Nigeria Spends 94.7% of August Oil and Gas Revenue on Petrol Subsidy
The Nigerian National Petroleum Company Limited spent 94.77 per cent of its revenue on petrol subsidy payment in August, latest data from the national oil company has affirmed.
The development, which clearly signposts grim outlook for the economy, came the same weekend the police high command disclosed that the Police Special Task Force on Petroleum and Illegal Bunkering (IGP-STFPIB) seized 123 oil tankers deployed for the purpose of crude oil theft.
That was as Bayelsa State Governor, Senator Douye Diri, alongside some leaders of the Ijaw National Congress (INC) and other stakeholders announced they had succeeded in calming frayed nerves arising from the pipeline surveillance contract awarded by the federal government to Government Ekpemupolo a.k.a Tompolo.
The information from the national oil company’s monthly presentation to the Federation Account Allocation Committee (FAAC) meeting at the weekend showed that NNPCL generated N553.99 billion in revenue from oil and gas operations in August 2022.
However, the subsidy payment or what the firm terms under-recovery, which was deducted for the month, was N525.71 billion, according to a THISDAY review.
The revenue made by the national oil company was mainly from Joint Ventures (JVs) and Production Sharing Contract (PSC) arrangements.
At the exchange rate of N403.87 per dollar, NNPCL got N527.13 billion from crude oil transactions under both arrangements, while it received N15.03 billion from its gas business under the agreements.
Apart from oil and gas proceedings, other transactions, termed miscellaneous, fetched the company N11.82 billion under JV and PSC.
In the same vein, NNPCL recorded N26.81 billion in outflow to National Petroleum Investment Services (NAPIMS), the upstream unit of the national oil firm.
The PSC Frontier Exploration Fund (FEF) was transferred to an escrow account, and the national oil company’s PSC management fee also gulped N708.06 million each.
Hitherto, the fund now paid for the controversial subsidy was remitted into the federation account, comprising the federal, state and local governments.
On Sunday, THISDAY reported that NNPCL continued its zero funding for the federation account in August, extending the national oil company’s prolonged non-remittance to the joint account to eight months.
The development came against the backdrop of the company’s deduction of N525.71 billion as value shortfall or subsidy for the importation of petrol in the month under review.
An analysis of the company’s monthly presentation to FAAC further showed that NNPCL had so far spent N2.565 trillion on the controversial subsidy this year.
Information from the FAAC meeting revealed that the money available for distribution among the three tiers of government for the month slumped by N280.948 billion to N673.137 billion when compared to N954.085 shared in July.
Of the amount, the federal government received N259.641 billion; the states received N222.949 billion; while the local government councils got N164.247 billion.
In July, the firm also deducted N448.7 billion for the purpose, a record high at the time, since the re-emergence of subsidy payment early last year.
It followed in a similar trend, which showed that in the first half of 2022, petrol subsidy claims surpassed oil and gas revenue by a whopping N210 billion, with NNPCL recording N2.39 trillion as gross revenues from oil and gas receipts, while subsidy claims amounted to N2.6 trillion.
The amount deducted in August was about $1.22 billion, according to figures submitted to the government by the state oil company.
The ballooning costs of keeping petrol prices low in Africa’s most populous country are straining the budget and draining revenue from the NNPCL.
Since this year, NNPCL has not remitted any money to the federal government due largely to subsidy costs as daily supply of petrol rose to 71.8 million litres, up nearly 10 per cent from July.
In August, Nigeria produced its least crude oil in decades, just about 972, 000 barrels per day, further worsening the country’s foreign exchange supply crisis.
Nigeria imports all its petrol because it does not refine a drop of the product in the country. All the refineries have been non-functional for years. The country operates a swap oil-for-petrol regime, which is largely seen as opaque.
It has blamed its inability to meet its production allocation on massive oil theft, deteriorating upstream infrastructure, lack of upstream investment, as well as outright sabotage of its assets.
Police Seize 123 Oil Tankers, 1,436, 020 Litres of Stolen Crude Oil, Diesel
The Nigeria Police high command disclosed that the Police Special Task Force on Petroleum and Illegal Bunkering (IGP-STFPIB) seized 123 oil tankers deployed for the purpose of crude oil theft. The taskforce also intercepted 1,301,020 litres of Automotive Gas Oil (AGO), also known as diesel, 135,000 litres of crude oil, 4, 900 litres of premium motor spirit (PMS), and 45, 000 litres of engine oil.
A statement issued by Force Headquarters stated that the development was in tandem with the commitment of the Inspector-General of Police, Usman Baba, to continuously develop and improve the capacity of its officers through practical training, acquiring top-notch investigative and operational assets to sustain the fight against oil theft and other crimes capable of sabotaging the country’s economy.
It stated, “In one of the cases, operatives of the IGP-STFPIB successfully discovered and busted the operations of an illegal refinery on 21st September, 2022 in Jijoro Community Riverside, Delta State, a creek of about one-hour boat ride.
“Suspected illegally refined AGO stuffed in 138 sacks, 10 empty surface tanks (ovens) used as cooking pots, 20 empty drums for storage one boat engine, two pumping machines were recovered.
“Three suspects, Happy Gift Lawson, 18; Ejime Precious Lande 22, and John Jugu Fom, 25, were equally arrested.”
