Oil
NNPC blasts NEITI report as ‘misleading’
…..Claims subsidy payment to self followed due process
ABUJA – The Nigerian National Petroleum Corporation, NNPC, on Sunday night discredited aspects of the Nigerian Extractive Industries Transparency Initiative (NEITI) oil and gas audit report which accused it of widespread corruption and misapplication of oil revenue.
It noted that NEITI without taking cognizance of the extant laws and regulations, guidelines and terms of relevant contracts in NNPC’s operations has continued to portray the Corporation to the public in bad light.
In a point-by-point rebuttal, the NNPC said the watchdog agency acted in bad faith, and did not give the Corporation the chance to explain some of the issues before going ahead to release a half-baked report with the sole intent to mislead the public.
The Corporation in a release made available to our correspondent said the NEITI draft report, covering the period of 2009-2011, was made available to NNPC on 17 January, 2013 and the Corporation was in the process of reviewing same for reconciliation when it was hurriedly made public and released to the press.
“Standard audit procedure requires close-out between the auditor and the auditee before it is finalized and put in the public domain.
“The report contains fundamental inaccuracies which are misleading and constitutes misinformation to the generality of the public. Given that the NEITI audit report is expected to be factual in all respects, it has become necessary to make the following observations and clarifications,” the NNPC stated. .
On its purported debt to the Federation, the NNPC said the sum of N1.3trn as indicated by the NEITI report was incorrect and misleading
It said with regards to the un-reconciled debt of N928bn, NNPC has 90 days moratorium for the payment of domestic crude. “This implies that at every year end, the Corporation will have outstanding 3 months balances not yet due for payment.
“However, the debt portion of the N928bn had been paid in the first quarter of 2012 on the relevant due dates. This can be verified with the relevant authorities. One would have expected NEITI to take cognizance of this process in the report to avoid misrepresenting NNPC’s debt profile,” the statement noted.
It added that the N377bn purported debt was a carry-over of 2004-2005 when NNPC was directed to buy crude oil for domestic consumption at international market price while the sale of petroleum products was at subsidized prices without appropriate instrument to recover the shortfall.
According to the Corporation, “NEITI’s report ought to have identified the anomaly and vindicated NNPC of the N377bn imposed debt repayment.”
On the subsidy payment, in which the report questioned both the process and NNPC’s right to re-imbursement under the subsidy scheme, the Corporation insisted that everything was carried out transparently in the spirit of due process.
It stated, “All our subsidy claims are duly verified, approved and authorized for payment by relevant agencies. However subsidy claims due to NNPC are not ‘cash payments’ as amounts duly approved are backed out from the Gross Domestic Oil revenue due to the Federation Account in any given month. This is the extant process for this transaction.”
It added that, “On the total amount of N1.4trn deducted, the report deliberately ignored and or omitted the factors responsible for the increasing amounts paid especially the price of crude oil which accounts for 82% of the price build-up for petroleum products.
“Other factors include increase in volumes consumed, variations in exchange rates and increase in freight rates especially in 2011.
“It should be noted that as a fall out of the subsidy crisis of 2012, other players that constitute over 50% of the market share in the downstream refused to import Petroleum Products from their supply obligation. NNPC being the supplier of last resort under the NNPC Act continued to supply the nation at huge cost while still maintaining the strategic reserve obligation. NNPC should be commended in this regard.”
Domestic Crude – Exchange Rate Differential
The report asserted that the Corporation underpaid the Federation by N98.30bn between 2009-2011 as a result of the application of wrong exchange rate in monetizing the value of crude lifted.
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.
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.
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.
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