NEITI indicts NNPC over cash calls deduction to JV partners before remittance to FAAC
A total of N5.33trillion was paid to Joint Venture (JV) Partners of the Nigerian National Petroleum Corporation (NNPC) as cash call by the Corporation between 2017 and 2019, before remitting balance of N3.49trn to the Federation Account Allocation Committee (FAAC). This was revealed in a recent audit by the Nigeria Extractive Industries Transparency Initiative, (NEITI) released on Thursday.
NEITI claimed NNPC, during the period under review , failed to comply with due process by negating the principle of Federation Account. The principle it would be recalled underscores the need for prudent, good governance, including transparent and accountable petroleum revenue management, which NEITI claimed NNPC has continued to flout.
EnergyDay in a previous publication, reported that the Corporation paid $3.68billion out of the total sum of $4.689bn cash call debt owed to five of its JV partners, including Mobil Producing Nigeria, Chevron Nigeria Limited, Shell Petroleum Development Company (SPDC), Total Exploration and Production Nigeria (TEPNG) and Nigeria Agip Oil Company (NAOC), as at April 6, 2022.
NEITI in its Fiscal Allocation and Statutory Disbursement report, stated that the NNPC, out of the N8.82trn it generated within the period in review, paid its JV partners a sum of N5.33trn as cash call, remitting only N3.49trn to the Federation Account.
The audit showed that NNPC’s total revenue for the 3-year period was N8.82tn: the Company generated N4.55trn from domestic crude sales, and N4.27trn from crude oil export receipts.
The agency, in the report which gave a breakdown of total extractive industry remittances to the Federation Account for 3 years, explained that the NNPC failed to comply with the rules which guide the disbursement of cash calls to JV partners.
It accused the oil Company of deducting cash calls for its partners before remitting to the Federation Account – an act which, according to the agency, “negates the principle of Federation Account.”
“During the period under consideration, a total of N8.82trn was generated. However, only N3.49trn (39.55%) was remitted to the Federation Account due to deductions at source by NNPC for JV cash calls.
“The deductions at source by the NNPC negate the principle of Federation Account,” NEITI’s report stated.
EnergyDay’s check further revealed that, as at December 31, 2021, the NNPC was still owing Shell, Total and Agip Oil about $1.01bn worth of cash call. It has, however, fully paid Mobil Producing Nigeria and Chevron their cash call outstanding.