With a paltry N10.54 billion in November, the Nigerian National Petroleum Company (NNPC) Limited, was only able to remit 8.5 per cent of its projected N122.7 billion to the federation account, a joint pool of funds shared by the country’s three tiers of government.
Aside April this year when the national oil company paid in nothing into the federation account, the November remittance represented the second lowest payment for the year. The information on the proceeds of the NNPC’s sales of crude oil and gas and subsequent contribution to the account was contained in its presentation to the Federation Account Allocation Committee (FAAC) for December, 2021. The committee comprises the minister of finance, who chairs the body, all state commissioners of finance and accountants-general, accountant–general of the federation and permanent secretary of the ministry of finance.
The N10.5 billion represented a 29.1 per cent decline in the monthly contribution which had steadily declined in the past three months due to a variety of factors, including under-production and petrol subsidy payments.
In addition, while a total of N2.30 trillion was supposed to have been paid to the federal, state and local governments in the first 11 months of 2021, only N522.2 billion had been paid as of November.
The NNPC data showed that the continuous deficit payment has so far resulted in a shortfall of N1.78 trillion far in the current year.
The company has struggled with production this year, pumping less than 1.3 million barrels of crude oil daily against its projected 1.8 million barrels per day, on the back of dilapidating upstream infrastructure owing to ageing assets and years of under-investment.
As of October, of the expected remittance of N2.09 trillion into the federation account, NNPC was only able to pay N511.66 billion, representing roughly 25 per cent of the projected national oil revenue for the 10 months.
It wan’t clear how the authorities augmented the shortfall for the month, but in December, the three tiers of government shared N675.946 billion as FAAC revenue for the month of November.
A communiqué issued at the end of a virtual meeting of FAAC for December 2021 stated that the N675.946 billion total distributable revenue comprised statutory revenue of N488.674 billion; distributable Value Added Tax (VAT) revenue of N182.678 billion, exchange gain of N4.156 billion and excess bank charges recovery of N0.438 billion.
Under the current sharing arrangement, the federal government takes 52.68 per cent of the revenue shared, states get 26.72 per cent while the local governments get 20.60 per cent.
A review of the figures released by the NNPC during the December FAAC presentation showed that in majority of the months between January and November, the company was barely able to meet its obligation to the federation.
In January, the national oil company paid N90.8 billion of the total projection; in February it remitted N64.16 billion and in March, the NNPC paid N41.1 billion into the federation account.
But in April, it paid nothing to the three tiers of government; in May it was N38.608 billion; in June it paid N47.16 billion while in the month of July it remitted N67.2 billion.
Things appeared to be looking up in August when the NNPC remitted N80 billion to the joint account, but it fell again to N67.533 billion in September, before slumping to N14.85 billion in October and finally hitting a low of N10.54 billion in November.
Alhough the mandatory cuts imposed by the Organisation of Petroleum Exporting Countries (OPEC), last year initially played a role in the inability of the NNPC to meet its obligation to the federation, the country has now been unable to meet its allocation for months.
This has further reduced its total crude oil export, coupled with the subsidy problem for which the NNPC deducted N200 billion in December and plans to net off another N270 billion by January 2022.
A THISDAY’s analysis of the document detailing the presentation of the national oil company to FAAC in December, indicated that the N270 billion will be the highest amount deducted by the NNPC since it resumed payment of petroleum subsidies in February this year.
In all, it further showed that the NNPC has removed at least N1.159 trillion from monies accruing to the three tiers of government in the country between February and November as payment for the controversial petrol under-recovery.
A breakdown of the various deductions indicated that payments have increased progressively, growing from N24.3 billion in February to N60.3 billion in March and N61.9 billion in April this year.
Furthermore, in May, the NNPC removed N126 billion as subsidy, while June came next with N164.3 billion. In July, the document stated that N103.2 billion was spent on what the government terms under-recovery.
Hitherto, August had the year’s lion’s share of N173.1 billion but was overtaken by the deduction in November of N200 billion, while September’s deduction stood at N149.28 billion and the October figure was N163.709 billion, before the projected highest deductible amount yet of N270 billion slated for January.
In June, the NNPC told the nation that Nigeria was losing about 42 million litres of petrol to the activities of smugglers across the country’s borders, increasing Nigeria’s estimated daily consumption of 60 million litres to 103 million litres, thereby worsening the subsidy payment regime.
Nigeria has not been able to reap the full benefits of rising international oil prices because it doesn’t refine a drop of the fuel it consumes locally. This means that almost all the revenues from sales are spent importing petrol and paying subsidies, even for neighbouring countries where the product is smuggled into.
