Petrol Subsidy Delays Funding of N26.2bn NNPC Projects

*Pledges respect for environment in its operations
*NEITI, NNPC, DPR to Develop Framework on Contracts’
Transparency

The burden of under-recovery of petrol price currently being
borne by the Nigerian National Petroleum Corporation (NNPC) may
have begun to affect its operations as the national oil company
failed to fund six of its scheduled projects in April.

NNPC is also to team up with the Nigeria Extractive Industries
Transparency Initiative (NEITI) and the Department of Petroleum
Resources (DPR) to sign an agreement on a framework to ensure
greater transparency in the oil and gas industry.

The funding performance from January to April, contained in the
corporation’s presentation to the Federation Account Allocation
Committee (FAAC) in May, showed that the gas infrastructure
development, frontier exploration services and renewable energy
development received zero allocation for the month.

In addition, the Nigeria-Morocco pipeline, the crude oil
pre-export inspection agency expenses as well as Brass LNG gas
supply project did not get any funding for the period under
review.

The data indicated that with the underfunding of the projects,
variance in terms of actual budget and actual funding for five of
the projects stood at N26.236 billion. The figures for Brass LNG
were not recorded.

The document showed that except for Brass LNG, the NNPC has
consistently funded the projects until February when it recorded
the payment of petrol under-recovery of N25.374 billion, N60.396 in
March and N61.966 in April.

It stated that with an annual budget of N4.9 trillion and a
monthly budget of N414.941 billion, as at the first four months of
the year, the corporation had spent N767.7 billion, actual
year-to-date, with a difference of N891.99 billion.

In January, the NNPC spent N195.6 billion, in February its
spending fell to N191.1 billion, in March it was N224.5 billion,
while in April it expended N156.3 billion.

However, the funded projects in April were: national domestic
gas development, which got N14.9 billion cumulative spendings,
pipeline security and maintenance cost which gulped N13.7 billion,
pre-export financing of N20 billion, under-recovery of N147.7
billion, among others.

From January to April, refinery rehabilitation for the
non-functional facilities had gulped N33.3 billion. The NNPC had
explained that it was still paying workers’ salaries and basic
maintenance for the refineries.

With an annual budgeted total net distribution to FAAC of N1.47
trillion and monthly budget remittance of N122.7 billion, the
document showed that in January, NNPC remitted N90.86, in February
it sent N64.1 billion to FAAC and in March remitted N41.1 billion.
There was zero remittance in April.

For March, domestic crude payable in June, in line with the
90-day circle, showed that an outstanding of Joint Venture (JV) for
Chevron Nigeria Limited, amounting to N72.6 billion, is due in
June.

Eroton will be paid N3.1 billion, Mobil’s is N68.5 billion and
is due this month, same for Seplat, which is expected to get N3.3
billion, Shell will be paid N33.6 billion, while Total is expected
to be paid N3.1 billion.
In March, the NNPC Group Managing Director, Mallam Mele Kyari,
opened up on the state of affairs at the corporation, saying that
at the time, the government was subsidising petrol with about N120
billion monthly.

He said the NNPC could no longer afford to bear the cost and
Nigerians would have to pay the actual cost sooner or later, as
market forces must be allowed to determine the pump price of
petrol.

“Today, NNPC is the sole importer of petrol. We are importing at
market price and we are selling at N162 per litre today. Looking at
the current market situation today, the actual price could have
been anywhere between N211 and around N234 per litre.

“The meaning of this is that consumers are not paying for the
full value of the petrol that we are consuming and therefore,
someone is bearing that cost. As we speak today, the difference is
being carried on the books of the NNPC and I can confirm to you
that the NNPC may no longer be in the position to carry that burden
and because we can longer afford to carry it on our books,” he had
said.

Meanwhile, the NNPC said yesterday that it remained committed to
the promotion of a sustainable environment across its operations,
stressing that its energy transition programme and support for
carbon-neutral projects are proofs of that commitment.

Kyari stated this at an event organised by the Group Health,
Safety, Environment Department to mark this year’s World
Environment Day, according to a statement by the corporation’s
spokesman, Dr. Kennie Obateru.

He said the oil and gas industry and particularly the NNPC were
conscious of the impact of their operations on the environment,
hence, have been at the forefront of efforts to preserve the
environment wherever they operate.

