Out of a possible N1.46 trillion the Nigerian National Petroleum Corporation (NNPC) budgeted as revenue payment to the nation in the first seven months of 2021, the corporation has only been able to remit N349.254 billon as of July ending this year, data from the corporation has indicated.
The amount delivered to the Federation Account Allocation Committee (FAAC) is short by N1.115 trillion, according to the national oil company’s presentation to a joint committee, which works out the sharing of monies by the federal, state and local councils every month.
When the NNPC makes deductions for petrol subsidy or under-recovery, it directly affects the nation’s collective purse, with actual monthly subtractions hitting N541 billion in the seventh month this year.
Whereas the national oil company projected a monthly remittance of N209.307 in 2021, however, a breakdown of the figures showed that its highest remittance this year was a N90.860 billion January payment, while the lowest was in April when it paid nothing into the federation account.
In all, the NNPC is supposed to pay the federation N2.51 trillion this year, but the national oil company now has a remote chance of hitting that target, having not been able to meet even a third of the projections at the end of July.
Aside the N90.8 billion highest payment in January, the NNPC also remitted N64.161 in February, N41.1 in March, N38.6 billion in May, N47.162 in June and the second highest being N67.28 in July.
Of the N541 billion subsidy paid in the first seven months, N25.374 billion was spent on what the corporation terms value shortfall in February, it was N60.39 billion in March and N61.966 billion in April.
It more than doubled to N126.298 billion in May, markedly increased to N164.337 billion in June, but came down to N103.286 billion in July.
In August, Economic Confidential reported that the NNPC alerted FAAC that it was again set to deduct about N215.3 billion from its contribution to September joint Federation Account, being a combination of N175 billion value shortfall or subsidy and N40 billion Joint Venture (JV) cost recovery.
However, the federal government may have found other means to bridge the revenue gap since the monies received every month have somehow been stable in the last few months, hitting N760.7 billion in July, but dipping to N697 billion this September.
But despite the obvious struggle to meet its projected obligation to the three tiers of government, the NNPC, apparently positioning for more transparency in its operations with the release of three audited financial statements, recently declared a profit of N287 billion.
Although with the new Petroleum Industry Act (PIA), the industry is supposed to be fully deregulated, however, the corporation has said that removal of subsidy will not be immediate since the impact on the poor and vulnerable will be ‘unimaginable’
Added to that, funding deficit of the national oil company’s priority projects in the oil and gas industry had fallen to the tune of $1.54 trillion, according to a document in July, analysed from January to June this year.
Cost recovery refers to a mechanism through which a party to an oil and gas project can recover most, if not all, of its capital and operating costs out of a specified percentage of production called ‘cost recovery oil’.
Whereas the total 2021 “calendarised’’ financing obligation was put at $3.21 trillion, with a monthly tranche of $536 trillion, the data showed that actual dollar equivalent funding stood at $846 million as of June this year, leaving a deficit of $1.545 billion.
A breakdown of the figures seen by Economic Confidential showed that $196.1 million of the budgeted $536 million was released in January, $168.5 million was released in February, while in March $128.101 million was made available for funding the projects.
In addition, $167.2 million was pumped into the projects in April; in May it was $172 million, while June saw the release of a meagre $14.2 million.
However, an upbeat Group Managing Director of the national oil company, Mallam Mele Kyari recently said that the NNPC is able to meet its obligations to its stakeholders and partners as and when due, admitting that despite the corporation’s immediate challenges, it is now on the path of growth.
Also, the company through its Chief Financial Officer, Mr Umar Ajiya, penultimate week, stressed that the NNPC would surpass its N287 billion profit for 2020, with a base N300 billion profit projection at the end of 2021.