What became of the $16.8 billion Nigerian Liquified Natural Gas
(NLNG) dividends in the custody of the Nigerian National Petroleum
Corporation (NNPC)?
That is the big question the Nigerian Extractive Industries
Transparency Initiative (NEITI) wants the NNPC to answer
immediately.
The transparency initiative in its 2015 Oil and Gas Industry
Audit Report released yesterday in Abuja said the NNPC confirmed
receipt of the payments but has no evidence of remittance into the
Federation Account.
The watchdog organisation also said Nigeria’s oil and gas
revenues plunged from $54.5 billion in 2014 to $24.8 billion in
2015, while oil production plummeted from 798 million barrels in
2014 to 776 million barrels in 2015.
The report similarly shows that Nigeria recorded a net loss of
over $723 million through the Offshore Processing Arrangement (OPA)
adopted by the Federal Government in 2015 to supply refined
petroleum products in the country.
The arrangement, which was introduced by the NNPC during the
Jonathan administration, involved the allocation of crude oil to
select indigenous and foreign oil traders under agreed swap
contract terms in exchange for refined products for local
consumption.
It said: “In 2015, the Nigeria Liquefied Natural Gas Limited
(NLNG) paid $1.07 billion as dividend, interest and loan repayment
to NNPC, broken down as follows: $1.04 billion as dividends, $3.1
million as interests, and $29.1 million as loan repayment.
“This brings to a total of $16.8 billion NLNG’s payments to NNPC
for the period 2000 to 2015. The payments are for the loan grant to
NLNG and for the 49 per cent stake that the government holds in the
company.”
“While NNPC has always confirmed receipt of the payments, it has
never shown evidence of remittance to either the Federal Government
or to the Federation Account.
“NNPC maintains that it has authorization from the presidency to
hold the dividends in trust and utilize as directed by the
government.
”NEITI recommends that NNPC should provide documentary evidence
of the authorization to hold the money in trust and to give account
of the expenditure from and the status of the $16.8 billion
collected in 16 years.”
It put the total outstanding revenue from the sector as at 2015
at $3.7 billion and N80 billion, while losses incurred stood at
$2.2 billion and N60 billion, and un-reconciled revenues put at
N317 billion.
The organisation added: “Beyond providing a snapshot of what
transpired in 2015, this report reveals money to be recovered,
leakages to be blocked and urgent reforms to be undertaken.
”The most critical take-away is the need to expedite, expand and
sustain reforms in this still critical sector of national
life.”
The report shows that Nigeria suffered a 54.6% decline in oil
revenues but only a slight 2.7% fall in oil production.
This development was attributed to “drastic reduction in the
unit price of crude oil in the global market.”
The yearly average price of crude oil per barrel tumbled from
$101.91 in 2014 to $52.16 in 2015.
Oil and gas revenues have been declining since 2011 when total
revenues peaked at $68.4bn.
A five-year analysis in the report reveals that revenues
declined by 8%, 7.7% and 6% in 2012, 2013 and 2014 respectively.
However, the decline leapt to double digits in 2015 when total
revenue dwindled by more than half.
Total oil production also dropped but not by much: from 798
million barrels in 2014 to 776 million barrels in 2015.
The report attributed the decline to oil theft and
militancy.
However, total gas production went up by 20.23% from 2, 593,090
million standard cubic feet per day (mmscf) in 2014 to 3, 250, 667
mmscf in 2015. The jump by a fifth was on account of the combined
effect of increase in gas utilization and decline in gas
flaring.
A total of 780 million barrels of oil was lifted in 2015, about
four million barrels higher than the quantity produced with the
balance drawn from previous years.
Of the 780 million barrels, the companies lifted 467 million
barrels while NNPC lifted 313 million barrels. NNPC’s liftings were
split almost evenly between Federation Export and Domestic Crude
Allocation, which accounted for 159.4 million barrels and 153.9
million barrels respectively.
However, only 8.7 million barrels or 5.6% of crude oil allocated
for domestic consumption went to the refineries in 2015 on account
of the dysfunctional state of the refineries.
It noted that the volume of crude oil declared lost to theft by
13 operators in 2015 was 27.1 million barrels.
Continuing, the report said: “Though this amounted to only 3.5%
of total oil production, the loss was valued at $1.4 billion. PPMC
also declared loss of crude worth $25 million, bringing the total
declared losses to $1.45 billion.
This brings the established loss to theft from 2011 to 2015 to a
total of 113.1 million barrels valued at $11billion. Also, PPMC
declared losing products worth N56.4 billion, broken down as
follows: N52 billion for losses on petrol, N3.8 billion for losses
on diesel, and N123 million for losses on kerosene.
“Deferred production on account of sabotage or repairs came to
57 million barrels. NEITI reiterates its call for effective and
adequate metering infrastructure and enhanced security of our oil
and gas assets.”
NEITI recommended close monitoring of the Direct Sale Direct
Purchase (DSDP) arrangement that replaced the OPA to ensure the
country is not being shortchanged. It also called for government to
recover the $498m OPA liabilities from the affected companies.
”From the report, NPDC (the upstream arm of NNPC) reduced its
legacy liabilities from $1.45 billion and N80 billion in 2014 to
$757 million and N68 billion in 2015. However, NPDC incurred
liabilities of $822 million and N9.6 billion in 2015, bringing its
total liabilities at the end of 2015 to $1.5 billion and N78
billion,” it said.
