NNPC Denies Not Remitting Over N3tn In 2014, Admits To Owing FG N326bn

The Nigerian National Petroleum Corporation has denied failing to remit N3.325tn to the Federation Account.

It, however, admitted that it owed the government N326.14bn, which was still being reconciled.

The corporation was reacting to the revelation of the Auditor-General of the Federation to the National Assembly on Monday that the NNPC failed to remit the sum of N3.235tn to the Federation Account for the period ended December 31, 2014.

The corporation stated that the AGF was incorrect.

NNPC in a document signed by its Group Executive Director/Chief Financial Officer, Finance and Accounts, Mr. Isiaka Abdulrazaq, said, “The NNPC wishes to state in strong terms that the AGF’s declaration is inaccurate.

“The Auditor-General of the Federation’s declaration is erroneous. It should also be noted that although this period is before the new NNPC management was appointed in August 2015, the management still deems it fit and important to correct any misinformation about the activities of the corporation as this will adversely affect its current and future financial and operational plans if not corrected.

“The declaration by the AGF may have been born out of misunderstanding of how revenues from crude oil and gas sales are remitted into the Federation Account.”

On how the fund was utilised, the corporation noted that as part of its responsibilities, the NNPC got an allocation of 445,000 barrels of crude oil per day for processing into petroleum products for distribution across the country.

According to the document, the proceeds from the sale of the products are remitted to the Federation Account after deducting the cost associated with the supply and distribution.

The costs, it said, included subsidy on petroleum products.

It recalled that the total amount of subsidy that had been approved and certified for the corporation by the Petroleum Products Pricing Regulatory Agency for the period of January 2012 to December 2014 was N2.34tn, adding that an additional N7.96bn subsidy claim was still under reconciliation.

Refineries Are Finally Running, NNPC To Start Posting Profits In Two Months – Kachikwu

“For the first time”, Nigeria’s refineries “are now ready to work”, Ibe Kachikwu, group managing director of the Nigerian National Petroleum Corporation (NNPC), said on Tuesday.

Kachikwu also said that the corporation, under his leadership, is saving Nigeria N1 trillion in subsidy “removal” and $1 billion in importation programme.

He said the change at NNPC is only just starting, adding that NNPC will be delivering profit in two to three months.

“All the changes that have happened so far, in case you do not know… but I’m sure you follow the numbers and the reports that we publish, but you’ve gone from an average deficit of over N30bn to 3 billion in a period of six months,” he said.

“If you continue on this tangent, this company should continue to show monthly profitability in two to three months. That would be dramatic, and that is even before we have even started – because we haven’t started.

“This is simply through your 20 fixes; you deciding to cut costs, and to watch your expenses and there’s still a huge amount of expenses you still need to cut.

“But imagine what it looks like if you succeeded in identifying and doing all those. Imagine what it would look like if every business unit followed the same principles and monitored cost at those various levels.”

Kachikwu said that for the first time, NNPC has met up with 75 percent of its responsibility to the federation account, highlighting the new ways of the corporation.

“With the new DSDP programme, not solely designed by me, but by all of you, you’re saving the nation $1bn in importation programme, $1bn.

“Look at the fact that with the removal or connivance on the removal of subsidy cost, you are saving the nation N1 trillion. For the first time this organisation is not worrying about where to get the next subsidy money or who is going to pay it.

“For the first time, our refineries are ready now to work. Crude has been pumped from Brass to Port Harcourt. Pipeline is being used for the first time in six years. For the first time we are able to pump to Ilorin, we have not done that in 10 years.”

He assured that in two weeks, the refineries would begin to receive crude via pipelines.

Oil Price Falls Below $40

Despite the pledge by Saudi Arabia to cooperate with other members of the Organisation of Petroleum Exporting Countries (OPEC) to stabilise the oil market, the price of crude oil fell by almost three per cent yesterday after Iran dashed hopes of a coordinated production freeze in the nearest future.

