NNPC’s JV Assets, Priority Projects Funding Gulp $2.64bn in Nine Months

*22 upstream gas projects valued at $23.7bn ongoing nationwide
*Corporation hasn’t remitted funds to FAAC for four months, says Fayemi
*US may counter OPEC’s refusal to increase oil supply

Emmanuel Addeh in Abuja and Victor Ogunje in Ado Ekiti

Out of the budgeted $4.8 billion for Joint Venture (JV) cost recovery and government priority projects between January and September 2021, the Nigerian National Petroleum Corporation (NNPC) was able to spend $2.645 billion during the period under review, latest data from the corporation has shown.

The data also showed that 22 gas projects currently valued at $23.7 billion are ongoing nationwide.
Ekiti State Governor, Dr. Kayode Fayemi has however lamented that the corporation had not remitted funds into the Federation Accounts Allocation Committee (FAAC) in the last four months.

However, while the total pr
ojected expenses for the JV projects and other priority projects in the whole year is pegged at $6.4 billion, broken down into $536 million monthly, the data obtained from the NNPC indicated that actual funding has dropped since the beginning of the year.
The development is coming as the NNPC has in a bid to rev up its funding for important projects and payments to its partners, devised a means to deduct subsidy financing from source before remitting monies to the federation account.

It also comes despite a substantial improvement in oil prices compared to last year when prices of some oil benchmarks hit the negative territory, following the price war between Russia and Saudi Arabia as well as the devastating impact of the COVID-19 pandemic.
The oil price now hovers between $83 and $86.
Against the $536 million monthly budget for the federally funded upstream projects, the NNPC paid out $276.4 million in January, $252.9 million in February, $307 million in March, and $239.2 million in April.

In addition, in May, the corporation funded its JV cost recovery obligations and priority projects to the tune of $392.2 million, then $202.2 million in June and $240.6 million, $352.5 million, and 381.1 million in July, August, and September respectively.
In all, the corporation recorded a deficit funding of $259.6 million in January, $283.1 million in February, $228.3 million in March, and $296.7 million in April.
Furthermore, it recorded a shortfall of $143.8 million in May, $333.7 million in June, $295.3 million in July, $183.5 million in August, and $154.9 million in September this year. Between January and September, a total deficit of $2.1 billion was recorded by the national oil company, according to the record of activities obtained by THISDAY.

It also showed that about 22 projects, mostly in the upstream gas segment, were being developed at different stages, with some of them already nearing completion.
These include the Excravos-Lagos Pipeline Expansion Phase 1 in Edo and Delta, valued at $263.92 million which has now been closed out, with $221.42 million payments due contractors paid based on works carried out.
It’s the same with the Excravos-Lagos Expansion Phase 2, straddling Edo, Delta, Ondo, Ogun, and Lagos states which have so far gulped $597.2 million.
For the 40×30km Odidi-Warri expansion pipeline/ Warri-Oghara pipelines, in Delta, from inception till date, the NNPC said that the project valued at $130 million had consumed N24.07 million.

Also listed are the TNGP/Obigbo node compressor station, TNGP phase 1, Umuahia-Ajaokuta pipeline, and Ajaokuta-Kaduna-Kano (AKK) project which have collectively gulped $117 million, covering revalidation of feed, Right of Way (RoW) acquisition, and outstanding survey payments.
In addition, $8.3 million has been paid for security and storage of line pipes and $11.4 million to relocate pipelines, coastal marine and logistics, water solutions, and soil investigation studies for gas supply to NIPP Egbema as well as Ogidigben/Delta gas city and industrial park.
Several other ongoing projects include the Obiafu/Obrikom-Oben (OB3), which has reached completion, Trans-Sahara gas pipeline, Ibadan-Ilorin-Jebba line, and Asa North processing plant.

Furthermore, the corporation noted that the construction of the West Niger Delta hub, Egbin gas project, upgrade of Sapele metering station, upgrade of Oben metering station as well as the Ajaokuta station and Delta IV, were other ongoing projects.
Also in the pipelines are the facilities to provide fuel supply to Gbaramatu and Excravos as well as the Gbaramatu/Excravos power plant which have already passed through the Engineering, Procurement Construction (EPC) stage.
An analysis of the 22 mostly gas projects showed that in all, they are currently valued at $23.7 billion, with a chunk of the money already expended at different stages of the projects.

In a related development, the Ekiti State Governor, Fayemi at the weekend lamented that the NNPC had not remitted funds into the FAAC in the last four months.
Fayemi added that the failure of the NNPC to remit funds into the Federation Accounts was responsible for the decision of his administration to slash the subvention of Ekiti State University (EKSU).
He made this clarification at a session with the Pro-Chancellor and Chairman of EKSU Governing Council, Prof. Bamitale Omole and other members of the council in Ado-Ekiti on Friday.

At the session, Fayemi explained that the decision of the state government to reduce the monthly subvention to EKSU was a temporary measure occasioned by the nationwide financial challenges.
In specific terms, the governor advised the university “to look inward using their various initiatives and innovation to support the subvention coming from the State Government.

“We have not reduced the subvention of the university. The subvention had been caught in a nation-wide challenge, as I am sure you all know that NNPC has not remitted money to the federation account in the last three to four months.
“So, what we had already planned at the beginning of the 2021 fiscal year has been caught in that web. As much as we tried to increase the Internally Generated Revenue (IGR) at the state level, we have not been able to meet our obligation.
“This is responsible for emergency reduction in the subvention of the Ekiti State University. However, it is not a permanent reduction. It will be reviewed as the state’s finances improve.”

US May Counter OPEC’s Refusal to Raise Oil Supply

Meanwhile, the United States Government yesterday said that it had “tools” to deal with high oil prices after the Organisation of Petroleum Exporting Countries (OPEC) and its allies rebuffed the country’s pleas for the producers to pump more crude.
Asked by a reporter at the White House whether he would authorise a sale from the US Strategic Petroleum Reserve (SPR), President Joe Biden said that his administration would respond at the appropriate time if the prevailing situation continues.

“There are other tools in the arsenal that we have to deal with other countries at an appropriate time,” Biden said.
OPEC+, a group of producers including Saudi Arabia, Russia and other countries, on Thursday snubbed US pleas to go beyond a previous plan to raise oil output by 400,000 barrels per day from December.
“I’m not anticipating that OPEC w
ould respond, that Russia and/or Saudi Arabia would respond. They are going to pump some more oil. Whether they pump enough oil is a different thing,” Biden added.
In defiance of the US request, OPEC agreed to stick with plans to raise oil output by just 400,000bpd as agreed earlier from December, effectively shunning repeated calls from the world’s biggest oil producer for extra production to tame rising prices.
Biden said his administration will discuss the issue, adding: “We can get more energy in the pipeline figuratively and literally speaking.”
US Energy Secretary, Jennifer Granholm, in the same vein, said that the Energy Information Administration (EIA) forecasts petrol prices slipping to $3.05 a gallon in December, saying that that the strategic reserve may come into play.