The Nigerian National Petroleum Corporation (NNPC) on Sunday threatened to seek a legal interpretation on whether it has the right to withdraw funds from the Nigeria LNG Dividend Account without the approval of the National Assembly.
The corporation issued the threat through its Chief Financial Officer (CFO), Isiaka Abdulrazaq, during an interactive session with journalists in Lagos over the ongoing probe by the Senate on the matter.
NNPC spokesperson, Ndu Ughamadu, in a statement sent to newsmen, quoted Abdulrazaq as saying there was nothing illegitimate about the withdrawals made by the NNPC from the account so far.
“We have provided the legal authority on which we rely to use funds from the NLNG Dividend Account to the Senate. We believe they will reason with us. But, if need be, we will seek legal opinion on it,” Ughamadu quoted the NNPC CFO as saying.
The NNPC established on April 1, 1977 is owned 100 percent by the Federal Government of Nigeria, with operational interests in exploration and production of oil and gas in partnership with some multinational joint venture operators in the areas of refining, petrochemicals and products distribution and marketing.
On the other hand, the Nigeria LNG Limited incorporated as a limited liability company on May 17, 1989, is a private company owned by four shareholders, with the Federal Government of Nigeria, represented by the NNPC, controlling majority shares of 49 percent.
The other shareholders include Shell gas BV (25.6 percent); Total Gaz Electricite Holdings France (15 percent) and Eni international (10.4 percent).
Although the provisions of the NNPC Act and the relevant extant laws in the Appropriation Act 2018 allow the corporation to defray its cost of operations from earned revenues, it was not clear which section of the NLNG Act gives it the authority to utilize revenues from the private company to finance NNPC activities.
On November 15, the Senate announced it uncovered the illegal withdrawal of $1.05 billion from the NLNG dividends accounts to support importation of petroleum products.
On November 22, the lawmakers constituted a committee headed by Bassey Akpan, Chairman of its Committee on Gas, to look at the operations of the NLNG account from 2015 to date.
Akpan said the committee was mandated to investigate reports that the NNPC unilaterally tampered with the account to fund its fuel importation under-recovery cost, without required consultation with states and appropriation by the National Assembly.
Statutorily, accruals in the NLNG Dividends account, which are basically earnings from dividends paid in line with federal government’s equity holding in the gas company, are meant to be shared between the federal, 36 state and 774 local governments.
Besides, in line with the Constitution, all revenues accruing to the government are supposed to be paid into the Consolidated Revenue Fund of the Federation at the Central Bank before sharing to the three tiers of the government based on the approved revenue allocation formula.
But, Ughamadu said the NNPC CFO’s presentation in his meeting in Lagos was to clarify that the Senate probe was not about missing money as was being insinuated in some quarters.
Rather, he said, the lawmakers were investigating whether NNPC acted legally in withdrawing about $1.05bn from the NLNG Dividend Account to support its fuel importation programme.
According to NNPC CFO, while the legislators have the statutory right to carry out oversight functions, the relevant extant laws, such as the Appropriation Act 2018, defines revenues from NNPC as net of cost.
He said this is an indication that NNPC has the right to defray the cost of its operations from earnings.
Citing the NLNG Act, which he said “explicitly provides that NNPC could defray its cost from the dividends”, Ughamadu quoted Abdulsazaq as saying this was one of the legal grounds NNPC relied upon to withdraw from the account and spend without recourse to appropriation by the National Assembly.
Abdulrazaq cited 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 amounted to revenue and should be swept into the Federation Account.
He said the Supreme Court ruling in the case by in 2002 was in tandem with NNPC’s position that revenue is after costs of operations have been deducted.
The statement did not, however, address the issue if the NNPC also has the right to utilise the earning from a private entity to defray the cost of its operations.
Ughamadu did not answer calls to his telephone on Sunday seeking his comment for this story. He also did not respond to a text message sent to him.