NNPC Unable to Pay N92bn Debt
Gets interim board
By Mike Oduniyi in Lagos and Onyebuchi Ezigbo in Abuja
The Nigerian National Petrolum Corporation (NNPC) may be heading on collision course with the Revenue Mobilisation and Fiscal Allo-cation Commission (RMFAC), following indications that the corporation is unable to pay $700 million (N92.4 billion) for crude purchased.
Senior NNPC officials confirmed at the weekend that the present financial position of the corporation, will make it unable to meet the payment obligation.
The amount is for the crude oil NNPC purchased from the Federal Government for the month of June this year, while the grace period for payment of the money into the Federation Account will elapse by end of this month.
However, NNPC, whose new, eight-member interim board was inaugurated in Abuja at the weekend, said it planned to meet with the Revenue Commission over the inability to meet the payment schedule.
THISDAY checks revealed that the corporation enjoyed 60 days credit for payment of the cost of crude purchased into the Federation Account. Thus payment for the crude purchased last June will fall due by this month.
It was gathered that the corporation only managed to pay into the Federation Account, the sum of $570 million for crude purchased in May but which was due last month.
"Having gone through some pile of invoices, including the debt profile of NNPC both for products delivered that have not been paid and the cost of crude which will be due at the end of this month, the treasury has confirmed that it is in no position to pay this month," a source disclosed.
Sources blamed the development on rising price of crude and the fact that the NNPC had to pay for crude purchased from the Federal Government at international market rate as directed by President Olusegun Obasanjo last October.
Oil prices hit another record high of $46.58 per barrel at the close of trading on Friday, triggered by an explosion and fire at a large BP refinery in Whiting, Indiana, in the United States.
The NNPC, sources said, planned to pay a visit to the Revenue Mobilisation Commission to brief its chairman and commissioners on the handicap facing the corporation.
The RMFAC had in 2002 and 2003 accused the NNPC of cheating on government by allegedly under-paying cost of crude allocated to it into the Federation Account to the tune of N300 billion.
Officials, however, said while the president directed that crude oil for domestic consumption should be purchased at international market price, the directive failed to spell out how NNPC will recoup its cost. The corporation, they said, was currently scouting for funds to pay subsidy on petrol sales amounting to N17 billion this month.
Meanwhile, the newly inaugurated interim board of the NNPC has been mandated to urgently take steps to ensure the actualisation of the administration's key objectives in the oil sector, especially, that of further raising the country's production capacity from three million barrels per day (bpd) to about four million bpd.
It is believed one of the major tasks before thee board is how to find an alternative funding window for the $600 million needed to augment the $3.2 billion allocated in the 2004 national budget for upstream development and to make sure it wins the appeal for increased OPEC quota.
Presidential Adviser on Petroleum and Energy, Dr. Edmund Daukoru, who heads the interim board told newsmen at the event that government was mindful of the sensitive situation of the country's oil and gas sectors and is mobilising the board members to address such issues as the draft policy reform on oil and gas, funding and achievement of new capacities.
"Government views development of the oil and gas very seriously and has established the interim board to handle the all-important issue of pushing up investment in deep water exploration and production," he said.
Group Managing Director of NNPC, Engr. Funsho Kupolokun, said at the occasion that so far the company has been able to initiate two funding arrangements and that negotiations are on-going on them.
He, however, denied that any upstream project is being delayed as a result of the shortfall in budgetary provisions for the corporation's share in the joint venture operations.
Membership of the board include the NNPC GMD, Dr. Onaolapo Soleye and all the Group Executive Directors of the corporation. Although Daukoru did not specify the tenure of his board, nor the reason for making the board an interim one, THISDAY gathered that the cold relationship that existed between immediate past board and NNPC management may have driven government's action to check a re-ocurrence.
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