More Problems For States As NNPC Laments $1.5bn Loss

By Tosin Olatokunbo

Mele Kyari, Group Managing Director, GMD of Nigerian National Petroleum Company, NNPC says the government has lost $1.5 billion to activities of pipeline vandals and illegal refineries operators within three months, between January and March this year.

The NNPC boss broke the news barely hours after President Muhammadu Buhari requested N4 trillion for this year’s petrol subsidy from the National Assembly.

The NNPC made the revelations amidst its zero payment to the federation Account last month and fear that the government oil firm will be unable to remit funds to the dedicated account this month.

In march, the agency failed to remit any fund to the account, thereby drawing the anger of Governor Fayemi of Ekiti state and Chairman, Nigerian Governors Forsum, NGF who described the development as ‘unacceptable’.

Kyari’s revelation, experts insist will not go down well with sub-national who are already in financial problems, with many of them not able to pay workers salary.

The NNPC chief executive who spoke when he appeared before the House of Representatives Committee on Petroleum (Upstream), on Thursday, said the development is coming at a time when the country’s oil sector was recording an all-time low crude oil production of 1.49 million barrels per day due to increase in the activities of vandals and operators of illegal refineries.

“What is going on has nothing to do with the PIA. It is purely an act of thieves; acts of vandals which have rendered the industry unworkable and taken us to the level where today, our production is around 1.49 million barrels per day,” he said.

He explained that “When you lose about 200,000 barrels per day, even at an average price of 65 dollars per barrel, we lost close to 1 billion dollars between January and March. From January till date, we lost an average of 250,000 barrels per day and at the current price of about 100 dollars to the barrel, even within this short period, we have lost close to 1.5 billion dollars.

“This situation deteriorated to the extent that by March 7, 2022, it came to zero and so, we shut down the line and declared force Majeure.

“Even on our most reliable pipeline which is the Forcados pipeline, we still lose about 7000 barrel per day. Needless to say that this is all coming as a result of the acts of vandals and oil thieves.”

He said serious efforts are ongoing to checkmate the economic saboteurs, noting that, “many of these illegal refineries are being taken down and also the insertions are being constantly removed and we believe that these interventions will pay off. And we will be able to restore production.

“And this is centrally coordinated. There is a coordinated action now because we are using a number of strategies including community-based security outfits.

Meanwhile, President Muhammadu Buhari has urged the House of Representatives to approved N4 trillion as petrol subsidy this year.

The president, in a letter, titled “Submission of the Revised 2022 Fiscal Framework,” to the Speaker of the House of Representatives, Femi Gbajabiamila, said the request was necessitated due to the realities in the global economy, citing the rising market price of crude oil heightened by the Russian-Ukraine war.

According to him, “As you are aware, there have been new developments both in the global economy as well as in the domestic economy which have necessitated the revision of the 2022 Fiscal Framework on which the 2022 Budget was based,” he said.

“These developments include spikes in the market price of crude oil, aggravated by the Russian-Ukraine war, significantly lower oil production volume due principally to production shut-ins as a result of massive theft of crude oil between the production platforms and the terminals.”