Economy

NNPC spends N1.1trn on subsidy, FAAC remittance, oil Exploration in 7 Months

The Nigerian National Petroleum Corporation (NNPC)has spent N1.165 trillion on petroleum subsidy, oil exploration and remittance to the Federation Account Allocation Committee (FAAC) in seven months of this year.

According to NNPC monthly FAAC report for September, the three expenditure items gulped 57 per cent of the total revenue distribution of N2.043 trillion done by the national oil company in the first eight months of 2021. The balance of N878bn was distributed for other expenditures, including crude oil lifting inspection expenses.

On subsidy which NNPC describes as under-recovery of Premium Motor Spirit (PMS) value shortfall, the corporation spent N714.791bn within seven months, from February to August.

While there was no subsidy spent in January, NNPC spent N25.37bn in February and that figure rose by nearly three times in March to N60.396bn. The corporation then spent N61.966bn in April which more than doubled to N126.298bn in May, following a reported a higher rise in the landing cost of imported petrol.

The national oil company further incurred a higher cost in petrol subsidy of N164.337bn in June but declined to N103.286bn by July; however, by August, the gain was reversed when subsidy cost rose to N173.132bn, the highest figure published so far.

The Minister of State, Petroleum Resources, Timipre Sylva, has continually reiterated that the government was committed to total removal of subsidy from next year, especially with the implementation of the Petroleum Industry Act (PIA) as Nigerians await the impact of the decision.

FAAC Gets N429bn In 7 Months

The corporation also remitted N429.284bn oil proceeds to the FAAC for seven months during the period as it skipped remittance in April.

The breakdown of the remittance shows that NNPC remitted N90.860bn in January, but that dropped to N64.161bn in February, and further depleted to N41.184bn in March 2021.

There was no remittance in April which was said to have gone for subsidizing petrol pump price per litre to keep it at the 162 to N165 price band.

By May, the remittance to FAAC dropped to N38.608bn but rose significantly to N47.162bn in June and higher to N67.280bn in July before climaxing at N80.030bn in August.

Frontier Exploration Gulps N20bn

NNPC also spent N20.681bn on frontier oil exploration in seven months with the highest expenditure done in August. While it spent N1.964bn on exploration activities in January, the bill slightly dropped to N1.920 in February but rose to N2.250bn in March. There was no expenditure on oil exploration in April but the figure rose to N3.216bn in May, and dropped to N2.715bn in June. While oil exploration expenses dropped to N2.443bn in July, they rose by three times in August to N6.167bn.

This expenditure on oil exploration is being made at a time when global leaders are shifting from the use of fossil fuel to renewable and clean energy. However, Sylva recently said Nigeria will gradually lead its energy transition by focusing on gas exploration towards reaching a cleaner energy goal.

More so, in the recently signed PIA, 30 per cent of oil proceeds has been pegged for oil exploration activities at the frontier basins with concerns that these activities are concentrated in the north.

However, the Governor of Nasarawa State, Engr. Abdullahi Sule, at an oil and gas union gathering last week in Abuja, clarified this misconception, saying what refers to as frontier encompasses all new exploration areas including the Niger Delta, with the Benue Trough exploration reaching Calabar, the Cross River State capital. He also said it includes the Benin Basin and some undeveloped offshore areas in the South-South.

Economy

Auditor General indicts MTN over evasion of Customs duty since 2021

—–as House of Reps knocks FIRS over operational infractions

The Office of the Auditor General of Federation has indicted the telecom giant, MTN, over evasion of payment of Customs duties since 2021.

This was contained in the 2019 queries issued by the office of the Auditor General of the Federation which was made available to the House of Representatives Committee on Public Accounts.

The committee also heard that the Federal Inland Revenue Service, (FIRS) received capital allowances claims by taxpayers without the certificate of acceptance from the ministry of trade and industries in 2019.

Speaking at the resumed hearing of the investigations on queries issued by the office of the Auditor General of the Federation against the Ministries, Departments and Agencies, (MDAs) of the Federal Government, the Chairman of the committee Hon Oluwole Oluwole Oke, lamented the level of external borrowings by the federal government, saying that the committee’s probe of public funds was aimed at curtailing revenue leakages to boost government treasury.

His statement was coming against the backdrop of tax evasion by the telecom service provider, MTN whose current assets stand at N2.68 trillion in the country, yet does not have proof of customs duty over the years.

The lawmakers also decried the issuance of an assets certificate by the Ministry of Trade and investment to the telecommunication firm without first evaluating their assets.

Following the failure of the MTN representative to tender the relevant documents to buttress his position that the company was up to date, the committee resolved to write the Nigeria Customs Service, (NCS) to furnish it with relevant documents, including MTN duty permit so as to ascertain the total amount it owes government since 2001.

Hon Oke, therefore, directed the Clerk of the Committee to write to the Management of the Nigeria Customs Service on the financial indebtedness of the firm to the federal government.

Economy

AFCFTA, WCO sign MoU to enhance trade in Africa

The African Continental Free Trade Area (AfCFTA) Secretariat and the World Customs Organisation (WCO) have signed a Memorandum of Understanding (MoU) aimed at operationalising the tariff schedules and ensuring additional free and efficient movement of goods in Africa.

The MoU, which was signed in Brussels, Belgium, on February 15, 2022, by the Secretary-General of the AfCFTA Secretariat, Wamkele Mene and the Secretary-General of the WCO, Kunio Mikuriya, is expected to strengthen the organisational capacity, transparency and effectiveness of African Customs administrations sustainably, through cooperation between both organisations.

