NNPC’s $1.05b withdrawal from NLNG fund ‘in public interest’

The Nigerian National Petroleum Corporation (NNPC) has explained why it withdrew $1.05billion from the Nigeria Liquefied Natural Gas (NLNG) dividend account, stressing that Section 7 of the NNPC Act empowers it to make such withdrawals.

The cash was used to support importation of premium motor spirit (PMS) or petrol, which is highly subsidised at the rate of N145 per litre, the current pump price in Nigeria.

According to data, petrol is supposed to be sold at a rate of at least N220 per litre but it currently sells at N145, making the price the cheapest among the countries surrounding Nigeria. Besides, while the government through the NNPC tries to make this fuel affordable and available to Nigerians by paying the under-recoveries, some people engage in illegal diversion of the fuel to neighbouring countries where they sell it at a premium. Under-recovery is the term used to describe the financial amount of subsidy the Federal Government absorbs for keeping the pump price of petrol at N145 per litre.

Also as the refineries work at very sub-optimal levels, the fuel importation level is high making the under-recovery payment huge. As a result of the low pump price of petrol, other oil marketers have shunned importation as they wouldn’t be able to recover their costs. Therefore, the onus of adequate fuel importation to meet daily national consumption falls wholly on the NNPC.

Therefore, according to industry players, it was cheery news when the alleged missing $1.05 billion from the Nigerian Liquefied Natural Gas (NLNG) dividend account was resolved between the Senate Committee on Gas Resources looking into the matter and the Nigeria National Petroleum Corporation (NNPC) confirmed the cash was not missing but used by the Corporation (NNPC) for national interest. The industry players said the clarification restores Nigeria’s image before the international communities and investors’ confidence.

The Chairman of the Senate Committee on Gas, Senator Bassey Albert, had said the investigation of the application of $1.05billion Nigeria Liquefied Natural Gas (NLNG) dividend to support the importation of petroleum products into the country has nothing to do with any missing funds since no such money was missing in the first place.

Senator Albert, who doubles as the Chairman of the Senate Committee on the Application of the NLNG Dividend, explained that the clarification became necessary due to sensational and misleading reports in some sections of the media.

He said the mandate of the committee was to determine the instrument under which NNPC relied upon to affect the said withdrawal and subsequent application of the NLNG dividend to meet pressing national demand for fuel supply, noting that the committee relies on NNPC to provide informed perspective on the issues.

The Chief Financial Officer (CFO) of NNPC, Mr. Isiaka Abdulrazaq, provided the relevant documents and parts of the NNPC Act that empower the corporation to make withdrawal from the account to the lawmakers

In 2017, three days before Christmas, there was severe fuel scarcity and millions of people travelling for the celebration were stranded on the road. Most of the fuel retail outlets didn’t have fuel and the few that had, sold at exorbitant prices. People were storing fuel at home, people travelling bought fuel and kept in their vehicles’ booths to avoid getting stranded on the way. Some of such vehicles got burnt on the way killing some of the occupants, while some houses had fire outbreaks resulting from storing fuel.

Fuel prices varied in different parts of the country last year. In the Southwest and South-south states, it was between N200 and N250. per litre, while in the Southeast and the north, it was between N250 and N300. Fares also went up astronomically. However, this year is completely different from last year.

The Department of Petroleum Resources (DPR) has also urged consumers across the country not to engage in panic buying as there was more than enough fuel to go round. “Consumers should avoid panic purchase of petrol. We have enough of the products in the depots, adding that storing of petrol at homes is dangerous because fire outbreak.

“The NNPC has also build up strategic reserves across its hinterland and coastal areas to meet emergencies arising from price volatility in the international oil market,” the Department said.

The oil and gas industry regulator also urged consumers to report any operator found selling the product above the approved pump price of N145 per litre.

Also the Group Managing Director of NNPC, Dr. Maikanti Baru, assured Nigerians that the DPR and the officers of the Nigeria Security and Civil Defence Corps (NSCDC) are on duty to ensure effective distribution of products to customers.

“Unlike 24th of December last year when there was scarcity, long queues and few filling stations with fuel, it is different today. The worry that we had has been cleared. “We also thank President Muhammadu Buhari for maintaining the N145 per litre pump price. During the course of the year, we had times when we brought in products that indicated an under-recovery of almost N80 per litre; and because of the peak of the crude oil price, the under-recovery on product price also rose.”

Baru also reiterated the effort of the government to ensure stable fuel supply during the Yuletide and beyond, especially in the face of attempts by some individuals to disrupt supply. He stated that presently the country had fuel stock to last for over 60 days, adding that current supply would last the country until after the 2019 general elections. “At the moment, we have 60 days supply almost three billion litres of PMS that would last us without bringing in any extra drop of fuel, another 60 days.”