Tuesday, 17 July 2012

After operating for several years without a board of directors, President Goodluck Jonathan Monday approved a new board for the Nigerian National Petroleum Corporation (NNPC). The reconstitution of its board coincides with a revealing audit report, which according to Reuters, has exposed the magnitude of improper loans running into millions of dollars that were given out by NNPC to the Federal Government and some of its agencies.
The new board, which is chaired by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has as members the Permanent Secretary, Federal Ministry of Finance, Mr. Danladi Kifasi; Group Managing Director, NNPC, Mr. Andrew Yakubu; Alhaji Abdullahi Bukar; and former Head of Service of the Federation, Mr. Steven Oronsaye. Others are: Professor Olusegun Okunnu; Mr. Daniel Wadzani; Group Executive Director, Finance and Accounts, NNPC, Mr. Bernard O.N. Otti; and Group Executive Director, Corporate Services, NNPC, Dr. Peter S. Nmadu.
A statement by the presidents Special Adviser, Media and Publicity, Dr. Reuben Abati, said the constitution of the board was in furtherance of the Federal Governments commitment to reforming and improving the oil and gas industry for the benefit of the people of Nigeria. President Jonathan charged members of the new board to discharge their duties efficiently and with integrity in order to enhance the positive transformation of the petroleum sector. It is expected that with a reconstituted board, NNPC will be better managed and the board will institute corporate governance standards that will shield it from political interference and demands that it provides loans to ministries, departments and agencies of government.
It was gathered that the yet-to-be published audit report was conducted by an independent organization at the instance of the Federal Government, as part of governments renewed commitment to improve transparency in NNPC. The organization was given unhindered access to the accounts of the NNPC in the course of its investigations.
The audit report, which is quite revealing, shows that the Federal Government owes the NNPC for improper, informal loans used to cover a range of expenses, from a presidential helicopter to maritime security. For example, NNPC paid for a $14 million presidential helicopter, and is owed $106 million by the Power Holding Company of Nigeria (PHCN) and $124 million by the Nigerian Maritime Administration and Safety Agency (NIMASA). The report will reveal outstanding debts owed NNPC by other ministries and agencies of the government.
When contacted by THISDAY, the acting spokesman of the corporation, Mr. Fidel Pepple, said relevant information concerning the issue was not immediately available to him. THISDAY, however, gathered that PHCNs indebtedness to NNPC was largely for gas supply by the Nigerian Gas Company (NGC), a subsidiary of the corporation, to the power stations.
NNPCs annual budget is approved by the National Assembly but it collects revenue from oil sales, which is paid into the Federation Account. However, the revenue is allegedly being tampered with before it is paid into the coffers of the government, raising transparency issues. State governors last week threatened court action against the Federal Government over illegal tampering with oil revenues that should be shared by the three tiers of government. The Ministry of Finance and the presidency did not respond to requests by Reuters for reaction. We are aware of many of these debts, obviously it isn't an ideal situation, an NNPC source said on condition of anonymity.

Investors Scramble for Oil, Gas Projects over Imminent PIB Passage

Approval of the newly-drafted Petroleum Industry Bill (PIB) by the Federal Government and hope of its speedy passage by the National Assembly have rekindled investors confidence in the Nigerian Oil and Gas sector, a source at the Petroleum Ministry told THISDAY at the weekend.
Activities in the sector have been at very low ebb since 2009 due to delay in the PIB passage. Former Chairman, Senate Committee (Upstream), Lee Maeba disclosed last year that the industry had lost in excess of $28 billion in investments. Most of these investments, he said had found their way into neighboring countries including Angola, Ghana and Burkina Faso, which have more stable policies. But the source hinted that potential investors from China, Korea and Russia have started approaching the Nigerian National Petroleum Corporation (NNPC) for discussions on possible investments in the petroleum sector.
THISDAY gathered that more companies are indicating interest to invest on various gas projects, while others that suspended their proposed investments, due to uncertainties in the oil reforms bill are seeking to renew interests on such projects.
The delay in the passage of the PIB had stalled the proposed $2.5 billion investment in Nigerias oil and gas sector by Gazprom, Russian gas giant and worlds largest gas producer. The Memorandum of Understanding (MOU), which the gas giant signed with the NNPC in September 2008, covered petroleum, gas exploration and power. However, more than four years after, Gazprom is yet to make any commitment regarding those projects, scheduled to come on stream in 2015, due to the uncertainties in the reforms bill.
Gazprom Chief Executive Officer, Vladimir Ilyanin, had in 2010 blamed the delay in the take-off of the project, originally aimed to provide gas for power generation on the non-passage of the PIB. He said: The delay in passing the bill is a major impediment. We need clear rules and a level-playing ground, said Ilyanin.
Nigerias proven gas reserve is 187 Trillion Cubic Feet, with about 600(TCF) Trillion Cubic Feet additional in undiscovered gas potential. Nigeria is currently the worlds seventh largest in terms of proven gas reserves, but with the estimated undiscovered potential, could easily be within the worlds top three in gas reserves. French oil giant. Total and Royal Dutch Shell were among the foreign oil companies that have shown interest in tapping into Nigeria's gas reserves.

