Was NLNG Funds Illegally Diverted by NNPCL? -By Adewole Kehinde

“Your transparency will lead to other people’s transformation.” — Trent Shelton

I came across a headline, “Falana to Finance Minister: Direct NNPC to remit $34.2 billion illegally diverted funds; Threatens legal action,” on Thursday on some major media platforms.

Since assuming office, Mele Kyari has pursued his Transparency, Accountability, and Performance Excellence (TAPE) agenda, a five-step strategic roadmap for NNPCL’s attainment of efficiency and global excellence.

On several occasions, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited has made clarifications on the withdrawal of dividends from the account of the Nigeria Liquefied Natural Gas (NLNG).

I remember that the Group Chief Executive Officer of the NNPCL, Mele Kyari, represented by the Chief Financial Officer of the company, Mr. Umar Ajiya, at an investigative hearing of the Public Accounts Committee of the House of Representatives chaired by Wole Oke, said the withdrawal was authorized by the Federal Government, as represented by the Federal Ministry of Finance, the Central Bank of Nigeria (CBN), and the NNPCL.

According to Mr. Umar Ajiya, “All withdrawals (from the NLNG dividends fund) were based on the approved mandates of the relevant authorities. As far as NNPCL is concerned, investments in NLNG were done on behalf of the Federal Government. I was the treasurer of NLNG, so I was aware of the federal government’s investment in the project.

“The same matter came up at the Federal Executive Council (FEC) and was referred to a committee headed by the Governor of Kaduna State, but the fact is that the Federal Government, through the NNPCL, is the true owner of the investment (the sum withdrawn). It is accrued to the federal government, not the federation account.

“There is no question of illegal withdrawal. Nobody can withdraw from the account illegally. The CBN governor can be invited to attest to that.”

Ajiya added “Though the NNPC sits on the board (of NLNG) on behalf of the Federal Government, proceeds from the investment are managed and disbursed, dispensed, or utilized based on the instructions of the Federal Government.

“When I say the federal government, I do not mean NNPCL. Ordinarily, it is the Federal Ministry of Finance that directs the utilization. We (NNPCL) are merely the agents of the Federal Government”.

As we all know, an Appropriation Act is a proposed law that authorizes the expenditure of government funds. It is a bill that authorizes amounts to be issued from public accounts and applied for services in a financial year.

Relevant extant laws, such as the Appropriation Act 2018, define revenue from NNPC as net of cost, indicating that it had the right to defray the cost of its operations from earnings.

Also, the NLNG Act gives the NNPCL the power to defray its costs from the dividends. It was one of the legal grounds relied upon by the company for the expenditure without recourse to appropriation by the National Assembly.

I could recall the case instituted by some state governments in 1999 seeking the interpretation of revenue on account of their contention that all accruals from oil and gas operations amount to revenue and should be swept into the Federation Account. The ruling on that case by the Supreme Court in 2002 was in tandem with NNPC’s position that revenue is accruals net of cost.

I am very optimistic that NNPC Limited will provide all the legal authority on which it relies to use funds from the NLNG Dividend Account whenever Femi Falana seeks legal action.

Since his assumption of office as the Group Chief Executive Officer of the Nigerian National Petroleum Corporation on July 8, 2019, Mele Kyari has put in place a robust operational blueprint that has reduced costs and improved profitability for the National Oil Company.

The NNPC Limited is very open and transparent, as it has continued to publish its NNPCL Monthly Financial and Operations reports in the media. I doubt if there is a company in Nigeria that publishes its monthly financial report as NNPC Limited does. The best they do is produce quarterly reports.

The NNPC Limited does operations reports on how much oil and gas was produced, sold, and monetary value; how much product the refineries processed; and how much was imported and sold. The company does all these things to defuse the perception of opacity.

I am also aware that NNPC Limited took and plowed back part of the dividends for the new trains that were built by the NLNG. The reinvestment in NLNG was part of its equity contribution to the cost of expanding the company’s trains. Six LNG processing units (trains) with a total nameplate processing capacity of 22 mtpa There are four LNG storage tanks, each with a capacity of 84,200 cubic metres.

I strongly believe that every amount removed from the funds was done with appropriate approval. I gathered that part of the spending for NLNG dividends was the development of NLNG trains, BrassLNG and OlokolaLNG, and other gas-related projects.

Nothing leaves the NLNG Dividend Account without appropriate approval, and the NNPCL is not a disorganized place where people do things anyhow, especially under the current Group Chief Executive Officer, Mele Kyari.

I recall that when the Federation Account Allocation Committee (FAAC) Report said that the NNPC Limited withheld a $55m NLNG dividend, The Whistler investigations revealed that in the month of May, when the NNPC was being owed N4.1trn for fuel subsidy by the federal government, the national oil company approached the federal government to provide the needed fund for the importation of petrol.

It was learnt that at the time the NNPC Limited made the request, the administration of former President Muhammadu Buhari was winding down and preparing to hand over to the then-winner of the 2023 presidential election, Bola Tinubu.

Findings further revealed that, due to the fact that the government was not willing to plunge the country into another round of fuel scarcity crises, the government gave approval that the sum of N400bn be given to NNPC as a loan to the federal government by the Central Bank of Nigeria.

The fund was used to defray some of the fuel subsidy debts owed by oil marketers.

Before the removal of the petrol subsidy, NNPC Limited had been the sole importer of petrol into Nigeria and has continued to play this role for several years, bearing the huge cost of fuel subsidy on behalf of the government.

Despite the huge budgetary allocation for subsidy payments under the administration of former President Muhammadu Buhari, no amount was actually paid to the NNPC Limited.

Other private oil marketers stopped importing petrol into Nigeria due to the difficulty encountered in accessing the United States dollars required for the import of Petroleum Motor Spirit (PMS).

The NNPCL, on behalf of the federation, spent about N400bn monthly and around N4.8trn yearly, a gesture that had been described as unsustainable.

It was further learnt that in June this year, the amount needed to import petrol into the country was $700m. The NNPC again approached the government for funding.

However, out of this $700m, only $275m which was sourced from the NLNG dividend account, was made available to NNPC Limited by the government.

The entire $275m, according to investigations, was paid by the NNPC to oil marketers to enable the national oil firm to reduce the level of its indebtedness.

The amount requested by NNPC was $700m. The government provided $275m from the NLNG dividend account. So, the NNPC got the money, and that was what the company used to reduce the debt owed to marketers. No dollar was withheld by the NNPC. So, anybody saying NNPC withheld $55m is telling a lie.

Adewole Kehinde is the publisher of Swift Reporters and can be reached at 08166240846. E-mail: swiftreporters@gmail.com