Petroleum minister orders NNPC to defray $1.48b debt

• ‘Corporation not indicted in oil sector audit’ 

• Global petroleum price rises

 THE Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke has directed the Nigerian National Petroleum Corporation (NNPC) to defray $1.48 billion remittances due to the Federation Account by the Nigerian Petroleum Development Company (NPDC), being signature bonus, taxes and royalties on the assets transferred to the firm.

  NPDC is an upstream subsidiary of NNPC. The Corporation also insisted it is not indicted by the forensic audit report on the alleged missing $20bn unremitted oil revenue carried out by the reputable international firm, PriceWaterhouseCoopers.

  The Group General Manager, Group Public Affairs Division of the NNPC, Ohi Alegbe said yesterday in Abuja that audit report absolved the Corporation of culpability over the allegation of non- remittance of $20bn.

  The Corporation noted that the release of the forensic audit report has finally laid to rest the controversy surrounding allegations of “missing oil revenue” or non-remittance to the Federation Account.

  The Corporation explained that it was not true that it was indicted in the Forensic audit report as being speculated in some quarters as the $1.48bn that the audit firm recommended the Corporation to remit to the Federation Account was not part of the alleged unremitted revenues from crude lifting.

  It explained that the $1.48bn was never in dispute as it is made up of statutory payments such as signature bonus, taxes and royalties, which are statutory payments that come with assets acquisition.

  It stated that the delay in payment was due to the reconciliation processes between the Department of Petroleum Resources (DPR) and the NNPC.

  Following the conclusion of the report, the Minister of Petroleum Resources has subsequently directed the NNPC to defray the signature bonuses, taxes and royalties in line with the recommendation of the forensic audit report.

  The Corporation stated that the forensic audit report and the Senate Committee on Finance report on the unremitted revenue all alluded to the fact that NPDC reported crude oil revenues of $5.11bn.

  It further explained that the forensic audit acknowledged that the total cash remitted into the Federation Accounts in relation to the crude lifting in the period under review was $50.81bn and not $47bn and that subsidy on premium motor spirit and dual purpose kerosene stood at $8.7bn.

  Expatiating further on the kerosene subsidy issue, the Corporation stated that the Forensic Audit Report also clarified that subsidy on DPK is still in force as the presidential directive of 19th October, 2009, was not gazetted in line with provisions of section 6 sub section 1 of the Petroleum Act of 1969.

  The Forensic Audit Report also acknowledged that section 7 subsection 4 of NNPC Act empowers the Corporation to defray its costs and expenses including the costs of its subsidiaries from crude oil revenues, though it also recommended that the laws be reviewed to make the Corporation meet its costs and expenses entirely from the value it creates.  

  The Federal Ministry of Finance last year hired the PriceWaterHouseCoopers, to investigate the veracity of the allegation by the former Governor of the Central Bank of Nigeria, Lamido Sanusi, that $48.9bn and later $20bn was not remitted to the Federation Account by the NNPC.

  Oil rose towards $56 a barrel on Thursday, recovering from part of the previous session’s drop, although traders and analysts said the prospect of a further, sustained rally from near six-year lows looked weak.

  Crude snapped a four-day winning streak on Wednesday, when the U.S. government said crude inventories increased by 6.3 million barrels, rising for a fourth consecutive week to hit a record high.

  A publication in Fox Business, quoting Reuters said while the global market has more than enough crude, a collapse in Libyan production and a raid on an oilfield by gunmen, plus an attack on a tanker off Nigeria renewed concern about threats to supply.  

 Brent crude rose $1.69 to $55.85 a barrel by 1345 GMT, having fallen more than a dollar intra-day earlier and settling 5.5 percent lower on Wednesday. U.S. crude added $1.35 to $49.80.

  “There’s more and more money coming in on the long and the short side, and I think the result of that is we’ll probably see increased volatility,” said Olivier Jakob, oil analyst at Petromatrix.

“If we start to have more problems in Nigeria, then it starts to reduce the spare capacity that there is and then it’s harder to make the case that oil should be at $30.”

  Oil began to rise last week from near-six-year lows, in part due to a downturn in U.S. rig activity that could eventually dampen rapid growth in shale oil production, only to tumble on Wednesday.

  Other participants said it was too soon to expect a sustained price rise. “There’s no basis for a sustained recovery at the moment,” said Carsten Fritsch, analyst at Commerzbank.

  Christopher Bellew, a senior broker at Jefferies Bache, also did not   expect prolonged gains. “I think prices will consolidate around these sorts of levels before moving lower. It takes a lot of time for fewer rigs to translate into lower oil production,” he said.

A workers’ strike in the United States at nine plants, including seven refineries accounting for 10 percent of the country’s refining capacity, added to concerns over crude demand.

The United Steelworkers union (USW) said a new contract offer was made by lead oil company negotiator Royal Dutch Shell Plc on Wednesday, and that it would respond after considering the offer on Thursday.

(Report by Alex Lawler and Jacob Gronholt-Pedersen; edited by William Hardy and Jason Neely).