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Tag: NNPC

  • Rusted NNPC pipes contaminate community’s water

    Rusted Nigerian National Petroleum Corporation (NNPC) pipes have contaminated water in Baruwa-Ipaja, Secretary of the Community Development Committee of Ayobo Ipaja Local Council Development Area (LCDA) Chief Bayo Shittu has said.

    Speaking at the Ayobo Ipaja LCDA Stakeholders’ Forum at the council secretariat last weekend, Shittu said the contaminated water is not good for the people’s health.

    “NNPC has destroyed our water since 1998 and this polluted water has affected the well being of our children,” he said.

    The community, he said, has reported to NNPC but up till now nothing has been done.

    “We drew the attention of NNPC and when they came, the statement they made was to construct three tanks but up till now, no single drop of water comes out of the tanks they dug,” he said.

    Shittu appealed to the government to provide potable water for the community.

    The council Executive Secretary, Dele Ayinde represented by Femi Owolabi, assured the residents that something would be done.

    “We will look in the complaints and challenges; be rest assured that we will include all your demands into this year’s budget to meet your aspirations,” he said.

    The stakeholders’ meeting, he said, is a feedback mechanism between the people and the government.  He said his administration would focus on projects that will transform the council.

  • NNPC, NGO promise to enforce N50 per litre of kerosene

    NNPC, NGO promise to enforce N50 per litre of kerosene

    The Nigerian National Petroleum Corporation (NNPC) and the Coalition of Grassroot NGO (CGN) have set up a monitoring team to ensure that kerosene is sold at N50 per litre, The Nation has learnt.

    The product though officially sold for N50 per litre, goes for over N120 per litre.

    The 15-man team will ensure that the product does not go to the black market through  middlemen. The Team Leader,  Waheed Adetunji, assured that Nigerians would not be subjected to hardship as a result of the inordinate ambition and get rich-quick attitude of a few Nigerians. “We have a job to do to ensure kerosene gets to the common man regularly and at regulated price of N50 per litre,” he said.

    He said the team would ensure that no one buys more than 25 litres of the product at a go. To checkmate officials and dealers, the  team would also ensure that measurement of kerosene at each station was taken before and after sales daily. It is also expected to report cases where there are infractions  of procedures by the dealers.

    The product will be available between 8am and 5pm daily.

    According to Adetunji, this  will halt the mid-night racketeering.

    Adetunji said kerosene would be sold at the NNPC Mega Stations and affiliated stations are scattered all over the country, urging Nigerians to take advantage of this intervention to get kerosene at the regulated price.

  • Oil price slump: Uncertainties loom over JV projects

    Uncertainties loom   over several Joint   Venture (JV) projects that international oil companies (IOCs) are executing with the Nigerian National Petroleum Corporation (NNPC).

    They are planning to scale down the projects that are either in their planning or advanced stages. No thanks to the slump in oil price.

    The Nation learnt that IOCs and some indigenous oil companies under the aegis of Oil Producers Trade Section (OPTS) are discussing  the oil price regime and its implications.

    The OPTS, it was also learnt, had decided that most of the projects that would be affected were JV projects that are being planned for development and those that they are being executed.

    A source in the petroleum industry said the OPTS members were meeting and would soon come up with a position on the issue. The source said the majority of projects under the production sharing contract (PSC)   would not be affected by the OPTS’ decision since they are funded by the IOCs.

    The source also said some major gas projects, such as the $5 billion Trans-Nigeria pipeline project, and the $4 billion Southnorth gas pipeline, designed to be built from Calabar through Ajaokuta and to Kano, would be put on hold. The Trans-Nigeria pipeline project is a major backbone pipelines targeted at integrating the gas transmission systems in the country. It also forms part of the Trans-Sahara pipeline project.

    Another project the oil price fall will affect is the over $5 billion Brass Liquefied Natural Gas (Brass LNG) project, which will be sited on Brass Island in Bayelsa State. The project, which was recently resuscitated after years of delay due to fund challenges and pull out of ConocoPhillips, which held 17 per cent interest in the project will be affected, the source said.

