Abuja – The burden of oil price under-recovery currently borne by the Nigerian National Petroleum Corporation (NNPC) may have started to affect its operations as the national oil company failed to fund six of its planned projects in April.
The NNPC will also partner with the Nigeria Extractive Industries Transparency Initiative (NEITI) and the Department of Petroleum Resources (DPR) to sign an agreement on a framework to ensure greater transparency in the oil and gas industry.
The January-April financing performance, contained in the company’s presentation to the Federation Accounts Allocation Committee (FAAC) in May, showed that the development of gas infrastructure, border exploration services and development renewable energy had not received any allocation for the month.
In addition, the Nigeria-Morocco gas pipeline, the expenses of the pre-export inspection agency for crude oil as well as the Brass LNG gas supply project did not receive any funding for the period under review.
The data indicated that with the underfunding of the projects, the gap in terms of actual budget and actual funding for five of the projects amounted to 26.236 billion naira. Brass LNG figures have not been recorded.
The document showed that with the exception of Brass LNG, the NNPC systematically funded projects until February, when it recorded the oil under-recovery payment of N 25.374 billion, N 60.396 in March. and 61.966 N in April.
He said that with an annual budget of 4.9 billion naira and a monthly budget of 414.941 billion naira, in the first four months of the year, the company had spent 767.7 billion naira, since start of the year, with a difference of 891.99 billion naira.
In January, the NNPC spent 195.6 billion naira, in February its spending fell to 191.1 billion naira, in March it was 224.5 billion naira, while in April it spent 156 , 3 billion naira.
However, the projects funded in April were: national domestic gas development, which generated N14.9 billion in cumulative spending, pipeline safety and maintenance costs which engulfed N13.7 billion, a pre-export financing of 20 billion naira, an under-recovery of 147.7 billion naira, among others.
From January to April, the rehabilitation of refineries for non-functioning facilities had consumed 33.3 billion naira. The NNPC had explained that it still paid workers’ wages and basic refinery maintenance.
With a total annual net budgeted distribution to FAAC of 1.47 trillion naira and monthly budgetary disbursements of 122.7 billion naira, the document showed that in January, the NNPC paid 90.86 naira, in February it sent 64.1 billion naira to FAAC and in March remitted 41.1 billion naira. There were no payments in April.
For March, domestic crude payable in June, in accordance with the 90-day circle, showed that a Joint Venture (JV) outstanding amount for Chevron Nigeria Limited, amounting to N72.6 billion, is due in June.
Eroton will be paid 3.1 billion naira, Mobil’s is 68.5 billion naira and is due this month, the same for Seplat, which is expected to get 3.3 billion naira, Shell will receive 33.6 billion naira naira, while Total should be paid paid 3.1 billion naira.
In March, the chief executive of the NNPC group, Mallam Mele Kyari, spoke about the situation of the company, saying that at the time, the government was subsidizing gasoline to the tune of about 120 billion naira per month.
He said the NNPC could no longer afford to bear the cost and Nigerians would have to pay the real cost sooner or later, as market forces must be allowed to determine the price of gasoline at the pump.
“Today, NNPC is the sole importer of gasoline. We import at market price and we sell today at 162 N per liter. Looking at the current market situation today, the real price could have been between 211 N and approximately 234 N per liter.
“The meaning of this is that consumers are not paying the full value of the gasoline we consume and therefore, someone bears that cost. As we speak today, the difference is written in the books of the NNPC and I can confirm to you that the NNPC may no longer be able to carry this burden and because we can no longer afford to carry it in our books, ”he said.
At the same time, the NNPC declared yesterday that it remains committed to promoting a sustainable environment in all its operations, stressing that its energy transition program and its support for carbon neutral projects are proof of this commitment.
Kyari said so at an event organized by the Group’s Health, Safety and Environment department to mark World Environment Day this year, according to a statement by company spokesperson Dr Kennie Obateru.
He said the oil and gas industry and in particular the NNPC are aware of the impact of their operations on the environment and have therefore been at the forefront of efforts to preserve the environment wherever they operate. .
Mallam Kyari said it was in line with the philosophy of environmental sustainability for the oil and gas industry to lead an evolution towards energy transition and adopt carbon neutral activities.
NEITI, NNPC and DPR will develop a framework on contract transparency
Nigeria Extractive Industries Transparency Initiative (NEITI), Nigerian National Petroleum Corporation (NNPC) and Department of Petroleum Resources (DPR) to sign agreement on framework to ensure greater transparency in the petroleum industry and gas.
Responding to questions on the sidelines of the closing ceremony of a NEITI staff retreat and knowledge-sharing session in Abuja this weekend, the organization’s Executive Secretary, Dr Ogbonnaya Orji, said that he had already met with the main actors, who had agreed on the need to build confidence in the extractive sector.
According to him, this decision will ensure that the terms of all contracts signed in the oil sector are open and fully accessible to Nigerians, as required by the Global Extractive Industries Transparency Initiative (EITI).
Orji said to speed up the process, a committee would be set up to harmonize the differences in the global deal, to which Nigeria is a signatory.
As a signatory to the EITI Framework, Nigeria is required to disclose the terms of contracts concluded in the oil and gas industry and in the solid minerals sector, with the NNPC having recently signed a $ 1.5 billion agreement for the renovation of the Port Harcourt refinery and the Production Sharing Contract (PSC) agreement with its partners on OML 118.
Orji said: “Yesterday I had an hour-long meeting with the NNPC group general manager on how we can develop an engagement framework starting with the NNPC disclosing certain contracts that they are currently pursuing.
“We need to develop the framework and it will spell out what will be disclosed, how and when it will be disclosed and who will use the information to be disclosed.
“It will also include how the information will be used in a way that does not compromise the operations of the covered entities and in a manner that is open, transparent and makes the information accessible.”
He added that he had met the director of the DPR, Mr. Sarki Auwalu, and had agreed to form the core of a joint committee to develop a framework that will guide the organizations and protect the interests of the country.