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NNPC records ₦17.16bn trading surplus, up 46%

The Nigerian National Petroleum Corporation (NNPC) has consolidated on its operational performance with a trading surplus of ₦17.16bn in the month of April, 2018.

NNPC Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, who disclosed this in a statement, said this was part of the highlight of the corporation’s Monthly Financial and Operations Report for April, 2018.

The report, the 33rd edition since NNPC commenced the publication of its financial and operations report on a monthly basis as part of efforts to instill a culture of transparency and keep stakeholders and the general public informed of its activities, indicated a ₦5.43bn improvement representing 46.29 per cent on the trading surplus recorded in the previous month of March, 2018.

According to the report released today, in Abuja, the trading surplus was achieved through a combined higher performance by the upstream, midstream (refineries) and downstream sectors as well as a reduction in Corporate Headquarters’ operational expenditure.

“This enhanced performance is attributable to robust revenues from sales of crude oil and petroleum products by NPDC and PPMC as well as the upsurge in refineries’ performance, particularly in the Port Harcourt Refining Company (PHRC)”, the report stated.

On the gas production and supply front, the report indicated that the average daily production for April, 2018, stood at 8,054.46 billion cubic feet (bcf), out of which an average of 835.27 million metric standard cubic feet (mmscf), equivalent of 3,283 megawatts of electricity, was supplied to the power sector daily during the period under review.

“The result when compared with that of April, 2017, implies an increase of 496mw of power generated relative to same period last year”, the report stated.

It further showed that in the period under review, a total of 1.61 billion litres of Premium Motor Spirit (petrol) was supplied by NNPC in furtherance of the zero fuel queue policy of the Federal Government.

The NNPC said it recorded a 48.21 per cent reduction in the rate of pipeline vandalism which fell to 166 from 224 vandalized points in the previous month.

According to the report, the Aba-Enugu pipeline segment accounted for 78 vandalized points, representing 84.78 per cent of total vandalized points on the nation’s network of products pipelines.

FRSC, NNPC seek safer operations by haulage firms

 

Following the recently concluded Stakeholders’ summit for Haulage in Nigeria which held on July 9 at the instance of the SGF , the Chief Operating Officer, Nigerian National Petroleum Corporation (NNPC) Downstream, Mr. Henry Ikem Obih, has met with the Corps Marshal of the Federal Road Safety Corps (FRSC), Dr. Boboye Oyeyemi, to discuss the roadmap to achieving the Plan of Action of the Haulage Summit.

Oyeyemi stressed the need for the harmonization of data between FRSC),  NNPC, Petroleum Equalization Fund (PEF)and Petroleum Pricing Regulatory Agency (PPRA), and also to ensure that Tank Farms compliance to minimum safety standards are achieved .

A statement by he Corps Public Education Officer of FRSC, Bisi Kazeem, stated that the Corps Marshal also addressed the issues of Safety Valves, which must be in place in all tankers to make sure that where there is a crash incident, the content of the tanker is not spilled; compliance to Road Transport Safety Standardization Scheme (RTSSS); and for tankers to have three plate numbers.

Other issues the Corps Marshal raised at the meeting were: provisions being made to acquire equipment for testing trucks at Tank Farms, payment of trucks tied to meeting minimum standards, fleet renewal for truck operators, capacity building of staff at tank farms, harmonization of operating safety requirements at all tank farms, possibility of pegging tanker carrying capacity to 33,000 liters.

Mr. Henry Obih expressed his gratitude to the corps for the support through monitoring of tankers at the depot, and equally stated that NNPC is committed to maintaining the working relationship to ensure Operational Excellence, Security and Coordination.

He further stressed that NNPC’s special interest in the behaviour of drivers is important because of the challenges faced in loading petroleum products with pipeline.

While he noted that the trucks plying roads in Nigeria are many and expressed their interest in making sure that trucks arrive their destinations safely, he assured the corps of their cooperation and commitment to the Action Plans as it will ensure that there is no scarcity of fuel.

