Seven years after, the Nigerian National Petroleum Corporation (NNPC) has agreed to pay a debt of $1.740 billion or N534.180billion billion (at 307/$1 official exchange rate) to the Federation Account. The whole debt will be cleared within 18 months.
The $1.740 billion is the balance of the $1.874 billion Shell Petroleum Development Company of Nigeria (SPDC) assets which were acquired by Nigerian Petroleum Development Company (NPDC), a subsidiary of NNPC. NPDC acquired the assets in 2012 at the sum of $1.874 billion and paid only $110 million, an equivalent of N33.7 billion.
LEADERSHIP investigations revealed that NNPC has made commitments to the Federation Account Allocation Committee (FAAC) to use a combination of cash payments, direct monthly allocation of crude cargo and gas sales revenues from Oil Mining License (OML) 60 Series to defray the debt.
The strategy is expected to raise about $110 million monthly, official documents which LEADERSHIP obtained, revealed.
The payment of the $110 million NNPC’s obligation to the Federation Account was agreed to commence in April 2019 while the arbitral award would be paid into CBN and Department of Petroleum Resources (DPR) account for onward transfer to the Federation Account, a reliable source in NNPC said.
At the meeting of the technical and plenary sessions of FAAC on March 27, 2019, the director (Funds), Office of the Accountant-General of the Federation, Alhaji Muhammad Usman, expressed the sub-committee’s objection to the repayment model of NNPC to include the use of gas sales revenues to defray the NPDC’s indebtedness to DPR. His action was based on the various associated deductions that would be involved in the transaction.
He, however, supported the sustained monthly payment of $110 million towards liquidating the $1.74 billion debt.
NNPC had indicated its readiness to liquidate the balance of NPDC indebtedness once it obtains the pending foreign loan and the arbitral award in favour of the NPDC on its litigation with Atlantic Energy, where NPDC was expected to receive $1.69 billion, $200,000 and N1.5 million.
On another note, our findings showed that the NNPC in October 2018 introduced a new cost item into the Central Bank of Nigeria (CBN) component statement called Pre-Export Financing Cost, an item FAAC members say was strange to them.
The sum of N52.99 billion has already been deducted from the Federation Account for that purpose between October 2018 and January 2019.
Some members of the FAAC sub-committee told LEADERSHIP that the only cost item known to them was the Joint Venture Cash Calls (JVCC). Detailed information on the subject was not available at the time of filing this report last night.
FG Goes Tough On AMCON N5trn Loan Defaulters
Meanwhile, Vice President Yemi Osinbajo has announced plans by the federal government to set up an inter-agency collaboration framework to ensure that individuals and organisations in the list of high-profile obligors of the Asset Management Corporation of Nigeria (AMCON) were not allowed to do business with the government.
Osinbajo, who is the chairman of the National Economic Council (NEC) said that the federal government would deal decisively with the “bad debtors” who have made it impossible for AMCON to resolve its N5trillion debt thereby holding the entire country to ransom.
He said that the inter-agency collaboration framework would comprise the relevant government ministries, departments and agencies (MDAs) and supervised by his office to ensure that the institutions and individuals who are indebted to AMCON are not allowed to do business with the government.
The vice president spoke when he received some board members and management of AMCON at the State House, Abuja who were led by the chairman, Dr. Muiz Banire. He said that administration of President Muhammadu Buhari would no longer fold its hands and allow a few individuals that owed AMCON huge sums of money walk freely in the country.
Osinbajo stated that the government would invite the AMCON team alongside other relevant MDAs to fine-tune plans on how to ensure that anybody or agency that is a debtor to AMCON is made to face the wrath of the law, describing the debtors as enemies of both the government and the people of Nigeria.
He said: “I think the time had come for the federal government to set some examples with some of these top debtors of AMCON, which I believe will serve as deterrent to others.”
The vice president, however, commended the corporation under the leadership of Ahmed Lawan Kuru for the successes that had been achieved against all odds.
Osinbajo promised that the federal government would give AMCON the needed support to enable it go after the obligors that had remained recalcitrant despite the olive branch extended to them over the years by the agency.
He said: “I congratulate AMCON for the work done so far having recovered over N1trillion and counting both in cash and in assets. The work you do as a recovery agency is not something that is particularly easy or encouraging because we all know how Nigeria works.
“But we are committed to working more closely with your management to ensure that these monies are recovered from AMCON obligors because it will help our economy and provide the government with more money to improve on the development of infrastructure across the nation,” he said.
In a speech, Banire highlighted some of the challenges and frustrations faced by AMCON as a result of the attitudes of some of the debtors who behave as if they are above the law in the country and urged the government to support AMCON to succeed.
He noted that “AMCON has been able to recover over N1 trillion since its inception till 2018. Of the recovered sum, the cash accounted for 60 per cent while non-cash assets such as properties and equity securities accounted for the balance of 40 per cent. Over the same period, AMCON’s repayment of its indebtedness to the CBN was over N1 trillion.
“As at end of December 2018, AMCON’s Assets Under Management (AUM) amounted to about N172.5 billion. It is noteworthy to state that of the total real estate properties, assets available for sale is valued at N62 billion. Of this N62 billion, about 83 per cent comprises of bare land and other assets, which may need considerable improvements to convert into income generating assets,” Banire said.
FG Targets 11.5million Jobs, $30bn From Export
In another development, the federal government says that it is targeting the creation of 11.5million jobs (1.5 million direct and 10 million indirect jobs) through the establishment of industrial parks/special economic zones across the country.
The minister of Industry, Trade and Investment, Dr. Okechukwu Enelamah, told journalists at the weekend that the government is also targeting making $30 billion from the export of various products from the country in line with its industrialisation agenda.
According to Enelamah, the products to be exported are those that Nigeria has comparative advantage, pointing out that the initiative has been captured under the “Project Made In Nigeria” programme.
Enalemah said: “We’ve passed the point of no return on the issue of Industrialisation and building of industrial parks. The president has signed it. It’s an initial $500 million investment outlay, and we’re providing a counterpart funding of $125 million. It’s like how the NLNG was formed. The money will come in tranches.
“Already, we’re working hard on further achieving more strides in the area of ease of doing business. We’re also addressing critical infrastructure and pursuing various sector reforms. We’ve comparative advantage in agro-processing, petrochemical, agriculture and others,’’ he said.
The minister further explained that a Public-Private-Partnership sector capital to build and maintain roads and guarantee participants’ timely and full recovery through tax credits was in place, adding that it has potential to save N175 billion hitherto lost annually to the economy via bad roads.
On the country’s cassava policy, the minister said that the government plans to ensure that cassava in the next four years creates 500,000 jobs and increase local production of starch from 38,000 metric tonnes to 1,437,000 metric tonnes.
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