NNPC Maintains Position on Withdrawal of $2.201 billion from NLNG Fund

• To meet with N’Assembly again this week
• FG to pay marketers N236bn of outstanding subsidy claims Friday

The Nigerian National Petroleum Corporation (NNPC) has again justified the withdrawal of $2.201 billion from the Nigerian Liquefied Natural Gas (NLNG) fund, saying the corporation has the power and the legal backing to carry out such withdrawal.

It also emerged Saturday that oil marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN) and the Depot and Petroleum Products Marketers Association of Nigeria (DAPPMAN), who have been owed about by N348 billion by the federal government as outstanding payment on petrol subsidy claims, would be paid N236 billion on Friday. That was as DAPPMAN yesterday denied reaching an agreement with the Federal Ministry of Finance on the payment of the N800 billion subsidy arrears.

Chief Financial Officer of NNPC, Mr. Isiaka Abdulrazaq, spoke in defence of the corporation yesterday in Lagos at an interactive session between it and business editors/energy correspondents. Abdulrazaq argued that the controversy arising from the withdrawal was whether the NNPC had the power to withdraw and not that the fund was misappropriated.

He said, “These are all legal issues. NNPC is the shareholder of record representing the interest of the Nigerian people in the joint venture business. The issue around legality is to deal with why or how the NNPC used those funds.

“There are two reasons. First one is, the 2018 Appropriation Act is very clear on this. The second is the Nigeria NLNG Appropriation Act Section 7, sub-section 4(b) makes it very clear. And what the National Assembly is saying is that we don’t have the legal authority to use this fund. We have provided them with those legal authorities and, basically, we will be meeting the committee again sometime next week.”

Abdulrazaq said neither the legislature nor the executive had the power to interpret the constitution when there was confusion arising from legal matters, arguing that section 6 of the Constitution was very clear on that.

“That power is not vested in the executive neither is it vested in the legislature. We have provided this information to them and will soon see them to clarify some of those issues. We just want people to know that this issue has absolutely nothing to do with whether the money is misappropriated, it is just whether we have the authority to withdraw the fund and we have provided the authority. We are hundred per cent confident that the fund used from the national coffers is under the law and it is legal,” he stated.

According to the CFO, “The interesting thing about democracy is that we need strong institutions and we need to also respect the law and the constitution. The constitution of Nigeria is the grundnorm.”

He explained that part of the money was being used for under-recovery and funding of some infrastructure projects, like the Second Niger Bridge, which is being managed by the Nigerian Sovereign Investment Authority (NSIA).

Besides, Abdulrazaq tried to allay fears about a looming fuel scarcity, saying, “There is 2.6 billion litres premium motor spirit (PMS) in stock to serve Nigerians throughout the Yuletide.”

Briefing journalists on the current cash-calls status, the Chief Operating Officer, Upstream, NNPC, Mallam Bello Rabiu, said a balance of $5 billion was left to be paid. Rabiu said the cash call payment was brought down to $5 billion after the offsetting of $8 billion of the debt owed the joint venture partners. He noted that up till 2016, NNPC was not paying the cash call, but that same year, it agreed to start paying the outstanding for five years.

Rabiu revealed that the corporation was saving about N305 billion every year by exchanging petroleum products for crude oil.

He stated, “What has happened before is that every litre of fuel consumed in this country was either imported by NNPC or the private sector. And when they bring the products in, you calculate what they bring or they don’t bring and the documentation would be used by the marketers to collect subsidies and that was how we arrived at that subsidy scam. Trillions of naira were claimed by the marketers as subsidies. In fact, we inherited about N2.2 trillion and now it has been reduced to about N800 billion.

“One way we thought the upstream sector could support the downstream sector is to use the crude oil itself, which has value, more to our advantage in solving the problems of PMS importation. When we came in, the cost at which we were importing metric tonnes of PMS in this country was international price plus $86 per metric ton and we were consuming at least one million metric tonnes of PMS every month. But we said we can actually give you the crude and collect the product and we can give you the price plus or minus 2. With that arrangement alone we were able to save $88 million per month from importation of PMS. Why do we have to continue the subsidy regime? With $88 million per month, we are saving N305 billion every year. The next thing is for us to ensure that our refineries are working so that we can produce in this country and don’t import.”

Meanwhile, oil marketers under the aegis of MOMAN and DAPPMAN, who have been owed about by N348 billion by the federal government as outstanding payment on petrol subsidy claims, would be paid N236 billion next Friday. Chief Operating Officer (COO), Downstream, NNPC, Mr. Henry Ikem-Obih, disclosed this yesterday. Ikem-Obih said after this first tranche, the balance of the subsidy debt will be cleared by the government in 2019 and 2020.

