Give Account Of $16.8bn NLNG Dividends ,NEITI Tells NNPC


The Nigerian Extractive Industries Transparency Initiative (NEITI) asked the Nigerian National Petroleum Corporation (NNPC) to account for the $16.8b Nigerian Liquified Natural Gas (NLNG) dividends in the custody.

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.