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Nigeria: NNPC Set to Deduct N149.2bn from October’s Federation Account

Nigeria’s state-owned oil company, the NNPC will again make a huge deduction of N149.2 billion from the federation’s joint account when the Federation Account Allocation Committee (FAAC) meets next month,

Nigeria’s state-owned oil company, the NNPC will again make a huge deduction of N149.2 billion from the federation’s joint account when the Federation Account Allocation Committee (FAAC) meets next month, according to a document seen by THISDAY.

The NNPC FAAC presentation held on September 21, which detailed the corporation’s operations for the month of August, disclosed that as reported by THISDAY last month, the national oil company also withheld about N173.1 billion during the month to pay for what it terms under-recovery or value shortfall. An analysis of the document showed that net revenue to FAAC from the NNPC rose to N80 billion in August as against N67.280 billion in July, an increase of about N13.28 billion.

Year-to-date, the NNPC FAAC presentation showed that N714.7 billion had been paid as subsidy from January to August, with the eight month getting the lion’s share of N173.1 billion, while June came next with N164.3 billion, followed by May with N126 billion, then July in which N103.2 billion was spent on what the government terms under-recovery.

In the same vein, while no subsidy was paid in January, N24.3 billion was paid in February, N60.3 billion in March and N61.9 billion in April this year.

According to the NNPC, a pending N40 billion from June under-recovery would be subsequently subtracted from the federation account jointly run by the federal, state and local governments.

When the implementation of the Petroleum Industry Act (PIA) begins in earnest and the federal continues in its hesitation to stop payment of subsidy on petrol, it would be double jeopardy for the sub-nationals which would also be hugely affected by the deduction of the controversial 30 per cent frontier exploration fund.

 “The value shortfall of N173,131,639,213.61, for July 2021 was charged. The balance of N40,000,000,000.00 for the June 2021 value shortfall will be deducted subsequently.

“The August, 2021 value shortfall of N149,283,084,869.20 is to be deducted from the September, 2021 proceeds due for sharing at the October, 2021 FAAC meeting,” the document disclosed.

In all, the overall NNPC crude oil lifting of 8.71 mbbls (export & domestic crude) in July 2021, recorded 0.87 per cent increase relative to the 8.66 mbbls lifted in June 2021, the corporation stated, with Nigeria maintaining 1.554 million bpd Organisation of Petroleum Exporting Countries (OPEC) production cut in July, 2021.

Crude Oil export revenue received in August 2021 amounted to $7.78 million, equivalent to N2.98 billion, while domestic gas receipts in the month was N5.69 billion.

According to the NNPC, feedstock valued at $64.66 million was sold to Nigeria LNG during the period, out of which $54.40 million was received during the month, the difference being Modified Carry Agreement (MCA)  obligations, gas reconciliation and credit notes. 

NLNG arrears amounting to $3.09 million was received during the period, while  the sum of $151.26 million being miscellaneous receipts, gas and ullage (the amount by which a container falls short of being full) fees and interest income was received in August 2021.

In its July operations, for monies which were shared in August, NNPC had deducted a cumulative N215.3 billion from its contribution to joint Federation Account, being a combination of N175 billion value shortfall or subsidy and N40 billion Joint Venture (JV) cost recovery.

The data earlier obtained by THISDAY showed that NNPC paid N67.280 to the joint account in July, in contrast to the N47.162 in June. The July payment was about N20 billion higher than that of June.

Furthermore, in January, net revenue to FAAC was N90.8 billion, it was N64.161 billion in February, N41.184 billion in March, zero in April, N38.608 billion in May, N47.162 billion in June and N67.280 billion in July.

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.

Meanwhile, Brent oil, Nigeria’s crude benchmark, rose above $80 a barrel on Tuesday, the latest milestone in a global energy crisis, on signs that demand was running ahead of supply and depleting inventories.

The international crude benchmark hit the highest since October 2018, before paring some earlier gains to trade close to $80, while West Texas Intermediate (WTI) also climbed above $75.

However, the jump to $80 was adding inflationary pressure to the global economy at a time when prices of energy commodities are soaring, especially in Europe and America.

Other things being equal, oil has rebounded from its collapse last year amid record output curbs from the OPEC+ group and a global economic recovery that has boosted demand.

Emmanuel Addeh in Abuja