    Some of the IOCs’ officials  declined to make definite statements but noted that that they would come out with  statements on the issue. Oil companies operating JVs with the Nigerian National Petroleum Corporation (NNPC) include Shell Petroleum Development Company (SPDC), ExxonMobil, Chevron, Total, Eni/Agip, Addax Petroleum, Petrobras, Pan Ocean, among others.

    The NNPC has reduced its capital budget for the 2015 joint venture oil operations by 40 per cent to $8.1 billion from the initial budget of $13.5 billion due to the slump in crude oil prices.The budget was planned when oil price was around $80 per barrel while price stands at about $52 per barrel.

    The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Joseph Dawha, at the Offshore West Africa conference in Lagos, said the  fall in oil price affected about three deep water projects, adding that many firms had serious cash challenges due to oil price decline.

  • Overnight lending rate soars to 95%

    Overnight lending rate soars to 95%

    The overnight lending rates climbed to near record highs on Friday after the Central Bank of Nigeria (CBN) sold Treasury bills to mop up liquidity and enforced a cash reserve requirement for lenders, dealers said.

    Amid a squeeze on the naira, the rate commercial banks charge other banks for borrowing on the interbank market jumped to 95 percent, from 20 per cent on Thursday.

    Overnight rates had climbed to a record high of 100 percent on Tuesday after the CBN soaked up liquidity to support the naira currency, which fell through the psychological 200 mark for the first time this week.

    The central bank sold 115 billion naira ($575 million) of debt in a bid to tighten liquidity in support of the local currency by draining cash and pushing up lending rates.

    Traders said the state-owned energy company, Nigeria National Petroleum Corporation (NNPC), also recalled a portion of its deposits with banks, putting further pressure on liquidity.

     

  • NNPC and foren-sick auditors

    It must be in order for Hardball to confess upfront that he is not particularly in love with accountants – and lawyers too. He would be the most happy if the world could do without them or better still, do away with them. Why? He thinks they do more harm than good to the modern man; or if you prefer, they cause more harm to the civilised world.

    Lawyers are not the subject of focus here, so we let them go in peace today. Besides, and in fairness to lawyers, they hardly start the quarrels, they are only on hand to help complicate and cash in on them.

    Accounting on the other hand and by Hardball’s estimation, is the most legitimised scam man ever contrived. It is a dreadful irony that a system that has been perfected over the ages to help man track his wealth is also the one most vulnerable to abuse and manipulation. For instance, every audit or accounting report can bear at least half a dozen versions.

    In other words, six different reports can be generated on one company’s particular accounts and mind you, not by six different firms, but one. Yes, just one accounting firm can produce for you, six different reports if you so desire and would make it worth their while.

    Any John Doe who can read an annual report of accounts knows that accounting is more about creative (mis)application of numbers for a desired result than a true picture of business transactions for a period. Yet people hardly speak up or demand a revolution. We have seen companies – some so-called blue-chip companies – audited to death by equally top-notch audit firms. Often, we have seen companies that are mere hollow shells yet reputable audit firms hide such deleterious facts from the investing public for many years until the dam of infamy busts and everyone gets drowned in it. Everyone but the audit firm.

    The best example in Nigeria is the Cadbury debacle a few years ago: for over a decade, a foremost audit firm reassured shareholder and the public that Cadbury was a blue-chip company. By the time it came to light that Cadbury had turned to dust, it was almost beyond salvage. It took almost another decade to revive it. Of course casualties were aplenty. The audit firm lost nothing; not even its ugly face.

    Who does not know the story of Arthur Anderson (AA)? At the apogee of AA, the entire globe was at its feet; it had its pick of jobs from government and corporate. Woe betide you if you worked with an AA alumnus: you would almost believe he resumed from Mars and returned straight to Mars after work. AA became a deity worshipped by denizens of the corporate world until a certain mega energy firm called Enron crashed. The world suddenly woke up to the fact that AA is actually a mere wooden totem. And if gold rust…

    As you may have guessed dear reader, the leitmotif of this long verbal excursion is that Hardball is of the lay opinion that something seems sick about the recent PWC’s forensic audit of the Nigerian National Petroleum Corporation, NNPC. Especially because they call it forensic!

