NEITI: FG Paid NNPC N297bn for Subsidy, Others in 2017

NEITI: FG Paid NNPC N297bn for Subsidy, Others in 2017

Chineme Okafor in Abuja

A new report released by the Nigeria Extractive Industries Transparency Initiative (NEITI) yesterday disclosed that the country paid N297 billion to the Nigerian National Petroleum Corporation (NNPC) for petrol subsidy and other related losses.

The report also stated that in the year under consideration, most of the crude oil produced in the country was shipped to 29 destinations including India, and United States which were top destinations for her oil.

NEITI, in a statement by its Director of Communications and Advocacy, Dr. Orji Ogbonnaya Orji, containing the content of the report, described the document as a pilot study which focused exclusively and extensively on the sale of Nigeria’s share of crude oil and gas produced in 2017.

The statement explained that the report disaggregated the federation share of production by types, allocation, uses, details of the revenues derived from the sales, the receiving accounts, and allocation of the revenues.

The report equally has information on details of the buyers’ selection process, the names of buyers or traders of Nigeria’s crude, destinations of the crude, the vessels details, bill of laden dates, pricing options, sale prices and actual payments, payment dates, products supplied by type, cargo, supplier, supply date, volume, unit cost and demurrage.

NEITI noted that from a total of $14.5 billion – $13.18 billion or 90.8 per cent from crude oil and $1.32 billion or 9.1 per cent from gas revenue, derived in that year, the NNPC deducted N297 billion from earnings as costs and losses.

It added that N141.6 billion of the N297 billion was claimed by NNPC for under-recovery on petroleum products or subsidy expenses; N25 billion for crude and product losses; N130.4 billion for pipeline repairs and maintenance.

The NEITI pointed out that N77.92 billion was equally under-remitted by NNPC to the Federation Account from the domestic crude oil allocation in 2017.

“NNPC acknowledges the under-remittance and states that there is an ongoing reconciliation to net off the N77.92 billion from the established federation indebtedness to the corporation of N797 billion arising from KPMG forensic audit of the corporation at the instance of the federation,” said the NEITI.

The report explained that the total crude oil production for 2017 was 692 million barrels, out of which the federation’s share was 240.9 million barrels representing 35 per cent of the total crude oil production for the year 2017.

“A trend analysis for the year under review shows that the 2017 federation share was four per cent higher than the 231.6 million barrels in the same category for 2016 but was 19 per cent lower than the 297.8 million barrels for 2015.

“This shows that while there was a slight improvement on the figure for 2016 (a year characterised by vandalism and sabotage of oil facilities), crude production for 2017 was about a fifth less than the 2015 level.

“A further breakdown of key findings in the report show that 240.9 million barrels federation share for 2017 was disaggregated as follows: Domestic Crude Allocation (DCA): 105.9 million barrels or 44 per cent of federation share; FIRS (Federal Inland Revenue Services) liftings: 57.3 million barrels or 24 per cent of federation share; federation export: 50.2 million barrels or 21% of federation share; third party financing: 17.6 million or seven per cent of federation share; DPR (Department of Petroleum Resources) liftings: 9.9 million barrels or 4 per cent of federation share,” NEITI said.

The agency added: “In turn, the 105.9 million barrels for Domestic Crude Allocation (DCA), the crude assigned for local supply of refined products, was further allocated as follows: Direct Sale Direct Purchase (DSDP): 72.8 million barrels or 69 per cent of DCA; refineries: 26.5 million barrels or 25 per cent of DCA; product exchange: 4.7 million barrels or four per cent of DCA; export (unutilised portion of DCA): 1.9 million barrels or two per cent of DCA.”

With regards to the trading destinations, NEITI stated that: “The top-five destinations were: India with 41.3 million barrels (17.12 per cent); USA 30.6 million (12.72 per cent); local refineries 26.5 million barrels (10.98 per cent); Netherlands 22.9 million barrels (9.5 per cent); and Spain 21 million barrels (8.83 per cent).”

Quoting NEITI’s Executive Secretary, Mr. Waziri Adio, the statement noted the report was undertaken in furtherance of the recent decision of the global Extractive Industries Transparency Initiative (EITI) to add commodity trading transparency to its scope of coverage through stand-alone and in-depth reports.

Adio reportedly explained that the objective was to ensure adequate returns to governments, increase competition and efficiency in commodity trading, and ensure greater public scrutiny of the resultant revenues.

He said: “Resource-rich countries receive shares of minerals produced in their territories as equity shares or as in-kind payments, and these minerals are usually sold directly or indirectly to commodity traders through state-owned enterprises.

“However, the process and details of these sales are mostly shrouded in secrecy, even when more than half of the revenues from the extractive sector come from these sales. This is why the EITI resolved to beam more searchlights on commodity trading. Nigeria is one of the five EITI-implementing countries selected to pilot this enhanced focus.”

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