Ribadu Task Force Finds NNPC “Not Guilty” of Non-remission of Crude Receipts

NNPC HQ

The Nigeria National Petroleum Corporation (NNPC) has been cleared of allegations of non-remission of crude oil sales as at when due by the Ribadu Task Force Report.

The report was submitted to President Goodluck Jonathan last week but not without hitches and controversies.

Under the sub-head ‘Remittance of Amounts due to the Federation Account relating to Domestic Crude Oil allocation,’ the report stated,  “The amounts outstanding as at 31 December, 2011, represent amounts due for the months of September 2011 to December 2011. In view of the 90-day credit period, the outstanding amount as at 31 December 2011 was not due for payment. The Taskforce, however, sighted evidence of subsequent payments in 2012.”

The committee explained that in order to verify that net amounts payable were remitted to the Federation Account in the Central Bank of Nigeria (CBN), they made sample selections across the 10-year period. They study however revealed that the amounts remitted were most times different from the net payable amount.

“From discussions with the NNPC, the variances were attributed to other miscellaneous receipts from the domestic gas sales and Nigeria Gas Liquids (NGL) supplies which were also included in the remittances to the Federation Account by the NNPC,” it added.

The committee added “The PPPRA subsidy approvals for the sale of the refined products by the NNPC were in excess of deductions made by about N132.7 billion as at 31 December 2011,” this, following reasons that it noted some negative differences attributed to differences in computation of subsidies.

The report noted that the subsidies deducted by the NNPC represent the difference between the Petroleum Product Pricing and Regulatory Agency (PPPRA) approved landing cost and the NNPC retail price (excluding margins) multiplied by the PPPRA observed volumes.

Subsidy is paid based on the difference between the cost of importation of refined products and the proceeds from the sale of refined products. “In the course of the Taskforce’s work, we did not receive sufficient justification and basis for the practice of deducting subsidies from the amount payable to the Federation account. Indeed, this practice does not accord with the law, with particular reference to the Constitution,” it added.

According to the report, it is expected that the NNPC would be allocated approximately 162 million barrels annually since the Federal Government allocates 445,000 barrels of crude oil daily. “Our review of the records received showed an inconsistent pattern in the implementation of this policy with variances found for 10 years review spanning 2002 to 2011,” it said. This means that the NNPC received less than the 445,000 barrels for half of the period under review.

Regarding the discrepancy in the pricing of Domestic Crude, the committee discovered that the average price per barrel payable by NNPC was compared with the average weekly prices for Nigeria Bonny Light, Forcados, obtained from the Energy Information Administration (EIA).

On the wide disparity in the prices in the earlier years, the committee found that until October 2003, the NNPC was granted fixed price regimes by the Federal Government: 1999 – 2001, $9.50bbl, 2002 to July 2003, $18/bbl, August/Sept 2003, $22bbl.

Source: Businessnews


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