The Executive Secretary, Waziri Adio, in Abuja, while explaining NEITI Policy Brief titled: ‘Unremitted Funds, Oil Sector Reform and Economic Recovery,’ said the Federal Government needs to take a second look at the transaction.
Alleges under-valuation, firm’s failure to make return on investment
The Nigeria Extractive Industries Transparency Initiative (NEITI) has urged the Federal Government to probe the transfer of some oil assets to the Nigerian Petroleum Development Company (NPDC) by the Nigerian National Petroleum Corporation (NNPC).
The Executive Secretary, Waziri Adio, in Abuja, while explaining NEITI Policy Brief titled: ‘Unremitted Funds, Oil Sector Reform and Economic Recovery,’ said the Federal Government needs to take a second look at the transaction.
According to Adio, the review becomes imperative in view of the under-valuation, non-payment for the assets and the inability of the NPDC to either make returns on the investments or be accountable to the federation over its management of Nigeria’s oil assets in its custody.
The NEITI Policy Brief had put the total unremitted revenues to the federation by the NPDC at about $5.5 billion and another N72.4 billion.NEITI in the policy brief observed that beyond the issue of unremitted money, there are issues of transparency and efficiency with the operations of NPDC, saying, “since 2005, NNPC has transferred 16 OMLs to NPDC.
“However, the process of transfer of these assets raises serious questions, as there appears to be no clear-cut criteria for transfer of oil mining assets to NPDC. The process for the transfer of federation’s assets to NPDC does not seem to pass the transparency test. One of the upshots of this is the undervaluation of these assets, thereby depriving the federation of optimal value for the assets,” Adio maintained.
The undervaluation, NEITI reported, resulted from NNPC’s divestment of its 55 per cent shares in the Shell Joint Venture, which it valued at $1.8 billion. It explained that PricewaterhouseCoopers’ (PwC) valuation of the same assets was $3.4 billion, in addition to four other assets were divested in 2012 by NNPC to NPDC under the NAOC JV, which the DPR valued at $2.225 billion.
Adio submitted that NPDC is contesting these valuations, even though it currently operates these 12 OMLs without paying in full the undervalued rates (it paid only $100 million) nor the new figures arrived at by PwC and the DPR. In total, the non-payment for the 12 oil blocs by NPDC adds up to $3.925 billion.
NEITI queried the situation where NPDC deliberately refuses to be accountable in its management of Nigeria’s oil assets entrusted in its care.Similarly, the company failed to co-operate with NEITI for five audit cycles and only partially cooperated during the 2013 and 2014 audits.”
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