The COO welcomed the idea of harmonizing data, ensuring minimum safety standards, and other ideas presented by the Corps Marshal. He advised that before getting to the implementation stage, other stakeholders like Nigerian Union of Petroleum and Natural Gas/Petroleum Tanker Drivers (NUPENG-PTD), Major Oil Marketers Association of Nigeria (MOMAN), Nigerian Union of Petroleum and Natural Gas (NUPENG), National Association of Road Transport Owners (NARTO) and Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN) be involved from the onset.

He equally commended the Secretary to the Government of the Federation, Mr. Boss Mustapha, for the summit of Haulage Operators in Nigeria which was held on Monday 9, July 2018 at the Conference Hall of the Office of the Secretary General of the Federation.

With a view to engendering participation amongst all stakeholders, the COO advised MOMAN and DAPPMAN to invest in driving schools, which he believes will have positive effect on drivers of articulated vehicles who he believes feel big and therefore, engage their Motor boys with the responsibility of driving their trucks.

States insist NNPC must remit N20bn to Federation Account

The Federation Account Allocation Committee (FAAC) appears to be set for a long drawn battle with the Nigerian National Petroleum Corporation (NNPC) over alleged non-remittance of N20billion to the federation account by the corporation.

Chairman of the Finance Commissioners Forum, Mr. Mamood Yunusa, told reporters last night in Abuja that the NNPC must pay fully what is due to FAAC.

He said: “Based on all provable assumption parameters, the Nigerian National Petroleum Corporation (NNPC) is to remit N60 billion as royalty based on the verbal admission of the Department of Petroleum Resources (DPR).

“And based on the MTEF submitted by NNPC, the Petroleum Profit Tax (PPT) expected was to be 1.46 multiplied by 60 billion amounting to N87.6 billion.

“The sum of PPT and royalty originally expected in the federation account is N147 as against the N127 billion paid by NNPC.”

Yunusa said the national oil company remitted N127 billion as May earnings instead of N147 billion, leaving a shortfall of N20 billion.

He recalled that at last week’s  inconclusive FAAC meeting NNPC “claimed it spent N3.5 billion on product leakages, pipeline vandalism, but the Department of Petroleum Resources (DPR) an agency that is  supposed to keep such record claimed ignorance of the amount.”

Yunusa said FAAC  got more revenue from NNPC when crude oil was N50/barrel but now receives   far less when the commodity is almost N80/barrel.

He said that as “equal stakeholders in the business, NNPC owes it a duty to Nigerians in the spirit of openness and transparency and by the Act that established it to be open and transparent to all stakeholders.

“States, as stakeholders in the federation account, are not expected to take NNPC’s account hook, line and sinker but are allowed by law  to ask questions for clarity.”

Finance Minister Kemi Adeosun  said on Thursday that the controversy over the revenue sharing might   delay payment of workers’ salaries for June.

FAAC members, according to her, felt that some of the costs presented by the NNPC could not be justified, hence their decision to withhold approval for the accounts.

Adeosun said Preseident Muhammadu Buhari and Vice President Yemi Osinbajo had been briefed on the situation and were in support of the finance commissioners not to approve those accounts until further explanations on some of the costs being expected are given.

Reacting last night the NNPC said the issue will be resolved soon by the National Economic Council (NEC) led by Vice President Yemi Osinbajo.

NNPC justifies N147bn June remittance to FACC

The Nigerian National Petroleum Corporation has justified its June remittance of N147bn to the Federation Accounts and Allocation Committee, the News Agency of Nigeria reports.

The Group General Manager, Group Public Affairs of the NNPC, Mr. Ndu Ughamadu, said in a statement that the June remittance was in line with the terms of agreement it reached with governors on the matter.

Ughamadu explained that the agreement NNPC had with the governors was that the corporation would make a monthly remittance of N112bn to FAAC.

