nigerians are entitled to know, is that whereas the NNPC claimed to have earned N8.1 trillion, what NNPC paid into the federation account from 2012 to May 2015 was N4.3trillion.
“What it means is that NNPC withheld and spent N3.8 trillion.
But in a position paper the corporation presented at a recent meeting with President Muhammadu Buhari, the embattled Nigerian National Petroleum Corporation (NNPC) contended that contrary to the general impression that it “spent the balance of N3.8 trillion (after remitting the sum of N4.65 trillion into the Federation Account) on its operations, the truth is that a bulk of that amount was unrealized revenue owing to the fuel subsidy regime which is a Federal Government policy.”
In the document, the corporation stated that the N3.8tn was not remitted because it was unrealized revenue and likened it to a situation where an agency like the Customs Service could not meet its revenue generation target because of duty waivers granted by the Federal Government to some companies on a certain category of goods.
“When petrol and kerosene are imported at say N130 and N140 per litre respectively and the subsidy regime dictates that they be sold at N87 and N50 per litre respectively, the balance of N43 and N110 per litre that is lost (not realized) over the period of review is what makes up a bulk of the N3.8tn that was allegedly not remitted and which Nigerians are being made to believe was willfully withheld by NNPC and ignorantly referred to as operation expense by NNPC,” the document explained.
Putting the losses or unrealised revenue incurred from petroleum subsidy in the period under review at 2.14tn, the Corporation further explained that crude oil and products losses as a result of theft and pipeline vandalism also constitute another stream of unrealized revenue amounting to a total of N250.2bn.
“It is grossly erroneous for people to think that pipeline vandalism and its twin evils of crude and products theft do not have any implication on what accrues to the Federation Account at the end of the day, but unfortunately, that appears to be the thinking,” the document stated.
On the other cost elements that make up the alleged unremitted N3.8tn, NNPC explained that the cost of pipeline management and repairs and the supply of crude to the refineries by vessels as a result of the frequent attacks on the crude supply pipelines by oil thieves amount to N460.1bn and N732.35 bn respectively.
“It needs to be understood that the PPPRA template does not make provision for cost recovery in the transportation of products through the pipelines. Even though the pipelines and the tankers perform the same role of bridging, the PPPRA template makes provision for bridging fee for tankers without a similar fee for product transportation though the pipelines. This has denied the Corporation of a ready pool of resources to draw upon for maintenance and repairs of the pipelines which have lately been under heavy and frequent attacks and consequently has led to a spike in the cost of maintenance and repairs”, the document explained.
It further explained that because pipeline repairs are by nature not what can be delayed while awaiting the normal appropriation process considering the fire and terrible impacts on the environment, the cost is usually defrayed from oil revenue in keeping with “Section 7 Sub-section A and B of the NNPC Act states inter-alia:
“The Corporation shall maintain a fund which shall consist of—
(a) such monies as may, from time to time, be provided by the Federal Government for the purposes of this Act by way of grants or loans or otherwise howsoever; and
(b) Such monies as may be received by the Corporation in the course of its operations or in relation to the exercise by the Corporation of any of its functions under this Act, and from such fund there shall be defrayed all expenses incurred by the Corporation.”
“NNPC is a creation of the law and a law-abiding corporate entity whose processes and procedures are guided by the provisions of the law and would not engage in expenditure and defray same from revenues generated if there was no legal basis for such”, the document clarified.
On the issue of NLNG dividends, it explained that the investment in NLNG was made by the Federal tier of government as distinct from the Federation and that by law the dividends from that investment are meant to be paid into the Consolidated Revenue Account of the Federal tier of government as internally generated revenue.