Joe Attueyi:
No problem....after your 2016-for-2006 mistake, you must have "mistook" 2015 for 2017 too......no prob......isiAllraiti....diarisGodo.......
Moving on.......and please read me to the end......
As to NNPC, it has been the greatest cesspit of money in our Nigerian semi-private - or is it semi-public? - sector since its establishment in the past forty years, being nothing more than a crude-oil transacting company all these years, and adding absolutely no value to that oil. If it had done in the oil arena what the NLNG has done in the gas arena, we would not be in the mess that we are in our country.
Back in March 2003 - almost exactly 14 years ago now - I spent some time looking at the "funny business" going on at the NNPC (in March 2003) and again INSPECTING NNPC's website (in July 2003) concerning claims about oil subsidy, and found quite some interesting figures. I then wrote, inter alia..
On Fuel Scarcity, Politics and NNPC
March 10, 2003
QUOTE
--- materials deleted ---
THE FUNNY BUSINESS AT NNPC
The Nigerian National Petroleum Corporation NNPC is the government-owned giant that controls Nigeria's oil industry, and is in charge of the four Nigerian refineries. Somehow it is backed by some inscrutable law to buy 0.445 million barrels per day of domestic crude - which is exactly how much all the refineries would refine at full capacity. This privilege is irrespective of the actual capacity used up by the refineries. It has another privilege – to buy at a discounted rate of $18 per barrel, no matter the international price of crude. A third privilege puts icing on the cake: to sell what it does not use up at the refineries at the prevailing WORLD MARKET PRICE!
I think that you get the picture: Suppose the fraction of the amount of the domestic crude that NNPC does not refine is y. If it had refined this amount and sold it at a domestic price of N26 per liter, it would have earned $ 38 crude/0.4 refined * 26 refined/127 exchange or $ 19.4 per barrel of crude refined. [0.4 million barrels of crude approximately equals 38 million liters of refined product; control refined price of N26 per liter is assumed.] If the current international market crude price is for example $28 per barrel, NNPC will make a cool profit of 0.445y(28 – 19.4) million dollars or $3.83y million for itself if the government does not ask for that profit back. At $1 to just N127 (for example), that translates to N486y million per day. Over a 364 day per year period, at half-capacity, NNPC would make N88.5 billion profit without the technical hassles and dangers of refining, thereby making the NNPC accountants happy.
This profit to NNPC "improves" as NNPC gets lazier (y increases), the Naira weakens (N127 becomes N130 becomes N150 to the dollar), and/or the cost of oil in the international market escalates ($28 becomes $35 becomes $40 per barrel). What would a "normal" person do in NNPC's shoes?
Thus by not refining a fraction y of its domestic crude, and being allowed to sell it at the prevailing international market, NNPC makes a direct gain of N486 y million per day on crude sales, but the nation takes an overall HUGE LOSS of N1,582y million on a daily basis (N290 billion per year for half-capacity all year round), a loss which increases with increasing non-refining. [All the assumptions that go into these calculations should be remembered.]
Thereby inefficiency is rewarded in one sense, but the whole nation suffers as a result.
There you go! No wonder the NNPC was recently accused by the Revenue Mobilisation and Fiscal Allocation Commission (RMFAC) of "missing" N300 billion due to inappropriate accounting for crude oil sales!........
A tighter leash must be put on the current operations of NNPC, many of which are a carry-over from military days when NNPC was a secret cash-cow for the "over-lords." Certainly, its inefficiency in the refining business should not be rewarded as described above. Either it buys its domestic crude at international market prices (not a reasonable option, I admit), or preferably it is prevented from selling its unused oil in the world market. Otherwise, it will continue to use the eye-popping profits from its operations to have the choicest real estate in Abuja; give its workers the greatest salaries; have its executives travel the world style in swankiest style; and operate secret accounts around the world that it gets defensive over when questions are asked.
We must set loose the chemical engineers and mechanical engineers of our country to do the Turn-Around Maintenance (TAM) of our refineries that we routinely contract to foreign companies, so that they all can operate optimally. Operating a refinery is not rocket-science. The same modus operandi of tasking our indigenous engineers to solve our iron-and-steel....
UNQUOTE
and also:
NNPC and Mr. President: Where is Our Subsidy?
July 5, 2003
QUOTE
So where might the need for subsidy that the government has been talking about arise from? Looking at the figures above and Table 2, it could come about from two sources:
(i) while the total revenue from the sale of refined products obtained from the refining of domestic crude is N211.34 billion (that is N155.82 + N55.52 billion), the cost of that crude is N156.32 billion, yielding a pre-operating expense charge profit of N55.02 billion in that arena.
(ii) While the revenue from sales of imported refined products was N123.75 billion, the cost of those products was N192.56 billion, leaving a shortfall of N68.81 billion. (This amount was N91.58 billion in 2001). If we subtract the profit of N66.21 billion from sale of exported unutilized crude oil, this particular shortfall reduces to N2.60 billion.
Thus when one considers ONLY total crude utilization AND total refined products revenue and costs, NNPC should be in the black to the tune of N52.42 billion.
Unfortunately, it is probably this N68.81 billion (or thereabout) shortfall that the president Obasanjo is alluding to when he is quoted recently as stating that:
QUOTE
"Subsidising fuel to the tune of N12 per litre is a wasteful way of spending our money", noting that the N250 billion subsidy per annum could be saved and used in providing education, health, water supply, roads, security and food.
