Nigerian National Petroleum Cooperation has begun the moves to recover over $7 billion owed in over-deducted tax benefits.
The Nigerian National Petroleum Corporation (NNPC) has begun the process of recovering over $1billion in over-deducted tax benefits from JV Partners on major capital projects and another $2.46 billion dollars from inflated contracts at NPDC. This information is contained in a report submitted to President Muhammadu Buhari by the new management of the NNPC, detailing its successes so far.
In the document, the Group Managing Director (GMD) of the NNPC, Ibe Kachikwu, revealed that the corporation had commenced Performance Measurement & Bench-marking as well as Value for Money Review of NNPC and the JV Companies covering the period 2008 to 2013. The report indicated that thisprocess may lead to further cost recovery.
According to the document, a reputable International Accounting Firm has been engaged by the NNPC to ascertain the exact amount due government on the Strategic Alliance Contracts entered by NPDC, where up to 2.46 billion dollars of government money is to be recovered.
It also revealed that consequent upon an extensive investigation of the various toxic crude oil for refined products swap contracts, a total sum of 420 million dollars has so far been reconciled in favour of NNPC and is now due for recovery from the legacy OPA/SWAP contracts.
Out of the reconciled amount, the sum of 277 million dollars has been recovered in lieu of products and the recovery effort is still ongoing, the document said. “Significant cost reductions are also expected to ensure the Corporation remains profitable in the prevailing low crude oil price regime.’’
According to the report, the GMD of NNPC is committed to continued review of all existing contracts and addressing the ones that are not favourable to the Corporation. It added that progress was being made toward bringing back the nation’s refineries to full production, noting that “the management of the NNPC is working to ensure that this happens before the end of this year’’ .
If this was completed, the report said, it was expected to achieve an annual savings of about one billion dollars of foreign exchange from fuel import substitution. The report also indicated that an additional total saving of over 500 million dollars annually would be made from the petrochemical products of Kaduna Refinery and Petrochemical Company.
The report also disclosed that efforts at repositioning the NNPC had started yielding result on the nation’s economy. It also said gas supply to the power plants, which had hitherto been handicapped by the supply of much-needed gas, had improved significantly from about 630 million to 861 million standard cubic feet per day.
“This has resulted in a more steady power supply being witnessed in the country.’’ The report added that gas supply for power and peak generation had in recent times reached a historical high of 876 million standard cubic feet per day and 4,782 Mega Watts respectively.