Nigerian National Petroleum Corporation (NNPC) says it will deduct about N126 billion from its remittance to the Federation Account in June.
Gatekeepers News reports that the Nigerian National Petroleum Corporation (NNPC) has notified the Federation Account and Allocation Committee (FAAC) of its plan to deduct about N126 billion from its remittance to the Federation Account in June.
The Group General Manager, Federation Account of NNPC, Bello Abdullahi in a statement said the corporation will begin the subtraction of the balance of an additional N50 billion, being Joint Venture (JV) cost recovery to sustain crude oil production level.
NNPC in the document which detailed the status of the corporation’s finances during its monthly FAAC meeting, between May 19 and 20, confirmed that it did not make any remittance to the Federation Account during the period.
However, this development will not go down well for the three tiers of government, federal, state, and local governments as they will be getting less from the Federation Account from June.
In April, NNPC had notified the Accountant-General of the Federation (AGF), Ahmed Idris, that it would not be able to remit any funds to the Federation Account in April for distribution in May.
According to NNPC, the corporation posted a value shortfall of N111.966 billion in February 2021, which would ultimately impact its ability to contribute to the joint account shared among the federal, states, and local governments.
The corporation attributed the shortfall to the rising average landing cost of petrol, which rose to N184 per litre in March as opposed to the existing N128 ex-coastal price.
NNPC stated that the N111.966 billion incurred as landing cost would be deducted from April’s oil and gas proceeds due to the federation in May.
Reports, however, state that the impact on the federation was not as profound as expected because the Department of Petroleum Resources (DPR), which collects royalties and bonuses on behalf of the federal government, helped the situation.
DPR came to the rescue with the remittance of about $500 million it received from the marginal fields which the agency recently put up for bids.
The Minister of State for Petroleum Resources, Timipre Sylva, who did not clearly state the amount paid, confirmed the role DPR played in augmenting the FAAC allocation for April, that was distributed in May.
The NNPC, however, stated that the corporation wasn’t broke, adding that the zero revenue projection was not a general reflection of its overall financial performance but it only had to do with the federation revenue stream.
In the most recent notice of the corporation to deduct N126 billion from its remittance in June, NNPC said it was still shouldering the burden of the differentials from the sale of petrol, which it prefers to call “under-recovery”.
According to FAAC document: “No remittance to Federation Account in April 2021 (May 2021 FAAC) due to recorded value shortfall resulting from the difference between the landing cost and ex-coastal price of PMS (petrol) recorded in March 2021.
“The sum of N61,966,456,903.74 was deducted out of the total March value shortfall of N111,966,456,903.74. This is to make funds available for JV cost recovery to sustain the existing production level. The balance of $50,000,000,000.00 will be deducted in subsequent months.
“In addition, April value shortfall of N126,298,457,944.36 is to be deducted from May federation proceeds in June 2021 FAAC meeting.”
Furthermore, the figures showed that while a net revenue of N90.8 billion was remitted to FAAC in January, N64.1 billion in February, N41.1 billion in March, and nothing was recorded for April.
Meanwhile, NNPC, according to the document, said it sold total oil and gas valued at $565.4 million or an equivalent of N214.5 billion in April.
NNPC stated that its overall crude oil lifting for both export and domestic in March 2021, recorded a 29 per cent decrease relative to the 10.79Mbbls lifted in February 2021.
According to the Corporation, Nigeria maintained a 1.52 million bpd OPEC production cut in the first quarter of 2021, while export crude oil revenue received in April amounted to $1.89 million, which is equivalent to N723 million.
The document added, “this represents a 98 per cent decrease compared to March 2021. Domestic gas receipts in the month were N5.13bn.”
Also, feedstock valued at $54.6 million was sold to Nigeria LNG during the period out of which $52.4 million was received during the month, with the difference being Modified Carry Agreement (MCA) obligations, gas reconciliation, and credit notes.
MCA is a financing agreement whereby the International Oil Companies (IOCs) advance loans to NNPC to invest in upstream projects.
For other receipts, the corporation stated that $1.25 million, being miscellaneous receipts, gas and ullage fees, and interest income was received in April 2021.
The data also showed that the exchange rate the CBN sold foreign exchange to the NNPC moved from N379 to N383.47, while N15 billion was spent on government priority projects.
In the same month, the national oil company said it lost 3.1 million barrels for various reasons, ranging from shut-ins due to repairs, industrial actions, flow line leaks, and power failure.
According to the analysis of receipts due in April, gross revenue from JV crude was N124.3 billion, JV gas was N26.1 billion, while N5.8 billion was received from miscellaneous sources, amounting to N156.3 billion.
After royalty was deducted, JV cost recovery, profit before tax and taxes, receipts from JV crude came down to N5.5 billion, while that of JV gas stood at N7.8 billion.
Of the March domestic crude oil payable in June by the NNPC, in line with the 90-day payment plan, Chevron Nigeria Limited has roughly 2.89 million barrels valued at N72.6 billion while Eroton’s share is 130,000 barrels valued at N3.1 billion.
Also, Mobil Producing has 2.84 million litres, valued at N68 billion, Seplat’s is N3.36 billion, SPDC’s share of the JV is N33.6 billion while the value of Total’s crude oil payable in June is N3.1 billion, totalling approximately N184.5 billion or equivalent of $487 million.
As of March 31, total pre-2016 JV cash call arrears repayment status indicated that JV negotiated debt remained at $4.68 billion, total payment till date is $3.1 billion, while the outstanding balance is $1.54 billion, except for Mobil which has been fully paid by the NNPC.
In April, N938.9 million was spent on security and maintenance, while strategic holdings of the NNPC gulped N740 million, amounting to N1.679 billion.
In all, 37 vessels imported petrol for the month under review, with landing costs ranging from between N169 and N199.90. Also, a total of N1.48 billion litres were imported for the month, 1.99 billion litres were sold, with depot price remaining at N128 and the recorded loss put at N111.9 billion.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Malam Mele Kyari, on Sunday, stated that the plan to purchase a 20 per cent minority stake in Dangote has not been concluded.
Kyari said the terms of the agreement were being finalised and could be subject to non-disclosure understandings.
According to him, NNPC is interested in acquiring a stake in any private refinery with a capacity of over 50,000bpd and not just the Dangote Refinery alone.
He said: “On the Dangote Refinery acquisition, it’s actually an ongoing negotiations that was disclosed by one of our executives. We haven’t concluded; terms are being finalised and may be subject to non-disclosure understandings.
“It’s difficult to discuss the details at this point. However, the decision is for NNPC to expand her portfolio as is the common practice amongst national oil companies as matter of energy security considerations and risk management. We will take equity from any refinery that plans to process in excess of 50,000 barrels per day, not just the Dangote.”
