• It's Forward Sales Arrangement, says corporation
THE House of Representatives has begun investigation into the alleged $1.56 billion loan to the Nigerian National Petroleum Corporation (NNPC) Monday amidst disagreement between the lawmakers and Petroleum Ministry officials regarding the loan.
Meanwhile, the House Committee on Finance has advocated close monitoring of all revenue-generating agencies of the Federal Government to ensure prompt remittances. And to this effect, it declared that a sub-committee might be set up to audit and conduct a forensic analysis of the expenditure of all revenue-generating agencies.
Speaker of the House of Representatives, Aminu Tambuwal and the Petroleum Minister, Diezani Allison-Madueke, set the tone of the disagreement in their opening speeches.
While opening the investigation, Tambuwal, who was represented by House Chief Whip, Isiaka Bawa, said: "The issue before us today for consideration, the proposed $1.56 billion loan by the NNPC, is a very important one; its importance is predicated on the fact that the proposed loan was neither captured in the 2013-2015 Medium Term Framework, nor in the 2013 budget. As a parliament, we believe that if we continue on the path of truth, history shall vindicate us".
But Allison-Madueke, in a brief remarks before leaving the venue of the investigation, said there was no loan at all. According to her, what existed was a "forward sales agreement between the NNPC and its trading partners."
The disclosure generated heated controversies at the investigation ground as many of the lawmakers expressed disgust and said that the minister's position was unacceptable.
But in a presentation made to the committee by the Group Managing Director of NNPC, Mr. Andrew Yakubu, the NNPC said it embraced the forward sales agreement "to enable NNPC honour its obligations while addressing the risk of
sovereign default and potential banking crisis that could ensue."
Yakubu listed the following as the financial challenges which made it to embrace the forward sales agreement:
• Unfunded Federal Government's expenditures over the decades,
including but not limited to crude oil and product losses, pipeline
security, demurrage on products strategic reserve stock which have resulted in periodic cash flows challenges to NNPC;
• NNPC has accumulated various legacy liabilities which were being
settled periodically from internal resources. The cash flow challenges have severe opportunity cost and complicated contradictions in corporate operations;
• The NNPC import invoices are contractually obligated to be paid 45 days after laycan, but they extended to over 360 days after laycan in recent time due to obvious cash flow challenges;
• The non-reimbursement by the Federal Government of the Petroleum Products Price Differential to NNPC has gradually led to accumulated and unpaid petroleum products invoices of about $3.5 billion; and that
• On account of this pipeline security issues and other severe operational losses, NNPC has been unable to settle its obligations to the suppliers of petroleum products importers in a timely manner according to contracted terms."
Speaking at the resumed hearing into the finances of the 60 revenue generating agencies at the National Assembly yesterday, Chairman of the House Committee Abdulmumin Jibrin lamented that almost all the agencies invited to the hearing regarding remittances of their operating surplus, advanced technical reasons why they could not pay the stipulated 25 per cent of their gross earnings into the federation account.
The lawmakers said the audit sub-committee would hold a candle to the claims of most agencies that they were operating at a loss and therefore could not remit funds to the Federation Accounts as stipulated by law.
The Guardian