Oil & Gas

NNPC justifies N865bn deductions from source, says it’s for ‘operational purposes’

•Corporation admits confusion over retaining fuel subsidy, denies withholding N4trn

Access Bank

Group Managing Director (GMD) of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, yesterday, justified the deductions made by his organization to run its operations.

Kyari, who appeared before the Wole Oke-led House of Representatives Committee on Public Accounts (PAC), maintained that the expenditure running into billions of naira was in line with the law that established the corporation.

He cited a Supreme Court judgment and approval by the Attorney General of the Federation to justify his position.

The GMD said: “What we do is backed by the provisions of the law. First, the NNPC Act is very clear that we should submit the net revenues of our cost.

“There is also an informed decision of the Supreme Court and also the Attorney General of the Federation that the position is correct and supported by law.

Kyari’s appearance was engendered by an audit query from the office of the Auditor General of the Federation (AuGF) over dwindling government revenues from 2014 to 2020.

The committee had invited him to defend deductions from source of the sum of N865 billion from the N2.4 trillion generated by the corporation in 2015.

The national oil firm was particularly asked to explain the non-remittance of N3.8 trillion of domestic crude oil sales, non-collection of gas receipts for some months, and refund of N450 billion among others.

The office of the AuGF Auditor General had claimed that the deductions violated Section 162 of the 1999 Constitution (as amended). The provision demands that all incomes must be paid into the federation account.

But Oke maintained that NNPC, as an agency of government, remained accountable to Nigerians, and as such, ought to remit every revenue into the federation account.

The chairman concluded that his panel would constitute a sub-committee to re-examine the legal provisions and ascertain the veracity of Kyari’s claims.

“Let us compare the provisions of the NNPC Act with Sections 88 and 81 of the Constitution. We need to read the provisions of the NNPC Act along with Sections 80, 81 of the Constitution of the Federal Republic of Nigeria to be able to decide which is superior and to follow.

“We would set up a sub-committee of legal-minded members to read through the judgment of the Supreme Court on this matter vis-a-vis the letter from the Attorney General. We need to take an informed position on the matter,” he clarified.

However, the corporation admitted that a silent fuel subsidy, still being shouldered by the government, had accumulated to N4 trillion.

Its chief finance officer, Umar Ajiya, who made the submission, conceded that “there is confusion within government circles at the moment for which a lot of consultations are ongoing on how to handle the implication of sustained subsidy.”

He was responding to a query by the AuGF over alleged unremitted N4 trillion by the corporation.

The lawmakers had relied on the 2016 report of the AuGF wherein the firm was accused of withholding the fund in question.

The document, read by Olutoye Agesin on behalf of Auditor General Aghughu Adolphus Arhotomhenla, stated: “It was observed upon scrutiny of NNPC report to the Technical Sub-Committee of the Federation Account Allocation Committee meeting held in December 2016 that a cumulative total of N4,076,548,336,749.75 remained unremitted to the federation account by NNPC as at December 31, 2016.

“The total revenue unremitted as of January 1, 2016, from amounts payable into the Federation Account by the NNPC was ₦3,878,955,039,855.73.

“The sum of N1,198,138,355,860.30 was due in revenue to the federation account out of the total generated in 2016. However, NNPC paid the sum of N1,000,545,058,966.20 resulting in the withheld amount of N197,593,296,894.02.”

Consequently, the AuGF ordered the corporation’s Group Managing Director (GMD) to remit all funds due to the federation account besides improving on remittances.

Throwing more light, Ajiya observed: “This has to do with the domestic crude that the NNPC takes to refine and sell products or takes to exchange and bring the product into the country.

“And side by side, the government has also fixed the price for PMS and that entails the accumulation of subsidy.

“This issue has been reoccurring for years. Even now, it’s a topical issue in government circles. A lot of consultations are ongoing because at the moment. There is also more or less an implied subsidy as a result of the local consumption.

“What has happened in the past is that the NNPC, based on the appropriation for pipeline and security cost and maintenance, had been deducting these sums before remitting balances to the federation account.

“It became a turbulent issue to the extent that the governors also got involved and commissioned a forensic audit by the PPMC. The forensic audit has been done. The auditor general has a copy.”

The official added: “At the end of the day, that forensic audit established that NNPC was owing about N797 billion but also on the other hand, the federation was also owing NNPC. The net effect was that the NNPC was being owed N239 billion. So, there is nothing like N4 trillion withheld by the NNPC.”


Text other than the caption courtesy of The Guardian



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