NNPC’s Subsidy Deduction Climbs to N2.6tn in Eight Months

*National oil company denies operating secret account

*Wabote: Nigerian content attracted $60bn FDIs in 12 years, retains $7bn yearly

Ejiofor Alike, Peter Uzoho in Lagos and Emmanuel Addeh in Abuja

The Nigerian National Petroleum Company Limited (NNPCL) continued its zero funding for the federation account in August, extending its prolonged non-remittance to the federal, state and local governments to eight months.

The development came against the backdrop of the company’s deduction for petrol subsidy, which climbed to N2.565 trillion with N525.71 billion deducted in the month under review.

The national oil company has also denied any involvement in the operation of any secret bank account, stating that the Office of the Accountant General of the Federation (OAGF) was aware of its financial transactions.

Meanwhile, the Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote, has said the implementation of the Nigerian Oil and Industry Content Development (NOGICD) Act attracted $60 billion in Foreign Direct Investments (FIDs) into Nigeria in the last 12 years.
The legislation, according to Wabote, has also yielded an in-country retention value of $7 billion year-on-year from the annual $21 billion capital spending in the country’s oil and gas industry.

An analysis of NNPC’s monthly presentation to the Federation Account Allocation Committee (FAAC) at the weekend, further showed that the NNPCL has so far spent N2.565 trillion on the controversial subsidy this year.

Information from the FAAC meeting had earlier revealed that the money available for distribution among the three tiers of government for the month slumped by N280.948 billion to N673.137 billion when put aside the N954.085 shared in July.
Of the amount, the federal government received N259.641 billion, the states received N222.949 billion while the local government councils got N164.247 billion.
“The sum of N525,714,373,874.60 being federation account share was used to defray value shortfall/subsidy for the month,” the NNPCL stated in a document quoted by TheCable.

According to the national oil firm, in January, February, March, and April 2022, the petrol subsidy gulped N210.38 billion, N219.78 billion, N245.77 billion and N271.13 billion respectively.
Furthermore, in May, June, and July, the country spent N327.07 billion, N319.18 billion and N448.78 billion respectively before the hugest deduction of N525.71 billion in the latest instance.

National Oil Company Denies Operating Secret Account

Meanwhile, the NNPCL also yesterday said it was not involved in the operation of any secret bank account, stressing that the Office of the Accountant General of the Federation (OAGF) was aware of its financial transactions.
In a thread on its verified Twitter handle last night, signed by the spokesman of the national oil company, Mr. Garba Muhammad, the company explained that it was unaware of the existence of any such account.

The House of Representatives a few days ago, said it was probing the structure and accountability of the joint venture businesses and Production Sharing Contracts (PSCs) of the NNPCL in the last 32 years.
The lawmakers had alleged that they had uncovered a secret account owned by the NNPCL allegedly in breach of due process.
The report stated that an official of the OAGF, Mr. Chize Peters, disclosed to the Abubakar Fulata-led Adhoc committee probing the matter.

The committee was said to have directed the Group Chief Executive Officer of the NNPCL, Mele Kyari, to appear before it to offer explanations on the issue.
But in a series of tweets, the spokesman of NNPCL said: “The NNPCL, directly or through its upstream arm, the National Petroleum Investment Management Services (NAPIMS), does not operate secret accounts at all.
“The joint venture cash call accounts denominated in US Dollars and Nigerian Naira are all domiciled with the Central Bank of Nigeria in line with the Treasury Single Account (TSA) policy.

“The Joint Venture Cash Call (JVCC) NGN and USD accounts were created to cater for the funding of cash calls for the various Joint Ventures managed by NNPCL on behalf of the federal government,” the company said.
The statement added that the ‘Joint Venture Proceeds Accounts’ were opened for the individual JVs to implement the self-funding strategy which aims at making them be self-reliant.

