A Review of the Nigerian Energy Industry

N450bn Debt: NNPC never withheld remittances to federation account- Oniwon

7 November 2011, Sweetcrude, November, Abuja – The Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Austen Oniwon has said that the Corporation has remained diligent in its monthly remittances of oil proceeds to the Federation Account in order to promote smooth operations of the various tiers of Government in the Country.

Oniwon made this presentation to the House of Representatives Joint Committee on Finance, Petroleum Upstream, Petroleum Downstream and Gas Resources at the Public hearing on the alleged NNPC N450 debt to the Federation Account at the National Assembly complex Abuja.

He said the Corporation has remained faithful in remitting oil revenues to the Federation Account and was therefore not aware of funds allegedly not being remitted into the Federation Account by the NNPC.

“With regards to the request on details of funds not remitted to the Federation Account, the NNPC is not aware of funds not being remitted by it into the federation account from inception to date, because crude oil and gas buyers do not pay into NNPC account, but into the oil and gas proceed account managed by the Central Bank of Nigeria,” Engr. Oniwon affirmed.

The GMD noted that with respect to the N450 billion supposedly owed by the NNPC to the Federation Account, prior to November 2003, domestic crude was sold to the Corporation at a discount both in terms of price and exchange rate saying that petroleum products were also sold at highly subsidized rates.

According to him, on 22 October, 2003, the Federal Government directed that NNPC should henceforth pay at prevailing international market price for the 445,000 barrels per day crude oil meant for domestic consumption. However, the petroleum products that are produced from this crude oil are sold at controlled and highly subsidized price approved by government hence giving birth to the subsidy regime which created a major imbalance for the market.

Oniwon informed that the impact of the lopsidedness in the regulated downstream business is usually most severe on NNPC during the period of high international crude oil and petroleum products.

He emphatically submitted that NNPC did not seek for loan nor obtain one from government but was asked to be made whole for the imbalance created by the imposed subsidy policy adding that payments for subsidy which upon government approval were taken in the form of underpayment of crude oil cost which now make up the outstanding.

“NNPC has been arm twisted into reaching agreement with the Federation Allocation Accounts Commission, FAAC, in respect to N450 billion of subsidy payment due to it, in order to allow peace to reign, we acceded, but we shall at the appropriate time revisit this case, to reclaim money rightly due to NNPC, and hope that with understanding of the true position, the Honourable members of this Joint Committee will convince the National Assembly to support NNPC to reclaim what rightfully belong to NNPC,” Engr. Oniwon averred.

The NNPC helmsman stated that the proceeds from the NNPC’s upstream Joint Ventures, JV, and Production Sharing Contracts, PSC, operations on behalf of the Federal Government represent a significant portion of revenues paid to the Federal Government. “NNPC is aware of the importance of these revenues to the Federation and follows strictly, the laid down procedures for remittances to the Federation Account and in compliance with extant laws.”

Oniwon re-emphasized that the Corporation had conducted all its activities in full compliance with the provisions of the constitution and in line with the Appropriation Act 2011.

Responding on behalf of the members of the House of Representatives Committee, Co-Chairman of the Joint House Committee, Hon. Peterside Dakuku applauded the NNPC for their comprehensive submission saying the report would go a long way in helping the committee to compile its probe report.

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