NNPC Spends N307bn on Subsidy While Domestic Sales is N1trn

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Ibe Kachikwu, minister of state for Petroleum Resources

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THE Nigerian National Petroleum Corporation spends N307 billion on oil subsidy in 2015 while its domestic sales proceeds to the federation account during the period is N1.095 trillion.

The Nigerian National Petroleum Corporation, NNPC, spent more than N306.92 billion on subsidy between January and December 2015. According to the NNPC’s monthly financial and operations report for December 2015 published on its website, the subsidy experienced a dip in the amount transferred to the federation account, which dropped to N1.02 trillion.

In a six-month period from January to June, the NNPC spent N15.35 billion, N11.175 billion, N31.06 billion, N30.01 billion, N53.05 billion, N18.928 billion, respectively on subsidy, while from July to December 2015, it spent N35.95 billion, N35.51 billion, N18.11 billion, N27.66 billion, N16.5 billion and N13.62 billion, respectively. In addition to the amount spent on subsidy, the NNPC recorded crude oil losses of N8.399 billion; product losses of N51.314 billion and spent N103.5 billion for pipeline repairs and management cost.

Also, the NNPC repaid N75.965 billion from its N450 billion indebtedness to the federation account. Specifically, the corporation paid N6.33 billion monthly, from January to December 2015, to the federation account. As a result, NNPC’s total payments from its domestic sales proceeds to the federation account in 2015 stood at N1.095 trillion.

On a month-by-month basis, the NNPC remitted N137.79 billion, N84.5 billion, N103.56 billion, N90.09 billion, N102.99 billion and N101.96 billion for January to June respectively. From July to December, it remitted N77.4 billion, N76.18 billion, N73.26 billion, N88.48 billion, N66.526 and N92.67 billion respectively. Giving a breakdown of domestic sales proceed, the NNPC earned N987.54 billion from the sale of crude oil; N28.26 billion from sale of gas while other receipts stood at N3.625 billion.

However, the NNPC’s exports were significantly lower than its domestic sales, as it earned $4.74 billion, about N948 billion from the export of crude oil and gas in 2015. It utilised $4.13 billion, about N826 billion for Joint Venture cash call funding, and remitted only $607.827 million, about N121.6 billion to the Federation Account. Of the total export sales proceeds, the NNPC earned $3.16 billion from the sale of crude oil; $1.296 billion from the gas sales, and $282.773 million from other receipts.

The report stated that total export proceeds of $197.15 million were recorded in November, consisting of crude oil receipt of $161.90 million, LPG & EGTL $34.84 million, and miscellaneous receipt of $0.42 million. It said: “The current total export receipt dropped by more than 50 per cent following further slide in crude oil prices and additional shut-in of about 35,000 barrels of oil per day (bopd) in Usan and Yoho Terminals. Other factors include none receipt of NLNG Feedstock of about $74.47 million following payment slippage into new year and 57.08 per cent drop in LPG/NGL lifting.

“Total export crude oil and gas receipt for the period of January – December 2015 is $4.74 billion. Of the total receipts, the sum of $0.61billion was remitted to Federation Account while the balance of $4.13 billion was used to fund the JV Cash Call for the period. Thus, JV funding has gulped more than 87 percent of the proceeds. JV cash call is a first line charge to Federation Account and 2015 approved budget requires monthly funding of about $615.8 million. NNPC is therefore mandated to sweep all the export receipt to JV Cash Call funding implying a zero remittance to Federation Account.”

— Feb 29, 2016 @ 01:00 GMT

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