  • NNPC’s forensic audit

    •FG should publish the report in full if it has nothing to hide

    For a corporation long known to be inured to shame and probity, it comes as no surprise that the Nigerian National Petroleum Corporation (NNPC) would mount an orgy of self-exculpation barely hours after the Auditor- General of the Federation, (AuGF), Samuel Ukura, made public the highlights of the PriceWaterHouse Coopers (PwC) forensic audit report on the alleged missing $20 billion. Not even a key highlight of the PwC report asking NNPC and its subsidiary, the Nigerian Petroleum Development Company (NPDC) to refund “a minimum of $1.48bn,” to the Federation Account, it seems, could suffice to temper the corporation’s mission in self-justification and image laundering.

    By the way, were the NNPC to be any guilty of the aforementioned, the Jonathan administration would be just as complicit for allowing the corporation to go public with the cherry-pick even as Nigerians are denied the opportunity of seeing the entire document.

    To be sure, the PwC can claim to have delivered on its mission of investigating the shortfall in remittances to the Federation Account as alleged by the former Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi. What remains at issue is whether the process – from duration to the point of submission – has resolved the riddle of the missing $20 billion.

    We have no difficulties in stating the obvious – which is that the entire process is, as would be expected in the circumstance, highly disappointing. To start with, it is worth noting that the report is actually coming four months late. Given that the Minister of Finance, Ngozi Okonjo-Iweala had stated in April last year that the firm had 16 weeks to do the job, the report ought to have been submitted last September. Without the relentless pressure mounted by various segments of the Nigerian society, it seems unlikely that the report which the administration is now so eager to claim some credit for would have seen the light of the day. That the administration finally caved in would owe in part to the fact that the general elections are only a few weeks from now; and the nigh impossibility of being able to fob off questions about the scandal.

    Of greater interest to us however is what President Goodluck Jonathan has chosen to do after receiving the report. Ordinarily, given the intense public interest generated in the wake of the allegations, we would have expected the administration (ever so eager to prove that it had nothing to hide) would cause the findings to be published to enable citizens – at whose behest the investigation was undertaken – draw their own conclusions. Rather, the President opted to hand the report to the AuGF with a directive to the latter to publish its highlights.

    The point really is that things have gone beyond the attempt to cherry-pick the report. Asking the AuGF to do what is no more than an executive summary, aside being opportunistic, is hardly helpful to the cause of establishing the truth. Moreover, audit reports are by their nature public documents. Why the Jonathan administration would choose to treat it as a matter covered by the Official Secrets Act is hard to comprehend; just as the notion that Nigerians cannot comprehend let alone draw their independent conclusion is absurd.

    As for the order by Minister of Petroleum Diezani Alison-Madueke to the NNPC to pay the outstanding $1.48 billion due to the Federation Account, we consider it superfluous and utterly condescending. Clearly, the magisterial directive merely confirms what is today known as the farce going on at the petroleum ministry where the minister doubles as sole administrator. Until the nation is availed the entire PwC report, we would expect the NNPC and the petroleum ministry to spare Nigerians the distractions.

  • NNPC report cooked – APC

    NNPC report cooked – APC

    The audit PriceWaterhouseCoppers (PWC) report which indicted the Nigerian National Petroleum Corporation (NNPC) was cooked from the beginning, the National Publicity Secretary of the All Progressive Congress (APC), Alhaji Lai Mohammed, said on Friday.

    He insisted that whether the missing money from the treasury was $1.48bn or not, the NNPC was corrupt.

    Mohammed, who spoke to reporters in Abuja at the weekend before a debate organized for political parties by Centre for Democracy and Development, accused the NNPC of lack of transparency.