Mallam Kyari said it was in keeping with the philosophy of
environmental sustainability that the oil and gas industry was
leading a move towards energy transition and embracing
carbon-neutral activities.

NEITI, NNPC, DPR to Develop Framework on Contracts’
Transparency

The Nigeria Extractive Industries Transparency Initiative
(NEITI), the Nigerian National Petroleum Corporation (NNPC) and the
Department of Petroleum Resources (DPR) are set to sign an
agreement on a framework to ensure greater transparency in the oil
and gas industry.

Responding to questions on the sidelines of the closing ceremony
of a NEITI staff retreat and knowledge-sharing session in Abuja at
the weekend, Executive Secretary of the organisation, Dr Ogbonnaya
Orji, said he had already met with the major players, who had
agreed on the need to build greater trust in the extractive
sector.

According to him, the move will ensure that the terms of all
contracts signed in the petroleum sector are open and totally
accessible to Nigerians as required by the global Extractive
Industries Transparency Initiative (EITI).
Orji stated that to fast-track the process, a committee would be
set up to harmonise differences in the global agreement, which
Nigeria is a signatory.

As a signatory to the EITI framework, Nigeria is obligated to
disclose the terms of contracts entered into in the oil and gas
industry and in the solid minerals sector, with the NNPC recently
signing a $1.5 billion deal for the revamping of the Port Harcourt
refinery and the Production Sharing Contract (PSC) agreement with
its partners on OML 118.

Orji said: “Yesterday I had a one-hour meeting with the Group
Managing Director of the NNPC on how we can develop a framework of
engagement beginning with NNPC disclosure of certain contracts that
they are currently pursuing.

“We need to develop the framework and it will specify what will
be disclosed, how it will be disclosed and when it will be
disclosed and who will consume the information to be disclosed.

“It will also include how the information will be used in a way
and manner as not to jeopardise the operations of the covered
entities and in a manner that is open, transparent and which makes
information accessible.”

He added that he had met with the Director of DPR, Mr Sarki
Auwalu, and had agreed to form the nucleus of a joint committee to
develop a framework that will guide the organisations and protect
the interest of the country.

*Pledges respect for environment in its operations
*NEITI, NNPC, DPR to Develop Framework on Contracts’
Transparency

The burden of under-recovery of petrol price currently being
borne by the Nigerian National Petroleum Corporation (NNPC) may
have begun to affect its operations as the national oil company
failed to fund six of its scheduled projects in April.

NNPC is also to team up with the Nigeria Extractive Industries
Transparency Initiative (NEITI) and the Department of Petroleum
Resources (DPR) to sign an agreement on a framework to ensure
greater transparency in the oil and gas industry.

The funding performance from January to April, contained in the
corporation’s presentation to the Federation Account Allocation
Committee (FAAC) in May, showed that the gas infrastructure
development, frontier exploration services and renewable energy
development received zero allocation for the month.

In addition, the Nigeria-Morocco pipeline, the crude oil
pre-export inspection agency expenses as well as Brass LNG gas
supply project did not get any funding for the period under
review.

The data indicated that with the underfunding of the projects,
variance in terms of actual budget and actual funding for five of
the projects stood at N26.236 billion. The figures for Brass LNG
were not recorded.

The document showed that except for Brass LNG, the NNPC has
consistently funded the projects until February when it recorded
the payment of petrol under-recovery of N25.374 billion, N60.396 in
March and N61.966 in April.

It stated that with an annual budget of N4.9 trillion and a
monthly budget of N414.941 billion, as at the first four months of
the year, the corporation had spent N767.7 billion, actual
year-to-date, with a difference of N891.99 billion.

In January, the NNPC spent N195.6 billion, in February its
spending fell to N191.1 billion, in March it was N224.5 billion,
while in April it expended N156.3 billion.

However, the funded projects in April were: national domestic
gas development, which got N14.9 billion cumulative spendings,
pipeline security and maintenance cost which gulped N13.7 billion,
pre-export financing of N20 billion, under-recovery of N147.7
billion, among others.

From January to April, refinery rehabilitation for the
non-functional facilities had gulped N33.3 billion. The NNPC had
explained that it was still paying workers’ salaries and basic
maintenance for the refineries.

