The Central Bank of Nigeria (CBN) has urged the Federal Government to monitor the utilisation of crude being managed by the Nigerian National Petroleum Corporation (NNPC) for domestic consumption. In a document on “Un-remitted Oil Revenue to the Federation Account by the NNPC” released in Abuja, CBN expressed concern over the propriety of NNPC’s handling of 440,000 barrels of crude it collected daily for refining. It suggested that the corporation should be made to collect only the quantity of crude that it had the capacity to refine.
“The amount of crude collected by NNPC should be reduced to the refining capacity of its refineries based on a signed refining contract that clearly states what products are to be delivered for each barrel taken,” it stated. The CBN said that proceeds from sale of the products “net of recognised processing costs” should be paid into the Federation Account. It added that “all crude for products swaps should be terminated and crude should be exported and sold at market price”.
The CBN document also suggested that where NNPC needed to generate cash to fund importation of petrol, it could borrow crude on the approval of the Finance Minister for 90 to 120 days.
“This crude is to be valued at the ruling price. NNPC may sell the crude, import PMS (petrol) and sell through its outlets. It should claim subsidy from Petroleum Products Pricing Regulatory Agency (PPPRA) like every other marketer and present all required documents. Thereafter, NNPC should pay back the full value of crude lifted to the Federation Accounts and retain the profit. When NNPC delays payment, the amount outstanding should attract interest at commercial rates until payment,’’ it said.
The bank called for the investigation of all Strategic Alliance Agreements (SAAs) entered into by Nigerian Petroleum Development Company (NPDC) “for constitutionality”. “The production numbers, Opex and Capex, and profit shares should be audited,” it said, adding that tax arrangements entered into with the parties should be reviewed and all revenues due to the federation should be collected.
