A worker at an oil refinery in Port Harcourt, Rivers state, Nigeria, September 16, 2015. PIUS UTOMI EKPEI/AFP/Getty Images
• Stakeholders Worry Over Revenue Shortfall To State
Although the nation’s refineries located in Port Harcourt, Warri and Kaduna did not process any crude oil in the last quarter of 2021, about N19.7b was spent by the Nigerian National Petroleum Corporation (NNPC) to maintain the facility.
While the corporation made about $5.83b in the last three months of last year from the sale of 152.83 million barrels of crude oil, remittance to the Federation account stood at $122.22m and N441.33b.
This is coming as NNPC recently decried growing revenue pressure, especially as the nation is expected to spend as much as N1.5tr to continue payment of subsidy on petrol.
In October 2020, NNPC made $1.95b from crude oil sales, while it made $2.15b and $1.72b in November and December, analysis of the monthly NNPC financial and operational document released by Budgit showed yesterday.x
The corporation’s subsidiaries made a surplus of N46b, a development way lower than the N78b recorded in the third quarter.
In terms of crude sales, International Oil Companies and Independent sources contributed about 67.63 per cent of the 152.83 million barrels of crude oil sold.
In three months, NNPC spent N8.08b on pipeline repairs and management, as it recorded 101 pipeline breaks.
Petroleum Products Marketing Company (PPMC), a subsidiary of NNPC, generated N672.88b in the period, but petrol generated the highest sale, standing at about 99.64 per cent, while diesel and kerosene had 0.34 per cent and 0.02 per cent.
While NNPC had in a letter expressed worry over revenue outlook, especially as subsidy payment laid siege to oil revenue, Energy expert, Michael Faniran, said reduction in the revenue accruable to FAAC would further reduce the fiscal sustainability of state governments.
“Most states are currently struggling to meet their recurrent expenditure and loan obligations,” he said.
According to him, FAAC contributes 66 per cent of revenues earned by states in 2019 and more than 50 per cent of the revenues for 34 out of the 36 states, as well as more than 80 per cent of revenue for 15 states.
Stressing that only Lagos with 22.8 per cent and Ogun with 35.81 per cent relied less than 50 per cent on FAAC allocations, Faniran said if the revenue to state reduces, there are possibilities of chaos in the country, when salaries are not paid by state governments.x
“This would engender protests, due to inability of states to pay salaries. There will also be increase in crime rates and over-stretching of nation’s security apparatus to contain the threats, as well as loss of jobs/mass retrenchment. It may be a difficult decision, but the nation must find a way to reduce the subsidy burden, which is only beneficial to few,” Faniran said.
Meanwhile, NNPC, yesterday, clarified that the revenue projection contained in the letter to the Accountant General of the Federation pertains only to the Federation revenue stream being managed by the corporation and not a reflection of its overall financial performance.
NNPC’s spokesman, Dr. Kennie Obateru, said: “The shortfall will be remedied by the corporation, as it relates only to the Federation revenue stream being managed by NNPC and does not reflect its overall financial performance. The NNPC remains in positive financial trajectory for the period in question.”