The Nigerian National Petroleum Company (NNPC) Limited spent N173.488 billion in excess of the budgeted N36.893 billion for petrol subsidy in January, a report from the oil firm has indicated.
A document detailing the company’s presentation before the Federation Account Allocation Committee (FAAC) showed that instead of the actual projected under-recovery for the month, the NNPC paid N210.382 billion for the purpose.
NNPC had also failed to make any contribution to the Federation Account during the month, although its forecast payment for January topped N122.7 billion.
The month also saw the NNPC spend N9.111 billion on what it termed refineries rehabilitation, although in reality, the funds are channelled into the payment of salaries of “workers” in the non-functional assets as well as the purchase of “essential items.”
An analysis of the latest data showed the continuation of a rash of factors that have combined to hobble the activities of the national oil company in the last few years.
For instance, in 2021, the NNPC recorded a whopping deficit of approximately N2 trillion out of its projected N2.511 trillion remittance and was unable to pay roughly 80 per cent of its projected contribution to the Federation Account for the year.
Data provided by the national oil company itself, showed that in the entire 12 months of 2021, the NNPC only disbursed N542 billion as against the budgeted N2.511 trillion, given a monthly contribution forecast of N209.3 billion.
The figure represented just about 21. 6 per cent of the total expected contribution of the company to the joint account operated by the federal government, states and local governments.
Aside the payment of subsidy, the company has also had to deal with declining oil production, high oil production costs, making the country unable to enjoy oil proceeds, despite the increasing international oil prices.
President Muhammadu Buhari has recently backtracked on the planned full deregulation of the downstream sector, including the wholesale removal of petrol subsidy, citing the negative impact it would have on the poor and the vulnerable in the country.
The total deductions for petrol subsidy or what the government terms under-recovery was about N1.43 trillion for last year. Nigeria does not refine a drop of the fuel it consumes locally as it imports all the products consumed in the country.
Buhari recently requested the National Assembly to approve a total of N2.557 trillion for the federal government to fund fuel subsidy in 2022 after the current administration suspended its plan to remove the monthly under-recovery.
But the national oil company, the data noted, was also able to slash its cash call arrears repayment during the month by $131.430 million, a huge improvement on its debt obligations to its Joint Venture (JV) partners.
With the latest payment, the arrears owed the five major International Oil Companies (IOCs) have now slumped from a total of $4.689 billion when the company began offsetting the renegotiated debts in 2016 to $1.011 billion currently.
The five oil majors are Shell Petroleum Development Company (SPDC), Mobil Producing, Nigeria, Chevron Nigeria Limited, Total Exploration as well as Nigeria Agip Oil Company (NAOC). Both Mobil and Chevron have now been fully settled.
While both companies have a renegotiated debt of $833.75 million and $1.097 billion respectively, Shell’s $1.37 billion still has an outstanding of $595.1 million, Total’s $610.9 million has $164.6 million left, while NAOC has a balance of $252 million from the initial $774.6 million in 2016.
By definition, cash calls are requests sent by JV operators to non-operating partners for payment in the light of anticipated future capital, operating expenditures or need of additional capital contributions.
The NNPC, in 2016, had signed a cash call repayment agreement with its JV partners to defray cash-call arrears within a period of five years after many years of its indebtedness to its partners.
Before then, it had consistently for years failed to meet its indebtedness to the IOCs, a situation the operators said caused loss of new investment in the oil and gas sector.
At the time, the ministry of petroleum resources negotiated a discount with the IOCs from about $5.1 billion down to $4.68 billion and had since then continued to reduce the debt payments in installments.
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