NNPC: $10.8bn Not Missing, Part of Unpaid Operational Costs

The Nigerian National Petroleum Corporation (NNPC) has said the disputed $10.8 billion, which has not been paid into the Federation Account, is not missing but formed part of its operational costs within the period January 2012 to July 2013 referred to by the Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi, in his letter to President Goodluck Jonathan on unremitted oil revenues.

It explained that repairs on Nigeria’s 5,000 kilometres of petroleum pipeline network which is constantly subjected to vandalism, unpaid subsidies on kerosene and petrol, as well as its maintenance of national strategic reserves for petroleum products, were all parts of its operational costs accounted for by the $10.8 billion

The corporation said in a statement yesterday in Abuja that issues surrounding the allegation of the unremitted $49.8 billion against it had since been explained but it appears that the initial dust raised by Sanusi’s letter was yet to settle.

In the statement issued by its General Manager, Media Relations, Dr. Omar Farouk Ibrahim, NNPC said it had to make further clarifications considering the extant media reports on the same issue, which it said were misleading.

“We are therefore constrained to respond and clarify the issues once again to help those who do not yet understand the clarification made earlier by the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, Minister of Petroleum Resources, Mrs.  Diezani Alison-Madueke, Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, and Group Managing Director of the NNPC, Mr. Andrew Yakubu, at a joint press conference which was widely reported in the media.

“For the avoidance of doubt, there was no where it was stated or admitted by any of the parties in the course of the press conference or anywhere else that the sum of $12 billion or $10.8 billion out of the alleged unremitted $49.8 billion was missing.
“The truth of the matter is that as at the time of the press conference, $30 billion of the alleged unremitted oil revenue had been reconciled by all the parties involved. Dr. Okonjo-Iweala did explain that the reconciliation was an ongoing process and that the balance of $10.8 billion was still being reconciled,” Ibrahim said.

He added: “At no time did anybody, be it the Coordinating Minister for the Economy or the CBN governor say that the outstanding $10.8 billion was missing. It is simply curious how some sections of the media are not prepared to see the difference between the two positions – reconciliation in progress versus money missing.

“These two positions are simply not the same thing no matter the angle from which anyone chooses to see them.”

Giving a breakdown of NNPC’s operational expenses which make up the $10.8 billion, Ibrahim said: “Having made that point, it is also pertinent to further clarify that NNPC as a national oil company is saddled with certain onerous responsibilities that other oil companies are free from.
“For instance, as the supplier of last resort, NNPC has the responsibility of ensuring that there is adequate supply of petroleum products whether the market is favourable or not.

“The yet to be reconciled $10.8 billion can be located in the expenses on some of the responsibilities which the corporation carries out on behalf of the federal government with respect to the domestic crude oil utilisation.

“One of such issues is the unpaid subsidy on kerosene and premium motor spirit (petrol). It would be recalled that Dr. Okonjo-Iweala was earlier in 2013 reported to have stated that she had not paid any subsidy on kerosene since she assumed office.

“The truth of the matter is that since 2007 when the late President Umaru Yar’Adua reviewed the prices of petroleum products, following the general strike in protest against the price hike by his predecessor, the issue of subsidy payment on kerosene was left hanging and NNPC was mandated to continue to sell the product at a subsidised rate of N50 per litre.

“Since then, not a dime has been paid to the corporation as subsidy on the product. It is also on record that since January 2012, NNPC has been importing the bulk of the premium motor spirit used in the country.
“NNPC has successfully kept the nation wet with products, especially premium motor spirit, these past two years as can be verified from the absence of queues at petrol stations during the end of year festivities.

Ibrahim added that another area of huge expenditure borne by NNPC on behalf of the federal government was the maintenance of national strategic reserves for petroleum products.
“At every point in time round the year, NNPC maintains huge petroleum products reserves in the national territorial waters as a result of pipeline vandalism which has made access to most of the inland storage facilities impossible.

“Though all hope is not lost in this regard, as the corporation has since launched an aggressive depot rehabilitation and pipeline recovery exercise with amazing results so far, however, for the purpose of strategic reserves, at the rate of 40 million litres of petrol national consumption per day, NNPC maintains about 32 days sufficiency of petrol.
“The cost incurred in this mandate is also part of the $10.8 billion yet-to-be-reconciled outstanding figure,” he said.

Ibrahim also stated that the third component of the expenditure comprises the cost of pipeline vandalism and oil theft, which it said were security issues.

“While we acknowledge that successive governments and their agencies like the military, police, NSCDC, etc, have been trying hard to create an enabling environment for the protection of our key infrastructure, including pipelines jetties, depots, etc, the sheer volume of vandalism and theft is just enormous.

“Over 5,000 kilometers of pipelines belonging to NNPC have been prone to incessant attacks. The cost of repairs each time the pipelines are hacked is also an issue. All these make up the yet-to-be-reconciled balance of $10.8bn.

“All the parties involved in the reconciliation process are aware of these facts and the figures that are being thoroughly scrutinised. At the end of the day, they will make their findings public as they did last time.

“It is therefore incorrect for anyone or medium to continue to misinform the public that the sum of $10.8 billion or $12 billion of oil revenue is missing,” Ibrahim insisted.

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