How The Government Loses Billions Of Dollars through NNPC

By Stephen Ubanna

President Muhammed Buhari  , who incidentally is the senior minister of ministry of Petroleum Resources, appears to have used his first term in office to study the nation’s oil industry and never to be hard on the Petroleum product importers and the marketers including the Nigerian National Petroleum Corporation, NNPC, to avoid sabotage .

H e may have feared that  if he should come hard on the NNPC and the marketers  they may gang up to creat artificial scarcity of petroleum products in the  country, particular petrol, to put the Administration in bad light. The fallout was the fluctuation of petrol Consumption in country to force the government to believe that that  the country fuel consumption level has skyrocketed to 53 million litres per  day to the  2016 figure of 36 million litres.   NNPC officials may have warmed themselves  into the heart of Ibe Kachukw, the minister of state , ministry of Petroleum Resources,  when they gave him the financial figures of September 2018, showing that the landing cost of  petrol in the country which was  at the neighbourhood of N180.00 per litre.

Based on the figure ,  they had  teamed up with the Markers  to paint the Hameed\ Ali, a retired Army Colonel led Nigerian Customs Service, NCs, to give the false impression that  10 million of the petrol imported for  the local market   were smuggled  through the nation’s porous borders the  , particular in the north  and the south west, to justify why the daily  petrol consumption has gone up and the need to review upwards the  price of a litre of  petrol to N180.00 from the current price of N145.00 per litre to stop the smuggling of the product.  Investigation by

Insiders told  the Value News that  the country subsidy regime which stood at about N1.2 trillion in 2015 has shut up to N1.3 billion in last four years.  But  market watchers believe  that  subsidy is about N1.86 trillion.

 Note that that the NNPC, which is the sole importer oof  petrol in the country has cried out to the government that with the current price of N145.00 per litre in the market   it may not  have the capacity to pay the difference.  ”We are still owning  the money  arising  from such subsidies”,  NNPC officials had said. They got it wrong.

Hameed Ali: Comptroller General, NCS

Unknown to them, Buhari and Kachukwu, the minister of state overseeing the daily activities of the nation’s oil industry including NNPC, have a different agenda to  on how to block the loophole to forestall the VIPs from further thieving of imported petrol and holding the nation to ransom. Kachukwu, at the instance of  the President was said to have reached out to the technocrats in the  in the Department of Petroleum Resources, DPR and  NNNPC, to ascertain the figures , reeled out by the Corporation which he   believes may have been   spiked.

This may informed the reason why the minister  who got the Presidential  approval  gave the nod   to DPR,  to ”install  the N17 billion tracker technology  that could track every product  landed into the country through the seaports for the first time.  This is bad news for NNPC , officials and the marketers who have been fat  from petrol imports at the expense of Nigerians.  

Kachukwu is optimistic that in a matter of months   the actual truth would come out about the quantities of petrol consumed  in the country  dail. ”We will be able to say for certain , what we really consume daily”, he said.  An agrived minister further said, ”  The government may have found solution to the lies of NNPC and the marketers  by instituting  the quiet audit  to look  at the NNPC  bogus figures ”why we are going up   especially when  the price of  petrol has been hiked per litre”.  

Note that the minister had consistently rejected  the layman excuse given of NNPC and the marketers  over alleged smuggling of petrol across the country  insisting that something is spiking that sort of daily petrol consumption in the country. The minister may have told those that cares to listen going by the tight security mounted at the nation’s Border posts that it was not possible  to smuggle 10 million litres of petrol , at a go  daily,   as the smuggler would require thousands of trucks  to do so.   The country Borders are not that porous , he had said. This may not be the only areas of revenue leakage in NNPC. Another area was  the Production Sharing Contract with the International Oil Companies: Shell Petroleum Development Company, SPDC. Exon Mobil, Nigeria  Agip Oil Company, NAOC, among others.

 Recall that  NNPC had raised alarm in 2015, that the country has lost N60 billion  naira  to the oil producing companies by going into  the PSC,with the Companies  because of their financial  Capacity  to search and drill oil without any financial responsibility on the part of the government  which settles  to collect Signature bonus, royalty and other fees agreed in the business deal.

The oil companies  brought the funds  and the expertise to  undertake the  more technical  offshore exploration activities within Nigeria shores .   According to NNPC sources, the government own the acreage while the oil companies are the contractors.  It is not surprising  why the  companies employ the latest technology  in the search for oil in the offshore acreage  because of the profit motive.  Officials of NNPC, a source disclosed are not brought too close to know the amount of  money spent  in the search for oil by the Companies  to avoid pock-nosing into the business.     

According to the source , if they hit oil in commercial quantities , they were sure to recoup their investment which are only known to them  and make the profit but if they found no oil  in the course of their searching, they would bear the  loss .   Th International oil companies may have cashed in on the loopholes in the deal to shortchange the government with their NNPC  Collaborators.  Eight Companies, including  SPDC, were the first to e in nter such a deal with the government which had  a 30-year lease  before the terms were toughened  2000 , by former Presidents Olusegun Obasanjo in 2000 and Goodluck Jonathan in 2015. But before then the government had been at the losing end as the International oil Companies smile to the bank and repatriate billions of dollars to their country annually.

 Femi Falana, a  senior Advocate of Nigeria, SAN, , who may not  be happy  with the way the international oil companies were going about the PSC  deal  due to the refusal of the Regulatory Agencies, particular, the DPR and NNPC, to enforce the implementation of the terms of the PSC , between the government and the oil companies ,   had written to  Kachukwu  in 2015,  in his  Capacity  as then Group Managing Director of NNPC, and minister of state , Petroleum Resources, to provide details how the country lost $60 billion to the International Companies involved in the PSC deal with the government.

NNPC  may have given Falana , the ammunition to  know that there is too much financial leakages  in the nation’s oil  industry    in 2017,  when it disclosed that the country had lost  over $60 billion ”due to the refusal  of the  Regulatory Agencies officials  to  implement  the terms of the PSC . It was an indictment on itself.

  Shetima  Bana,  acting Chairman  of the Revenue  Mobilisation  ,Allocation and Fiscal Commission, RMAFC,  was said to have also confirmed the loss of the $60 $billion , arising from the non implementation  of the said PSC , with the  companies by DPR and  NNPC  last January .

 This may have strengthened the resolve of Falana, to head to Court to Challenge Kachukwu andd NNPC on the matter. The minister appears to be waiting for such an opportunity as he has vowed to speak on the matter in Court.  Many believe that the revenue loss would have been worse if the duo of former Presidents Obasanjo and Jonathan  had not taken the initiative to review the  terms of the Agreement.

 Note that the  Nigerian Extractive Industries  Transparency  Initiative , NEITI,  had earlier raised alarm  that between 2008 and 2017,  the government had lost  over $28 billion  from Crude oil sales  to outdated  PSC  it has  with the international oil companies, operating in the country. The group  had said that  the country  lost that much because   it failed to review  the 1993 PSCs with the International oil companies. the money may have been lost as  the government is  not making any reference to  it.

1,578 total views, 4 views today

Leave a Reply

Your email address will not be published.