Saudi Arabia and several fellow OPEC members had agreed with non-OPEC Russia to freeze output at January levels in an attempt to prop up prices.

President Muhammadu Buhari, who was in Doha, Qatar early this month, also told OPEC and non-OPEC producers that low oil prices were no longer acceptable.

During a bilateral meeting with the Emir of Qatar, Sheikh Tamim Bin Hammad Al-Thani, Buhari spoke on the need for the members of OPEC and Gas Exporting Countries Forum (GECF) to cooperate to stabilise the oil market for the benefit of their people.

A recent Saudi cabinet statement also disclosed that the kingdom was working towards stability in the oil market and would remain in contact with all main producers in an attempt to limit volatility.

The renewed cooperation between OPEC and non-OPEC members had led to a rise in the price of oil above $40 per barrel but that was still a fraction of the $115 per barrel of 20 months ago.

But following Iran’s revelation on Sunday that it would only join the discussions for cooperation after its output has hit 4 million barrels per day (mbpd), the price of oil fell by about three per cent yesterday.
Iran’s oil exports are due to reach 2mbpd in the Iranian month that ends on March 19, up from 1.75 million in December 2015, according to Reuters.

Iran’s position has returned bearish sentiment over a supply glut that has sent prices crashing in the past 20 months.
Global benchmark Brent crude, which hit a 12-year low of $27.10 per barrel in January and had risen above $40 this month, fell back monday to below $40 a barrel, trading at $39.27, while US crude was down $1.09 trading at $37.41 a barrel.

Iran’s Oil Minister, Bijan Zanganeh was quoted as saying on Sunday that it would join discussions after its output reached 4mbpd.

Reuters reported that Zanganeh met Russian counterpart Alexander Novak in Tehran yesterday but talks focused on long-running discussions about an oil and gas swap mechanism.

According to the Shana news agency, Zanganeh said Iran and Russia could cooperate on the swap, which would see Russia send oil and gas to northern Iran in return for Iranian supply to Russian customers in the Gulf.

Saudi Arabia appeared to have stuck to a preliminary deal reached with some other producers to freeze output, as its crude production held steady in February at 10.22 million barrels per day (bpd), an industry source told Reuters.
OPEC members and non-OPEC producers are likely to meet again in mid-April in Doha to discuss freezing output, OPEC sources told Reuters.

With Iran’s position, the scheduled March 20 meeting in Russia, which was part of an earlier plan, now looks unlikely.

NNPC Did Not Remit N3.2tn Of Sales In 2014 Alone – Auditor General

Nigeria’s Auditor-General, Samuel Ukura, has revealed how the Nigerian National Petroleum Corporation (NNPC) shortchanged federal government revenues by N3.2 trillion in 2014 alone.

Addressing reporters on Monday after submitting his office’s 2014 audit report of the Integrated Payroll and Personnel Information System (IPPIS) to the national assembly, Ukura said the oil corporation under-remitted domestic crude oil sales to the federation account.

Kura implored the federation account allocation committee (FAAC) to investigate the funds and ensure their recovery to the federation’s coffer.

“From the examination of NNPC mandates to CBN on domestic crude oil sales and reconciliation statement of technical sub-committee, FAAC amount not remitted was N3.2 trillion.

“Also, the $235-million sale of gas to NLNG was not paid to the federation account but transferred to some undisclosed Escrow Accounts.

“Another $346.2 million was stated to have been paid and received by the federation account, through NGL funding account as gas export sales, yet no document was available to confirm this”, he said.

He also disclosed that discrepancies up to N73.5 billion were found from various special funds accounts of the federal government.

He added that “total payments amounting to N73.5 billion were made contrary to the established purpose of the funds.

“The sum of N36.4 billion was released to the office of the national security adviser for the rehabilitation and construction of dams instead of the federal ministry of water resources.

