News - Oil & Gas - May 1, 2021

NNPC reacts to controversial letter to AGF on its financial standing

Says revenue projections in its letter to the Accountant General of the Federation not a reflection of its real financial health 

Revenue projections contained in the letter to the Accountant General of the Federation (AGF) which leaked in the media this week not a reflection of the true financial health of the Nigerian National Petroleum Corporation (NNPC), its management clarified on Friday.
Rather, it pertains only to the  revenue stream  to the Federation Accounts being managed by the Corporation on behalf of the three tiers of government.
During the week, rellrts emerged in the media about a controversial letter the NNPC sent to the AGF alluding to the possibility of the huge funding of the fuel subsidy exposure negatively affecting its capacity to make financial contribution to the Federation Account for April and May.
In the letter, the NNPC said a whooping N112 billion would be deducted from whatever it should be transferring to the Federation Account as proceeds from its oil and gas operarions for April.
By implication, such deduction would mean its inability to contribute to the pool of revenue for sharing among the three tiers of government.
With oil revenue accounting for almost 80 percent of the earnings by the government, the contribution from the NNPC accounts for the bulk of it.
Although the NNPC did not deny writing the letter in question, in its clarification through a statement by its spokesperson, Kennie Obateru, the Corporation blamed “unscrupulous persons” of “inappropriately” sharing the letter, fueling reports of impending revenue shortfalls with dire consequences for the various tiers of government.
Obateru said the clarification became necessary in the light insinuations that the Corporation was insolvent.
“NNPC maintains that it is conscious of its role and was doing everything possible to shore up revenues and support the Federation at all times.
“The shortfall will be remedied by the Corporation as it relates only to the Federation revenue stream being managed by the NNPC and does not reflect the overall financial performance of the Corporation.
“The NNPC remains in positive financial trajectory for the period in question,” he stated.
The Corporation said it would continue to pursue and observe its cost optimization processes with a view to maximizing remittances to the Federation Account.
A part of the statement read:
“It would be recalled that NNPC, in a letter to the Accountant General of the Federation entitled: Re: Impact of Hike in Crude Oil Prices on the Deregulated Downstream Sector: Projected Remittance to the Federation Account for April to June 2021, which was inappropriately shared by unscrupulous persons, had projected that it would deduct the sum of N112bn from Oil and Gas proceeds for the month of April 2021 to ensure continuous supply of petroleum products to the country and guarantee energy security.
“This has fueled reports of impending revenue shortfalls with dire consequences for the various tiers of government.
“NNPC, however, assures that it would continue to meet its financial obligations to the Federation.”

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