The Nigerian National Petroleum Corporation (NNPC) Thursday disclosed that President Muhammadu Buhari had given it the approval to undertake a review of all Production Sharing Contracts (PSCs) between it and its various partners to reflect the current realities in the industry.
NNPC’s Group Managing Director, Dr. Maikanti Baru, disclosed this to the members of the Senate Committee on Petroleum (Upstream) who were at the corporation’s headquarters in Abuja on an oversight visit.
He stated that a committee to undertake this has been set up, adding that they would soon begin the process.
According to a statement from NNPC’s Group General Manager, Public Affairs, Mr. Ndu Ughamadu, the senate committee had asked to know why the PSC agreements had not been reviewed for a long time despite clauses in the agreements that stipulate periodic review.
The NNPC maintains PSC agreements with International Oil Companies (IOCs) which is expected to be reviewed periodically, but had reportedly not been reviewed for a while now.
He, however, disclosed that in the absence of a comprehensive review, NNPC had looked at projects on a project-by-project basis and raised observations which some of the partners had taken permission to present before their managements.
Also, in the statement, Baru stated that the corporation has been faithfully remitting all revenues accruing to it to the Federation Account.
He said allegations of non-remittance of funds had become a recurrent decimal over the years, occasioned in part, to the nature of the corporation’s operations which involved credit lines requiring constant audit and reconciliation.
“While the process of audit and reconciliation of accounts is on, a lot of accusations of short payments and non-remittances are usually traded, we endeavour to keep our cool on these allegations because we know that we remit whatever is due to the Federation Account,” he explained.
Baru further stated that such allegations usually arose from disagreements over expenses borne by the corporation on behalf of the federal government.
On the efforts by the NNPC to ensure that Joint Venture (JV) and PSC partners do not run excessive bills at the expense of Nigeria, Baru explained that apart from the establishment of an efficiency unit in the corporation to ensure value for money across all operations, NNPC had also done a lot in renegotiating contracts as well as benchmarking costs in keeping with international best practices.
He added that the effort had yielded significant results in terms of reduction in the cost of crude oil production per barrel in the Industry.
Speaking earlier, the Chairman of the Senate Committee on Petroleum (Upstream), Senator Omotayo Alasoadura, who led members of the committee on the oversight visit, said the committee would like to have a month-by-month crude oil production figures for the past two years and crude prices for the period.
He called on NNPC to fully cooperate with the Senate in providing input on the fiscal component of the Petroleum Industry Reform Bill and the other segments of the bill coming up for public hearing next week at the National Assembly.
“We have just come to fulfill another part of our mandate, which is to oversee what NNPC is doing. It’s not a mission to harass anybody, it’s for us to understand each other, give advice, as nobody is a sole repository of knowledge. Everybody knows that Dr. Baru is very knowledgeable in the Industry, but he can’t know everything, even people who don’t know anything about the Industry may have useful ideas that can be of help,” said Alasoadura in the statement.
The statement noted that other members of the committee who were present at the meeting included Senators Gershom Bassey (Vice Chairman), Sam Egwu, Victor Umeh, Fatimat Raji Rasaki, Clifford Ordia, Osinakachukwu Ideozu, Stella Oduah and Biodun Olujinmi.