“Another N2.8 billion was spent for the procurement of hand sanitisers for schools and critical public places.”

Ukura said N509 million recorded as payment for schools agricultural programmes could not be accounted for.

He added that the report also showed that N7.3 billion was deducted from various MDA accounts as tax but was not remitted into any account of the Federal Inland Revenue Service.

Ukura urged the senate and house of representatives to do justice to the reports so that all the money could be recovered and put to better use.

FG Plans To Start Exportation Of Refined Oil Products

The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu has said that Nigeria will begin to export refined petrol and other petrochemical products within the next four years if plans to ramp up the country’s domestic refining capacity work out well.

Kachikwu stated this recently in Abuja when he briefed journalists on his plans for the country’s petroleum sector.
He noted that if the plans to co-locate new refinery investments within the country’s existing refinery complexes in Kaduna, Warri and Port Harcourt become successful, and the private refinery owned by the Dangote Group comes on stream, Nigeria will produce more petrol than she needs and then export the excess.

He explained that it would take at least three years to get the co-located refineries to begin production, adding that Dangote’s is expected to come on stream between 2019 and 2020.

“The policy on the whole is that we must target a time frame of 12 and 18 months to get out of importation.
“It is not good for the country, it is not a good image, it does not create jobs and we lose tax when it comes to the government and creates a huge amount of quite frankly, emotional backlash when people have to queue looking for fuel,” said Kachikwu.

He said that Nigeria, which imports most of her the petrol she needs for her domestic use was working feverishly to get joint venture partners who can come in and set up new refineries in the country.

“We have advertised recently for co-located refineries and asking people to come and co-locate new refineries into our refineries’ premises so that they can share pipelines, tankages and we are working hard to see that we can complete whatever refinery upgrade we are trying to do within the next 12 to 18 months and obviously for the co-located refineries which are the new ones, targeting to see that we are able to finish within two to three years,” he said.

According to him: “If we do that, obviously we will have excess production capacity for refined products and bear in mind that obviously Dangote is also bringing in its refinery which probably is hitting up about 2019/2020.
“At that point, we begin to look at export market and that really is what we should be doing given the sort of behaviour of oil prices today.”

The minister also talked about improving the incentives for private investments to come in and help upgrade the country’s gas production and supply infrastructure.

He noted in this regards that works on new terms for gas businesses was already going on in the ministry. That, he stated would be discussed further with the oil majors to get their inputs.

“We need to finalise gas terms. A team within the ministry is working very hard now to come up with gas terms and negotiate those gas terms with majors because if the gas terms are there, the investments will go in and once there is certainty we can grow those,” Kachikwu stated.

He added: “Once we have parallel revenues that can come in from gas and some extent the petrochemicals, the reliance on crude oil revenue will ease, so gas is very critical not just in terms of our earning cycle but also in terms of our power mix, being able to supply power to the Nigerian public.”

“I know that the ministry of power is targeting about 7000 megawatts for 2016 and some portion of 2017, and stranded gas is key.

“We need to get infrastructure to get that gas through NPDC or third parties so we have sufficient gas to power the turbine and so we are working on that and the sort of numbers or duration that I see is a period of one to two years to get us this level,” he further explained.

Oil Prices To Rise Again, Kachikwu Says In Recitation

Minister of State for Petroleum, Ibe Kachikwu on Monday said the price of oil would rise again.

Kachikwu while rendering a poem on oil during the sixth African Petroleum Congress in Abuja said the prices may not rise too high, but they would also not stay too low.

He said, “I was asked by an ephemeral subject being whose name is oil to say a few words on its behalf.

“My name is oil, the very kind people who are kind to me call me black gold. The ones who hate me call me crude.

“I worry for my future; everyone now talks down on me. Even farmers who trembled at the sight of my name are now strategizing against me.

“And all my beneficiaries, me have they abandoned. All because the producers have lost their tracks. But I would rise again, and when I do, I will take no prisoners.

