NNPC not meeting FAAC obligation, but declaring profit, oil sector opaque – Fayemi
State governors on Thursday lambasted the Nigerian National Petroleum Company Limited for not remitting any funds at last month’s Federation Accounts Allocation Committee meeting.
The Chairman of the Nigeria Governors’ Forum and Governor of Ekiti State, Kayode Fayemi, also wondered how the oil firm was bold enough to declare profit when it had not been meeting its obligations.
Fayemi spoke alongside other governors during the Nigerian Governors’ Forum session on natural resources at the Nigeria International Energy Summit 2022 in Abuja.
In August last year, the NNPC declared N287bn profit after tax for its 2020 financial year, which was the first profit ever made by the oil firm in 44 year.
But while speaking at the governors’ natural resources panel session on Thursday, Fayemi wondered how NNPC was able to make a profit when it had not been meeting it obligations in terms of remittances to the Federation Account over the years.
He specifically pointed out that in the last Federation Accounts Allocation Committee meeting in February, the NNPC made zero remittance to the federation.
The governor, however, stated that state governments were anxious to see that the Nigerian oil sector thrived, as the bulk of the country’s earnings came from the industry.
Fayemi said, “We are very desirous that this industry is sustained over the long term. But we see areas of concern, particularly in terms of revitalising the industry around transparency, accountability, opex (operational expenditures).
“We’ve just had the Federation Accounts Allocation Committee meeting a couple of days ago and the NNPC contributed zero to the Federation Accounts this month.”
The NGF chairman stated that governors were aware of the fact that the rise in oil prices had not been favourable to Nigeria due to issues of fuel subsidy.
“Of course, we know why. For even though oil price in the international market is going up, maybe $110/barrel today or more, the more it goes up, it would appear that the more we suffer locally,” he stated.
Fayemi added, “So there’s an injurious relationship of sort between what is happening in the international market and what we are experiencing in Nigeria. And as critical stakeholders in the Nigerian federation, states are actually concerned about this.
“They (states) are concerned about how to grow this industry and ensure that it is sustained over the long term in a manner that it can benefit our stakeholders in the industry.”
On transparency issues in the oil sector and the inability of the NNPC to meet its obligations despite declaring profit, the NGF chairman said this was baffling.
He said, “When you look at the statistics, transparency is central to the challenge we face in the oil sector. On my way here, I was looking at the Natural Resources Governance Institute Report and Nigeria is not doing very well.
“We ranked 40 out of 58 natural resource countries on the transparency index because we are still believed to run a largely opaque oil industry. And we see it ourselves.
“The NNPC declares profit, yet it cannot meet its obligations. My simple knowledge of economics teaches me that it is only after you’ve met all the obligations that you then talk about making profits.
“So if your obligation to the federal accounts has not been met, how can you then talk about profit-making?
Fayemi further noted that it was the desire of state governments to also participate actively in the oil and gas industry in Nigeria.
He explained that while he was the Minister of Mines and Steel Development, the Federal Government ensured the creation of a special purpose vehicle that enabled some states to participate in the mining sector.
The governor charged the Minister of State for Petroleum Resources, Chief Timipre Sylva, and other players in the sector to work towards allowing states to participate in the oil sector.
Zero NNPC remittance shows Nigeria’s bankruptcy, says Akeredolu
Also speaking at the event, the Governor of Ondo State, Rotimi Akeredolu, said the issue that played out in February when the NNPC remitted zero allocation to FAAC indicated that Nigeria was bankrupt.
Akeredolu, who was represented by his Commissioner for Energy and Natural Resources, Razaq Obe, said, “With what happened last month, what that means is that we are running a country that is basically bankrupt. So we either act now or we are compelled to act perhaps when it is too late.
“Number two, we must get all the oil that can be produced from our reservoirs to surface now. The $100/barrel oil price is not going to go on forever. If we can get our production above two million barrels per day, that will be good for the future.”
On the Petroleum Industry Act, which was passed in August 2021, the Ondo governor said, “And for PIA, it has not delineated correctly or clearly what a host community is.
“If we don’t work on that, we may begin to create a kind of crisis and warlords would take advantage of the ordinary people that the PIA intended to take care of.”
On his part, the Rivers State Governor, Nyesom Wike, who was represented by his Commissioner, Energy and Natural Resources, Peter Medee, urged the Federal Government to eschew bitter politics when implementing policies in the oil sector, particularly with respect to the Petroleum Industry Act.
FG blames acute fuel scarcity on unforeseen accident
Meanwhile, the Federal Government on Thursday blamed the acute fuel scarcity in Nigeria to an unforeseen and unexpected accident.
Sylva told journalists in Abuja that efforts were in top gear to clear the queues and assured Nigerians that the scarcity would end in days.
He said, “This kind of supply disruptions are like accidents, they are not desirable and you don’t expect them to happen but they do happen once in a while.
“You will agree with me that this administration has done well as far as fuel supply is concerned. But accidents do happen and this is one of those accidents that was not foreseen.
“But I am quite happy today to hear from the group managing director of NNPC and the Nigerian Midstream and Downstream Petroleum Regulatory Authority chief executive all that they have been doing to ensure that this problem is brought under control.”
The minister added, “From what they have told me, I believe that in a matter of days we will see that this problem is totally back to normal. Everybody is putting every effort to ensure that the supply disruption is overcome.”
The Group Managing Director, NNPC, Mele Kyari, said the oil firm had enough petrol to end the scarcity.
He said, “We are doing everything possible to bring the situation under control. We have a significant product in stock and as of this evening, we have 1.79 billion litres of Premium Motor Spirit on the ground.
“We are continuing the 24 hours loading at the depots and selling at some selected petrol stations,” adding that NNPC was working to halt racketeering at the depots.
Fuel scarcity lingers
Meanwhile, three weeks after the importation of methanol-blended fuel into the country, motorists have continued to lament the lingering scarcity of petrol which has seen most marketers close shop due to a seeming shortage of fuel supply.
Findings by our correspondents on Thursday across major cities revealed that motorists were still forming long queues in filling stations due to the unavailability of petrol in most of the supply outlets in the country.
Our correspondents also gathered that majority of motorists who did not buy directly from filling stations had to resort to buying at exorbitant rates from black marketers who have taken advantage of the scarcity to jack up the price of petrol across the country.
