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Senate chastises Nigerian National Petroleum Company Limited (NNPCL)’s N406 billion dividends

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The Senate has expressed strong reservations over the sum of N406 billion declared as dividends by the Nigerian National Petroleum Company Limited (NNPCL) and credited to the Federation Account in 2023.

Addressing members of the Senate Committee on Appropriation led by Senator Solomon Adeola at the weekend, the Group Chief Executive Officer (GCEO) of the NNPCL, Mele Kyari said between July and November, this year, the oil giant made a profit of N4.4 trillion and credited the sum of N406 billion to the federation account. He also noted that aside from crude oil, the earnings was inclusive of condensates.

Individual lawmakers who are members of the Appropriation Committee however dismissed the GCEO of NNPCL revelation as no cheering news as they submitted that the oil giant should strive to compete with its peers in the Organisation of Petroleum Exporting Companies(OPEC).

The lawmakers cited the Saudi Aramco and Perobas (the latter is set to join OPEC as an observer in 2024) the oil corporations owned by Saudi Arabia and Brazil, respectively and admonished Mele Kyari to borrow a leaf from them.

Nigerian Tribune checks revealed that Saudi Aramco, with a 90% equity stake owned by the Saudi Arabia government posted as earnings for its full-year 2022 financial results, a record net income of $161.1 billion — its highest annual profits as a listed company. It also declared a fourth-quarter dividend of $19.5 billion, paid in the first quarter of 2023.

Further checks revealed that Saudi Aramco’s 2022 earnings was a 46.5% increase in its earnings compared to $110.0 billion in 2021.

In his defence before the senate committee, Kyari expressed regret that the national oil corporation was not run as a profit-driven entity until recently.

The GCEO cited the passage into law of the Petroleum Industry Bill into an Act in 2021 as a development that made it compelling for the corporation to be run solely as a business entity.

He said:” We nurse the dream of having NNPC being run like its peers across the globe. But that vision wasn’t delivered until 2021 when we had the Petroleum Industry Act. We didn’t have a national oil company that was profit-driven. It was the bold decision of this Senate with the passage of the PIB that made it possible.

“We know that today, by virtue of PIA and Company and Allied Matters Acts this company can be shut down, if we lose money, consistently, in three years but we have come to the level that we are making money.

“In 2023 alone up to October, this company made money N4.4 trillion this was as a result of removal of subsidy.”

Kyari who lauded the initiative to remove subsidy from petroleum products noted that the bold decision of President Bola Ahmed Tinubu has saved the oil giant from what he described as needless financial strain.

He said: “Now, the PIA has said this company must provide energy security and we are happy that we are out of this.

“There are two things you can’t control: once you sell your product below market, you can’t make a profit. We don’t have credible data on fuel consumption in Nigeria. With the removal of subsidy, it has removed smuggling, the government is giving priority to gas and considering electric cars, and fuel consumption has gone down. These are the collateral advantages.”

Kyari who admitted that for the downstream oil sector, NNPCL remains the sole importer however assured the lawmakers that the corporation is doing everything possible to bring the marketers into the importation business. He acknowledged sourcing foreign exchange as a big challenge facing petroleum marketers.

While assuring the Senate that the Port Harcourt refineries would come on stream in December as promised while both Warri and Kaduna refineries would resume production in the first and last quarter of 2024, he however cautioned against the expectations that having the refineries produce at installed capacities would bring down the prices of petrol.

The GCEO noted that crude oil which is the main feedstock of the refineries dollar-denominated.

He said:” I know it is difficult to say, but refineries are not created to reduce price. They are paying for their feedstock, which is crude which they buy in dollars.

“The first intention of establishing refineries is to ensure energy security, that’s your first priority.

“Our mission is energy security, but with Dangote and our refineries, we can be a net exporter of petroleum products.”.

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