“This will be subject to sufficient funds from sales of domestic crude allocation for the corresponding month after meeting cash call obligations on Joint Ventures, deductions on petrol, cost under recovery and pipeline maintenance.“

He said NNPC was able to surpass the terms of agreement with the governors on the monthly remittance for June by N35bn by taking from the fund meant for settling cash call obligations.

The NNPC spokesperson said the corporation “regrets the governors’ additional request of N40bn,” saying, it is unfortunate, given the fact that the corporation is set to exit the cash call phenomenon.

(NAN)

NEITI seeks review of oil production contracts as NNPC loses N547bn in two years

The Nigeria Extractive Industries Transparency Initiative (NEITI) has alerted the nation on the urgent need to review the Deep Offshore and Inland Basin Production Sharing Agreement between Nigeria and oil companies.

This comes against the backdrop of a N547bn loss posted by the NigeriaNational Petroleum Corporation between 2015 and 2017.

NEITI says that the urgency to review the obsolete legislation without further delay is in view of the revenue losses to the federation by the use of the old agreement in computation of revenues to be shared between the government and oil companies.

NEITI recalls that the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 provides for: “ a review of the terms when prices of oil crosses $20 in real term; and a review of the terms 15 years after operation of the agreement and five years subsequently”.

NEITI however observed with concern that Nigeria is yet to adhere to this important provision even now that the price of oil is revolving around $70 per barrel.

In an Occasional Paper released by NEITI which reviewed three years of NNPC’s financial and operations reports, NEITI has noted that crude oil production under the Production Sharing Contracts (PSCs) has since overtaken production under the Joint Venture arrangements.

A careful look shows that Production Sharing Contracts (PSCs) accounted for 44.8% of total oil production while the Joint Ventures (JVs) contributed 31.35%.

A historical analysis of this development by NEITI shows that JV Companies accounted for over 97% of Production in 1998 while PSCs contributed only 0..50%.. This trend continued until 2012 when PSCs accounted for 37.58% while JVs contributed 36.91%. From the publication in 2013, PSCs contributed 39..22% while JVs contributed 36.65%, 2014: PSCs; 40.10% and JVs 32.10%; 2015: PSCs 41.45% and JVs 31.99% while in 2017 the contributions stood at PSCs 44.32% and 30.85% respectively.

The NEITI Occasional Paper further explained that: “Other companies, comprising Nigerian Petroleum Development Company (NPDC), Alternative Financing (AF), and Independent/ Marginal Fields contributed 2.39% to total production in 1998 and by 2017 this had risen to 24.83%. This figure clearly shows the changing structure of oil production in Nigeria, where PSCs (which contributed a mere 0.5% to total production 20 years ago) have dramatically overtaken JVs (which contributed 97% to total production 20 years ago)”.

Between 2015 and 2017 covered by NEITI’s Occasional Paper review of NNPC Report, Nigeria produced 2.126 billion barrels of crude oil and condensate.

A Further review of the NNPC Report shows that: “Production was highest in 2015 with 775.6million barrels produced. Production was lowest in 2016 with 661.1million barrels produced, while production in 2017 was 690 million barrels. 2016 was a difficult year for oil production because production was shut in a number of oil terminals”.

NEITI’s major concern is that now that the PSCs account for about 50% of total oil production and major source of revenues, the delay or failure to review and renew the agreement means that payment of royalty on oil production under PSCs would not be made while computation of taxes would be based on the old rates.

On lifting of crude oil, the NNPC Monthly Financial and Operations Report disclosed “international oil companies (IOCs) lifted more crude oil than the government. Total lifting of crude oil and condensates was 2.135 billion barrels. Of this sum, IOCs and Independents lifted a total of 1.367 billion barrels, while government’s lifting by NNPC was 721.16 million barrels. This means that the operators lifted 64.01% of total crude lifting’s, while government through NNPC lifted 33..76%. When expressed in monetary terms, total government lifting of oil amounted to $35.893 billion while the figure for IOCs and Independents was $68..591 billion”

The NNPC Report further disclosed that refineries received 15.15% of total domestic crude lifting out of which 41.32% was utilized under the Direct Sale Direct Purchase (DSDP) program of NNPC.

