NNPCL’s Financial Controversies: Unremitted Billions and Crude Swaps – In a recent reveal, the Nigerian National Petroleum Company Limited (NNPCL) has come under scrutiny for its significant financial discrepancies. The company failed to remit an astonishing $6.923 billion and swapped crude worth about $7.108 billion under its Direct Sale Direct Purchase (DSDP) scheme in the year 2021. This comes as a surprise, especially considering the borrowing spree of the Muhammadu Buhari administration and the declining revenues from the oil sector.
Outstanding Liabilities to Government Agencies
Further adding to the financial cloud over NNPCL, the company has significant outstanding taxes and federation revenue payables. As of July 31, 2023, taxes payable to the Federal Inland Revenue Service amounted to $13.591 million. On the other hand, as of December 31, 2022, the outstanding federation revenue payable to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) stood at a whopping $8.251 billion. More concerning is that NNPCL and its exploration and production subsidiary alone account for over 70% of these liabilities.
Transparency Report Raises Eyebrows
The alarming details came to light in the 2021 Oil & Gas Industry Report by the Nigerian Extractive Industry Transparency Initiative (NEITI). The report, which scrutinized the activities of over 69 companies, revealed that 47 other oil firms also defaulted, failing to remit $1.342 billion to the government. Of these companies, twenty-two met the criteria for reconciliation, with their payments amounting to a staggering 95.65% of the total payments by all companies, which totaled $11,332,792.48.
NNPCL’s Deductions and Outstanding Liabilities
The report shed light on NNPCL’s deductions from the Domestic Crude Account in 2021, which amounted to N751.11 billion ($1.94 billion). This amount was not due for payment as of December 2021. However, there was an outstanding liability of N334.87 billion ($871.15 million) as of that same date.
NNPCL’s financial intricacies don’t end there. A significant sum of N1.20 trillion ($3.15 billion) was deducted against domestic sales proceeds as subsidy. Additionally, crude and product losses amounted to N16.20 billion. The expenses for pipeline repairs and maintenance and strategic stock holding were reported as N22.05 billion and N6.15 billion, respectively.
NEITI’s Call to Action
In light of these revelations, NEITI has called for a comprehensive investigation into the financial dealings of NNPCL and the Nigerian Petroleum Development Company. The transparency organization urges other companies to settle their outstanding liabilities promptly. NEITI also emphasized that government agencies must ramp up their efforts to recover these debts.
A final point of contention raised by NEITI revolves around the provision in Section 64 (m) of the Petroleum Industry Act (PIA). This provision designates NNPCL as the supplier of last resort and mandates that all associated costs should be borne by the federation. NEITI warns that such a clause is open to misinterpretation, much like the old practice of deducting from the revenue source.
The revelations about NNPCL’s financial dealings underscore the need for greater transparency and accountability in Nigeria’s oil and gas sector. With billions at stake, it’s crucial for stakeholders to ensure that funds are appropriately managed and allocated.