The Nigerian National Petroleum Cooperation has commenced the process of recovering over $7bn (N1.4tn) in over-deducted tax benefits from joint venture partners on major capital projects.
It was learnt on Sunday that the corporation had also engaged an international accounting firm to ascertain the exact amount due to government on the Strategic Alliance Contracts entered by Nigerian Petroleum Development Company, where up to $2.46bn (N484.6bn) of government money would be recovered.
In a report submitted to President Muhammadu Buhari by its new management, detailing the corporation’s successes so far, the Group Managing Director of the NNPC, Dr. Ibe Kachikwu, stated that the firm had commenced its performance measurement and benchmarking.
He added that the corporation had started what it described as value for money review of the NNPC and the JV companies covering the period of 2008 to 2013.
The Senior Special Assistant to President Buhari on Media and Publicity, Mr. Garba Shehu, in a statement on Sunday, disclosed that the NNPC report indicated that the new measures might lead to further cost recovery for the firm.
The report, according to Shehu, also revealed that after an extensive investigation of the various toxic crude oil for refined products swap contracts, a total sum of $420m had so far been reconciled in favour of the NNPC and was now due for recovery from the legacy OPA/SWAP contracts.
“Out of the reconciled amount, the sum of $277m has been recovered in lieu of products and the recovery effort is still ongoing,” the statement added.
According to the report, the NNPC GMD stated that he was committed to the continued review of all existing contracts and addressing those that were not favourable to the corporation.
It noted that significant cost reductions were also expected to ensure that the corporation remained profitable in the prevailing low crude oil price regime.
The NNPC upstream operations are in joint partnerships with major oil companies. These multi-national exploration and production companies are operating predominantly in the onshore Niger Delta, coastal offshore areas and lately in the deep waters.
As with many other developing countries, the multinationals in Nigeria have been operating under what is called a concession system, with the NNPC being the concessionaire, while the companies are the operators.
The NNPC also is responsible for the management of the exploration bidding rounds for oil and gas. The multinational oil companies operate in partnership with the corporation under Production Sharing Contracts.
The statement from the Presidency on Sunday did not name the joint venture partners from which the corporation plans to get the funds.
Some of the international oil companies that are JV partners of the NNPC include Shell, Agip, Mobil, Chevron and Texaco.
Kachikwu, in the statement from the Presidency, said progress was being made towards bringing back the nation’s refineries to full production, noting that the management of the NNPC was working to actualise this before the end of 2015.
The report noted that if the refineries were completed as scheduled, it would help Nigeria save about $1bn worth of foreign exchange from fuel import substitution annually.
It said additional total savings of over $500m would be made from the petrochemical products of the Kaduna Refinery and Petrochemical Company annually.
The report also disclosed that efforts at repositioning the NNPC had started yielding result to the nation’s economy.
For instance, it stated that gas supply to the power plants had improved significantly from about 630 million to 861 million standard cubic feet per day, which had resulted in a more steady power supply.
“Indeed, the report revealed that gas supply for power and peak generation have in recent times reached a historical high of 876 million standard cubic feet per day and 4,782 megawatts, respectively,” the statement added.