    He said: “You see, the thing we have always been saying about NNPC accounting is that it is not transparent. There is nobody that can probe NNPC account because they receive, they spend, they keep.

    “And one of the things we have been advocating in unbundling the NNPC is that the corporation should restrict itself solely to one thing: operation. We should have another body for regulation.

    “But in a situation whereby the same person take receipt, field licenses and spend, what do you want to audit? You audit the book that I gave you so the book has been cooked from the beginning.

    “But even if it has been cooked and they couldn’t uncook it and they are saying now it is $4billion or $1.6billion and $1.6billion is more than what the Osun State government receives a year. It is more than that because $1.6billion is almost N300bn. Osun doesn’t receive that in two years.”

    “But what we want is a root and branch of NNPC where we have checks and balances. They cannot be issuing licenses, collecting taxes royalties, they cannot be keeping the money. It is not done anywhere in the world.”

    He said that Nigeria needs public sector reform to fight corruption.

     

  • NNPC to pay $1.48bn

    NNPC to pay $1.48bn

    Auditing giant PriceWaterhouseCoppers (PwC) has said $1.48 billion is missing from the treasury —no thanks to  the Nigerian National Petroleum Corporation (NNPC).

    Addressing reporters on the highlights of the PwC report as requested by President Jonathan, the Auditor General of the Federation, Mr. Ukura Samuel, said the PwC report centered on NNPC Costs; Ownership of NPDC revenues and Kerosine (DPK) subsidy.

    Samuel stated that “based on the information available to PwC, and from analysis, the firm submitted that NNPC and NPDC should refund to the Federation Accounts a minimum of $1.48 billion.”

    The Auditor General before presenting the PwC audit highlights categorically stated that President Goodluck Jonathan “cannot direct” him to release the highlights or complete details of any report but can “request” for the release of the highlights. His office, he said, is mandated by law to submit its report to the National Assembly and not to the Presidency.

    With regards to NNPC cost, from where the $20 billion was alleged to have gone missing, the PwC report berated NNPC’s operations which it described as “an unsustainable model”.

    The report noted that 46 per cent of proceeds of domestic crude oil revenues for the review period was spent on operations and subsidies while the corporation is unable to  sustain monthly remittances to the Federation Account Allocation Committee (FAAC) and meet its operational costs entirely from the proceeds of domestic crude oil revenues and have had to incur third party liabilities to bridge the funding gap.

    NNPC provided transaction documents representing additional cost of $2.81 billion related to the review period, citing the NNPC Act LFN No 33 of 1977 that allows for such deductions.

    However, PwC was at a loss “whether such deductions should be made by NNPC as a first line charge before remitting the net proceeds of domestic crude to the federation accounts.”

    Based on this, PwC recommended that “the NNPC model of operation must be urgently reviewed and restructured, as the current model which has been in operation since the creation of the NNPC cannot be sustained.”

    In the case of the ownership of the Nigerian Petroleum Development Company (NPDC), PwC stated that NPDC generated $5.11 billion (net of royalties and petroleum profit tax paid), relied on the legal opinion provided to Senate Committee by the Attorney General on the subject of the transfers of NNPC’s 55 per cent portion of oil leases (OMLs) involved in the Shell (SPDC) divestments which impacted crude oil revenues in the period.

    The PwC report noted that “the Attorney General’s opinion indicated that these transfers were within the authority of the minister of petroleum resources to make.”

    The report added that “NNPC’s 55 per cent portion of oil lease (OMLs) involved in the Shell divestments related to the eight OMLs were transferred to NPDC for an aggregate amount of US$1.85 billion. So far, only the amount of the US$100 million had been remitted. PwC also added that they had expected a transfer basis higher than the US$1.85 billion earlier mentioned.”

    PwC reported that “NPDC had done a self assessment of PPT and Royalty and had unpaid self assessed PPT and Royalty to the tune of $0.47 billion related to the review period”. PwC added that it did not obtain any information that suggested that NPDC has been assessed for PPT and Royalty for the review period.

