The Nigerian National Petroleum Corporation (NNPC) has commenced the process of recovering over $7bn in over-deducted tax benefits from joint venture partners on major capital projects and from unfavourable agreements in oil swap deals.
Senior Special Assistant to President Muhammadu Buhari on Media and Publicity, Mr. Garba Shehu, in a statement on Sunday, said the corporation had also engaged an international accounting firm to ascertain the exact amount due to government on the Strategic Alliance Contracts entered by Nigerian Petroleum Development Company, where up to $2.46bn of government money was to be recovered.
In a report submitted to Buhari by its new management, detailing the corporation’s successes so far, the Group Managing Director of the NNPC, Dr. Ibe Kachikwu, revealed that the firm had commenced performance measurement and benchmarking.
He added that the corporation had also started what it described as Value for Money Review of NNPC and the JV companies covering the period of 2008 to 2013.
The NNPC report, according to the statement, indicated that the new measures might lead to further cost recovery for the firm.
The report also revealed that after an extensive investigation of the various toxic crude oil for refined products swap contracts, a total sum of $420m had so far been reconciled in favour of NNPC and was now due for recovery from the legacy OPA/SWAP contracts.
“Out of the reconciled amount, the sum of $277m had been recovered in lieu of products and the recovery effort is still ongoing,” the statement added.
According to the report, the NNPC boss stated that he was committed to the continued review of all existing contracts and addressing the ones that were not favourable to the corporation.
It noted that significant cost reductions were also expected to ensure that the corporation remained profitable in the prevailing low crude oil price regime.
NNPC upstream operations are in joint partnerships with the major oil companies. These multi-national exploration and production companies are operating predominantly in the on-shore Niger Delta, coastal offshore areas and lately in the deep-waters.
As with many other developing countries, the multinationals in Nigeria had been operating under what is called a concession system, with NNPC being the concessionaire, while the companies are the operators.
NNPC is responsible for the management of the exploration bidding rounds for oil and gas. The multinational oil companies operate in partnership with NNPC under Production Sharing Contracts.
The statement from the Presidency on Sunday did not name the joint venture partners from which the corporation plans to demand the refund.
However, some of the international oil companies that are JV partners of the NNPC include Shell, Agip, Mobil, Chevron and Texaco among others.
