By Jeph Ajobaju, Chief Copy Editor
Local and export sales of oil and gas in January fetched N209.54 billion for the Nigerian National Petroleum Corporation (NNPC), which Peoples Democratic Party (PDP) governors have accused of failing to remit funds to the Federation Account.
The NNPC disclosed in its report that about 40 per cent of the proceeds was spent on joint venture assets and priority projects, such as Joint Venture (JV) assets which took N83.29 billion.
The NNPC, which represents the government in JVs, is obligated to make cash call payments for the development of the assets.
Per the report, quoted by Nairametrics, the NNPC
· Transferred $80.32 million (N30.44 billion) to the JV cash call account as first line charge in January
· Spent N52.85 billion on JV cost recovery and priority projects
· Recorded total export receipt of $108.75 million in January 2021 against $125.25 million in December 2020
· Recorded $24.32 million proceeds from oil and gas. Gas fetched $66.28 million and miscellaneous $18.15 million
· Remitted $28.43 million to the Federation Account
· Remitted $80.32 million to fund JVs to guarantee production
Oil production structure
Nigeria’s oil and gas production structure is split mainly between JVs (onshore and in shallow waters) and Production Sharing Contracts (PSCs) in deepwater offshore.
Under the JV arrangement, both the NNPC and the private firms contribute to fund operations in proportion of their equity holdings and receive produced crude in the same ratio.
The NNPC said total export crude oil and gas receipt from January 2020 to January 2021 was $2.73 billion; out of which $1.58 billion was transferred to JV cash call as first line charge and the balance $1.15 billion paid into the Federation Account.
Proceeds from the sale of domestic crude and gas rose to N168.32 billion in January 2021 from N136.25 billion in December 2020, out of which N52.86 billion was transferred to the JVCR.
In January 2021, the NPPC claimed it remitted N163.63 billion to the Federation Account Allocation Committee (FAAC).
And that from January 2020 to January 2021, its total remittances to the FAAC stood at N2.10 trillion; out of which the Federation Account received N850.63 billion and JV priority projects N1.04 trillion.
PDP govs dispute NNPC remittance to Fed Account
However, the PDP Governors’ Forum met in Uyo on June 7 and issued a communique which accused the NNPC of acting unilaterally by refusing to make remittances to the Federation Account.
The Forum examined the operations of the NNPC and expressed alarm at the muddy manner it carries out its operations.
It decried the recent decision of the NNPC “not to make its statutory contributions to the Federation Account,” thereby starving states and council and indeed Nigerians of funds needed for employment, development and general wellbeing.
The meeting reiterated that the NNPC is bound by the Constitution to remit proceeds of sale or business of petroleum to the Federation Account which belongs to the three tiers of government, excluding reasonable and verified and verifiable cost of operations.
The federal government through NNPC is merely a manager of Nigeria’s oil wealth as a trustee for all citizens, the PDP governors insisted.
They frowned at a situation where the NNPC decides in a “discretionary” and “whimsical” manner, how much to spend, how to spend it and how much to remit to the Federation Account, contrary to the Constitution.
They urged other government agencies such as the Nigerian Ports Authority (NPA), Nigerian Maritime Administration and Safety Agency (NIMASA), Nigerian Communication Commission (NCC), Federal Inland Revenue Services, Customs and Excise and similar organisations that are statutorily required to make contributions into the Federation Account, to do more.
Federating states should, going forward, have a say in the determination of operating costs to ensure transparency and accountability, the governors argued.
They sought urgent steps to reverse these ugly trends in Nigeria’s practice of democracy, constitutionalism, and federalism.