Chat212 - Mail Summary...
- Nigerian National Petroleum Corporation, NNPC denied claims that it failed to remit $20 billion crude oil revenue to the Federation Account.
- Iyowuna, Managing Director, NPDC, who stated noted that the FG inability to fund oil exploration, over the years, is depriving the country of billions of dollars in oil revenue.
- Dr. Abiye declared that the missing money was never in the hands of the NNPC, adding, “this subsidy is not the money that the NNPC collected from government.
Chat212 - Mail News... Report
NIGERIAN National Petroleum Corporation, NNPC, weekend, denied claims that it failed to remit $20 billion crude oil revenue to the Federation Account, adding that it submitted all the documents on domestic crude and subsidy claims to the Federal Account and Allocation Committee, FAAC.
Also, the Nigerian Petroleum Development Corporation, NPDC, a subsidiary of the NNPC, disclosed that the allegation that $20 billion was not remitted to the Federation Account is false, blaming the loss of revenue on inadequate funding of oil exploration activities by the Federal Government.
Mr. Iyowuna Briggs, Managing Director, NPDC, who stated this in Benin, noted that the Federal Government’s inability to fund oil exploration, over the years, is depriving the country of billions of dollars in oil revenue.
He maintained that the Central Bank of Nigeria, CBN, lacks understanding of the workings of the oil sector, saying that majority of the funds that should have accrued to the federal government from the sale of crude oil was paid to its technical partners who provided the financing for its operations.
According to him, the growth the country is seeking in the petroleum sector is no longer coming, adding that Nigeria’s goal of producing about four million barrels of crude daily would have been attained if the issue of funding and security had been addressed.
He stated that the Federal Government, by not funding oil operations, is bringing third parties to lay claims to crude oil revenue, saying that proceeds from the sale is gotten, a substantial part of the proceeds is used to pay back the person who provided the funding for the operation.
He said, “What does this mean, it means if I produce one million barrels per day, five years ago, at $100 per barrel, government gets certain revenue. Five years after, government is no longer funding the way it should, if I produce the same one million barrels per day at the same price, guess what, government gets less.
“By not funding, you are bringing a third party to lay a claim. By funding, all of that one million barrels, when they pay, it goes to government. By not funding, when they pay, part of it is the cost to pay back the person who provided the funding, part of it is the compensation to pay back the person who has funded. By not funding, you don’t expect to get the same amount.”
Also speaking in Abuja, Dr. Abiye Membere, Group Executive Director, Exploration and Production, NNPC, said the issue raised against it by Mallam Sanusi Lamido, Governor, CBN, would be vividly tackled at the next public hearing of the Senate Committee on Finance.
Membere vowed that the NNPC would inundate the Senate Committee with deluge of documents detailing all transactions, adding that, the NNPC works with the Petroleum Products Pricing Regulatory Agency, PPPRA, and other agencies of government, which scrutinize “all our documents.”
He declared that the missing money was never in the hands of the NNPC, adding, “this subsidy is not the money that the NNPC collected from government.”
He said, “For example, the subsidy on kerosene, it is not that government will pay the NNPC the remaining N100 on the product directly. What happens is that the NNPC sells the product at N50 and then pays that into the Federation Account and then expects government to balance it up in the Federation Account with the subsidy claims of the NNPC.
“Nigerians must understand that NNPC has never collected any money from government as subsidy claim. The NNPC simply paid the N50 we collected at pump into the Federation Account. Now, people turn around and say the NNPC owes government.
“It is simply because the Federation Account is not balance and they think that because the NNPC has defaulted simply because we have not paid the required figure forgetting that the balance of what we ought to pay is with the Federal Government.
“The Ministry of Finance has not denied this position. The CBN must know that that the NNPC cannot pay what it does not have.
“The NNPC is not the sole agency of government that determines how much subsidy claim should be. We work with the Petroleum Products Pricing Regulatory Agency, PPPRA, and other agencies of government, which scrutinize all our documents.
“There is a difference in government-to-government transaction as against private sector government transactions. The private sector does not have anything to do with the Federation Account, which is why they are paid subsidy claims directly into their accounts.
“What do people want us to do in the NNPC? They want us to first collect the money from the ministry and then pay back into the Federation Account? Nigerians must understand how these things work.” he said.
Membere added that the NNPC submit document on domestic crude and subsidy claims to the Federal Account and Allocation Committee, FAAC. It is therefore done in a net-in net-out basis. All we do is to submit the subsidy claim and the crude we have sold and handed it over to government.
“Neither NPDC nor NNPC has any power to stop any oil company from paying tax, royalties, nor any tax for that matter. However, a company that is carrying out operation is the one that is required to pay royalty and tax and not the financiers. Contrary to the erroneous belief in some quarters, Septa Energy Nigeria Limited and Atlantic Energy do not carry out any operation.
“It is NPDC that carries out operation and pay the necessary fees to government. These companies provided alternate funding for NPDC to carry out operation. The $2 billion that is the third party funds that was paid into the CBN account that the Governor said he does not recognize is the royalty and Petroleum Profit Tax, PPT that the NNPC paid into the federation account. The NNPC paid its royalties and PPT out of the profit that arose from the operation of the NPDC.
“The NNPC cannot pay directly into the Federation Account because the Federal Government is not the one funding the operation. In this case, the NPDC went to borrow money from third party just as Shell does not pay its money into the Federation Account but pays into its parent company, which in turn pays government tax from its profits.”
Dr. Membere, who noted that “not that the NNPC has never been paid subsidy claim on kerosene before, recalled, “in fact, under Olusegun Aganga as Minister of Finance, subsidy claims between 2009 and 2011 was paid to the NNPC. So, this payment has removed any doubt about the fact that the NNPC was not authorized to carry on with subsidy on kerosene.”
