NNPC loses N547bn in three years
The group monetary loss of the Nigerian National Petroleum Corporation for 2015, 2016 and 2017 is N547bn, the latest review of the oil firm’s financial and operations reports in the period has revealed.
According to the review, which was done by the Nigeria Extractive Industries Transparency Initiative and released in Abuja on Sunday, the refineries posted a cumulative performance of 12.26 per cent during the three-year period.
On refineries and domestic crude utilisation, NEITI stated that for the three years under review, the facilities recorded an average capacity utilisation of 12.26 per cent.
A further breakdown showed that the Kaduna refinery had the lowest capacity utilisation of nine per cent, while Warri and Port Harcourt recorded 9.73 per cent and 15.4 per cent, respectively.
NEITI stated that one striking feature of the NNPC financial operations report was the disclosure that the corporation lost the sum of N547bn in its operation for the three years.
“Out of this amount, the NNPC corporate headquarters recorded the highest revenue loss to the tune of N336.268bn,” the organisation stated.
It, however, noted that the Nigeria Gas Company made a profit of N141.324bn during the period under review.
NEITI applauded the monthly voluntary disclosures by the NNPC, but stressed that it was important to note that the transparency monitoring agency through its auditors under the Extractive Industries Transparency Initiative framework had not independently verified the information and data from the national oil firm’s reports.
The agency stated, “NEITI has not, except for the year 2015, independently validated the data from the NNPC. This will be done in ongoing and future reconciliation reports. What has been done here is a preliminary analysis of the data that the NNPC has made available for the three-year period.
“The figures examined here do not represent the sum total of all revenues from the sector, as other payment streams like royalties and taxes from Joint Venture signature bonuses, transportation rental fees, penalties and others are not covered by the NNPC financial and operational reports.”
NEITI also called for the urgent review of the Deep Offshore and Inland Basin Production Sharing Agreement between Nigeria and the oil companies.
It said the urgency to review the obsolete legislation without further delay was in view of the revenue losses to the federation by the use of the old agreement in the computation of revenues to be shared between the government and the oil firms.
NEITI recalled that the Deep Offshore and Inland Basin Production Sharing Contracts Act of 1993 provided for “a review of the terms when prices of oil crosses $20 in real term; and a review of the terms 15 years after operation of the agreement and five years subsequently.”
The agency, however, observed with concern that Nigeria had yet to adhere to this important provision even now that the price of oil was revolving around $70 per barrel.
In its latest Occasional Paper, which reviewed three years of the NNPC’s financial and operations reports, NEITI noted that crude oil production under the PSCs had since overtaken production under the JV arrangements.
The agency also stated that for the three-year period of 2015 to 2017, the country produced 2.126 billion barrels of crude oil and condensate.
It added that production was highest in 2015 with 775.6 million barrels and was lowest in 2016 with 661.1 million barrels, while production in 2017 was 690 million barrels.
“The year 2016 was a difficult year for oil production, because production was shut-in in a number of oil terminals,” NEITI stated.
The agency said its main concern was that now that the PSCs accounted for about 50 per cent of total oil production and major source of revenue, the delay or failure to review and renew the agreement meant that payment of royalty on oil production under the PSCs would not be made, while computation of taxes would be based on the old rates.
On lifting of crude oil, the NNPC monthly financial and operations report noted that “international oil companies lifted more crude oil than the government. Total lifting of crude oil and condensates was 2.135 billion barrels. Of this sum, the IOCs and independents lifted a total of 1.367 billion barrels, while the government’s lifting by the NNPC was 721.16 million barrels.”
NEITI noted that this implied that the operators lifted 64.01 per cent of total crude lifting, while the government, through the NNPC, lifted 33.76 per cent. When expressed in monetary terms, the total government lifting of oil amounted to $35.893bn, while the figure for the IOCs and independents was $68.591bn.