BREAKING NEWS, Oil & Gas
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The Nigeria Extractive Industries Transparency Initiatives recants allegations that the transfer of $1.8 billion oil blocks to Nigeria Petroleum Development Company was not transparently done
THE Nigeria Extractive Industries Transparency Initiative, NEITI, has absolved Isiaka Abdulrazaq, group executive director, finance of the Nigerian National Petroleum Corporation, NNPC, of saying that the transfer of eight oil blocks by corporation to one of its subsidiary, the Nigerian Petroleum Development Company, NPDC, was not transparent and would be investigated.
NEITI, in a report on its website stated “categorically that Mr. Abdulrazaq did not say that the transaction was not transparent; neither did he say the new NNPC management would investigate the transaction. It was a discussion about the full payment of the consideration for the divestment and some reconciliation issues flagged in the finalised 2013 NEITI Audits that occasioned the mix-up.”
NEITI also recalled that the divestment of the eight blocks to NPDC was highlighted in the 2012 independent NEITI Audit Report, saying that the report disclosed that the oil blocks were divested by the NNPC to NPDC during the period covered by its 2012 Audit at the cost of $1.8 billion. Of this amount, only $100 million was paid.
The statement noted that in a communication with NEITI at the weekend, Abdulrasaq reiterated what he had said to the NEITI team when asked about the divestment to NPDC was that “The decision (to assign the oil blocks) was consistent with the desire of the NNPC to build the capacity of its subsidiary, the NPDC, to compete favourably in the oil and gas industry as a flagship exploration and production national company. Although the investment decision was made years before the new NNPC team came on board, it was made in accordance with the powers vested in the office of the Minister of Petroleum Resources.”
It also noted that on the concerns of NEITI on transparency issues in the national oil company that predated the new management of NNPC, Abdulrazaq further explained that serious and concerted engagements were in progress between the top echelon of the new team in NNPC, the Department of Petroleum Resources, DPR, and the ministry of petroleum resources to determine the assets, goods and valuable considerations.
“The NNPC values its relationship with NEITI and whilst there are areas where we may professionally disagree as agencies, unbridled and misleading press releases do nothing other than fan the flames of media sensationalism at the expense of the credible work that NEITI as an agency is normally associated with,” Abdulrazaq was quoted as saying.
NEITI said that its internal review also confirmed that Abdulrazaq was quoted out of context and was misrepresented in its earlier statement. “This statement provides the needed correction and clarification. The mix-up is regretted,” NEITI said in the statement.
In an earlier statement made available to the media on the outcome of the meeting, NEITI said that Abdulrazaq had claimed 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 been paid by NPDC was not transparently conducted.
The meeting was attended by Kayode Fayemi, minister of solid minerals and chairman of NEITI’s Board, Waziri Adio, NEITI’s executive secretary, and Abdulrazaq, who represented the group managing director of NNPC. 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. Abdulrazaq noted NNPC’s full commitment to the NEITI process, saying that 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,” Abdulrazaq was quoted to have said.
NEITI had in 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 that 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 weekend statement, NNPC provided its defense of the 445,000 barrels per day, b/d, 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 a 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. We sell the allocated crude using the international market price and use the proceeds to procure products also at the international market price and sell the products to domestic market at subsidised price to meet sensitive local consumption demand.”
He explained further 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 also said 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,” Fayemi said.
— May 9, 2016 @ 01:00 GMT
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