unbalance accounts

Oil Earnings: Jonathan AndHis Ministers’ UnbalancedAccounts By Ifeanyi IzezeOctober 7, 2013 - 16:56 —siteadminBy Ifeanyi IzezeIf it was meant to dousethe controversy andtension over shortfalls inthe nation’s oil revenueand who exactly to blamefor it, the disclosure lastweek by the NigerianNational PetroleumCorporation (NNPC) thatNigeria generated $20.91billion from crudeoil sales in the first sevenmonths of this yearachieved only one thing-further compounded theconfusion. The figurereleased by the NNPC oncrude oil sales for theperiod under contentiondid not explain a singlething nor answer a singlequestion on thecontroversy.Let’s look at this matter:The NNPC agreed itrealized $20.91billionfrom the sale of191,939,235 barrels ofcrude oil from January -July.The sale statistics of thecorporation showed thatin the month of January,it realized $4.34bn from37,675,591 barrels ofcrude oil. In February, $2.36bn was realized fromthe sale of 20,590,812barrels of oil. In March,30,901,111.67 barrels ofoil was sold for $3.35billion.The earning went down to$2.58billion as theproduced crude also camedown to 25,116,194.39barrels in the month ofApril. The NNPC recorded$2.98billion as earning inMay from 28,411,526.25barrels of oil sold withinthe month.In June, it was $2.6billionas earning from the saleof 24,708,531.8 barrels,while in July thecorporation realized thesum of $2.69bn from saleof 24, 535,468 barrels ofoil.From January to July2013, the federation wasexpected to have earnedN1.837 trillion (orN204.168 billion permonth) from the sale ofcrude oil and gas. Thisfigure was supposed to bethe rake-in after payingfor Joint Venture CashCalls (that is, cost ofproduction) and petrolsubsidy payments.As it has always been,NNPC as the seller wassupposed to remit all therevenue generated to thefederation account beforeany deduction and sharingby the three tiers ofgovernment.However, of the N1.837trillion realised at theprevailing market rate ofcrude oil which averagedat about $108 per barrelwithin the period underreview, as the actualrevenue both the NNPCand the Central Bank ofNigeria (CBN) endorsed,only N1.516 trillion hasbeen or rather wasremitted to the federationaccount by the NNPCleaving a deficit ofN320.654 billion.As most of us know, theprojected budget crude oilsales revenues have notbeen realized due tosignificant shortfall inproduction blamed on oiltheft and pipelinevandalism. The 2013planned production was2.45 million barrels perday but the Year-to-DateJuly 2013 production hasaveraged 2.19millionbarrels per day.Although oil prices haveaveraged $108 per barrel,which is about $38 perbarrel above the 2013budget benchmark of $79per barrel, this has notaugmented the drop ingovernment revenue.But this is aside thepresent controversybecause what is beingcontended between thefederal government/NNPCon one side and the statesand local governments onthe other is the shortfallin remittance into thefederation account ofmonies already earned. Allthe actors agreed thenation earned N1.837trillion but only a fractionof it - N1.516 trillion hitthe federation account.Did we save the shortfallof N320.654 billion in theexcess crude account orexternal reserve? Wherehas the money gone to-NNPC coffers or PDPaccount? This is the issue!As rightly said by theChairman House ofRepresentativesCommittee on FinanceHon. Abdulmumin Jibrin,Nigerians are not as keenon crude oil sales figuresas the actual remittancesfrom NNPC to theFederation Account. Theamount remitted to thefederal government ismore important and NNPCshould have been morehonest to present thefigures so that Nigerianscan understand whatactually accrued.It would be recalled thatthe controversy over non-remittance of actualaccruals into thefederation account startedwhen the NigerianGovernors’ Forum (NGF)raised alarm that thestates have not beengetting their dueentitlements from thefederation account sinceMarch this year. Asexpected, the governorsasked the Minister ofFinance and thecoordinating minister ofthe economy, Dr. NgoziOkonjo-Iweala to explainthe discrepancies or quithis job.However, the dissidentfaction of the NGF led byPlateau State governor,Jonah Jang and someNational Assemblymembers loyal to the Janggovernors came in defenseof the Finance Ministerand rather insisted thePetroleum Minister shouldexplain or be sacked.Since then, the ministriesof finance and petroleumresources have tried hardto shift the blame to eachother’s doorstep. Withoutbias, whose mandate is itto present monies asreceived in the federationaccount for sharing by thethree tiers of government- finance or petroleumminister?And why is the FinanceMinistry now trying toexonerate itself from thisunbalanced accountingwhen the abnormality asalleged has been runningsince the first quarter ofthis year and the ministrydid not see any need toraise alarm either to theiroga at the top or to alertNigerians? Did the FinanceMinistry at any of theFederal Executive Council(FEC) meetings reportwhat the NNPC and byextension the PetroleumMinister was doing toshortchange thefederation? So what arewe saying!Another curious angle toall these was the transferof the sum of N35.103billion to the Excess CrudeAccount (ECA) in July bythe Finance Minister whenthe same ministry hasbeen alleging that Nigeriais shutting down due toshortfall in oil earnings asprojected in the 2013fiscal appropriation. Howcan we have drasticshortfall as trumpeted andat the same time excessearnings to be saved inthe excess crude account?So where is this moneycoming from? Could thatbe the money the statesand the local governmentsare asking for?The Minister of Financecharged with theresponsibility of managingthe nation’s earnings andexpenditures shouldactually be the one doingthe explanation to Nigeriaand not the NNPC. Maybe,both the Ministers ofFinance and Petroleumshould actually educatetheir oga since theyreport to one person.Then, the Presidentshould take it on fromthere to correct theimpression that hisministers are pulling atcross purposes.IFEANYI IZEZE is an Abuja-based Consultant and can be reached on: iizeze@yahoo.com;234-8033043009)The views expressed inthis article are theauthor’s own and do notnecessarily reflect theeditorial policy ofSaharaReporters