NNPC will cough up more than $1.5bn under APC Govt

Nigeria’s beleaguered national oil company, NNPC will be made to refund more than the $1.5 billion stated in the highlights of a PricewaterhouseCoopers (PwC) LLP report released by the auditor-general in February, Kayode Fayemi, the APC’s policy director, said in an interview on Tuesday.

“I have a figure that’s more than $1.5 billion that’s been talked about,” said Fayemi, a former governor of Ekiti state. “We’ve seen credible information that what PwC says is more than that. We will release the report. We’ll make it available to Nigerians as soon as we have full information on this.”

The remarks by the APC policy chief is coming after an exclusive story by BusinessDay yesterday, which said the Nigerian government earned as much as 96 percent of total gross margins in Joint Ventures (JVs) with international oil companies, with the government through the NNPC, taking as much as $77 of every barrel of oil sold at $100.

Former Central Cank Governor,Sanusi Lamido Sanusi was suspended by President Goodluck Jonathan last year, after he alleged the NNPC hadn’t remitted about $20 billion of oil revenue to the government, which derives 90 percent of export earnings and two-thirds of income from the commodity.

Sanusi said last month, that the issue wasn’t addressed sufficiently.

Key points of the PwC audit into the NNPC said it should refund a minimum of $1.48 billion, with the oil company saying the report absolved it of Sanusi’s allegations.

Buhari’s APC plans to publish the complete report which Jonathan’s government hasn’t published yet.

Publishing the audit report would be a welcome development in Nigeria whose NNPC is adjudged to have the poorest transparency record out of 44 national and international energy companies, according to Transparency International and Revenue Watch Institute.

A 146 – page report by Nuhu Ribadu, the former head of the anti-corruption agency EFCC, covering the year 2002 to 2012, released in 2013 concluded that oil majors, Shell, Total and Eni, made bumper profits from undercutting Nigeria on gas prices.

“The estimated cumulative of the deficit between value obtainable on the international market and what is currently being obtained from NLNG, over the 10 year period, amounts to approximately $29 billion,” the report said.

The report also alleges NNPC had short-changed the Nigerian treasury of billions of dollars over the last 10 years by selling crude oil and gas to itself below market rates.

The Nigerian arm of EITI, or Nigerian Extractive Industry Transparency Initiative (NEITI) in its audit of the petroleum industry from 2009 – 2011 found that NNPC failed to remit  $4.84 billion dividend payments over a two year period, from the Nigeria Liquefied Natural Gas (NLNG) to the Federation Account.

That was uncovered by comparing the monies reported to have been paid to its government and its agencies and the funds Nigeria reported receiving.

The APC plans to reorganise the NNPC, which regulates the petroleum sector and takes part in production through joint ventures with Royal Dutch Shell Plc., Exxon Mobil Corp., Total SA, Chevron Corp. and other companies, said Fayemi.

“NNPC will not be in the form or shape it’s currently in,” Fayemi said. “Some measure of unbundling will happen.”

Two weeks ago, the Central Bank Governor ,Godwin Emefiele was reported by BusinessDay as calling for the selling down of government holding in the JVs in a move he said could earn the nation as much as $75 billion in instant cash.

Other ways the new administration could reform NNPCV would be to change the way it sells Nigerian crude.

Non-governmental organisations, such as Switzerland’s The Berne Declaration, have criticised Nigeria’s crude oil sales method, saying it is opaque and offers no guarantee the oil is sold at fair value.

The government has repeatedly denied there is any lack of transparency in the process.

London-based think-tank ,Chatham House, estimated in a 2013 report on Nigerian oil that local traders could score up to 40 cents a barrel, amounting to around $5 million a year on 12 cargoes, just by “flipping” the contract to a bigger trading company.

 

Nigeria is Africa’s largest crude oil exporter, shipping more than 2 million barrels per day (bpd), and is also home to the world’s ninth biggest gas reserves and one of the world’s largest LNG export terminals.