President Obasanjo explained that the age of the four refineries in the country and their lack of maintenance in the past, made them to produce only 13 million litres per day, below the national consumption rate of 30 million litres per day.
Government's continued importation of the shortfall of N17 million litres per day, he noted, is not only too costly, but also benefiting only a few rich individuals and neighbouring countries through smuggling.
UNQUOTE
A quick calculation using the president's subsidy numbers above puts the annual subsidy at N74.5 billion (N12 per liter times 17 million liters per day times 365 days per annum) and not N250 billion.
Obviously, somebody is not giving Mr. President the whole economic/financial picture of NNPC's operations - or possibly the president is refusing to see it.
(i) while the total revenue from the sale of refined products obtained from the refining of domestic crude is N211.34 billion (that is N155.82 + N55.52 billion), the cost of that crude is N156.32 billion, yielding a pre-operating expense charge profit of N55.02 billion in that arena.
(ii) While the revenue from sales of imported refined products was N123.75 billion, the cost of those products was N192.56 billion, leaving a shortfall of N68.81 billion. (This amount was N91.58 billion in 2001). If we subtract the profit of N66.21 billion from sale of exported unutilized crude oil, this particular shortfall reduces to N2.60 billion.
Thus when one considers ONLY total crude utilization AND total refined products revenue and costs, NNPC should be in the black to the tune of N52.42 billion.
Unfortunately, it is probably this N68.81 billion (or thereabout) shortfall that the president Obasanjo is alluding to when he is quoted recently as stating that:
QUOTE
"Subsidising fuel to the tune of N12 per litre is a wasteful way of spending our money", noting that the N250 billion subsidy per annum could be saved and used in providing education, health, water supply, roads, security and food.
President Obasanjo explained that the age of the four refineries in the country and their lack of maintenance in the past, made them to produce only 13 million litres per day, below the national consumption rate of 30 million litres per day.
Government's continued importation of the shortfall of N17 million litres per day, he noted, is not only too costly, but also benefiting only a few rich individuals and neighbouring countries through smuggling.
UNQUOTE
A quick calculation using the president's subsidy numbers above puts the annual subsidy at N74.5 billion (N12 per liter times 17 million liters per day times 365 days per annum) and not N250 billion.
Obviously, somebody is not giving Mr. President the whole economic/financial picture of NNPC's operations - or possibly the president is refusing to see it.
UNQUOTE
My view of NNPC and its PRESENT and PREVIOUS workers - particularly top management (a la Dr. Andrew Yakubu, say of the Kaduna shanty fame) - was sharpened when last Christmas, a former employer confessed directly to me un-solicited that his spouse - a top management pensioner from NNPC - currently earns N3 milion PER MONTH (as a pensioneer o!) and, that every Christmas, there is a bonus declared for even certain pensioneers that earns them anywhere from N10 million to N20 million - end-of-year bonus! This was UNSOLICITED information. I later learnt that in the oil industry, NNPC workers - maybe their top management - are known to enjoy the best benefits! (This appears to be the case for the NCC, etc., by the way.)
So, yes, I agree with you. Rather than go around the world BORROWING money, we should look inwards to the so-called CASH COWS within the country, and curb both the LEGAL and ILLEGAL excesses that are still going on EVEN under the Buhari administration.
It may sound oxymoronic, but LEGAL CORRUPTION is still going on in this country as we speak....that is why I keep writing that the anti-corruption battle is not holistic enough.....in fact, it is oxymoronic to write "not holistic enough"..you are either pregnant or not pregnant....it is either holistic or not holistic.....
And there you have it.
Bolaji Aluko
Shaking his head...
On Wed, Mar 1, 2017 at 11:52 AM, 'Joe Attueyi' via AfricanWorldForum <africanworldforum@googlegroups.com> wrote:
--Thanks Prof Aluko for the correction. I mistook 2006 for 2016.This is even greater good news Finally we are seeing some movement ( I hope) on the missing NNPC $20 billionBuhari promised to investigate Emir Sanusi report. But for nearly 2 years nothing. And his officials are going upandan seeking to borrow $30 billion!Buhari must come back o. He cannot create all these expectations and vamoose to London to be drinking tea under the guise of medical vacation.#BuhariMustComeBack
Joe
Sent from my iPhone
Joe Attueyi:
You don't even seem to read some content any more before making your one-liners: the report says "between 2006 and 2015' - not between 2015 and 2017.
Haba...your laughter is really good mericin...
Bolaji Aluko
Shaking his head
On Wednesday, March 1, 2017, 'Joe Attueyi' via AfricanWorldForum <africanworldforum@googlegroups.com > wrote:
> The more things change.......
> http://www.vanguardngr.com/2017/03/nnpc-faces-probe-over- alleged-unremitted-n5-1trn/
> By Henry Umoru ABUJA—THE Senate is set to investigate the Nigerian National Petroleum Corporation, NNPC, over allegation of unremitted fuel subsidy to the tune of N5.1 trillion collected between 2006 and 2015. Raising a point of order, yesterday, during plenary, Senator Dino Melaye, APC, Kogi, drew the attention of the Senate to what he described as huge amount allegedly collected by NNPC, but was not accounted for following the records available.
>
> Read more at: http://www.vanguardngr.com/2017/03/nnpc-faces-probe-over- alleged-unremitted-n5-1trn/
>
> Sent from my iPhone
>
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