Similarly, on September 9, 2022, it disclosed that following intelligence received from the NNPCL Command and Control Centre Portal, operatives of the IGP-STFPIB proceeded to the Rumuekini Area of Port Harcourt, Rivers State, where they discovered a warehouse within a residential building, storing about 15,000 litres of petroleum products suspected to be illegally refined AGO stuffed in sacks.
Other products recovered included Mack Tanker, one plastic storage tank, one-barrel drum, and one pumping machine. The police revealed that one Franklin Osuagwu, 29, was arrested at the scene in connection with the offence.
The statement said samples of the products were collected for laboratory analysis while the suspects will be charged to court on conclusion of investigations for effective prosecution in line with extant laws.
It said, “The Inspector-General of Police restates emphatically that the Nigeria Police Force will not relent in enforcing all laws as it is statutorily empowered to do by effect of Section 4 (d) of the Police Act, 2020, and so charge all suspects arrested for oil theft and other related offences accordingly, without any prejudice.
“Also, the IGP has called for increased support particularly in expanding the scope of our courts and confer jurisdictional competence to hear petroleum and illegal bunkering matters, as well as provision of storage capacity for exhibits recovered during special operation pending the determination of a suit by the courts.”
Pipeline Surveillance: Diri, INC Resolve Tompolo, Asari, Ateke Rift
Bayelsa State Governor, Senator Douye Diri, leaders of the Ijaw National Congress (INC), and other stakeholders resolved conflicts arising from the pipeline surveillance contract awarded by the federal government to Tompolo.
Diri also said leaders of the Ijaw nation and other ethnic nationalities in the Niger Delta had decided to work together to protect federal government’s facilities in the region.
The governor spoke at the weekend after a meeting of stakeholders of the Ijaw nation, led by the INC President, Professor Benjamin Okaba, at Government House, Yenagoa.
Diri noted that the meeting examined the various issues that threatened the unity of the Ijaw nation following the award of the pipeline surveillance contract to Tompolo’s firm. He explained that the meeting was held to foster peace and unity within Ijaw land and that all parties agreed to sheathe their swords.
Tompolo, King Ateke Tom, and Chief Dokubo Asari had representatives at the meeting.
Diri stated, “I am happy that the issue has been put behind us. Beyond building consensus, all hands must be on deck to protect the oil pipelines.
“Today, we have seen the end of the matter. Before now, there was a deafening silence in the INC. But today, that voice is resonating and I thank all Ijaw leaders that took it upon themselves to ensure that the Ijaws do not fight themselves.
“Tompolo and Asari are brothers. We have all come to a consensus to protect all federal presence, especially oil pipelines in the Niger Delta, as we sue for peace to attract development.”
Diri commended Okaba and others for demonstrating leadership.
At the end of the meeting, INC issued a communiqué, titled, “We are stronger together,” which was read by Okaba.
The communiqué said a five-man reconciliatory committee was constituted to interface with the various groups and individuals on the pipeline surveillance issue.
It noted that Ijaw people were irrevocably committed to the peace, unity and stability of the ethic group and other nationalities in the Niger Delta.
The communiqué stressed the people’s determination not to allow the pittance in the guise of oil pipeline surveillance create an arena of in-fighting and bloodshed in Ijaw land before, during and after the execution of the job.
The meeting also agreed that the Ijaw nation would collectively stand against oppressive issues and obnoxious legislations to safeguard the future of the people.
Such issues include re-introduction of the National Water Resources Bill, the Petroleum Industry Act 2021, non-constitution of a substantive board for the Niger Delta Development Commission (NDDC), and the politicisation of the Nigerian National Petroleum Limited with a lopsided board.
It called on the federal government to fast track the realisation of the proposal for the establishment of modular refineries to put an end to illegal refineries and pollution of the environment.
It also agreed to maintain the people’s position on the restructuring of Nigeria “to free it from the shackles of a faulty and fraudulently contrived foundation that perpetuates injustice, disunity and hegemonic tendencies.”
The peace meeting, which was chaired by Diri, had in attendance Bayelsa Deputy Governor, Senator Lawrence Ewhrudjakpo; Commissioner for Ijaw National Affairs, Patrick Erasmus; INC President, Okaba; Acting Chief of Staff, Government House, Dr. Peter Akpe; former INC President, Chief Joshua Fumudoh; and former Minister of Police Affairs, Alaowei Broderick Bozimo.
Other stakeholders in attendance were Senator Emmanuel Diffa, Emeritus Professor Alabo Dagogo Fubara, Chief Kennedy Odiowei, as well as representatives of Farah Dagogo and ‘General’ Horsfall Olali, among others.
Meanwhile, the Movement for the Survival of Ijaw Ethnic Nationality in the Niger Delta (MOSIEND) commended Okaba and his team for their efforts towards restoring peace among aggrieved leaders from Rivers Ijaw who had expressed misgivings over what they termed inequitable award of pipeline security and surveillance contract.
In a statement signed by Chairman of MOSIEND Eastern Zone, Prince Prince Marley, and Secretary, Godwin Opiuyo, equally, commended Government Ekpemopolo alias Tompolo for engaging community leaders from Rivers State, where his company’s surveillance operations cover, describing the move as a step in the right direction for peace to reign.
“We appreciate the leaders from Rivers State for their maturity, understanding and cooperation with our brother, Tompolo, in ensuring that the security and surveillance of pipeline in Rivers State is effective, in order for our communities to be free from black soot and other illnesses resulting from the illegal bunkering activities,” the statement said.