The Nigerian Petroleum Development Company Limited (NPDC) and one of its Joint Venture partners, Seplat Petroleum Development Company Plc, have both been accused of defrauding the Federal Government for five years. This may affect Seplat‘s shares.
The Special Presidential Investigation Panel for the Recovery of Public Property (SPIP) disclosed that NPDC (a subsidiary of the Nigerian Petroleum Development Company Ltd) and Seplat swindled the sum of $1.8 billion and N8.8 billion from 2013 to 2017.
NPDC pleads guilty: Without denying the accusation, NPDC admitted to short-changing the Federal Government while promising to finance the discovered debt.
How the funds came about: During SPIP‘s one-year investigation, the Mr. Okoi Obla-led panel discovered the funds were;
- Royalties on oil and gas,
- Concessional rental,
- Gas flaring penalty due to the Federal Government;
The NPDC and Seplat never remitted the funds to the Government.
How long this lasted: According to the report, the swindling took place from 2013 to 2017, which means it began during President Goodluck Jonathan’s administration and continued under the administration of President Muhammadu Buhari.
Why it matters: According to the panel, Seplat allegedly owes $33,423,617.18 out of the $1,824,469,208.36 not remitted to FG, while NPDC owes $1,791,045,591.18.
Also, out of the N8,825,778,039.61 yet to be remitted to FG, Seplat allegedly owes N1,302,028,429.46, while NPDC accounts for the remaining N7,523,749,610.15. In total, Seplat owes FG about N13 billion.
Seplat is listed on the Nigerian Stock Exchange (NSE) and currently trades at N520. If the government proceeds with recovering its claims then this could negatively impact on Seplat revenues. Investors could see this as a risk and dump Seplat shares.
NPDC working towards remittance: Not only has the NPDC admitted the fault, it is also working towards payment of the owed funds to FG, as the government has since approved for NNPC/NPDC to source for a third-party loan to finance the payment of the outstanding balance of $1.747 billion.
“NNPC has made appreciable progress on this but has yet to achieve financial close. While waiting for the conclusion of the third party loan to pay off the balance, NPDC has since December 2018 stated the allocation of 30,000 barrels per day towards the liquidation of this indebtedness.
“On achievement of financial close and drawdown, NPDC will pay to the federation the lump sum less the value of the crude oil so far allocated; less the value of crude lifted by the federation post assignment of the assets; and less any other federation’s indebtedness to NPDC on the assets.”
Note that the NPDC had initially deposited $100 million.
There are more of Seplat swindling FG: The NPDC has Joint Venture agreements with nine companies to operate Oil Mining Leases, including Seplat, and they all have failed to remit oil royalty, gas royalty, concessional rental, and gas flared penalty to the Federal Government.
List of the partners involved with NPDC;
- Seplat/NPDC JV (OML 4, 38 and 41)
- ND Western (OML 34)
- Elcrest /NPDC JV (OML 40)
- Neconde/NPDC JV (OML 42)
- NAOC (Nig. Agip Oil Coy)/NPDC JV (OML 60, 63)
- FHN (First Hydrocarbon Nigeria)/NPDC (OML 26)
- Abura/Oredo/Oziengbe (OML 65, 111)
- Okono/Okpoho/NPDC JV
- Shoreline/NPDC JV (OML 30)
Other resolution by SPIP;
- The Department of Petroleum Resources (DPR) should shed light on the outstanding royalty payments for divested assets amounting to $745,462,045.00.
- It added that the DPR would also need to explain the defrayal of Nigeria Agip Oil Company’s royalty oil payments using the balance of NAOC’s ‘good and valuable’ consideration valued at $293,102,181.93.
- Demanded Managing Directors of all the following regulators, and operators of OMLs to be interviewed by the SPIP and also avail the panel with records of oil and gas royalty payments; gas flaring penalty payments; and concessional rental payment for analysis, among others.
- The regulator – DPR; government Operators of OMLs – NAPIMS and NPDC; JV, PSA and PSC Operators of OMLs; NPDC and Seplat are to attend to the SPIP and agree on terms of paying the underpaid assets from 2013 to 2017 to the government.
- The DPR is required by the SPIP to shed more light on the agreement and the approval to defray Shell Petroleum Development Company’s outstanding royalty payments for divested assets amounting to $745,462,045.00 (Atlantic Lifting).
Note: The Federal Government’s interests in Oil Mining Licences 4, 38 and 41 and OMLs 26, 30, 34, 40 and 42 respectively were assigned on the approval of the Minister of Petroleum Resources to the NPDC in August 2010 and April 2011.
