A Review of the Nigerian Energy Industry

NNPC budget too big for government – Alison-Madueke

4 November 2011, Sweetcrude, Abuja – Nigeria’s Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has said the budget of the Nigerian National Petroleum Corporation (NNPC) was too big for the Nigerian government.

She disclosed this during her appearance before the House of Representatives committee probing NNPC’s non-remittance of N450 billion to the federation account.

“NNPC is not subjected to the Consolidated Fund of the Federal Government. It cannot depend on federal budget because it runs very capital intensive operations beyond what government can finance,” she said, adding: “The NNPC budget is not an appropriated budget.We function largely like a private commercial enterprise.”

Alison-Madueke was responding to a question on whether the NNPC was bigger than the federal government since it did not bring its annual budgets to the legislature for approval.

She said that the NNPC was like an independent entity that should have been run on purely commercial basis.

The minister insisted that the NNPC was not owing the Federal Government but that what was being regarded as debts were deductions meant to cater for the shortfall between the cost NNPC bought domestic crude and the “low pump price” fixed by government.

Describing the report presented to the committee by the Nigeria Extractive Industries Transparency Initiative which put NNPC’s indebtedness to the government at N842 billion as “outdated,” she said the report did not capture the credit period of N389.5bn.

“There is a misrepresentation by NEITI. If this (N389.5bn) is deducted from N842.7bn, of course, you will get N450.7bn, which is why we are here”, she explained.

According to her, the NNPC has its own audit report updated up to 2010, while the NEITI report covered 2004 to 2008.

“I am sure that by the time they update their own report, some of these issues will take their proper shape. For now, they are giving historical information”, she said.

Executive Secretary of NEITI, Mrs. Zainab Ahmed, had told the House panel on Wednesday that the NNPC total indebtedness to the Federal Account was in fact N842bn, as against the N450bn for which the corporation was being probed.

Ahmed also accused the NNPC of having “several discrepancies and flaws” in its transactions.

On deductions by NNPC, the Accountant-General of the Federation, Mr. Joseph Otunla, made a submission which tallied with that of the minister and the NNPC on the figure of the debt.

He noted, “The NNPC withheld a total sum of N450bn from proceeds generated by it from February 2005 to November 2008.

“The amount deducted is not in dispute as the NNPC agreed with the figures and they have begun the repayment of N7.7bn per month, effective from September, 2011.”

Meanwhile, the NEITI testimony almost marred the committee’s sitting on Thursday as members were sharply divided in their reactions to the information provided by the organisation.

At a point, some members of the committee staged a walkout following heated arguments with a co-chairman of the joint committee being accused of canvassing for the NNPC.

Trouble started when one of the co-chairmen, Mr. Ajibola Muraina, kicked against NEITI. He said that it was wrong for NEITI to classify the deductions on subsidy as unauthorised when there was a government policy on subsidy.

Muraina also said that NEITI did its audit on the NNPC every three years, while the corporation did its own every year, an indication that the former might be behind time.

“NEITI is taking technicalities to the extreme”, he said.

But, many committee members took exceptions to his questions, accusing him of taking sides with the NNPC.

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