Shocker as NNPC deducts N126bn from June remittance to FAAC

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The three tiers of government, federal, states and local governments had better braced for a shortfall in revenue allocation from the federation account in June as the Nigerian National Petroleum Corporation (NNPC) has served notice to the Federation Account and Allocation Committee (FAAC) that it will deduct about N126 billion from its remittance to fund subsidy on petrol.

In a report issued at the weekend, the national oil company also said it will begin to deduct the balance of an additional N50 billion being joint venture cost recovery to sustain crude oil production level.

In the document which detailed the status of its finances during its monthly FAAC meeting held between May 19 and 20, the NNPC also disclosed that it did not make any remittance to the federation account during the period.

Recall that the corporation had, in April, notified the accountant-general of the federation Mr. Ahmed Idris, that it would not be able to remit any funds to the Federation Account in April for distribution in May.

NNPC said it posted a value shortfall of N111.966 billion in February 2021, which would ultimately impact on its ability to contribute to the joint account shared among the federal, state and local governments.

The corporation attributed the N111.966 billion shortfall to the rising average landing cost of petrol, which jumped to N184 per litre in March as opposed to the existing N128 ex-coastal price.

According to the corporation, the N111.966 billion incurred as landing cost would be deducted from April oil and gas proceeds due to the federation in May.

“No remittance to federation account in April, 2021 (May, 2021 FAAC) due to recorded value shortfall resulting from difference between landing cost and ex-coastal price of PMS (petrol) recorded in March, 2021.

“The sum of N61, 966,456,903.74 was deducted out of the total March value shortfall of N111, 966,456,903.74. This is to make funds available for JV cost recovery to sustain the existing production level. The balance $50,000,000,000.00 will be deducted in subsequent months.

“In addition, April value shortfall of N126,298,457,944.36 is to be deducted from May federation proceeds in June 2021 FAAC meeting,” said the corporation.

The document further revealed that net revenue of N90.8 billion was remitted to FAAC in January; N64.1 billion was remitted in February, N41.1 billion in March while zero amount was recorded in April.

The document also stated that the corporation sold oil and gas valued $565.4 million or an equivalent of N214.5 billion in April.

Also, NNPC’s overall crude oil lifting for both export and domestic in March 2021 recorded 29 per cent decrease relative to the 10.79mbbls lifted in February 2021.

The national oil company said Nigeria maintained 1.52 million bpd OPEC production cut in the first quarter of 2021, while export crude oil revenue received in April amounted to $1.89 million, equivalent to N723 million.

“This represents a 98 per cent decrease compared to March 2021; domestic gas receipts in the month was N5.13billio,” it added.

It stated that feedstock valued at $54.6 million was sold to Nigeria LNG during the period out of which $52.4 million was received during the month, with the difference being modified carry agreement obligations, gas reconciliation and credit notes.

MCA is a financing agreement whereby the International Oil Companies (IOCs) advance loans to NNPC to invest in upstream projects.

For other receipts, the corporation stated that $1.25 million, being miscellaneous receipts, gas and interest income was received in April 2021.

The data also showed that the exchange rate the CBN sold foreign exchange to the NNPC moved from N379 to N383.47, while N15 billion was spent on government priority projects.

In the same month, the corporation lost 3.1 million barrels for various reasons, ranging from shut-ins due to repairs, industrial actions, flow line leaks and power failure.

On the analysis of receipts due in April, gross revenue from JV crude was N124.3 billion; JV gas was N26.1 billion, while N5.8 billion was received from miscellaneous sources, amounting to N156.3 billion.

After deduction of royalty, JV cost recovery, profit before tax and taxes receipts from JV crude came down to N5.5 billion, while that of JV gas stood at N7.8 billion.

Of the March domestic crude oil payable in June by the NNPC, in line with the 90-day payment plan, Chevron Nigeria Limited has roughly 2.89 million barrels valued at N72.6 billion while Eroton’s share is 130,000 barrels valued at N3.1 billion.

Also, Mobil Producing has 2.84 million litres, valued at N68 billion, Seplat’s is N3.36 billion, SPDC’s share of the JV is N33.6 billion while the value of Total’s crude oil payable in June is N3.1 billion, totalling approximately N184.5 billion or equivalent of $487 million.

As of March 31, total pre-2016 JV cash call arrears repayment status indicated that JV negotiated debt remained at $4.68 billion, total payment till date is $3.1 billion, while outstanding balance is $1.54 billion, with the exception of Mobil which has been fully paid by the NNPC.

In April, N938.9 million was spent on security and maintenance, while strategic holdings of the NNPC gulped N740 million, amounting to N1.679 billion.

In all, 37 vessels imported petrol for the month under review, with landing cost ranging from between N169 and N199.90.

Also, a total of N1.48 billion litres were imported for the month, 1.99 billion litres were sold, with depot price remaining at N128 and the recorded loss put at N111.9 billion.

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