What became of the $16.8 billion Nigerian Liquified Natural Gas
(NLNG) dividends in the custody of the Nigerian National Petroleum
Corporation (NNPC)?
That is the big question the Nigerian Extractive Industries
Transparency Initiative (NEITI) wants the NNPC to answer
immediately.
The transparency initiative in its 2015 Oil and Gas Industry
Audit Report released yesterday in Abuja said the NNPC confirmed
receipt of the payments but has no evidence of remittance into the
Federation Account.
The watchdog organisation also said Nigeria’s oil and gas
revenues plunged from $54.5 billion in 2014 to $24.8 billion in
2015, while oil production plummeted from 798 million barrels in
2014 to 776 million barrels in 2015.
The report similarly shows that Nigeria recorded a net loss of
over $723 million through the Offshore Processing Arrangement (OPA)
adopted by the Federal Government in 2015 to supply refined
petroleum products in the country.
The arrangement, which was introduced by the NNPC during the
Jonathan administration, involved the allocation of crude oil to
select indigenous and foreign oil traders under agreed swap
contract terms in exchange for refined products for local
consumption.
It said: “In 2015, the Nigeria Liquefied Natural Gas Limited
(NLNG) paid $1.07 billion as dividend, interest and loan repayment
to NNPC, broken down as follows: $1.04 billion as dividends, $3.1
million as interests, and $29.1 million as loan repayment.
“This brings to a total of $16.8 billion NLNG’s payments to NNPC
for the period 2000 to 2015. The payments are for the loan grant to
NLNG and for the 49 per cent stake that the government holds in the
company.”
“While NNPC has always confirmed receipt of the payments, it has
never shown evidence of remittance to either the Federal Government
or to the Federation Account.
“NNPC maintains that it has authorization from the presidency to
hold the dividends in trust and utilize as directed by the
government.
”NEITI recommends that NNPC should provide documentary evidence
of the authorization to hold the money in trust and to give account
of the expenditure from and the status of the $16.8 billion
collected in 16 years.”
It put the total outstanding revenue from the sector as at 2015
at $3.7 billion and N80 billion, while losses incurred stood at
$2.2 billion and N60 billion, and un-reconciled revenues put at
N317 billion.
The organisation added: “Beyond providing a snapshot of what
transpired in 2015, this report reveals money to be recovered,
leakages to be blocked and urgent reforms to be undertaken.
”The most critical take-away is the need to expedite, expand and
sustain reforms in this still critical sector of national
life.”
The report shows that Nigeria suffered a 54.6% decline in oil
revenues but only a slight 2.7% fall in oil production.
This development was attributed to “drastic reduction in the
unit price of crude oil in the global market.”
The yearly average price of crude oil per barrel tumbled from
$101.91 in 2014 to $52.16 in 2015.
Oil and gas revenues have been declining since 2011 when total
revenues peaked at $68.4bn.
A five-year analysis in the report reveals that revenues
declined by 8%, 7.7% and 6% in 2012, 2013 and 2014 respectively.
However, the decline leapt to double digits in 2015 when total
revenue dwindled by more than half.
Total oil production also dropped but not by much: from 798
million barrels in 2014 to 776 million barrels in 2015.
The report attributed the decline to oil theft and
militancy.
However, total gas production went up by 20.23% from 2, 593,090
million standard cubic feet per day (mmscf) in 2014 to 3, 250, 667
mmscf in 2015. The jump by a fifth was on account of the combined
effect of increase in gas utilization and decline in gas
flaring.
A total of 780 million barrels of oil was lifted in 2015, about
four million barrels higher than the quantity produced with the
balance drawn from previous years.
Of the 780 million barrels, the companies lifted 467 million
barrels while NNPC lifted 313 million barrels. NNPC’s liftings were
split almost evenly between Federation Export and Domestic Crude
Allocation, which accounted for 159.4 million barrels and 153.9
million barrels respectively.
However, only 8.7 million barrels or 5.6% of crude oil allocated
for domestic consumption went to the refineries in 2015 on account
of the dysfunctional state of the refineries.
It noted that the volume of crude oil declared lost to theft by
13 operators in 2015 was 27.1 million barrels.
Continuing, the report said: “Though this amounted to only 3.5%
of total oil production, the loss was valued at $1.4 billion. PPMC
also declared loss of crude worth $25 million, bringing the total
declared losses to $1.45 billion.
This brings the established loss to theft from 2011 to 2015 to a
total of 113.1 million barrels valued at $11billion. Also, PPMC
declared losing products worth N56.4 billion, broken down as
follows: N52 billion for losses on petrol, N3.8 billion for losses
on diesel, and N123 million for losses on kerosene.
“Deferred production on account of sabotage or repairs came to
57 million barrels. NEITI reiterates its call for effective and
adequate metering infrastructure and enhanced security of our oil
and gas assets.”
NEITI recommended close monitoring of the Direct Sale Direct
Purchase (DSDP) arrangement that replaced the OPA to ensure the
country is not being shortchanged. It also called for government to
recover the $498m OPA liabilities from the affected companies.
”From the report, NPDC (the upstream arm of NNPC) reduced its
legacy liabilities from $1.45 billion and N80 billion in 2014 to
$757 million and N68 billion in 2015. However, NPDC incurred
liabilities of $822 million and N9.6 billion in 2015, bringing its
total liabilities at the end of 2015 to $1.5 billion and N78
billion,” it said.
Read more https://nairalaw.com/neiti-to-nnpc-account-for-16-8bn-nlng-dividends/