“I would new technologies control, I will new technologies control. I will my supremacy confirm. I will my respect regain.

“And my pricing, not too low, not too high, but I would not allow prices to humiliate me. All of you in OPEC, APPA, GCEF and all such bodies who have shown me no respect recently, soon, you’ll eat your words.”

Kachikwu was a onetime publisher of the defunct Hints magazine and was also a fiction writer, in the poem extolled the oil and its prospects for the days to come.

Kachikwu: Nigeria Aiming To Produce 2.6mbpd Of Crude Oil In 2016

Nigeria hopes to mine at least 2.4 million barrels of crude oil from her fields every day in 2016, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has disclosed.

He spoke recently in Abuja on the work plan he intends to pursue in the country’s oil and gas sector for the year.

He said that even though the planned output target of 2.4 million barrels per day (mbpd) of oil was not listed in the country’s annual budget, that it was that production volume that she will mostly pursue.

The minister however noted that about 200,000bpd of the planned total output would be cut off and dedicated for domestic refining. He added that the remaining 2.2mbpd would be kept whole for export.

According to him, the country would have been doing 2.3mbpd of production but for the pipeline incident that was recorded on one of Shell’s facilities last week.
“In terms of volumes, I think we are working at a 100 per cent volume. Before the Shell pipeline incident which happened about a week ago, we were already hitting about 2.3mbpd up from about 2.18mbpd.

“Target this year really is without putting that in the budget, we try to target to see if we can get up to about 2.4mbpd and dedicate some of that to total refining capacity and keep our 2.2mb as whole as we can,” said Kachikwu.

“That is still the target we are shooting for and I think that if we have a 100 per cent performance in terms of funding and oil companies are going full blast in their works, we will see things happen,” he added.

NNPC Station Also Caught Hoarding Fuel, Shut By DPR

The Department of Petroleum Resources, DPR, in Akwa Ibom, said it sealed the NNPC mega filling station in Uyo, for allegedly hoarding petrol.

The Controller (Operations) in charge of Akwa Ibom and Cross River, Bassey Nkanga, told the News Agency of Nigeria in Eket on Sunday that the mega station had amassed the product in its storage tanks, but refused to sell it to members of the public.

Mr. Nkanga, however, said that although the state was experiencing shortage of the product, the situation was not peculiar to the area.

He appealed to residents of the state to be patient as government was working hard to redress the problem.

“The fuel scarcity is not experienced only in Akwa Ibom; it is a national problem.

“Yesterday, we got two trucks of the product for Uyo. We are monitoring the sale of the product to see if there will be any illegality,’’ Nkanga said.

Meanwhile, motorists in the state have continued to express displeasure at situation created by the scarcity of the product.

This is because a litre of the product now sells for between N170 and N200 in Eket and environs and transport fares in the area have increased as a result.

Kachikwu Apologizes Over Fuel Scarcity

The Minister of State for Petroleum Resources, Ibe Kachikwu has said the current fuel scarcity being experienced across the country will be over in the next two days, stressing that the Nigerian National Petroleum Corporation, NNPC, has increased supply of the product across the country.

Kachikwu gave the assurance yesterday during a tour of petrol stations in Abuja.He stated that the NNPC deploys 300 truckloads of fuel to Abuja on a daily basis.

He said, “We have enough coming in. Obviously the two days of strike hit us very badly but we are flooding in, getting an average of 300 trucks a day into Abuja; it’s going to take a bit of while for the queues to finish but we are hoping that between the next one-two days we should have the queues all disappear because we are continuing to pump in, while a lot of the stations are open 24 hours a day.

“I apologise to Nigerians for all the pains; nobody wants to see people spend two hours on the fuel queue.”

Noting that President Muhammadu Buhari is bothered about the current situation of fuel scarcity being experienced across the country, the Minister said, “talks had begun with the CBN to help major oil marketers in Nigeria access foreign exchange to import petrol into the country.”

