IN LIGHT OF THE FOREX CRISIS, NNPC INCOME REMITTANCES CREATE NEW CONCERNS

Concerns over the organization's transparency have been raised by the Nigerian National Petroleum Corporation Limited's purported inability to earnings to the federation's treasury. Experts advise reviewing the company's financial records to boost the naira and increase transparency.

The Nigerian National Petroleum Corporation Limited was in the news for a variety of reasons last year due to a number experienced. In addition to fighting oil thieves, they had a shortage of fuel and close in the creeks. The year was not easy for the company.

The problem of revenue not being remitted to the arise in 2023. The corporation was accused by the Governors' Forum of Nigeria last year of not remitting any revenue. The company neglected to send money into the federation account last year, even though the price on the global oil market continued to grow. It attributed its inability to deposit money into fuel subsidy payment.

However, openness persists even after the Federal Government terminated the subsidy scheme seven months ago.

In his inaugural speech on May 29, 2023, President Bola Tinubu listed the elimination of fuel subsidies as one of his administration's main policy goals.

A former governor of the Central Bank of Nigeria, Sanusi Lamido, asked for a nation's daily oil production, export, and accrued revenue, which raised concerns about the low dollar remittance. He accused the NNPCL management of being dishonest in their report of foreign revenue.

The NNPCL came under fire from the former Emir of Kano for allegedly not sending in enough foreign cash into the government coffers even after the gasoline subsidy.

“We need to stabilize the exchange rate and address why there is no money coming in,” he said. Why can't the NNPCL generate revenue？ I apologize that this was the question that cost me my job, and I will keep bringing it up until NNPCL resolves it or I pass away. The money are missing. The NNPCL need our attention.

The finance minister lacks a monitoring system that reports to him, therefore he cannot inform you. How many barrels of gasoline we produce and export is a secret even to the finance minister. Only the NNPCL is able to provide those numbers. The amount of oil we produce, sell, and where the money is going are all important details for the finance ministry to be aware of.

Where are the money since we are no longer providing subsidies？ During the subsidy era, it was under recovery, but that has since ended. So, where's the cash now？ I was suspended because of the concern I brought up. You can suspend me once more, then. The NNPCL is the world's most opaque oil company. They had never been at the central bank. We must track the money as it moves from production to export to import. Where does the money end up？ We paid N11 trillion in subsidies, but as of right now, there has been no answer. The NNPCL was asked to bring the records by the National Assembly, but they declined. Likewise, the World Bank observed in its most recent Nigeria Development Update that the company's handling of the fuel subsidy lacked transparency.

It said that the federation lost over N380 billion in fuel subsidies and they have shown a rise in net oil earnings once the subsidies were eliminated.

The bank stated that it covered the impact of eliminating subsidies on federation income as well as arrears of subsidies that are currently being withheld.

The World Bank claims that even while they have increased income, more information about oil revenues—including the PMS subsidy reductions—is still required.

The increases in oil revenues in H2 2023—as reported by OAGF—can be linked to advances in exchange rates, according to the research. In the absence of exchange rate increases, net oil revenue would have decreased by 0.2 percentage points of GDP year over year from January and August, with the loss occurring in the months of July and August.

The interim yearly dividend and additional revenue from Production Sharing Contracts' 40% profit were recorded in the accounts in August. These were not, however, as large as the gains that would have resulted from eliminating the gasoline subsidy. The risk that the implicit fuel subsidy has reemerged and kept net oil revenues lower than anticipated is that gas pump prices have not changed in step with market fundamentals, particularly variations in exchange rates and global oil prices.

Experts thought that the foreign exchange market's volatility was impacted by the opaqueness. Due to a lack of foreign money in 2023, the naira was worth more than $1,000 or $1 at the Nigerian Autonomous Foreign Exchange market. The currency rate experienced a 30% depreciation in a single day due to a decrease in supply in response to an increase in demand. In the end of 2023, it has, nevertheless, increased to 899.10/$1.

In a similar vein, on December 26, the local currency closed at 1,205/$1 after depreciating by 0.58 percent on the parallel market. On the first day of the New Year, it dropped even lower to 1,210/$1.

The market is still struggling to correct the imbalance brought forth by low FX. However, according to information retrieved from the CBN website, Nigeria's foreign reserves decreased by 11.3% from $37.08 billion on December 28, 2022, to $32.89 billion during the same period last year.

In response, Akpan Ekpo, an Economics Professor at the University of Uyo, stated over the phone with The PUNCH that requests for increased NNPCL transparency were essential to strengthening the foreign exchange market.