NNPC Admits Spending $10.8b Missing" Money

The Nigerian National Petroleum Corporation (NNPC) yesterday explained how it incurred the $10.8 billion expenditure that is undergoing reconciliation by various agencies of the Federal Government at the Federation Account Allocation Committee (FAAC)

According to the corporation, “the sum in question has been expenditure incurred as art of statutory responsibilities which the NNPC as the National Oil Company executes on behalf of the Federal Government and by extension the entire people of Nigeria.”

While insisting that the fund is not missing, the Group Managing Director (GMD), Engr. Andrew Yakubu, who was represented by the Group Executive Director, Finance and Accounts Directorate, Mr. Bernard Otti, at a press conference in Abuja, added that $8.49 billion subsidy claim for 2012 was part of the $10.8 billion.

The GMD recalled that for many years, the NNPC has been the main supplier of the subsidised Premium Motor Spirit (PMS).

Yakubu claimed that the Federal Government had not made payment to the corporation in the name of subsidy during the period under review.

He noted that “pipeline management and repair cost is $1.22 billion while product/crude oil losses is $0.72 billion and cost of holding the strategic reserve stock is $.7 billion.”

These, he said, are being subject to the normal continuing inter-agencies reconciliation exercise.

Yakubu submitted that “as long as it is a transaction, it is always work in progress.”

Speaking, the NNPC Director of Transformation and Coordination of Data and Corporate Planning, Dr. Tim Okon, noted that the pipelines are constantly being hacked into and there is no budget from which the corporation can recover the cost.

According to him, the Petroleum Products Pricing Regulatory Agency (PPPRA) offers a mechanism for which under the subsidy regime there is a certain claim to make from importation or distribution of petroleum products.

“However, that template does not have any recovery mechanism for pipelines. Everyone needs to be aware that pipelines are constantly being vandalised in Nigeria, and there is a constant cost of keeping those pipelines running are the cost we are reflecting here,” said Okon.

He however stated that the NNPC Act allows the corporation to defray the cost, adding that Nigeria buy 445 million barrel of oil per day in order to import products to the citizenry.

The GMD stated that petroleum products are subject to theft as there has always been a loss of 30% of crude before arrival at Port Harcourt Refineries.

His words: The other point to be made is that the products themselves are subject to theft. Again, if you look at the PortHarcourt Refineries, in many cases, by the time you send crude through that pipeline system, when it arrives at the refineries, about 30 per cent of it is already lost

“NNPC has to accounted for that 30 per cent that is lost. It is criminal and that cost is reflected here in the 0.72 billion.”