A new report on Thursday said despite President Muhammadu Buhari’s attempt at ensuring transparency in the oil sector, the Nigerian National Petroleum Corporation, NNPC, still withholds billions in oil revenues from the government account.
The report by the Natural Resource
Governance Institute, titled “NNPC still holds blank check” said that
within the first six months of the Buhari administration, the NNPC
withheld over $4.2 billion (about N824.7 billion) out of a total of $6.3
billion (N1.24 trillion) revenues realised from crude oil sales in the
second half of 2015.
The withheld revenues represented about
66 per cent of the total revenue – $1.4 billion earnings from Nigeria’s
regular crude oil exports for the period; $3.4 billion from domestic
crude oil sales, and $1.5 billion from oil sold from the corporation’s
upstream subsidiary, the Nigerian Petroleum Development Company, NPDC
The report said only $2.1 billion (about N413.7 billion) was transferred to the Federation Account.
The group said the unremitted revenues
for the six months was about 14 per cent more than the amount withheld
by the corporation under the Goodluck Jonathan administration in the
first half of 2015, and about 12 per cent higher than the share withheld
in 2013 and 2014.
The report said the figure of unremitted
oil revenues in 2015 contrasted sharply with 2005 figures, which showed
the NNPC remitted about 68 per cent of its total oil sale earnings to
the Federation Account and kept only 32 per cent that year.
The report said while part of the
withheld funds was used for servicing Nigeria’s share of the joint
venture operating obligations, the NNPC did not fully explain what the
other retained revenues from domestic crude and NPDC oil sales were used
In general, the report said despite the
on-going reforms in the oil sector, the NNPC under the present
administration was still retaining a major share of oil sale earnings
and spending at will.
Some of the reforms by the Buhari
government, the report noted, have cut the number of passive, well
connected middlemen that pocketed billions of oil revenues, while the
administration has cancelled costly, unbalanced NNPC swap contracts as
well as seek more efficient replacements.
The report lamented that recent
announcements on NNPC reforms and the latest drafts of the Petroleum
Industry Bill, PIB, by the Ministry of Petroleum Resources, failed to
adequately address how NNPC and the government would share future oil
“Until government establishes a clear,
legally enforceable rule governing which revenues NNPC can keep and how
they can be spent, oil sector corruption and waste could return to their
prior devastating levels once the president (Buhari) leaves, or prices
rise,” the report noted.
While encouraging government to push
ahead with its reform plans for the oil sector, NRGI stressed the need
for NNPC to adopt new financial controls and transparency measures for
its subsidiaries, especially bordering on the several billion revenues
retained each year from NPDC operations and its oil trading and
The Institute also called for the
immediate replacement of the 445,000 barrels per day crude oil
allocation for domestic refining with a fit-for-purpose mechanism for
supplies to the country’s four refineries.