Kyari justifies US$21bn withdrawal as Nigeria falls back to China for petrol.too

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OilandPower South-Sudan  2020

The Group Managing Director GMD, Nigeria National Petroleum Corporation, Mohammed Mele Kyari said the withdrawal of US$21 billion from the dividend account of the Nigerian Liquefied Natural Gas, NLNG by the Federal Government through the finance ministry was legal and in conformity with the rules of engagement, he told the House of Representatives Committee on Public Accounts in Abuja.

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Represented by the Chief Finance Officer of the corporation, Umar Ajiya, the NNPC boss also said investment in the corporation belongs to the Federal Government alone and not to the three tiers of government.

He said the NNPC pulled out the sum from the account, following the authorization of the Federal Government, with representations from the Ministry of Finance, the Central Bank of Nigeria, CBN and the NNPC.

Kyari said proceeds from the account were the Federal Government’s shares of revenues from oil shared among the Federal and state governments of the federation.

He said: “All withdrawals (from NLNG dividends fund) were based on approved mandates of the relevant authorities. As far as NNPC 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 at the FEC (Federal Executive Council) and was referred to a committee headed by the Governor of Kaduna State. But the fact is that the Federal Government, through the NNPC, is the true owner of the investment – the sum of money withdrawn). It accrued to the Federal Government and 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.

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

“When I say the Federal Government, I do not mean the NNPC. Ordinarily, it’s the Federal Ministry of Finance that directs the utilization. We (NNPC) are merely the agent of the Federal Government.”

In his response to queries from the Office of the Auditor General of the Federation on alleged and unauthorized deduction of over N1.2 trillion in 2014 from proceeds from oil, the NNPC CFO explained that “the NNPC could not have remitted all its earnings” at the time to the Federation Account.

The House Committee on Public Account said it would therefore summon the Minister of Finance, Mrs. Zainab Ahmad; CBN Governor Godwin Emefiele and the Accountant General of the Federation, Ahmed Idris for clarifications on Ajiya’s claims on issues of utilization of the NLNG fund.

Meanwhile, Nigeria, Africa’s biggest oil producer and exporter, has shifted to China, one of Nigeria’s former and biggest crude importers for the importation of petrol.

The Asian country shipped 37,000 metric tonnes of petrol to Nigeria in September for the first time since July 2019, data from General Administration of Customs showed, courtesy S&P Global Platts.

China, a major exporter of transportation fuels, has extended exports to Africa in recent years, with Togo as the first African country to receive Chinese petrol of about 50, 000 metric tonnes in April 2018, followed by Nigeria in January 2019 with 51,000 metric tonnes, courtesy GAC data.

They have also sold products to Kenya and South in the volumes of 40, 000 metric tonnes and 35, 000 metric tonnes respectively. “So Africa is now on the receiving end”, says an analyst.

China’s annual crude oil imports increased by 0.9 million barrels per day in 2019 to an average of 10.1 million bpd, according to the United States Energy Information Administration.

The EIA said China’s new refinery capacity and strategic inventory stockpiling, combined with flat domestic oil production, were the major factors contributing to the increase in its crude oil imports in 2019.

Last year, China’s refinery capacity increased by 1.0 million bpd, primarily because two new refining and petrochemical complexes came online with capacities of 0.4 million bpd each.

As a result, the country’s refinery processing also increased to an all-time high in 2019, averaging 13.0 million bpd for the year, according to EIA.

Meanwhile Nigeria has continued to rely heavily on importation for many years to meet its fuel needs as the nation’s refineries are left comatose and unproductive.

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