The shared goal of both organisations remains to enhance continental trade by eradicating trade barriers through connecting Customs systems, populating the AfCFTA Tariff Book and providing capacity building for Customs officials and administration.

Mene said that “The MoU will improve the partnership between the WCO to and the AfCFTA in ensuring that Customs Administrations are fully equipped to implement the AfCFTA Agreement.”

He further said that good progress has been made since the establishment of the AfCFTA Secretariat, saying that one major milestone is the ratification of Rules of Origin for 87.7 percent of tariff headings agreed upon by 41 of its 54 Member States.

Mene noted that the expectations were high and that communities were eager to start trading under the new Agreement. He acknowledged the WCO’s expertise and role in delivering capacity building in highly-technical areas which were key for implementing the Agreement.

On his part, Dr. Mikuriya highlighted the areas where the WCO could contribute, including customs technical matters such as the Harmonised System, Valuation and Origin, as well as automation, risk management and trade facilitation which will yield economic benefits to the African continent.

He reaffirmed WCO’s commitment to contribute to the regional integration efforts in Africa through customs modernisation.

AfCFTA is the world’s largest free trade area since the formulation of the World Trade Organisation.

It aims to bring together all 55 member states of the African Union, covering a market of more than 1.2 billion people, including a growing middle class and a combined gross domestic product of $2.6 trillion.

It works towards several objectives, most importantly to create a single market for goods and services, having the potential to boost intra-African trade by 52.3 percent.

WCO is the only intergovernmental organisation focused uniquely on customs matters.

With 184 Members across the globe collectively processing 98 percent of world trade, the WCO is recognised as the voice of the customs community.

It is noted for its expertise in developing global standards, simplifying and harmonising customs procedures, trade security, trade facilitation, customs enforcement and compliance, the Harmonised System goods nomenclature, valuation, origin, and customs capacity building.

The MoU is expected to strengthen the organisational capacity, transparency and effectiveness of African Customs administrations sustainably, through cooperation between both organisations.

AfCFTA is the world’s largest free trade area since the formulation of the World Trade Organisation. It aims to bring together all 55 member states of the African Union, covering a market of more than 1.2 billion people, including a growing middle class and a combined gross domestic product of $2.6 trillion.

Economy

NNPC, MRS engage in blame game over importation of toxic fuel

The Nigerian National Petroleum Corporation(NNPC) and MRS, a Major oil marketer, have engaged in a blame game over the importation of adulterated fuel into the country.

The two organisations were locked in trading of accusations and counter-accusations over who was responsible for the importation of the toxic fuel.

Curiously, the NNPC, the sole importer of petroleum products into the country, in an attempt to absolve itself of the national embarrassment, fingered some major oil marketers in the sordid transaction.

The Group Managing Director of NNPC, Mallam Mele Kyari, at a press conference on Wednesday, revealed that MRS, Emadeb/Hyde/AY Maikifi/Brittania-U Consortium, Oando and Duke Oil are the importers of the adulterated fuel.

However,MRS countered the position of the NNPC, accusing the oil corporation of importing the toxic fuel.

In its rebuttal statement on Wednesday, MRS accused Panama-based Duke Oil, an NNPC agent, of being the direct importer of the adulterated fuel.

The Major Oil marketer denied importing the substandard PMS, stating that importation of fuel into Nigeria was solely the responsibility of Duke Oil on behalf of NNPC, and the contaminated fuel was distributed to various retailing companies.

How the toxic fuel was imported and distributed in Nigeria

Investigation revealed that Duke Oil is a subsidiary of Nigeria National Petroleum Corporation (NNPC), acting as the government agency’s trading arm, which makes the firm the only importer of PMS into Nigeria.

The company was established about 32 years ago during the administration of Gen Ibrahim Babangida, with a registered designation of Sociedad Anonima, which means Anonymous Society.

Sociedad Anonima implies that shareholders of Duke Oil are largely unknown or secret, and its registered base is in Panama, a Central American country known for providing safe haven to money launderers.

Stakeholders have however queried why a government agency such as NNPC should be running a sole trading arm that is operating out of a money laundering country with secret shareholders.

After the importation of the contaminated fuel, it was gathered that OVH, MRS, NIPCO, ARDOVA and TOTAL received the contaminated fuel from NNPC, after landing in Apapa between the 24th and 30th of January, 2022.

Sources claimed the adulterated fuel was bought by Duke Oil from the international trader, Litasco, and it has 20% methanol, an illegal substance in Nigeria after it was delivered with Motor Tanker (MT) Nord Gainer.

“Following delivery into the tank, it was observed that the product appeared hazy and dark,” MRS claimed.

adding “the product analysis revealed that the PMS discharged by MT Nord Ganier had 20% methanol, which is an illegal substance in Nigeria.

“As a Company, we are aware that alcohol/ethanol is not permitted to be mixed in PMS specification.” The oil and gas company wrote in the filing at the Exchange on Wednesday.

MRS said it has now halted further sales of fuel from its retailing stations and awaits NNPC’s decision on replacing the contaminated fuel.

However, Kyari said the efforts of the NNPC have been to hold back the affected fuel some of which came from Antwerp in Belgium.

He also explained that petrol imported into the country does not include tests to ascertain the level of methanol content.

The NNPC boss however said that the quality of the products as shown in the certificates issues at port of loading in Belgium showed the fuel was in compliance with Nigerian specifications.

Apart from this, he added that GMO, SGS, GeoChem and G&G working as NNPC quality inspectors had carried out tests before the products were discharged showing Nigeria’s standard.