The Nigeria Extractive Industries Transparency Initiative (NEITI) has urged the Federal Government to revisit oil assets transfer by Nigerian National Petroleum Corporation (NNPC) to its subsidiary, Nigeria Petroleum Development Company (NPDC).
Executive Secretary of NEITI, Mr Waziri Adio, made the call in a statement by the agency’s Director, Communications, Dr Orji Ogbonnaya Orji, on Tuesday in Abuja
Adio said that review of the transfer was imperative in view of the “under-valuation, non – payment for the assets and the inability of the NPDC to make returns on the investments’’.
He urged that NPDC should be accountable to the federation over its management of the oil assets in its custody.
Adio said that NEITI had found out that total unremitted revenue to the federation by the NPDC was about 5.5 billion dollars and another N72.4 billion.
He said that NEITI had observed that beyond the unremitted monies, there were issues of transparency and efficiency with the operations of NPDC.
According to him, since 2005, NNPC had transferred 16 Oil Mining Licenses (OMLs) to NPDC.
The executive secretary added that the process of transfer of these assets raised serious questions as there appeared to be no clear-cut criteria for transfer of oil mining assets to NPDC.
“The process for the transfer of the Federation’s assets to NPDC does not seem to pass the transparency test.
“One of the upshots of this is the undervaluation of these assets, thereby depriving the Federation of optimal value for the assets.
“The undervaluation NEITI reported results from NNPC’s divestment of its 55 per cent shares in the Shell Joint Venture which it valued at 1.8 billion dollars.
“PriceWaterhouseCoopers’ valuation of the same assets was 3.4 billion dollars,’’ he said.
He disclosed that four other assets were divested in 2012 by NNPC to NPDC under the Nigerian Agip Oil Company Joint Venture (NAOC JV) which the Department of Petroleum Resources (DPR) valued at 2.22 billion dollars.
Adio said that NPDC was contesting the valuations but was currently operating 12 OMLs without paying in full, the undervalued rates or the new figures by the auditor and the DPR.
He said that in total, the non-payment for the 12 oil blocks by NPDC summed up to 3.93 billion dollars.
He questioned the situation where NPDC deliberately refused to be accountable in its management of Nigeria’s oil assets entrusted in its care.
Adio said that NPDC had consistently declined to give account of its operations and its management of national oil assets in its possession.
He explained that NPDC also failed to cooperate with the forensic audit ordered by the Auditor-General of the Federation in 2015.
“Similarly, the company failed to cooperate with NEITI for five audit cycles and only partially cooperated during the 2013 and 2014 audits.
“In the Policy Brief, NEITI also expressed concerns over NPDC’s technical expertise and financial capability to manage Nigeria’s oil assets.
“ Also, NPDC’s lack of finances has been evident since 2010 when the company resorted to Strategic Alliance Agreements (SAAs) with indigenous oil companies to carry out production on the fields in its possession,”.
Adio said if NPDC was established to foster indigenous participation in upstream sector, it had not in the past three decades, demonstrated ability to either maximize its production capacity or showed financial muscle to operate independently.
“In mid-2006, total output from its wholly-owned production was just 10,000 bpd.
“On the other hand, production from its service contract agreement with Agip was 65,000 bpd.
“In spite of NPDC’s clear operational and capacity deficiencies, the company continues to be allocated valuable concessions of Nigeria’s most productive OMLs”.
Adio said that the call for Federal Government to revisit and re-evaluate the divestments of Nigeria’s oil assets “at a time the country is passing through very difficult economic challenges is therefore appropriate and timely’’.