ABUJA, NIGERIA–(12.12.13)- The Nigerian National Petroleum Corporation (NNPC) has refuted reports in the Premium Times which credited the Governor of the Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi, alleging that it withheld the sum of N8 trillion representing 76% of the total crude oil revenues from January 2012 to July 2013.
The publication also alleged that Nigeria should rather realize N10.6 trillion in the first 10 months of 2013 based on daily production average of 2.11 million barrels of crude oil sold at $105.84 per barrel.
In a statement signed by the General Manager, Media Relations Department of the NNPC, Dr. Omar Farouk Ibrahim, and made available to the press, the Corporation clarified that the allegation is borne out of misunderstanding of the workings of the oil and gas industry and the modality for remitting crude oil sales revenue into the Federation Account.
“For the avoidance of doubt, it needs to be stated that the figure of 594.024 million barrels of crude oil given by the CBN as the total crude oil lifting for the period of January 2012 to July 2013 does not represent the correct picture of crude oil lifting for the period. From our records, the correct figure is 618.55m barrels. This shows that the CBN understated the actual crude lifting by 4.13%,” Dr. Ibrahim stated.
He explained that revenues from crude oil lifting are in various categories, namely Equity Crude; Petroleum Profit Tax, Royalty, Third Party Financing and the Nigerian Petroleum Development Company, NPDC. It is noteworthy to state that revenues from each of these categories are statutorily collected by different agencies of the government. Royalty for Joint Ventures (JV) is 20% (before cost recovery) while that of Production Sharing Contract (PSC) is 0%. Petroleum Profit Tax for the JV is 85% and PSC 50% after cost recovery. Thereafter Profit Oil which ranges from 7 – 18% lifted by NNPC and remitted to the Federation Account accordingly.
The NNPC collects only one of the aforementioned categories, namely Equity Crude. Petroleum Profit Tax is collected by the Federal Inland Revenue Service (FIRS) Royalty goes to the Department of Petroleum Resources (DPR) Third Party financing goes for Reserve Development Program and Satellite fields Development, while NPDC goes to NPDC for upstream development.
While NNPC pays proceeds from Equity crude directly to the Federation Account with the CBN, the FIRS and DPR pay PPT and Royalty respectively into the Federation Account with the CBN. The sum total of these proceeds make up the alleged unremitted revenues, Dr. Ibrahim stated.
“The 24% of total crude oil revenue receipts which the CBN governor is reported to have acknowledged that NNPC remitted represents the proceeds from the equity lifting which NNPC is directly responsible for. The Nigerian public may wish to know that the entire Federation Equity in JV is about 58%, hence only such equity belongs to the Federation.
The alleged 2.11 million barrels of oil is an aberration as the publication did not recognize other parties (JV/PSC) in the entire value chain. In addition, NNPC believes that this is a calculated attempt to deceive the Nigerian public as about 50% of the 2.11million barrels of daily production is under the PSC regime which the Federation barely makes 10% profit.
The alleged unremitted 76% was paid to the agencies that are statutorily empowered to receive them for onward remittance into the Federation Account”. Therefore this allegation is a case of lack of understanding of the statutory obligations and responsibilities of different Government Agencies, Dr. Ibrahim explained.
He stressed the need for institutions of the Federal Government and top government functionaries to seek understanding of issues that are not clear to them from relevant agencies rather than go public with misleading information that is capable of creating public disaffection. He expressed NNPC’s availability at all times to meet with all relevant stakeholders to clarify issues.
Dr. Omar Farouk Ibrahim
Media Relations Dept.