“We are doing everything we can; NNPC is taking the whole nation on its shoulders while majors are really not bringing in product; but we are working long term solutions to majors to now begin to go back to importation lane and be able to service their own outlets rather than us servicing our outlets, independents, majors and servicing everybody; its a lot of wear and tear on our capabilities as a status.

“Long term obviously we have got to systemically look at how do you prepare this nation in circumstances where there are emergencies to be able to respond; we are obviously not getting that as well as we should,” he said.

Motorists In Osogbo Laments Fuel Hoarding At NNPC Station

Motorists in osogbo, the Osun state capital are calling on the department of petroleum resources (DPR) to probe the only NNPC mega station in‎ the state for alleged hoarding of product.
Visit to the NNPC station which is  located along ring road ‎osogbo, revealed long queue resulting from scarcity and hike in the price of fuel in the city.
Some motorists in an interview , accused the management of the station of hoarding the product at the expense of the people.
They alleged that the management of the station  is in the habit of deliberating waiting for the situation to get messy before selling to the waiting motorists, in order to enrich themselves from over billing.
According to them, other NNPC retail outlets in the state usually open for business from 6 in the morning till evening,saying reverse is usually the case at the only mega ‎station in the state.
They therefore called on the federal government through the DPR to wade into the matter and find a lasting solution soon.
” the situation in this country is very appalling and devastating, we have been here since 5am, and they have refused to sell us fuel. We want government to do something to this” of one the motorists pastor Oloyede Taiwo lamented.
Another motorist Moye Oyewale also expressed dissatisfaction at the alleged hoarding of premium motor spririt PMT  ” the usual practice at the NNPC mega station is that one will expect them to start selling fuel as early as 8am, but the situation is not so. They decide at will when to sell and when not. I would advice that the federal government should probe the management of theis station”
‎”It’s so sad that while the government is busy sanitising the whole NNPC, some people can still be sabotaging his effort at this local level” Oyewale said.

NNPC Restructuring: While Senate Backs Moves, The House Of Representatives Is Not So Sure

The two chambers of the National Assembly have disagreed with the Minister of State for Petroleum Resources, Ibe Kachikwu, over the restructuring of the Nigerian National Petroleum Corporation.

While the Senate has backed the reforms, saying the minister’s action did not contravene any known law, the House of Representatives insists that the restructuring of the national oil firm is illegal.

Kachikwu appeared before the Senate Joint Committees on Petroleum Resources (Upstream, Downstream and Gas) in Abuja on Thursday to explain the reasons for the restructuring.

Before going into a closed session with the senators that lasted about one hour, the minister explained that his action was in the best interest of the country, but regretted not holding necessary consultations with the National Assembly before announcing the restructuring.

He explained that the exercise was necessary in order to make the NNPC a real revenue generating organisation so that it would be able to offset the $5.2bn it currently owed major oil companies as well as reduce its current N30bn monthly losses as much as possible.

Kachikwu also said the restructuring of the NNPC subsidiaries was aimed at making them more effective and efficient, but that they would still be under the corporation and would be controlled by a single board.

He said, “I must apologise that we didn’t take some of the Senate leadership along the path of this restructuring, but if you look at the draft of the Petroleum Industry Bill sent to us for our input, you will discover that the restructuring was within the suggestion we made.

“Having said that, I must take responsibility for not carrying out the necessary consultation as we should have done.”

A member of the committee, Senator Sola Adeyeye, said that the minister would have run afoul of the law if he had stuck to the use of the word ‘unbundling’ in the restructuring exercise, because his action would have contravened Cap. 23 (6) 1D of the Act that established the corporation.

He argued that although the minister, in his capacity as the group managing director of the NNPC, was given a free hand to operate, it would be illegal for him to create autonomous firms separate from the NNPC.