On Refineries and domestic crude utilization, the report disclosed that for the 3yrs under review, Nigeria’s refineries recorded an average capacity utilization of 12.26%. A further breakdown shows that Kaduna refinery had the lowest capacity utilization of 9% while Warri and Port Harcourt recorded 9.73% and 15.4% respectively.

One striking feature of the NNPC financial operations report is the disclosure that the Corporation lost the sum of N547billion in its operation between 2015 and 2017. Out of this amount, the NNPC Corporate Headquarters recorded the highest revenue loss to the tune of N336.268billion.

On the contrary, the Report revealed that the Nigeria Gas company made a huge profit of N141.324billion.

While NEITI applauds the Monthly voluntary disclosures by the NNPC, it is important to note that NEITI through its auditors under the EITI framework has not independently verified the information and data from the NNPC reports.

“NEITI has not, except for the year 2015, independently validated the data from NNPC. This will be done in ongoing and future reconciliation reports. What has been done here is a preliminary analysis of the data that NNPC has made available for the three-year period. The figures examined here do not represent the sum total of all revenues from the sector, as other payment streams like royalties and taxes from JVs, signature bonuses, transportation rental fees, NESS fees, penalties and others are not covered by the NNPC financial and operational reports” the NEITI Report concluded.

NEITI however commended the NNPC for the reconciliation of the crude swap under-delivery transaction executed during the crude- for- product- swap. NEITI also urged the Corporation to sustain the new spirit of openness while encouraging the citizens to use the information and data from the NNPC’s disclosures to promote public debate required in implementing the on-going reforms in the extractive sector.

The NEITI Occasional Paper series which reviewed the 3 years of NNPC operations and financial reports is the third in the series.. In the pursuit of EITI global Open Data Policy, NEITI has data set for the three years (2015 -2017) in excel format readily available on its website in support of public interest, analysis and debate. NEITI has also began a process of building a model to calculate the extent of losses as a result of failure to review the PSCs agreement as at and when due.

Only an angel can run NNPC transparently, says Sanusi

Muhammadu Sanusi, emir of Kano, says only angels can run the Nigerian National Petroleum Corporation (NNPC) in a transparent manner.

Speaking with PUNCH in commemoration of his fourth year on the throne, Sanusi said payment for subsidy should be scrapped.

The monarch said money paid for subsidy could make changes in the power, agriculture, education and health sectors.

“It is not about the persons in the NNPC but about whether anyone can make a system operate honestly when there are such huge arbitrage opportunities. We need to import angels for that to happen,” he said.

“So, for me these are the issues. It is an economist’s nightmare. Sadly the very reason this subsidy should be scrapped is probably the reason it never will be. For those who profiteer from it, it is just too good to be true.

“The petroleum minister has disclosed that this government has spent N1.4trn already on fuel subsidy and for most of this period, oil price was between low and moderate.

“You can imagine how much we will pay as oil price goes up. Imagine if that money had gone into the power sector or agriculture and education and health. So for me this government inherited a bad situation but if it continues with these programmes, the next government will also inherit a bad situation which is a shame.”

The emir said government’s attitude could lead the country into bankruptcy.

“What we have is not a subsidy. The federal government guarantees Nigerians a maximum price per litre for fuel. And this is a product we import. And its price is based on unpredictable underlying commodity prices,” Sanusi said

“So what the federal government is saying is look it does not matter what the price of oil is internationally, what the exchange rate is, what interest rate is, what shipping clearing and demurrage is, I am so rich that I will ensure you get fuel at this maximum price and I will pay the difference.

“Meanwhile, the balance sheet of the federal government is not hedged in anyway against these risks. As a professional risk manager, I have never seen a policy that is so guaranteed to bankrupt anyone as this policy.”

