Home Finance NNPC, joint partners spend N444.5bn on security in Niger Delta

NNPC, joint partners spend N444.5bn on security in Niger Delta

by Business News Report

By Omoh Gabriel and Victor Ahiuma-Young
The Nigerian National Petroleum Corporation NNPC and its joint partners have spent close to N444.5billion in the last seven years on security of oil installations in the Niger Delta. This amount to a yearly average of $500million or N63.5billion as the Department of Petroleum Resources generate a total of N1.067trillion from oil companies as levies, royalties and penalties. Vanguard investigation show that all the oil companies operating in the country are all involved in the huge expenditure on security. But it will be recalled that recently workers of oil companies went on a three days warning strike over the insecurity of their members in the Niger Delta. Also several multinational companies threaten to pull out of the Niger Delta due to fear of the safety of the members in the wake of increased activities of the restive youths in the region.
Aggrieved oil workers and community leaders told Vanguard in the course of investigation that such a huge amount spent on security with little or no result if spent on infrastructure would have greatly reduced the restiveness in the region.
The oil companies which are grumbling in silence said that the federal government continue to reap huge amount from revenue accruing to it from royalties, penalty on gas flaring, rentals and licences and permit from oil companies yet the companies have had to spend heavily on security.
Figures made available to Vanguard in the cause on investigation show that the Department of petroleum resources in the last five years generated a total of N1.067trillion from oil companies for the federal government. A break down of the revenue generated show that in 2001, the Department of Petroleum Resources collected the sum of N202.848billion over and above a budget estimate of N163.18billion projected for the year from royalties paid by oil companies. In 2002 on a budget projection of N132.145billion from petroleum royalties the department collected N171.370billion and in 2003 the amount collected from oil companies as royalties rose to N253.464billion.

According to available data revenue from royalties in 2004 went up further to N376.254billion and further to N619.22billion in 2005.
Oil companies officials disclosed that they pay huge sums as penalty for gas flaring amounting to the federal government. In the last five years the federal government reaped a total of N16.03billion from gas flaring. In 2001 the various oil companies paid a total of N3.427billion as penalty for flaring gas. In 2002 the amount paid rose to N3.630billion. It dropped however to N3.055billion in 2003 and rose again to N3.144billion in 2004. In 2005 penalty paid by oil companies for gas flaring dropped again to N2.773billion.
According to data made available to Vanguard oil companies operating in country paid as rental a total of N48.21million in 2001, N177.385million in 2002, N93.798million in 2003, N110.73million in 2004 and N186.263million amounting to N1.803billion in the five year period.
The government it was learnt during the period earned from licences and permit a total of N1.793billion. According to the figure available in the department of Petroleum Resources in 2001 it collected the sum of N330.6million for licences and permit, in 2002 it collected N366.467million, N285million in 2003, N297million in 2004 and N554.161million in 2005.
From all sources the Department of Petroleum Resources collected on behalf of the federal government the sum of N206.624billion in 2001, N175.544billion in 2002, N256.899billion in 2003, N379.8billion in 2004 and N622.7billion in 2005.

File NNPC security 02/10/06

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