With an annual budgeted total net distribution to FAAC of N1.47
trillion and monthly budget remittance of N122.7 billion, the
document showed that in January, NNPC remitted N90.86, in February
it sent N64.1 billion to FAAC and in March remitted N41.1 billion.
There was zero remittance in April.

For March, domestic crude payable in June, in line with the
90-day circle, showed that an outstanding of Joint Venture (JV) for
Chevron Nigeria Limited, amounting to N72.6 billion, is due in
June.

Eroton will be paid N3.1 billion, Mobil’s is N68.5 billion and
is due this month, same for Seplat, which is expected to get N3.3
billion, Shell will be paid N33.6 billion, while Total is expected
to be paid N3.1 billion.
In March, the NNPC Group Managing Director, Mallam Mele Kyari,
opened up on the state of affairs at the corporation, saying that
at the time, the government was subsidising petrol with about N120
billion monthly.

He said the NNPC could no longer afford to bear the cost and
Nigerians would have to pay the actual cost sooner or later, as
market forces must be allowed to determine the pump price of
petrol.

“Today, NNPC is the sole importer of petrol. We are importing at
market price and we are selling at N162 per litre today. Looking at
the current market situation today, the actual price could have
been anywhere between N211 and around N234 per litre.

“The meaning of this is that consumers are not paying for the
full value of the petrol that we are consuming and therefore,
someone is bearing that cost. As we speak today, the difference is
being carried on the books of the NNPC and I can confirm to you
that the NNPC may no longer be in the position to carry that burden
and because we can longer afford to carry it on our books,” he had
said.

Meanwhile, the NNPC said yesterday that it remained committed to
the promotion of a sustainable environment across its operations,
stressing that its energy transition programme and support for
carbon-neutral projects are proofs of that commitment.

Kyari stated this at an event organised by the Group Health,
Safety, Environment Department to mark this year’s World
Environment Day, according to a statement by the corporation’s
spokesman, Dr. Kennie Obateru.

He said the oil and gas industry and particularly the NNPC were
conscious of the impact of their operations on the environment,
hence, have been at the forefront of efforts to preserve the
environment wherever they operate.

Mallam Kyari said it was in keeping with the philosophy of
environmental sustainability that the oil and gas industry was
leading a move towards energy transition and embracing
carbon-neutral activities.

NEITI, NNPC, DPR to Develop Framework on Contracts’
Transparency

The Nigeria Extractive Industries Transparency Initiative
(NEITI), the Nigerian National Petroleum Corporation (NNPC) and the
Department of Petroleum Resources (DPR) are set to sign an
agreement on a framework to ensure greater transparency in the oil
and gas industry.

Responding to questions on the sidelines of the closing ceremony
of a NEITI staff retreat and knowledge-sharing session in Abuja at
the weekend, Executive Secretary of the organisation, Dr Ogbonnaya
Orji, said he had already met with the major players, who had
agreed on the need to build greater trust in the extractive
sector.

According to him, the move will ensure that the terms of all
contracts signed in the petroleum sector are open and totally
accessible to Nigerians as required by the global Extractive
Industries Transparency Initiative (EITI).
Orji stated that to fast-track the process, a committee would be
set up to harmonise differences in the global agreement, which
Nigeria is a signatory.

As a signatory to the EITI framework, Nigeria is obligated to
disclose the terms of contracts entered into in the oil and gas
industry and in the solid minerals sector, with the NNPC recently
signing a $1.5 billion deal for the revamping of the Port Harcourt
refinery and the Production Sharing Contract (PSC) agreement with
its partners on OML 118.

Orji said: “Yesterday I had a one-hour meeting with the Group
Managing Director of the NNPC on how we can develop a framework of
engagement beginning with NNPC disclosure of certain contracts that
they are currently pursuing.

“We need to develop the framework and it will specify what will
be disclosed, how it will be disclosed and when it will be
disclosed and who will consume the information to be disclosed.

“It will also include how the information will be used in a way
and manner as not to jeopardise the operations of the covered
entities and in a manner that is open, transparent and which makes
information accessible.”

He added that he had met with the Director of DPR, Mr Sarki
Auwalu, and had agreed to form the nucleus of a joint committee to
develop a framework that will guide the organisations and protect
the interest of the country.