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NNPC did not receive N1.3tr subsidy payment from CBN, says minister


NNPC• Non-passage of PIB threatens 40b oil reserve target

THE Nigerian National Petroleum Corporation (NNPC) did not receive N1.329 trillion from the Central Bank of Nigeria (CBN) for the period covering 2009 and 2011 as erroneously painted by the House of Representatives Ad-hoc Committee on Subsidy Regime, Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke has said.

Also, Alison-Madueke has said that Nigeria’s dream of hitting a whooping 40 billion barrels of oil reserve by 2020 is under threat by the non-passage of the Petroleum Industry Bill (PIB).

She disclosed this yesterday in Abuja at the on-going 14th edition of the Nigeria Oil and Gas (NOG) Exhibition.
The Ad-hoc committee report had alleged that the NNPC deducted directly the sum of N408.255 billion (in addition to the payment of N81.648 billion by CBN in 2009, the sum of N407.801 billion (in addition of the payment of N402.423 billion by CBN) in 2010, and the sum of N847.942 billion (in addition to the payment of N844.944 billion by CBN) for 2011 contrary to Section 162 of the 1999 Constitution (as amended).
Speaking yesterday in Abuja on the matter, the minister submitted that the claim is totally baseless, false and without verifiable foundation.
She further explained that subsidy payments to NNPC are not based on cash remittance and therefore CBN could not have remitted any cash to NNPC for the purpose of subsidy.

She explained: “The mechanics of subsidy recovery by NNPC is non-fund based but by way of credit to NNPC against domestic crude cost due. When approval certificates are received from Petroleum Products Pricing Regulatory Agency (PPPRA) their values are deducted from crude oil cost due in a given month after due consideration of what is approved.’’

She added: “All such approvals and deductions are regularly copied to other relevant agencies of government such as: Federal Ministry of Finance (FMF), Office of the Accountant General of the Federation, Budget Office of the Federation, Federation Accounts Allocation Committee (FAAC) and Revenue Mobilization and Fiscal Allocation Commission (RMFAC).

“In the advice on subsidy deductions forwarded to FMF, NNPC always state that “in line with presidential directives, the FMF should authorise the Accountant General of the Federation to source for the approved subsidy amount and transfer same to the Federation Account for onward distribution by FAAC.”
The minister berated the ad-committee for doing a shoddy and hatchet job, saying: “It is grossly inaccurate and misleading for the Ad-hoc committee to claim that NNPC made ‘double deduction’ by deducting subsidy at source and simultaneously receiving payment for the same purpose from CBN.”

According to her, the conclusion by the committee of double payments to NNPC obviously accounts for the erroneous and outrageous sum of ‘N2, 587.087 trillion’ (N2.587 quadrillion) as total subsidy payment for 2011 as stated in the Committee’s report.
She noted that the NNPC believes that the Adhoc committee’s proceedings was a very serious and important assignment for the nation for the purpose of “verifying and determining actual subsidy requirement…” and put to rest the issue of subsidy once and for all.

Alison-Madueke added: “It is unfortunate that the wide allegations, suppositions and conjectures, which form the basis of their conclusion, actually did more damage to the objectives than verify subsidy requirement. Furthermore, such reckless allegation is capable of inciting the public against the corporation and its personnel.”

She therefore called on the Federal Government, the security agencies and all well-meaning Nigerians to demand full disclosure on the allegation in order to set the records straight.
In this context, she challenged the Ad-hoc committee to disclose the source of its data and such source must also disclose to the nation the demand note for the payment, the bank and account to which the amount was paid and the purpose for which the money was expended and by who.
She posited that until this is done, the story of subsidy in Nigeria would never be closed.

The minister, who spoke through the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Dr Joseph Dawha, explained that there are other numerous challenges facing the sector which are forming formidable threats to the realisation of the national aspirations of growing its hydrocarbon reserve to 40 billion barrels per day by 2020.

Besides the threat posed by the non-passage of the PIB, there are palpable fears that the 40 million barrels per day production target is under threat by the possibility of contracting capital expenditure in 2015.

The minister then urged multinational companies and their indigenous counterparts to brace up for the imminent challenges and devise strategies of raising funds for project execution.
She said the conference is more apt now that the energy competitiveness map of the world is also evolving and affecting countries, companies and consumers alike.

She, however, noted that the persisting drop in crude oil prices have forced companies globally to slash capital spending in 2015, while it continued to take its toll on Nigeria’s petroleum business as a whole.
According to her: “Persistent depressed oil prices may limit industry scope to maneuvers in growing long-term production and reaching the target of 4.0 million barrels per day.”

She further explained: “Under a sustained low oil price, industry must challenge itself to raise funds for projects in order to meet these targets. This will call for radical changes in the cost environment, improved contracts/project management and innovative financing.”

“However, in the event of moderate oil prices recovery, we would still require innovative funding and greater private sector involvement across the hydrocarbon value chain. Nevertheless, at a high price, we must maintain a prudent and incentive based fiscal environment that will prevent the return of high cost of production currently experienced in our industry,” she said.

In his submission, Dawha who was represented by the Group Coordinator, Corporate Planning and Strategy of the NNPC, Dr Tim Okon, stressed on diversification of the national economy, noting that other areas such as agro-industrial, mining-related products and petrochemical industrial products among others could contribute largely to the national purse if adequately harnessed.

Dawha also called for liberalisation of the downstream petroleum sector, adding that the NNPC has rejigged strategies to reviving the refineries and make Nigeria a net exporter of refined products by the year 2020.

He noted that diversification from oil to gas was also crucial, as the country is set to tap into the environmental potentials that gas offers in its quest to drive the economy.
“If the last 50 years is regarded as the oil age, then the next 50 years will be age of gas,” he said.

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