How NNPC failed to remit $4.2bn to federation account under Buhari

A report by the Natural Resource Governance Institute, NRGI, has revealed that the Nigerian National Petroleum Corporation, NNPC, failed to remit $4.2bn in oil revenues into the federation account under the President Muhammadu Buhari’s administration.

The report released yesterday disclosed that in the second half of 2015, NNPC’s sales of export crude, domestic crude and oil from its subsidiary- the Nigeria Petroleum Development Company, NPDC, totaled $6.3 billion.

According to the report titled, “NNPC Still Holds Blank Check” and authored by Aaron Sayne and Alexandra Gillies, only $2.1 billion of the total $6.3bn entered the Federation Account while $4.2 billion was not remitted, representing 66 percent of proceeds from crude oil sales for the six months.

The report said, “This was 14 percent more than the corporation’s withholdings under Goodluck Jonathan in the first half of 2015, and 12 percent higher than the share withheld in 2013 and 2014.”

It stated that some of NNPC’s withholdings cover known costs, notably its share of joint venture operating expenses.

“The corporation has not fully explained others; especially revenues retained from domestic crude and NPDC sales,” it said.

NRGI, however, raised the alarm over NNPC’s spending, especially at a time when public finances are stretched and the federal government is looking to fund more of its budget with debt.

The report said the reform instituted by the current administration in the oil sector is yet to address how NNPC retains revenues.

On the sales of the country’s oil to foreign buyers and domestic crude allocation, the report said, “This simple two-part system has broken down, however. As NNPC’s financial debts and operational problems have deepened, it has introduced more types of ad hoc oil sale transactions to work around these challenges.”

The report revealed that the $4.2 billion of NNPC oil sales not remitted to the federation account was spent in an unknown manner instead of entering the government’s budget.

It said, “In one especially questionable case, we found evidence that NNPC has retained all earnings from the offshore Oil Mining Lease (OML) 119, a field owned wholly by NPDC that produces around 30,000 barrels per day of Okono grade crude.”

NGRI urged President Muhammadu Buhari to establish a clear, legally enforceable rule governing which revenues NNPC can keep and how they can be spent, adding that the government should move to curb the corporation’s discretionary, unaccountable use of much-needed public funds.

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