Says $1.167m gas revenue lost in exchange rate variations
Chineme Okafor in Abuja
The Nigeria Extractive Industries Transparency Initiative (NEITI) has asked the federal government to investigate again the various oil blocks the Nigerian National Petroleum Corporation (NNPC) had assigned in the past.
Specifically, NEITI said it wants the government to investigate NNPC’s divestment and/or transfer of oil blocks to its subsidiary, the Nigerian Petroleum Development Company (NPDC) in 2011 and 2012.
NEITI and other independent audit exercises had in the past described the terms under which NNPC assignment of oil blocks to NPDC as controversial.
Bringing up the issue in its 2013 audit report on Nigeria’s oil and gas industry which it released last Monday in Abuja, NEITI said there was need for the government to revisit the transactions.
It said it wanted the government to undertake fresh comprehensive investigation into NNPC’s past divestment exercises.
The content of the report was presented by the Chairman of NEITI’s board and Minister of Solid Minerals Development, Dr. Kayode Fayemi.
The report said the NNPC acknowledged it divested its interest in Oil Mining Leases (OMLs) 26, 30, 34, 40, and 42 which it operated in joint venture with the Shell Petroleum Development Company (SPDC) in 2011 to NPDC with the authorisation of the minister of petroleum resources.
NEITI also noted that the consideration for four other OMLs NNPC operated in joint venture with Nigeria Agip Oil Company (NAOC) and which was assigned in December 2012 to NPDC was not paid and the deed of assignment contained no mention of the value to be paid.
“Eight OMLs assigned to NPDC from Shell JV between 2010 and 2011 were valued at $1.8 billion but only $100 million was paid leaving an outstanding of $1.7 billion in year 2011.
“No reasons were given for the transfer other than exercise of ministers’ legal authority and development of NPDC’s upstream capacity,” NEITI in its 2013 audit reports, said.
It however stated that: “Federal government to conduct a comprehensive investigation on the circumstances that led to the divestments, transactions and operations of all assets transferred by NNPC to NPDC.”
NEITI explained that despite the alleged transaction anomalies, NPDC has continuously enjoyed full rights and benefits accruing from the assets transferred to it.
NEITI also said Nigeria in 2013 lost $1.167 million of its expected gas sales revenue to disparities in naira-dollars payment for gas purchases into the federation account.
The report stated that the total value of gas to the tune of $616.006 million was invoiced by the Crude Oil Marketing Department (COMD) of NNPC and there was a net receipt of $381.095 million, consisting of $271.316 million as direct transfer from traders and $109.780 million as Natural Gas Liquids (NGL) price balance.
It said they were traced to a JP Morgan Chase gas revenue account but that there was an exchange loss of $1.167 million. It noted that this was due to gas sales being valued in dollars, invoiced in naira and payment made into JP Morgan in dollars for subsequent remittance into federation account in naira.