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Friday, February 21, 2014

INTERESTING: NNPC Can Spend Oil Revenue?

The Attorney-General of the Federation and Minister of Justice, Mr. Mohammed Adoke, said on Thursday that the Nigerian National Petroleum Corporation, was empowered by the NNPC Act to remit only to the federation account its net earnings after deducting cost of its operations.
Adoke, who stated this in the legal opinion he presented at the resumed public hearing of Senate Committee on Finance on the alleged unremitted $20bn oil revenue, said that NNPC was generally under an obligation to remit its revenue from the upstream petroleum operations into the Federation Account.
Adoke’s legal opinion on the controversial unremitted oil money by the NNPC was in response to the invitation by the Senate Committee on Finance, led by Senator Ahmed Makarfi investigating the alleged missing $20bn.
In his response, the AGF explained that in determining the issue of oil revenue remittance to the Federation Account, NNPC, by virtue of Section 7 (4) of the NNPC Act, could defray all expenses incurred in the course of its business in the upstream operations.
He said, “I am of the considered view that NNPC is generally under an obligation to remit its revenue from the upstream petroleum operations into the Federation Account.
“This is however dependent on the definition of ‘revenue’ within the meaning and intendment of Section 162(10) (c) 0f the Constitution.
“I am also of the considered view that the NNPC can by virtue of Section 7(4) of the NNPC Act defray all expenses incurred in the course of its business in the upstream operations.
“Consequently, what NNPC is required to pay into the Federation Account is the ‘net revenue’ as opposed to the ‘gross revenue.’
“This position is further reinforced by the decision of the Supreme Court in A.G. Ogun State & Ors v. A.G. Federation (2002) 18 N.W.L.R (Nigeria Weekly Law Report) (Part 798) 232 at 284, where the Court recognised similar provisions as the ones contained in Section 7 (4) of the NNPC Act in the Public Enterprises (Privatization and Commercialisation) Act, Cap P.38, LFN 2004 i.e. Section 20 thereof.
“I am therefore of the respectful view that only the net revenue from upstream petroleum operations of the NPDC should be paid into the Federation Account by the NNPC.
“In other words, NPDC is required to pay only what amounts to the dividend of its crude oil proceeds to NNPC (as its holding company) and the NNPC will in turn pay that into the Federation Account.”
Source: Punch