Speaking after a meeting with officials of petroleum product marketers in Abuja, Ikem-Obih, said, “We agreed that after the first tranche is paid, the marketers would form a committee to work on details of how the next tranche will be paid in 2019 and the last tranche in 2020.

“Government is fully committed to pay the first tranche as promised and it will be paid through promissory note that would be issued by the Debt Management Office (DMO).”

He said the decision to pay through promissory notes was based on the need to manage cash injection into the economy, explaining that injecting cash of that magnitude into the economy may affect the country negatively.

Ikem-Obih said this mode of settlement had been agreed between the government and the oil marketers since 2017, and it was not a new development.

He noted that the government decided to pay the money to the oil marketers in full and had directed that there would be no deductions from the marketers’ account to settle debts owed government.

“Some oil marketing companies, DAPPMAN and MOMAN members, are indebted to federal government agencies, like the Federal Inland Revenue Service (FIRS). But the government had directed that the debts should not be deducted from the payments. This is because if we do, most of the marketers would be left without a dime,” Ikem-Obih added.

NNPC Justifies Withdrawal of $2.201bn from NLNG Account

While explaining the disparity between the N800 billion claimed by the oil marketers and the N348 billion approved by the National Assembly, he said the debt position of all the marketers to the government was considered and agreed upon as at June 30, 2018 and presented to the National Assembly for approval, which after consideration of the debts, approved the sum of N348 billion.

He assured Nigerians that the NNPC was ready to ensure stable supply of petroleum products during the Yuletide and beyond, stating that presently, the corporation has over 2.8 billion litres of petrol in stock which would last 55 days.

Ikem-Obih further stated that 90,000 metric tonnes of diesel, imported by the Petroleum Products Marketing Company (PPMC) and NNPC Retail, would arrive the country in the next couple of days. He said MOMAN, DAPPMAN and IPMAN had assured the government that their facilities would be available throughout the festive period, while all the NNPC depots across the country and its 618 retail outlets would also be dispensing the products.

In addition to the imported fuel stock, he stated that the country’s refineries would also be contributing to fuel supply, with the Warri Refinery reportedly returning to production last Thursday, while Port Harcourt refinery would soon resume production.

Speaking at the meeting, the Chief Executive Officer of A.A. Rano Limited, Mr. Aliyu Sa’id, said his company would not be part of any operations shutdown by DAPPMAN and MOMAN. He said the timing was wrong, and oil marketers should not be seen to be sabotaging the efforts of government in ensuring stable fuel supply during the Yuletide season and beyond.

In a similar vein, Managing Director of A.Y.M. Shafa, Mr. Ahmad Abdullahi, stated that at this time that the country was going through series of challenges, which included security and financial problems, any plan by the oil marketers to stop operations could make things worse.

Abdullahi urged other oil marketers to support the government and trust its decisions as it concerns settlement of the outstanding claims.

Prince Akinfemiwa Akinruntan, who is Group Managing Director of Obat Oil and Gas, said the company was ready to support the government by loading products on a 24 hours basis. Akinruntan noted that NNPC had been supportive of oil marketers over the years, and that national interest superseded his personal interest, hence, his decision to keep his facilities open.

Meanwhile, DAPPMAN yesterday denied reaching an agreement with the Federal Ministry of Finance on the payment of the N800 billion subsidy arrears, insisting that its seven days ultimatum stands. DAPPMAN, in a statement signed by its Executive Secretary, Mr Olufemi Adewole, said there was no agreement with the union, noting that offers made by ministry failed to meet the legitimate demands of the association.

According to him, “We refer to the press release from the Federal Ministry of Finance on December 6 following the meeting with marketers under the aegis of Major Oil Marketers Association of Nigeria (MOMAN), and DAPPMAN, and Independent Petroleum Marketers Association of Nigeria (IPMAN), which said the marketers had agreed to resume operations.

“We did not sign the purported document with government as claimed. We still stand by our ultimatum. We cannot continue to borrow money to pay staff salaries.”

A coalition of petroleum products marketers had on December 2 given the federal government a seven-day ultimatum to settle outstanding N800 billion subsidy payment in cash, threatening to cease their depot operations across the country should the federal government fail to meet their demands.

But Special Adviser to the Minister of Finance, Mr. Paul Abechi, on December 6, issued a statement, saying marketers had reached an agreement with the federal government on the settlement of the outstanding subsidy claims.