FAAC Queries NNPCL Over Misapopration of $55m NLNG Dividend

The Federation Account Allocation Committee (FAAC) has launched an investigation to find out what the Nigerian National Petroleum Corporation Limited (NNPCL) did with some dividends from the Nigerian Liquified Natural Gas (NLNG)..

NLNG is a Nigerian natural gas company that operates in the liquefied natural gas sector.

An Ad-hoc committee is currently reviewing and comparing the amounts due for subsidies, taxes, royalties, and other payments, with the amounts that have been received or paid so far.

According to the report of the FAAC post mortem sub-committee for August, $275 million accrued as dividend from the NLNG.

NNPCL reported that out of the total, $220 million was used to pay off the nation’s debt on subsidy, which is 80 per cent of the total dividend.

However, NNPCL withheld $55 million or 20 per cent that should have been paid to the nation’s coffers, a development the committee said was unconstitutional.

The Ad-hoc Committee had its inaugural meeting on 26th July, to consider the terms of reference. Thereafter, the Sub-Committee wrote to NNPCL requesting for the details of dividend accrued from NLNG operations from inception to date. The Sub-Committee is awaiting response from NNPCL.

In July, it was revealed that the NNPC Production Sharing Contracts (PSC) Crude Oil lifting stood at 1.45 Mbbls for both export and domestic crude which is relatively higher than 1.33Mbbls recorded last month by 9.02 per cent.

Under the PSC Profit Crude and Gas Receipt and Distribution, crude oil export revenue received in July amounted to $17.75 million while the sum of N65.53 billion was the Domestic PSC crude oil and gas receipt in July.

The Federation Share which is 40 per cent of PSC Profits amounting to $7.10 million and N26.21 billion were transferred to Federation Account and shared in August.

Aside the $55 million, the sum of $5.33 million and N19.66 billion were transferred to NNPC Ltd as Management fee “being 30 per cent share of PSC Profit in line with Petroleum Industry Act (PIA)” the report revealed.

The sum of $5.33 million and N19.66 billion were also transferred to Frontier Exploration Funds (FEF) being 30 percent share of PSC Profit in line with PIA.

The PIA establishes FEF to provide financial support for the exploration and development of new areas that have not yet been explored for hydrocarbons such as oil and gas or where exploration has been limited. Areas targeted by the FEF include regions like Anambra, Bida, Sokoto, Chad, and Benue.

Also during the August meeting of FAAC certain financial information was disclosed regarding dividends that would be credited to the Federation Account in Nigeria. Specifically, the NNPC Ltd announced an estimated interim dividend payment of N81.17 billion to be allocated to the Federation Account.

This dividend payment represents a portion of the profits or earnings generated by NNPC Ltd that will be distributed to the Nigerian government for the benefit of the Federation Account.

Additionally, it was revealed that the NLNG has a dividend due to the Federation Account amounting to $158.17 million.

With regards to obligations owed to the Federal Inland Revenue Service (FIRS) and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) it was disclosed that certain sums of money were being reconciled for domestic products in Nigeria.

The first was a total of $109.47 million and N10.02 billion, which represent Joint Venture (JV) Royalty and Production Sharing Contract (PSC) Royalty for domestic products. These royalties were paid by companies involved in the oil and gas industry in Nigeria to NUPRC.

The second was $28.76 million and N92.51 billion undergoing reconciliation. These amounts represent JV Taxes and PSC Tax for domestic products.