The Nigerian National Petroleum Corporation (NNPC) yesterday finally accepted that the transfer of oil blocks to its subsidiary, the Nigerian Petroleum Development Company (NPDC) valued at the cost of $1.8 billion but for which only $100 million has so far being paid by NPDC was not transparently conducted.
NNPC’s Group Executive Director (GED) in charge of Finance and Accounts, Alhaji Ishiaka Razak, said at a meeting with the Nigeria Extractive Industries Transparency Initiative (NEITI) that the oil blocks transaction was not transparent and requires comprehensive independent investigation.
A statement from the NEITI on the outcome of the meeting in Abuja contained this.
The statement noted that the Chairman of NEITI’s Board, Dr. Kayode Fayemi who is also the Minister of Solid Minerals; NEITI’s Executive Secretary, Mr. Waziri Adio and Razak who represented the Group Managing Director of NNPC and Minister of State for Petroleum, Dr. Ibe Kachikwu were at the meeting.
According to NEITI, the meeting was convened to resolve the frosty working relationship between both organisations, as well as bridge the information gap between them in the execution of their respective mandates.
Razak noted NNPC’s full commitment to the NEITI process. He said the corporation would henceforth deepen its involvement at all levels of NEITI processes in the oil and gas sector.
Continuing on the lingering controversy over NNPC’s transfer of the oil blocks; OMLs 26, 30, 34, 42, 4, 38 and 41: “We in the new management team of NNPC have reviewed that transaction and totally agree with NEITI that the transaction was not transparent and should be investigated.”
NEITI had its 2012 oil and gas audit report stated that Nigeria may have lost billions of Naira from the transaction. Its audit findings were further buttressed by a PwC audit report which also said the NPDC had yet to complete the payment for the assigned assets, with only $100 million paid out of the total value of $1.85 billion assigned by the Department of Petroleum Resources (DPR).
NNPC and NEITI had in the past held different positions on this transaction, with the former insisting that the transaction was duly completed.
Also in the statement, NNPC provided its defense of the 445,000 barrels per day (bpd) domestic crude allocation to it from the country’s daily production, as well as other clarifications on revenue remittances to the federation account, management of the fuel subsidy regime, Joint Venture cash call and its debt to the federation.
On domestic crude allocation of the 445,000bpd which NEITI has over the years faulted in its reports as source of huge loss of revenues given the fact that refineries are not working, the corporation said: “It is based on its responsibility to ensure availability of petrol for local consumption.”
Razaq added: “We sell the allocated crude using the international market price and use the proceeds to procure products also at international market price and sell the products to domestic market at subsidised price to meet sensitive local consumption demand.”
He further explained that in carrying out this statutory national responsibility, it often put the NNPC at debts and exposed it to enormous national pressure to meet citizen’s demands.
He however stated that in-line with the NEITI’s recommendations in its audit reports, the on-going restructuring in NNPC would involve unbundling it into autonomous business units that will operate commercially, profitably and transparently.
The statement also quoted Fayemi to have welcomed the spirit of the new team in the NNPC and called for closer cooperation based on mutual respect between NEITI and the NNPC.
“The role of NEITI in the extractive industries is to ensure that revenues from oil, gas and mining are prudently managed to support national development, reduce poverty and positively improve the lives of the citizens. We need the NNPC to understand this and open its doors for NEITI operations,” said Fayemi.