PIB: NNPC calls for simplified fiscal terms

The Nigerian National Petroleum Corporation (NNPC) has urged the Senate to consider simplifying the fiscal provisions in the Petroleum Industry Fiscal Bill (PIFB) to ensure easy implementation of the law.

Group Managing Director of the corporation, Dr. Maikanti Baru, made this submission during the Senate Joint Committee Public Hearing on the Petroleum Industry Fiscal Bill (PIFB), Petroleum Host and Impacted Communities Development Bill (PHICDB) and Petroleum Industry Administration Bill (PIAB) at the National Assembly on Monday.

Represented by the Chief Operating Officer (COO), Gas and Power, Engr. Saidu Mohammed, the GMD alsoadvocated for the inclusion of clauses to make it easy for the law to be reviewed in response to economic, technical and other considerations.

The corporation advocated for incentivizing oil and gas operations to attract investment into the country.

He said there was need to leave out all regulatory issues in the Bill to ensure progressivity and empower the regulatory commission to effectively regulate the industry.

He said NNPC was fully in support of the Petroleum Industry Reform Bill which has now been broken intoregulatory, operational and administrative segments for easy passage.

Going down the memory lane, the GMD said the original Petroleum Industry Bill was borne out of the Federal Government’s desire to put in place a robust and desirable legislation to engender transparency, accountability and fairness in the nation’s Oil and Gas Industry.

He noted that although the process of getting the Bill passed had been very challenging, the National Assembly had taken the most practical step to advance its passage by breaking it into phases.

“It is laudable to note that the Governance Bill has been passed by the Legislature while the Fiscal Bill, Administration Bill, and the Host and Impacted Communities Development Bill are going through legislative processes.

“NNPC appreciates the opportunity to review these bills and we have employed our deep expertise and experiences in the Industry to assess their provisions and will gladly make contributions that will not only enforce the desires of the National Assembly but will ensure that the reform bills when passed into law meet the expectations of Nigerians and investors alike,” Dr. Baru stated.

Earlier, the Lead Senate Committee Chairman, Senator Kabiru Marafa, said the public hearing on the three (3) bills was the first time that the National Assembly was sponsoring the bills in bits and pieces for easy consideration and speedy passage of regulations that would lead to the reform of the Nigerian Oil and Gas Industry.

It would be recalled that the Federal Government, some years ago, sponsored the Petroleum Industry Bill as an executive bill to establish the legal and regulatory framework, institutions and regulatory authorities for the Nigerian petroleum Industry.

PIB: NNPC recommends split of petroleum licences

The Nigerian National Petroleum Corporation (NNPC) has recommended the splitting of petroleum licences into two components for prospecting and production phases under the draft Petroleum Industry Administrative legislation currently before the National Assembly.

In a presentation at the Public Hearing organized by the House of Representatives Committee on the Petroleum Industry Administrative Bill (PIAB), Petroleum Industry Fiscal Bill (PIFB) and the Petroleum Industry Host Community Bill (PIHCB), Group Managing Director of the corporation, Dr. Maikanti Baru, said the proposed split would prevent a situation where operators would sit perpetually on oil acreages.

The NNPC’s recommendation under the PIAB seeks a break up of Petroleum Licence into Petroleum Exploration Licence (PEL) – to prospect for petroleum, while the second component to be known as Petroleum Lease (PL), should be created to cover the production phase to search for, win, work, carry way and dispose of petroleum.

The corporation also pushed for a re-think of the duration of licences as proposed in the PIAB which stipulates initial duration of 25 years for onshore and shallow water petroleum licence and 30 years for deep water and frontier acreages.

NNPC, however, proposed five years prospecting licence for onshore and shallow fields and a duration of 10 years for deep offshore and frontier basins.

It recommended 20 years production lease for onshore and shallow fields as well as deep offshore and frontier basins. The corporation noted that only the production lease period should be renewed for a period not exceeding 20 years.

