NNPC provides insight into alleged N3.8trn under-remittance from crude oil sales


by Akpobor Jirue

 THE Nigerian National Petroleum Corporation, NNPC, has explained issues around the alleged under-remittance of N3.8 trillion from crude oil sales to the Federation Account between January and December 2015.

The Senate had on Wednesday faulted the NNPC over alleged under-remittance of N3.8 trillion revenue from domestic crude oil sales to the Federation Account during the period in question, and urged it to desist from further deduction at source, as the practice contravenes Section 162(1) of the 1999 Constitution (as amended).

It also mandated the Federation Account’s Allocation Committee, FAAC or any other approving authority to urgently approve an agreed percentage which should be allocated to NNPC monthly, as the operational cost to prevent its operations from being adversely affected .
Senate’s decision was sequel to the adoption of 59 recommendations contained in the report of its Committee on Public Accounts on the Annual Report of the Auditor-General of the Federation on the Accounts of the Federation for the year ended Dec. 31, 2015.

But in a document to the Federal Ministry of Finance, Budget and National Planning, sighted by this medium, the Corporation explained that the allegation was resolved by a Forensic Audit carried out by the Ministry of Finance in 2015 which showed a net indebtedness in favour of NNPC.
It also stated that the amount allegedly under-remitted was the applicable subsidy and unrealised revenue from petroleum products sales and other operational costs for the period.
The Corporation which gave a breakdown of the N3.8 trillion to include: the PPPRA Certified Subsidy (2012-November 2015) N2,439,439,859,459,982.00, Validated & Approved NNPC Claims (2004 – 2009) N797,710,684,354.00, Crude Oil and Products Losses (2012-November 2015) N245,184,597,565.65, and Pipeline Maintenance Cost (2012-November 2015) N409,985,574,539.86, attributed the misunderstanding to the non-incorporation of the claims into the Accountant-General of the Federation’s report even though they had been validated by Forensic Auditors and the Auditor-General of the Federation.
 It further stated: “Subsidies are operational costs as set out in the NNPC Act Section 7(d) which does not contradict the 1999 Constitution Section 80 (1) and Section 162 (1).

Sources at the NNPC disclosed that the management is well disposed to the proposal by the Senate to approve a certain percentage of revenues for it as cost of collection, as is the case with the Nigeria Customs Service, NCS, Federal Inland Revenue Service, FIRS and the Department of Petroleum Resources, DPR in readiness for full deregulation.

Nevertheless, in April 2021, NNPC, had in a statement by its Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, disclosed that despite challenges, it would continue to remit funds to the Federation Account.
NNPC had in a letter to the Accountant General of the Federation warned that it would not make any remittance to the Federation Account Allocation Committee in the month of May after spending N111.966 billion to subsidize petrol consumption in March.
However, Obateru had clarified that, “the revenue projection contained in the letter to the Accountant-General of the Federation being cited in the media pertains only to the Federation revenue stream being managed by the Corporation and not a reflection of the overall financial performance of the Corporation.”
NNPC maintained that “it is conscious of its role and was doing everything possible to shore up revenues and support the federation at all times.
 “The shortfall will be remedied by the Corporation as it relates only to the Federation revenue stream being managed by the NNPC and does not reflect the overall financial performance of the Corporation. The NNPC remains in positive financial trajectory for the period in question,” Obateru stated.
He said NNPC would continue to pursue and observe “its cost optimisation process with a view to maximizing remittances to the Federation Account.”