The federal government through the Nigerian National Petroleum Corporation (NNPC) may have been unable to fund its priority projects in the oil and gas industry to the tune of $1.54 trillion, according to a document presented by the corporation to the Federation Account Allocation Committee (FAAC) in July.
In the document sub-headlined “Statement of Joint Venture (JV) Cost Recovery and Government Priority Projects for June 2021”, the government stressed that the shortfall was between January and 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 THISDAY 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.
Some of the ongoing projects in the budget of the NNPC include a handful of national domestic gas development initiatives, frontier exploration, renewable energy and the Nigeria/Morocco pipeline.
Others include the Gbaramatu IPP/Excravos environs power plant, upgrade and rehabilitation of Delta IV, upgrade of Oben metering, Sapele metering station, Ajaokuta metering station as well as construction of Egbin 500mmscfd gas facility.
There’s also construction of the West Niger Delta project, Asa north Ohaji project, Excravos/Lagos pipeline expansion, OB3 supply lines as well as the Ajaokuta-Kaduna-Kano (AKK) project.
The figures showed that in January, the NNPC recorded a deficit of $259.6 million, $283 million in February, $228 million in March, $296 million in April, $148 million in May and a whopping $333.7 million in June.
Coupled with sundry other issues besetting the national oil company is the issue of subsidy which it has shouldered in last few months, sometimes affecting its obligations and contributions to the joint federation account.
Earlier in the year, the NNPC Group Managing Director, Mallam Mele Kyari, opened up on the state of affairs at the corporation, saying that at the time, the government was subsidising petrol with about N120 billion monthly.
He said the NNPC could no longer afford to bear the cost and Nigerians would have to pay the actual cost sooner or later, as market forces must be allowed to determine the pump price of petrol.
“Today, NNPC is the sole importer of petrol. We are importing at market price and we are selling at N162 per litre today. Looking at the current market situation today, the actual price could have been anywhere between N211 and around N234 per litre.
“The meaning of this is that consumers are not paying for the full value of the petrol that we are consuming and therefore, someone is bearing that cost. As we speak today, the difference is being carried on the books of the NNPC and I can confirm to you that the NNPC may no longer be in the position to carry that burden and because we can longer afford to carry it on our books,” he had said.
In June, he noted that the NNPC was paying subsidy on over 103 million litres of petrol daily, including the one smuggled through the borders because of the cheapness of Nigeria’s fuel compared with the price it is sold in neighbouring countries.