On the PIFB version of the proposed oil industry law, NNPC recommended a three-stage licences regime consisting of: Exploration Licence (EL) – to explore for petroleum on a non-exclusive basis; Petroleum Exploration Licence (PEL) – to prospect for petroleum on exclusive basis; and Petroleum Lease (PL) – to search for, win, work, carry away and dispose of petroleum.

Beyond the clause by clause recommendations, the corporation also advocated for the simplification of the fiscal system for ease of implementation and to ensure progressivity.

It called for expunging all regulatory issues out of the draft legislation to empower the Commission to regulate the industry effectively.

NNPC highlighted the need to introduce and provide clauses that will ensure easy review of provisions of the bill in response to economic, technical and other considerations, while disallowing legislation on issues bordering on contracts.

Chairman of the House Committee, Honorable Alhassan Ado Doguwa, thanked the NNPC for its contribution, noting that the committee would sift through all the submissions by stakeholders before taken informed decisions on the issues.

Andrew Yakubu’s $9.7m stands forfeited to FG – Appeal Court

The Kaduna Division of the Court of Appeal today affirmed the decision of the Federal High Court Kano which ordered the interim forfeiture of the money found in a house in Kaduna belonging to former Group Managing Director of NNPC, Engineer Andrew Yakubu.

On 3 February, 2017, operatives of the Economic and Financial Crimes Commission stormed a house allegedly belonging to the former NNPC boss and uncovered the sum $9,772,800 (Nine Million, Seven Hundred and Seventy Two Thousand, Eight Hundred Dollars ) and another £74,000 (Seventy Four Thousand Pounds Sterling) stashed in a fireproof safe.

The money according to Yakubu, were gifts from well-wishers.

However, the Commission suspected that the money was a proceed of crime and that prompted the EFCC to secure an interim forfeiture from the Federal High Court on the money.

Yakubu through his counsel Ahmed Raji SAN approached the Federal High Court in Kano asking the court to revoke the order.

The Federal High Court Kano presided over by Justice Z.B Abubakar on  10th May 2017 dismissed the application of Yakubu and affirmed the order of interim forfeiture it granted on the 13th February 2017.

Yakubu being dissatisfied with the decision of the Federal High Court approached the court of appeal in a  bid to reverse the interim forfeiture order and get his money back.

The appeal was filed on the 22nd of May, 2017 while the Commission filed its response which was subsequently adopted on the 29th of January 2018 and matter was then adjourned to today for judgment.

The appeal was brought on grounds of jurisdiction, misrepresentation of fact by EFCC that the money was suspected to be proceeds of illegal activities.

He further argued that Section  29 of the EFCC Establishment Act is null and void while at the same time submitted that, Section 28 of the EFCC Act offends the provision of Section 44 (2)(k). In Section 43 of the EFCC Establishment Act.

The learned silk argued that the Attorney General of the Federation did not make regulations and guidelines consequently, all forfeiture made shall be null and void.

However, the respondents in their reply contended that the ruling of the lower court validating its order was not perverse and that sections 28 and 29 of EFCC Act are valid and operational notwithstanding the alleged failure of the AGF to make regulations for their operations.

In a judgment delivered by Justice Obietonbara  Daniel  Kalio who headed the panel of the three judges, the appellate court resolved all the issues in favour of EFCC.

Senate orders NNPC to refund N216bn illegal fuel subsidy payments

The Senate has declared the current payments by the Nigerian National Petroleum Corporation for subsidy of premium motor spirit (petrol) illegal.

It asked the corporation to refund the sum of N216bn spent for the purpose in 2017 under the guise of “operational costs” into the Federal Government’s coffers.

The legislature also asked the corporation to stop further payment of the subsidy, while asking it to pay the arrears owed fuel marketers.

The legislature also resolved to legalise the payment by including it in the 2018 budget.

They also called for sanctioning of the officials involved in the illegal payments.

The Committee on Public Accounts made the recommendations in its report on the investigation into the illegal subsidy payments, which was adopted by the Senate at the plenary on Thursday.