Briefing journalists after the session, the Chairman, Senate Committee on Petroleum Resources (Upstream), Senator Tayo Alasoadura, described the interactive session with the minster as highly rewarding and useful.

He said Kachikwu had been able to convince members of the three committees mandated to carry out oversight functions on the petroleum sector that his action was legal and one that would boost the sector, generate more revenue and ensure stable supply of products.

Alasoadura said, “We have a very useful discussion with the minister. He clarified the issue that he was not unbundling the NNPC, because it is an entity created by an Act of the National Assembly and nobody can touch it unless he comes back to the National Assembly for amendment.

“Having looked at what he did and the presentation he made to us, and having considered the welfare of the staff of the NNPC and those working in the subsidiaries that were affected by the reorganisation that he has done in the sector, we found out that the staff would not be short-changed, nor deprived of their employment.

“We also found out that he has not contravened the law because we were worried that he might be acting against the law; but having looked at the law with him, we found out that he did not contravene the law.

“We also told him that he ought to have done more consultation with the National Assembly for which he apologised and he said that henceforth, more consultation would be done. We feel that he is working in the best interest of Nigeria.

“We want all Nigerians to support him so that we can get out of the mess in which we have found ourselves in this country today. One good thing today is that the price of fuel is going up and if we don’t do the reorganisation when we are in trouble, it may be more difficult for us to do anything when the price goes up.

“We will continue to pray that the price of oil will be going up and Nigeria will be better. What the minister has done is the internal reorganisation of NNPC. From the figure given to us by the NNPC, the organization is making about N30bn loss every month, if we continue like that, there is no time we are going to get out of the hole which we found ourselves.”

The senator added, “With the gradual reorganisation that the minister has been doing before, the loss of the NNPC as of last month was only N3bn. He is already assuring us that by July, we would have got to a level that the NNPC will not be making loss any longer.

“The only way to do it is to put all hands on the plough. Let everybody work for his pay. Let there be no fat cow that will just suck without contributing anything.”

In his contribution, acting Chairman, Senate Committee on Petroleum Resources (Downstream) Senator Jibrin Barau, said the most important thing was that the Senate was convinced that no law was contravened.

However, the House of Representatives reiterated its opposition to the restructuring at the NNPC, insisting that the action remained illegal so long as the law setting up the corporation was not amended to reflect the changes.

It noted that a key solution was the PIB, which the House said President Muhammadu Buhari had yet to present to the National Assembly.

The Chairman, House Committee on Media and Public Affairs, Mr. Abdulrazak Namdas, said the House had so far made three requests to Buhari to present the bill but that the President had not responded.

According to him, it was the Speaker, Mr. Yakubu Dogara, who made the requests on behalf of the House.

Namdas said, “Mr. Speaker has called Mr. President three times to at least bring an executive PIB. We have not received the bill or his response, only to hear that the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has unbundled the NNPC into seven units.

“What he has done is not in line with our laws.”

However, the minister re-stated his earlier statement that he was merely carrying out a reorganisation at the NNPC and not unbundling the corporation.

A lawmaker, who attended a meeting between Kachikwu and the joint House Committees on Petroleum (Upstream and Downstream), told one of our correspondents that the minister explained that his actions were misconstrued.

“He took some time to explain that he was reorganising the operations of the corporation internally and not unbundling it as had been earlier interpreted. He came with officials of the NNPC,” the source added.

Speaking on the need to amend the NNPC Act, Namdas noted that the extant law provided for a Petroleum Inspectorate Directorate, which was not among the seven just created by Kachikwu.

He explained that the House recognised the powers of the executive to introduce reforms, but said such would achieve limited results without following “the due process of law.”

Meanwhile, at its plenary, urged Buhari to constitute the National Council on Public Procurement in line with the provisions of Section 1 of the Public Procurement Act.

In its resolution, the House observed that eight years after the enactment of the Act, successive administrations had failed to constitute the council.