$49.8bn controversy: NNPC seeks changes in trade model

NNPC-Andrew-Yakubu31 December 2013, Abuja – The Nigerian National Petroleum Corporation, NNPC, has stated that the commercial template used in its operations would continue to pit it against the various government agencies, especially with regards to revenue generation, remittances and operational disclosures, unless the model is changed.

The corporation argued that the template largely contributed to its regular disagreements with various government agencies that seemed unaware of underlying contents of its commercial templates.

The Group Managing Director of NNPC, Andrew Yakubu who spoke recently in Abuja, explained that it was imperative for the corporation and federal government to decide on the sustainability of the corporation’s commercial template.

Yakubu spoke shortly after a reconciliatory meeting between the NNPC, Ministry of Finance, Petroleum Resources, Central Bank of Nigeria, Federal Inland Revenue Services and Department of Petroleum Resources (DPR) on a certain $49.8 billion crude oil revenue that was initially alleged by CBN to have been missing from the federation account.

“We also have to come out clearly to identify what has been happening month in and out about the challenges we have through FAAC (Federation Accounts Allocation Committee) and streams that were missing in the calculation have been accounted for now and the joy is that we are clearer now and we have to develop a new strategy on understanding the complex nature of crude oil accounting,” Yakubu said.

He added that the challenge is about the commercial template that corporation operating, as well as the security challenges in the country.

“Now when you account for crude, for instance, from the terminals and knowing that not all that crude gets to your refineries, how can you have it? it is absolutely impossible. We are all aware that the trunk lines have being under serious challenges and attacks and of course what happened in Arepo last year when my staffs were killed,” he pointed out.

He continued: “When you bring in products and those products are stolen through incessant attacks on the product distribution lines, it is absolutely impossible for you to recover that, and if you account for it at international oil price but have to sell it at subsidised price, how do you get the balance. These are the contributing factors and they are commercial issues that bother on the commercial templates that we are using and need to be addressed aggressively.

We have always reported this and the issue to face now is should we continue with the template that we are using today and leave it as a social service or we want to put commercial sense to what we are doing and if we have the PIB (Petroleum Industry Bill) we are clearly delineated as a commercial entity and we will do our business and return the benefits to the federation.”


– This Day

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