NPDC admits $7.46bn liability in divested oil assets

The Nigerian Petroleum Development Company (NPDC), a subsidiary of the Nigerian National Petroleum Corporation (NNPC), has admitted to a liability of $7.46 billion to the federation account in divested oil assets taken over by the oil firm. Hence, NPDC has furnished the Federation Allocation Accounts Allocation Committee (FAAC) with payment plan and commitment to stick to the plan, New Telegraph Nigeria can authoritatively report. A copy of tentative breakdown of some of the NPDC liabilities presented at the just-concluded FAAC meeting in Abuja, put the firm’s liability in respect to Royalty oil at $1.66 billion, goods and valuable consideration on Nigeria Agip Company (NAOC) assets at $2.25 billion while Petroleum Profit Tax (PPT) is $3.55 billion.

NPDC representative that briefed FAAC on the level of its indebtedness confirmed to the committee that the firm had established the value of Shell’s divested assets balance at $1.7 billion. He promised that the amount would be paid to the federation account before the end of 2017.

The debt in question arose when NPDC took over divested oil assets by Shell Petroleum Development Company (SPDC) and Nigerian Agip Company (NAOC) in 2012. FAAC had, on monthon- month basis, been stressing the need for NNPC subsidiary to come forward and present before the committee, status of the assets, including the proceeds accrued on them which was supposed to be remitted into federation account since divestment.

The firm shunned this directive until last FAAC when its representative appeared and briefed the committee. According to the FAAC report, “members may recall that the sub-committee had reported that NPDC, a subsidiary of NNPC, had taken over some assets divested by Shell petroleum Development Company (SPDC) and Nigeria Agip Company (NAOC) since 2012. The committee invited NPDC to send a representative to its meeting to give an update of the matter.

“NPDC’s representative, during the meeting, acknowledged the fact that the company has some liabilities to settle, but it had been having some constraints in crude oil production in the last 15 months. This is in addition to the activities of militancy in the area which also affected their operations.” An insider source told New Telegraph that FAAC members were happy with the NPDC’s presentation, months after several invitations for the updates were turned down by the oil firm.

The NPDC representative, this paper gathered, informed FAAC sub-committee that the firm is currently being audited, and that a repayment of its liabilities will be prepared. The oil firm is also following up on $1.762 billion debt owed it by an oil company, which when recovered, will go a long way in settling its liabilities to the federation account. However, FAAC said activities of militants from Niger Delta impacted negatively on overall crude oil production of December 2016.

A report by sub-committee said the federation was losing about 1.11 million barrels of crude oil per day, a figure it said accounted for drop in the volume reported by the Department of Petroleum Resources (DPR) in December 2016. Meanwhile, NNPC has paid a total of $26.5 million into the federation account, being amount from the Nigeria Liquefied Natural Gas, SPDC, TEPNG and NAOC joint ventures price reconciliation exercise.

The NLNG, SPDC, TEPN and NAOC joint ventures prices reconciliation invoices spanned between January and November 2016, but payment into federation account was effected in December 2016.

FAAC confirmed the receipt of the payment by state-owned oil firm in a document exclusively sighted by New Telegraph, prepared by the subcommittee of FAAC. Prior to NNPC’s December payment, FAAC had complained about no revenue from the JVs reconciliation, a development that prompted FAAC to write the corporation, urging it to pay to the federation account.

Detailed scrutiny of payment schedule at the disposal of this medium revealed that in January 2016, NNPC, on completion of NLNG-SPDC/TEMPNG JVCs supplementary invoice on gas reconciliation, paid $20,048,810.75 into federation account and paid another $2,515,644.50 in April 2016.

There was no additional payment until December 2016 when it made another payment in the sum of $3,939,592.52. Impressed with NNPC’s response to the payment, FAAC, at its last meeting, was said to have commended the management and enjoined it to sustain the payment momentum.

Source: New Telegraph