Prior to the passage of the Petroleum Industry Bill (PIB), members of the Senate and House of Representatives in the 9th Assembly unanimously passed the Executive bill transmitted by President Muhammadu Buhari’s administration which made provision for Frontier prospecting tendencies strictly for the benefit of the Northern region.
Hence, the introduction of the Frontier Exploration Fund as encapsulated in the Petroleum Industry Act, 2021, to support exploration and development in Nigeria’s frontier acreages.
Speaking during the launch of the Kolmani River Field, President Buhari averred that the Kolmani River Field holds up to 1 billion barrels of oil reserves, about 14 billion cubic meters of gas.
The president said the new project will include upstream production, oil refining, power generation, and fertilizer production.
He said it already has attracted three billion dollars’ worth of investment. The project is expected to produce up to 50,000 barrels of crude oil per day.
The Kolmani River Field is located between Bauchi and Gombe states in northeastern Nigeria – a region that has been battling Islamist militants for years. Other regions being looked at include: Anambra, Dahomey, Bida, Sokoto, Chad, and Benue where hydrocarbon exploration is yet to occur or remains undeveloped.
The PIA further stated that the Fund, constituting 30% of NNPC’s ‘profit oil and profit gas’ from various contracts, will finance exploration and development activities in these frontier acreages.
Meanwhile, a member of the 10th Assembly, Hon. Billy Osawaru who raised a motion on matter of urgent public importance, alleged that the funds were spent without approval by the National Assembly, as stipulated in the PIA.
According to the motion, Hon. Osawaru observed that the funds run into millions of dollars, adding that the action of the NNPCL was an affront in the management of public finances, and a grave financial misconduct.
The House therefore mandated its relevant committees, to investigate the matter within four weeks.
Recall that the Senate had in October 2023, also resolved to investigate the state oil company over the lack of funds to explore and develop new frontier acreages.
This year, the House through its Committee on Finance on Tuesday, 21st May, 2024 quizzed management of NNPCL over projected N10.8 trillion revenue for the 2024 fiscal year.
Chairman, House Committee on Finance, Hon. Abiodun James Faleke who presided over the hearing on revenue generated by key MDAs held in Abuja, also demanded for details of all joint ventures (JVs) contracts with International Oil Companies (IOCs) so far.
After the scrutiny of the documents submitted to the Committee, the lawmakers expressed fears over the possibility of attaining the crude oil production as well as the revenue forecast for the year under review.
According to the document exclusively seen by Nigerian Tribune, 1.644mbpd for January, 1.551mbpd for February, 1.475mbpd for March, 1.478mbpd for April, 1.564mbpd for May, 1.774mbpd for June, 1.819mbpd for July, 1.838mbpd for August, 1.850mbpd for September, 1.904mbpd for October, 1.889mbpd for November and 1.946mpbd for December, 2024, respectively.
Similarly, the lawmakers who spoke in turns questioned the projected N368 billion being 40% profit sharing from production sharing contract (PSC) of 113.1 billion for January, N9.8 billion for February, N30.7 billion for March, N8.2 billion for April, N16.0 billion for May, N25.9 billion for June, N26.6 billion for July, N27.0 billion for September, N27.8 billion for October, N27.6 billion for November and N28.4 billion for December, 2024, respectively.
The lawmakers also queried the rationale behind the static N81.2 billion dividends being paid on monthly basis from January to December, 2024 despite the projected increase in crude oil production. Members of the Committee also demanded for update on the Frontier Basin projects embarked on by the Corporation as stipulated in the Petroleum Industry Act (PUA) across the country, including Bauchi, Sokoto-Bida, among others. The lawmakers also inquired into the revenue projected from gas supply which they argued was low.
Responding to various questions from the lawmakers, NNPCL Chief Financial Officer (CFO), Mr. Umar Ajiya disclosed that from the N10.8 trillion revenue projection submitted in the 2024 Appropriation plan, the company has so far remitted the sum of N2.5 trillion into government’s coffers as at the end of the first quarter of 2024.
The breakdown of the revenue paid include: N2.50 trillion from upstream, N22.53 billion from gas and power, N24.69 billion from Downstream and N1.10 billion from other sources which was not disclosed by the Chief Operating Officer.
He, however, assured the Committee that the company may surpass the N10.8 trillion revenue projection. While responding to question bothering on the engagement of a private company – Tantita for pipeline security, Mr. Ajiya discloser that the Corporation was able to attain the current 1.5mbpd as against the 1.0mbpd after the engagement of Tantita Security company.
He also explained that the decision on naming and shaming those involved in the economic sabotage is solely the responsibility of the Court, as well as security agencies, adding that while Nigerian Navy has the capacity to track every vessel on Nigerian waterways, only Tantita has made arrest of those involved in oil thefts.
On the fluctuation of the crude oil production, he explained that the company has a couple of investments being carried out including the 40,000bpd crude oil production. He also confirmed that the IOCs partners are divesting not only because of insecurity but due to fiscal incentives in other jurisdictions.
Mr. Ajiya also informed the Committee that the Electricity Generation Companies (GENCOs) are owing the Company the sum of N500 billion prior to President Bola Tinubu’s administration. Chairman of the Fiscal Responsibility Commission (FRC), Mr. Victor Mururako, NNPCL has failed to provide relevant financial documents for scrutiny in breach of extant financial regulations.
While noting that the company had no record of remittances by the NNPCL as expected by law, the FRC helmsman who was represented by Mrs. Victoria Adizou-Angakuru, said: “Ours is just a plea as regards their remittance to the purse of the government, which is the CRF.
“The Commission has observed that NNPCL has not really been having a good rapport with FRC. They have been meeting other agencies like RMFAC and OAGF to resolve disputes regarding their operating surplus remittances but they have never come to FRC for reconciliation.
“Our table shows that from 2007 to 2018 we have computed the liabilities against NNPCL but we are not saying these liabilities are still existing but we don’t have any evidence as against any remittance they could have made.”
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