FX Crisis Reignites Questions Over NNPC’s Dollar Remittance

“Why is there no dollar coming in? Why is NNPC not able to bring in dollars? I am sorry this is the question that cost me my job and I will continue asking this question until NNPC fixes it up or until I die. Where are the dollars?”

These hard-hitting questions from Lamido Sanusi, former governor of the Central Bank of Nigeria, are intensifying scrutiny of the Nigerian National Petroleum Company Limited’s (NNPC) dollar remittance practices amid the lingering foreign exchange crisis in the country.

Last year, Saudi Aramco declared a profit of $160 billion, the largest-ever by a publicly traded firm. The NNPC, Nigeria’s equivalent of Saudi Aramco, blamed petrol subsidy for its inability to remit enough of the proceeds of oil sales to fund the government’s budget.

“We are no longer paying subsidies, so where are the dollars? It was under-recovery during the subsidy era and that has been stopped. So, where is the money? This was the issue I raised for which I was suspended. Well, you can suspend me again,” Sanusi said.

The petrol subsidy may have crept back in due to the rise in oil price and the naira depreciation but it doesn’t absolve the NNPC of its lack of transparency.

The Nigeria Extractive Industries Transparency Initiative (NEITI), an industry watchdog, said the NNPC did not remit over $2 billion to the federation account in 2021 before transitioning to a commercial venture.

This $2 billion consists of $722.596 million in unremitted dividends from the Nigeria LNG, $286.4 million of unremitted crude oil export sales, $871.145 million of unremitted domestic crude sales, $24.332 million of unremitted transportation revenue, $45.758 million of unremitted domestic gas proceeds and $859,583 of miscellaneous revenue.

NEITI also showed in the same year that the NNPC failed to remit $2 billion, and Nigeria’s oil and gas industry generated $23 billion in revenue.

It said the portion of total revenue that was eventually available for sharing by the federation in accordance with the revenue allocation formula stood at $13.2 billion, representing 57.27 percent of total revenue.

Reacting to the development, Mele Kyari, group CEO of NNPC Ltd, expressed disappointment with NEITI for going public with its report that NNPC failed to remit some monies into the federation account “instead of seeking clarification on any perceived gap in its assessment”.

Kyari said NNPC was not holding any public funds back and what NEITI reported as non-remittance was what was due to the company as payment for taking the burden of fuel subsidy on behalf of the federal government.

However, critics argue that NNPC’s dollar earnings, if fully remitted and managed effectively, could significantly bolster the country’s foreign exchange reserves and stabilise the exchange rate.

“Once upon a time, NNPC was the goose that laid the golden egg for Nigeria’s FX; where are all the dollars from crude oil operations?” a senior oil executive asked.

Kolawole Oluwadare, a deputy director at the Socio-Economic Rights and Accountability Project (SERAP), said Nigeria’s daily oil production, exportation, and the revenues generated have been mostly shrouded in secrecy.

“The NNPC has a legal responsibility to disclose the details sought. Transparency would increase public confidence that the revenues would benefit Nigerians,” he said.

Amid growing concerns, President Bola Tinubu has initiated a series of sweeping reforms to enhance accountability in the oil sector.

The recent directive involves a fundamental shift in responsibility for crude oil sales, transferring oversight from the NNPC to the CBN.

Reacting to this development, Kingsley Moghalu, a former deputy governor at CBN, in a post on X, said the move had “long been overdue”.

“President Bola Tinubu’s decision that official NNPCL revenues be deposited by CBN is a bold and necessary one and long overdue,” he said. “The opacity of the NNPC has long been a problem for Nigeria and its fiscal management, but no President has had the political will to do this.”