November 13, 2018
Business & Finance

NEC, FAAC Approves $1.05bn NLNG Dividends For Fuel Subsidy

Indications are rife that the National Economic Council (NEC) and the Federation Allocation Accounts Committee (FAAC) approved the use of Nigeria Liquefied Natural Gas dividends for the financing of the petroleum products importation.

One of the members of FAAC, who revealed this on condition of anonymity to journalists in Abuja, disclosed that the Nigerian National Petroleum Corporation (NNPC) briefed the meetings before using the fund. He said that the Group Managing Director of the NNPC, Dr. Maikanti Baru, had briefed NEC and FAAC on the NLNG dividends, which was paid to the corporation as a major shareholder.

Also, a source in the Central Bank of Nigeria (CBN), corroborated the development, saying that the Corporation had sourced $1.05 billion, a revolving loan, to finance the importation of Premium Motor Spirit, known as petrol into the country in 2018. He said that Section 7 of the NNPC Act empowers the NNPC to defray costs from its revenue.

He further explained that the NNPC had fully complied and had implemented the approved Treasury Single Account (TSA) laws in utilising the money, which is domiciled in CBN account. According to him, the fund is managed by inter-governmental agencies such as the Ministry of Petroleum Resources, Ministry of Finance, Department of Petroleum Resources, Petroleum Equalisation Fund, among others.

He added that it was unfortunate for anybody to say NNPC had misappropriated the fund. The source said, “There is nothing like $3.5billion subsidy claim; it is not true and it is also false alarm that the NNPC was mismanaging such account, the dividends of NLNG as we know is being properly managed.” Also, spokesperson of the NNPC, Mr. Ndu Ughamadu, confirmed to newsmen that the corporation operates a regime of under-recovery since it is only the National Assembly that could appropriate on fuel subsidy. He said that the NNPC was a major shareholder of NLNG and the dividends of NLNG were paid into the corporation account, which the corporation manages.

He said, “I want you to know that in this situation, there is nothing like subsidy payment as the Senate President had mentioned. “The GMD had briefed both NEC and FAAC on this NLNG dividend; also you know that the National Assembly had asked the corporation to ensure an adequate supply of products in the country. “We used the 1.05 billion dollars revolving loan in question, to finance the importation of product in the country.” Ughamadu noted that the corporation had addressed the Senator Ahmed Lawal-led Ad Hoc Committee on fuel importation and explained every detail of its operations. The Daily Times recalls that Senate President, Dr. Bukola Saraki, had faulted the reported use of $1.05 billion by the NNPC from its dividends from the NLNG for fuel subsidy.

Saraki expressed grave concern that the NNPC GMD was claiming that the illegal diversion of dividends from the NLNG, which should be paid into the Consolidated Revenue Fund of the Federation for funding the fuel subsidy “was done ‘in compliance with the National Assembly’s directive that NNPC as the supplier of last resort should, and has maintained robust petrol supply.” Meanwhile, the NNPC in its monthly Financial and Operational report released in Abuja on Wednesday disclosed that it transferred N128.40 billion into the federation account in August, 2018.

The Corporation disclosed that between August 2017 and August 2018, the federation and joint ventures received the sum of N879.02 billion and N651.4 billion respectively. The NNPC explained that the Federation Crude Oil and Gas Revenue, Federation Crude Oil and Gas lifting, were classified into Equity Export and Domestic crude. It explained that this crude was lifted and marketed by the corporation and the proceeds remitted into the Federation Account.

It noted that Equity Export receipts, after adjusting for Joint Venture Cash Calls, were paid directly into the Federation Account domiciled in Central Bank of Nigeria. The corporation explained that domestic crude oil of 445,000 barrel per day was allocated for refining to meet domestic products supply, and payments were effected to the Federation Account by NNPC. This, it said, was done after adjusting crude and product losses and pipeline repairs and management costs incurred during the period. On the crude oil and gas export sales, the report noted that sales for the month of August stood at 470 million dollars.

According to the report, the sales indicate an upsurge of about $78 million in relation to July oil and gas export figures of $391.91million. It further indicated that crude oil export sales contributed $337.62 million which represented 71.83 per cent of the dollar transactions compared with $283.43million contribution in the previous month.

“Export gas sales during the period amounted to $132.38 million. “The August 2017 to August 2018 crude oil and gas transactions involved crude oil and gas export worth 5.26billion dollars,” it said. The report explained that based on the above sales figures, a total export receipt of $450.24 million was recorded in August 2018 as against $382.65 million in July 2018. “Contribution from crude oil during the period, amounted to $336.43 million, while gas and miscellaneous receipt stood at $101.33million and $12.48million respectively,” the report noted.

A further breakdown of the figures showed that out of the export receipts, $142.31 million was remitted to the Federation Account. The sum of $307.93 million was remitted to fund the JV cost recovery for the month of August, 2018 to guarantee current and future production. “Total export crude oil and gas receipt for the period August 2017 to August 2018 stood at $5.23 billion out of which $3.74 billion was transferred to JV Cash Call as first line charge and the balance of $1.49 billion paid into the Federation Account,” it added.

 

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