    Based on these, PwC recommended that NPDC should remit dividend to the NNPC and ultimately to the federation account based on NPDC’s dividend policy and declared dividend for the review period.

    For kerosine subsidy, PwC determined that $3.38 billion relating to DPK subsidy cost was incurred by the NNPC for the review period. PWC confirmed that there was indeed a presidential directive issued on the 15th of June 2009 instructing that subsidy on DPK be stopped and that there was a correspondence between PPPRA and the CBN governor to the effect that “PPPRA had ceased granting subsidy on kerosine since the Presidential directive of 15 June 2009, but kerosine subsidy was appropriated for in the 2012 and 2013 FGN budgets.

    However, because the presidential directive was not gazetted  and there has been no other legal instrument cancelling the subsidy on DPK, the subsidy has remained in effect.

    Therefore, PwC recommended that an official directive be written to support the legality of the kerosine subsidy costs to be followed by adequate budgeting and appropriation for the costs.

    Based on PwC’s audit it was revealed that total gross revenues generated from FGN crude oil liftings was $69.34 billion and not $67 billion as earlier stated by the senate reconciliation committee for the period from January 2012 to July 2013 and within this $69.34 billion, $28.22 billion was the value of domestic crude oil allocated to NNPC.

    Also, total amount spent as subsidy for PMS amounted to $5.32 billion, $3.38 billion was spent on subsidy for DPK (not appropriated), $1.19 billion was spent as other third party financing arrangement and equity crude oil processing costs.

    Total cost directly attributable to domestic crude oil amounted to $1.46 billion while other costs incurred by the NNPC not directly attributable to domestic crude oil was put at $2.81 billion. Revenue attributable to NPDC as submitted by the former NPDC managing director to the senate is $5.11 billion.

    PwC stated that this amount needs to be incorporated into the financial statements of NPDC from where dividend should be declared to the federation accounts.

    In addition, signature bonus, PPT and Royalty yet to be paid by NPDC is $2.22 billion. Total cash remitted into the federation accounts in relation to crude oil liftings was $50.81 billion and not $47 billion as earlier stated by the senate reconciliation committee for the period from January 2012 to July 2013.

  • Minister directs NNPC to pay outstanding cash

    Minister directs NNPC to pay outstanding cash

    Petroleum Resources Minister, Mrs. Diezani Alison-Madueke yesterday directed the Nigerian National Petroleum Corporation (NNPC) to defray the outstanding $1.48billion Nigerian  Petroleum Development Company (NPDC) signature bonus, taxes and royalties in line with the recommendation of the forensic audit report.

    The forensic audit report on the alleged missing $20bn unremitted oil revenue carried out by auditing giant PriceWaterhouseCoopers had  absolved the  corporation  of culpability over the allegation of non- remittance of $20bn, saying that what is due for remittance to the Federation Account is $1.48bn, the Nigerian Petroleum Development Company (NPDC) being signature bonus, taxes and royalties on the assets transferred to the Corporation’s upstream subsidiary, the Nigerian Petroleum Development Company.

    In a statement made available to journalists, the Corporation noted that the release of the forensic audit report has finally laid to rest the controversy surrounding allegations of “missing oil revenue” or non-remittance to the Federation Account.

    The Corporation explained that it was not true that it was indicted in the Forensic Audit Report as being speculated in some quarters as the $1.48bn that the audit firm recommended the Corporation to remit to the Federation Account was not part of the alleged unremitted revenues from crude lifting.

    It explained that the $1.48bn was never in dispute as it is made up of statutory payments such as signature bonus, taxes and royalties which are statutory payments that come with assets acquisition.

    It stated that the delay in payment was due to the reconciliation processes between the Department of Petroleum Resources (DPR) and the NNPC.

    Mrs. Alison-Madueke has directed the NNPC to defray the signature bonuses, taxes and royalties in line with the recommendation of the forensic audit report.

