Reps probe NNPCL, oil firms’ $1.6bn debt to FG

The House of Representatives Public Accounts Committee, on Tuesday, initiated an investigation into the outstanding debts owed to the Federation Account by the Nigerian National Petroleum Company Limited and oil companies.

The investigative hearing, chaired by the sub-committee Chairman, Akinlade Isiaq, followed queries issued by the Office of the Auditor-General for the Federation regarding NNPCL’s financial obligations.

The report alleged that, as of the end of 2021, NNPCL and other oil companies owed the Federation $1.6bn in royalties to the Nigerian Upstream Petroleum Regulatory Commission under the Production Sharing Contract, Repayment Agreement, and Modified Carry Arrangement.

Responding to the queries, NNPCL Group Chief Executive Officer, Mele Kyari, represented by Chief Financial Officer, Dapo Segun, stated that part of the disputed funds had been used to finance the government’s priority projects and subsidies.

He said, “Once the reconciliation is concluded, relevant reports will be made available to all appropriate agencies and stakeholders.”

The sub-committee has vowed to continue its investigation, with a clear mandate to determine the current status of the debts as of December 2024 and ensure that these significant sums are recovered.

The probe is set to continue through 2025 to recover the outstanding funds and prevent further financial mismanagement in the industry.

In his remarks, Isiaq reiterated the sub-committee’s commitment to professionalism and transparency in handling the investigation.

“This hearing is an essential step towards ensuring that Nigeria’s oil and gas resources are properly accounted for. We are determined to take all necessary actions to recover these debts in the interest of the Federation and its citizens.”

Key stakeholders, including the Accountant-General of the Federation, the Central Bank of Nigeria, the Nigeria Extractive Industries Transparency Initiative, the Ministry of Finance, the Revenue Mobilisation Allocation and Fiscal Commission, the Bureau of Public Procurement, and the Federal Inland Revenue Service, have also been invited to provide clarification on the financial discrepancies.

Substandard fuel

In another development, the NNPCL boss, Kyari, revealed that the company was presently sourcing all petroleum products sold to Nigerians from a single supplier.

He also said the oil firm is not selling sub-standard fuel and has the right to import petroleum products which is not a crime.

Kyari revealed this at the opening ceremony of the 60th Annual International Conference and Exhibition of the Nigerian Mining and Geosciences Society themed, “Transformation of the Mineral, Energy, Water and Construction Sectors Through Innovations” on Tuesday in Abuja.

His statement came in response to ongoing allegations suggesting that the NNPC has been importing sub-standard products, emphasising the company’s commitment to ensuring the quality and integrity of the products it supplies.

The NNPCL said PMS has quality standards that are obtainable in every country and there are no two countries that have the same standards.

Citing an example, Kyari said in Europe, oxygenate (a fuel additive) has to be introduced into PMS; otherwise, it will solidify the tank in people’s cars. But if the same fuel additive is introduced into cars in Nigeria, it turns to water once it comes into contact with air.

He noted that what is required by law to be introduced in one country is also required by law not to be introduced in another country.

He added that in the case of Nigeria, the country has standard regulatory agencies such as the Standard Organisation of Nigeria and the Nigerian Midstream & Downstream Regulatory Agency, whose job is to ensure that every product that comes into this country meets the required product specifications and standards.

He said, “It is important to address some of the issues on the import of petroleum products or sub-quality fuel in the country. For the avoidance of any doubt, importing petroleum products is not a crime. Let me just make it very, very clear. It is not a crime. There is no country, including the United States, that doesn’t import products.

“There is no country possessing petroleum that does not import petroleum. I’m sure you have seen in the media that this country sold products to Saudi Arabia. The reasons are simple. It’s not just about energy security, it’s commerce. Sometimes you need to bring in products that are not in your country to blend with the available products. This is normal. This is business. But it’s also a necessity.

“All that news that you see out there around NNPCL import 200m litres and so on, we didn’t do it in the period that was mentioned; we have not imported a single litre of oil this year. We have taken our supplies from local sources. But I must make it clear that it is not illegal. It’s not abnormal. Circumstances will come, and you will be forced to do things. It is very, very possible, and sometimes supply can be disrupted for many reasons; anything can happen. Even market opposition can decide to cut supply.”