Oil
$20bn not missing, NNPC, NPDC insist
ABUJA – Nigerian National Petroleum Corporation, NNPC, weekend, denied claims that it failed to remit $20 billion crude oil revenue to the Federation Account, adding that it submitted all the documents on domestic crude and subsidy claims to the Federal Account and Allocation Committee, FAAC.
Also, the Nigerian Petroleum Development Corporation, NPDC, a subsidiary of the NNPC, disclosed that the allegation that $20 billion was not remitted to the Federation Account is false, blaming the loss of revenue on inadequate funding of oil exploration activities by the Federal Government.
Mr. Iyowuna Briggs, Managing Director, NPDC, who stated this in Benin, noted that the Federal Government’s inability to fund oil exploration, over the years, is depriving the country of billions of dollars in oil revenue.
He maintained that the Central Bank of Nigeria, CBN, lacks understanding of the workings of the oil sector, saying that majority of the funds that should have accrued to the federal government from the sale of crude oil was paid to its technical partners who provided the financing for its operations.
According to him, the growth the country is seeking in the petroleum sector is no longer coming, adding that Nigeria’s goal of producing about four million barrels of crude daily would have been attained if the issue of funding and security had been addressed.
He stated that the Federal Government, by not funding oil operations, is bringing third parties to lay claims to crude oil revenue, saying that proceeds from the sale is gotten, a substantial part of the proceeds is used to pay back the person who provided the funding for the operation.
He said, “What does this mean, it means if I produce one million barrels per day, five years ago, at $100 per barrel, government gets certain revenue. Five years after, government is no longer funding the way it should, if I produce the same one million barrels per day at the same price, guess what, government gets less.
“By not funding, you are bringing a third party to lay a claim. By funding, all of that one million barrels, when they pay, it goes to government. By not funding, when they pay, part of it is the cost to pay back the person who provided the funding, part of it is the compensation to pay back the person who has funded. By not funding, you don’t expect to get the same amount.”
Also speaking in Abuja, Dr. Abiye Membere, Group Executive Director, Exploration and Production, NNPC, said the issue raised against it by Mallam Sanusi Lamido, Governor, CBN, would be vividly tackled at the next public hearing of the Senate Committee on Finance.
Membere vowed that the NNPC would inundate the Senate Committee with deluge of documents detailing all transactions, adding that, the NNPC works with the Petroleum Products Pricing Regulatory Agency, PPPRA, and other agencies of government, which scrutinize “all our documents.”
He declared that the missing money was never in the hands of the NNPC, adding, “this subsidy is not the money that the NNPC collected from government.”
He said, “For example, the subsidy on kerosene, it is not that government will pay the NNPC the remaining N100 on the product directly. What happens is that the NNPC sells the product at N50 and then pays that into the Federation Account and then expects government to balance it up in the Federation Account with the subsidy claims of the NNPC.
“Nigerians must understand that NNPC has never collected any money from government as subsidy claim. The NNPC simply paid the N50 we collected at pump into the Federation Account. Now, people turn around and say the NNPC owes government.
“It is simply because the Federation Account is not balance and they think that because the NNPC has defaulted simply because we have not paid the required figure forgetting that the balance of what we ought to pay is with the Federal Government.
“The Ministry of Finance has not denied this position. The CBN must know that that the NNPC cannot pay what it does not have.
“The NNPC is not the sole agency of government that determines how much subsidy claim should be. We work with the Petroleum Products Pricing Regulatory Agency, PPPRA, and other agencies of government, which scrutinize all our documents.
“There is a difference in government-to-government transaction as against private sector government transactions. The private sector does not have anything to do with the Federation Account, which is why they are paid subsidy claims directly into their accounts.
“What do people want us to do in the NNPC? They want us to first collect the money from the ministry and then pay back into the Federation Account? Nigerians must understand how these things work.” he said.
Membere added that the NNPC submit document on domestic crude and subsidy claims to the Federal Account and Allocation Committee, FAAC. It is therefore done in a net-in net-out basis. All we do is to submit the subsidy claim and the crude we have sold and handed it over to government.
“Neither NPDC nor NNPC has any power to stop any oil company from paying tax, royalties, nor any tax for that matter. However, a company that is carrying out operation is the one that is required to pay royalty and tax and not the financiers. Contrary to the erroneous belief in some quarters, Septa Energy Nigeria Limited and Atlantic Energy do not carry out any operation.
“It is NPDC that carries out operation and pay the necessary fees to government. These companies provided alternate funding for NPDC to carry out operation. The $2 billion that is the third party funds that was paid into the CBN account that the Governor said he does not recognize is the royalty and Petroleum Profit Tax, PPT that the NNPC paid into the federation account. The NNPC paid its royalties and PPT out of the profit that arose from the operation of the NPDC.
“The NNPC cannot pay directly into the Federation Account because the Federal Government is not the one funding the operation. In this case, the NPDC went to borrow money from third party just as Shell does not pay its money into the Federation Account but pays into its parent company, which in turn pays government tax from its profits.”
Dr. Membere, who noted that “not that the NNPC has never been paid subsidy claim on kerosene before, recalled, “in fact, under Olusegun Aganga as Minister of Finance, subsidy claims between 2009 and 2011 was paid to the NNPC. So, this payment has removed any doubt about the fact that the NNPC was not authorized to carry on with subsidy on kerosene.”
– VANGUARD
Oil
FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
Business
Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
Oil
ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.