“The Office of the Accountant-Gen. of the Federation (OAGF) is fully aware of the JVCC accounts as the OAGF regularly sanctions & approves the updates/change of signatories to the accounts. The NNPCL has documents where these correspondences with the OAGF were acknowledged.
“The NNPC/NAPIMS books of accounts in respect of the federations upstream petroleum activities are audited annually by independent external auditors,” the national oil company said.
 According to the NNPCL, a critical part of the independent statutory audit is sending ‘circularisation’ to banks to confirm balances and bank accounts belonging to NNPC/NAPIMS.

It stressed that Audited Financial Statements (AFS) are submitted to all stakeholders including the National Assembly.
In addition, the company stated that the OAGF conducts periodic (yearly) checks on the activities of NNPC/NAPIMS, maintaining that the activities of the NNPCL and NAPIMS are audited yearly by the Nigerian Extractive Industry Transparency Initiative (NEITI).
“NNPCL has documented evidence of the correspondences between the company and the OAGF before the accounts were opened with the @cenbank, in line with the Treasury Single Account (TSA) policy.

“We also have evidence of reconciliations carried out with the @cenbank for the year ended 31-12-2021 in respect to the JV Cash Call Accounts.
“Thus, with such multiple layers of checks and balances, it is impossible for @nnpclimited to operate secret accounts until the ad hoc Committee, with due respect to its competencies, discovers it.

“If such ‘secret account’ does exist, then @nnpclimited certainly is not aware of, and has absolutely nothing to do with it,” the statement concluded.

Wabote: Nigerian Content Attracted $60bn FDIs in 12 Years, Retains $7bn Yearly

In another development, Executive Secretary of the NCDMB, Wabote, has said the implementation of the NOGICD Act attracted $60 billion in FIDs into Nigeria in the last 12 years.

In an interview with THISDAY at the weekend, Wabote also stated that since the NOGICD Act came into effect in 2010, about $7 billion is being retained yearly in the Nigerian economy from the estimated $21 billion being spent on projects in the Nigerian oil and gas every year.
He said the $7 billion is retained in-country through the use of local materials and manpower.

According to him, the $7 billion was a leap from the paltry five per cent of the yearly expenditure that was retained before the advent of the Act.
Wabote explained that the clawing back of this amount was achieved through some major oil and gas development projects, including the construction of TotalEnergies’ 200,000 barrels per day Egina Floating, Production, Storage and Offloading (FPSO) facility and the recently commissioned 50,000 barrels per day Ikike project.

He also cited the ongoing Nigeria Liquefied Natural Gas (NLNG) Train 7 project and others.
“From 2010 to date – there is a need for clarification here. The $7 billion is not Foreign Direct Investment, it’s different. What we have done is that we have retained that $7 billion in the country. What Foreign Direct Investment in the oil and gas industry has attracted for that period is almost $60 billion. I have mentioned Egina; I have mentioned other ongoing projects. But the retention is about $7 billion year-on-year in terms of the $21 billion that you spend in the industry. So, it’s important to differentiate these two things,” Wabote explained.

“If I just extrapolate in terms of the yearly spend before now in the industry, it is put at $21 billion year-on-year. So, today, we have clawed back $7 billion of industry spending into the country every year. A typical example is the Egina project.

“Egina, which is almost $21 billion –  the majority of the fabrication was done in-country, including topside integration, which was never done in Africa. Egina, as you know, is the largest FPSO in the country today – 200,000 barrels of oil per day. That’s huge in terms of its production, and it was integrated here in Nigeria. So, we have clawed back almost $7 billion,” Wabote said.
As part of the agency’s goals in its 10-Year Strategic Roadmap, he said the board aimed to raise the current in-country value retention to $14 billion and 70 per cent by 2027.

“We aim to get $14 billion into the country with regards to our 70 per cent by 2027, because the truth is, you cannot achieve 100 per cent Local Content. It’s not possible because you also have to depend on a lot of countries in terms of intellectual property rights, and you cannot manufacture everything.
“So, that 30 per cent we are leaving is for what we get outside. What used to happen was that 95 per cent of everything was done outside this country, and we have been pushing the envelope, and now, we have attracted this much in terms of monetary value and terms of percentage,” Wabote explained.