By Chineme Okafor in Abuja
The Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), and 22 other oil companies are yet to pay to remit $3,632,075 to the Federation as fines for flaring gas beyond their allowed thresholds.
The NPDC and four other oil companies also failed to remit $46,674,360.78 to the federation as royalty on the volume of oil they produced within the period, bringing the outstanding to over $49 million, an audit report has revealed.
Also, Nigeria has just about $34,432,432 to draw from the Nigeria Liquefied Natural Gas (NLNG) Limited, being reimbursement for the $2,672,926,309 loan it gave for the establishment and running of the gas company.
These were contained in an audit report of operations in the country’s oil and gas industry by the Nigeria Extractive Industries Transparency Initiative (NEITI).
The audit report, which covered the 2016 operations of the industry was released at the weekend in Abuja by NEITI.
Among others, the report shows how much money Nigeria earned from oil and gas production within the period, as well as issues such as loan repayments by NLNG to the country, gas flare fines defaults, and unremitted oil royalties.
According to the report, in 2016, the NLNG paid $390,234,415 to bring the total value of payment to the country to $2,638,493,877 and drawdown its loan repayments to $34,432,432.
It equally stated that a subsidiary of the Nigerian National Petroleum Corporation (NNPC) – the Nigerian Petroleum Development Company (NPDC), and 22 other oil companies failed to pay to the federation $3,632,075 as fines for flaring gas beyond their allowed thresholds.
Additionally, it noted that the NPDC and four other oil companies failed to remit$46,674,360.78 to the federation as royalty on the volume of oil they produced within the period.
Nigeria through the NNPC maintains a 49 per cent shareholding in the NLNG, and would still retain its dividends from the operations of the entity even after the loan repayment is completed.
“The total federation loan/investment in the NLNG project was $2,672,926,309 as at December 2016, out of which $2,638,493,877 has been liquidated leaving an outstanding balance of $34, 432, 432,” NEITI said in the report.
It added: “For the period under review, NLNG paid a total of $390,234,415 to NNPC as loan repayments, interest and dividend. The dividend accruing to the federation in 2016 was $356,126,898 representing 91.26 per cent of the total revenues while interest and principal repayment were $2,323,733 (0.60 per cent) and $31,783,784 (8.14 per cent), respectively.”
NEITI stated that the NNPC confirmed to it receipt of the $390,234,415 as payment of dividend, loan repayment and interest by NLNG in 2016, but protested that these monies were paid into a JP Morgan Chase NNPC Depository Account domiciled with the Central Bank of Nigeria (CBN) as against an existing constitutional obligation in this regards.
“The NEITI audits have consistently maintained that these monies should be paid into the Federation Account. This position is based on Section 162(1) of the 1999 Constitution of the Federal Republic of Nigeria, which stipulates that, “all revenue proceeds should be paid to the Federation Account.”
“NNPC has always referred to approvals by the federal government, authorising it to withhold remittances or in some cases utilise the funds for specific projects such as the Brass LNG project. NNPC made available these approvals for sighting by our team. The NNPC says that the Ministry of Finance is managing the fund,” it further explained.
According to it, while the NPDC and companies such as Addax; Aiteo; Belema Oil; Brittania U; Conoil; Energia and Eroton, incurred a total gas flared liability of$3,632,075 in 2016, the same NPDC and Dubri Oil; Newcross E&P; ND Western and Platform owed a total oil royalty underpayment worth $46,674,360.78 to Nigeria.
On the country’s earnings from the use of oil pipelines it jointly invested in oil companies, the report stated: “In 2016, the total revenue that accrued as pipeline transportation fee was$25,713,879.
“This represents 55 per cent counterpart share of the federation in the SPDC pipeline JV infrastructure. These fees were paid directly to NNPC as income from the JV,” the report said.
It added however that there was an unreconciled difference of $23,185,327 due to the inability of the NNPC to provide proof of receipt of the total sum paid by Shell Petroleum Development Company (SPDC) in this regards.
In 2016 as well, the NEITI report showed there was an unappropriated public spending of N99.598 billion by the NNPC as subsidy for petrol consumption in the country following price differentiation in the importation of fuel by NNPC.
It said thus: “The federal government discontinued fuel subsidy in 2016. However, NNPC, the sole importer of domestic PMS, introduced a system tagged under/over recovery of petroleum products. The approach aims to offset the shortfall in domestic supply of white fuels with imported products bought with revenues from the sale of excess domestic crude.
“The balance of the revenue is remitted to the Federation Account. This system commenced in January 2016. Officially, the NNPC commenced the under recovery in June 2016, as there were no recoveries from January to May 2016. The sum of N 99.598 billion accounted for under/over recovery of petroleum products,” the report said