    The Corporation stated that the forensic audit report and the Senate Committee on Finance report on the unremitted revenue all alluded to the fact that NPDC reported crude oil revenues of $5.11bn.

    It explained that the forensic audit acknowledged that the total cash remitted into the Federation Accounts in relation to the crude lifting in the period under review was $50.81bn and not $47bn and that subsidy on premium motor spirit and dual purpose kerosene stood at $8.7bn.

    On kerosene subsidy, the Corporation said that the Forensic Audit Report also clarified that subsidy on DPK is still in force as the presidential directive of 19th October, 2009, was not gazetted in line with provisions of section 6 sub section 1 of the Petroleum Act of 1969.

    The Forensic Audit Report also acknowledged that Section 7 Subsection 4 of NNPC Act empowers the Corporation to defray its costs and expenses including the costs of its subsidiaries from crude oil revenues, though it also recommended that the laws be reviewed to make the Corporation meet its costs and expenses entirely from the value it creates.

    The Federal Ministry of Finance last year hired the PriceWaterHouseCoopers to investigate the veracity of the allegation by the former Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, that $48.9bn and later $20bn was not remitted to the Federation Account by the NNPC.

  • Oil firms slash capex, work programmes on price crash

    Oil firms slash capex, work programmes on price crash

    • Job cut, projects cancellation loom

    Oil companies are cutting their capital expenditures (capex) and work programmes for this year as crude oil price remain below $50 per barrel for close to two months, it was learnt.

    The implication of these cut downs, according to the Managing Director of Seplat Petroleum Plc, Austin Avuru, is that as the oil firms cut their capex, they are also  reducing future oil production.

    Avuru told The Nation that the stable long term average price of crude should be within $70 and $80 per barrel noting that if the price is at $40 per barrel, a number of projects will be cancelled and work programmes will be reviewed to reflect the current realities. He also confirmed that Nigeria companies will cut down their workforce to ensure that their capital expenditures (capex) and operating expenditures (opex) remain within the generated revenue from the current oil price. However, he assured that Seplat will not sack its staff as a result of oil price slump.

    He said: “A few things will normally happen when oil sells at $40 per barrel. A number of projects will be cancelled. Every company in Nigeria today is reviewing its capex spend and its work programme. There will be projects that will be cancelled in deepwater, shallow water, swamp and even some high capex projects on land. In the near term if the low price persists and the capex cut continues, it will affect production in the future. When you cut down capex today, you are inevitably cutting production in the future. And once the capacity production gets lower and demand doesn’t fall with that production, there will be pressure on price.”

    The Seplat chief said in periods of oil price decline like this, what is important is operational discipline and prudence to make sure that a company’s cash flow remains neutral at least if not positive, adding that if a company can establish operational and financial discipline at a period like this, it can only get better. “So for us (oil firms), these are trying times but these are the kind of times that are require from time to time to test your resilience in the business and also to remind you that should prudent because there will always be tough days like these,” he added.

    “I have also heard that some companies will lay-off. Will that apply to Seplat? I can specifically say no, not because we are doing better than other companies but because fortunately we don’t want to kill the growth mode. Ordinarily, we should still be growing even our human capital, so what will happen in reality with cutback in capex and work programme, is that we will simply reduce our growth rate in terms of manpower rather than fire the ones we already have. So, Seplat wouldn’t be firing but it will slow down on its manpower growth because of the existing reality.

    The Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr Joseph Dawha had last week at the Offshore West Africa conference in Lagos, said that the ongoing decline in crude oil price will cause delay of about three deep water projects in Nigeria.

    Dawha said that many companies had serious cash flow challenges due to oil price decline which has to reduce their capital expenditure adding that it will result in delay of economic viable projects. “Delay in major projects will now be a feature in many companies’ project and progammes, especially for offshore project,” he added.

    He said some deepwater projects will suffer delays or outright cancellation including one in Angola, three in Nigeria and one in Ghana, while two shallow water projects in Angola, one in Nigeria and two in Ghana may also suffer delays.