Skye Bank Records N8.2bn Profit in Six Months

Skye Bank Plc yesterday released its financial performance figures for the half year ended June 30, 2012, showing improvements over the figures of the 2011 corresponding period. Gross earnings stood at N59.7 billion in 2012, indicating a growth of 22 per cent above the N48.9 billion posted in 2011. Profit before tax rose from N7.321 billion to N9.089 billion, while profit after tax grew by 39 per cent to N8.187 billion, from N5.857 billion in 2011. Earnings per share was 61 kobo compared with 44 kobo in the corresponding period of 2011.
The equity of Skye Bank Plc rose by 1.5 per cent or five kobo to close at N3.07 as investors reacted positively to the results. Commenting on the results, analysts at FBN Capital Limited said “we find these results reassuring and believe that they underpin our view that the banking sector recovery is well underway. To our minds, Skye Bank’s N13.9 billion profit after tax forecast for nine months as well as its 15 per cent return on equity (ROE) target for the full year appear within reach.
Meanwhile, the Nigerian Stock Exchange (NSE) All-Share Index rose further as the bulls consolidated their hold on the back of the return of more foreign investors to the market. The index appreciated by 1.04 per cent to close at 22,974.1, while the market capitalisation of equities added N73 billion to close at N7.335 trillion. Thirty-three stocks recorded price appreciation led by Lafarge Cement WAPCO Nigeria Plc with N1.50 to close at N43.50 per share. Conversely, Nigerian Enamelware Plc led the 12 price losers with N1.80 to close at N34.39 per share.

Energy sector investment gets boost as Russian firm arrives Nigeria

The drive to attract investment to the energy sector by government received a boost at the weekend, with the arrival of a Russia-based energy firm- Umek Insulator, in Nigeria. In collaboration with another Nigeria-based energy firm, Afriwide Consult, the firm has already begun talks with the Federal Government and many state governments with a view to establishing a business relationship that would reverse the negative trends in the power sector.
Speaking to journalists at the end of a round-table discussion in Abuja, a member of the board of directors of the company, Alexey G. Orekhov, said that his team was in Nigeria to explore ways of establishing a long-term partnership with government and the private sectors.
We want to explore possibilities of business development in Nigeria, Alexey stated, adding, we want to establish partnership with private companies and government across all levels. We have interacted with some government agencies on how the Federal Government is opening up the power sector through privatization. We are going to establish a production plant in the country when this business agreement is concluded.
Speaking on the investment drive, Dr. Gbenga Oduntan, the director of Afriwide Consult and an expert in international and energy law said that his company had created the link-bridge between the Russian investors and the business community in Nigeria.
In the next three years, we are talking about more than $100 million worth of investments with Russian group of companies that will come into Nigeria. If there is any aspect of electricity generation or distribution that Nigerians need, we are able to draw up expertise from Russian companies as well as funds. We are building a strong partnership and in no time, we will cover the whole of Nigeria and the entire West Africa region.
Gbenga also hinted that arrangements had been made with some state government on how to partner on Independent Power Project (IPP). Just on Thursday, he stated, we agreed with Ekiti State government to embark on an IPP in the state. It is a major IPP project. It involves powering streets across the whole of Ekiti State. That is just one out of many such partnerships. We are also in discussion with Ogun State for a similar partnership. We have also started talking to Lagos State.

Presidency disowns PIB in circulation

Abuja The Presidency, yesterday, disowned the version of the Petroleum Industry Bill presently in circulation that has  been published on some websites, saying PIB which was approved by the Federal Executive Council recently was still undergoing finishing touches by relevant government agencies. A statement in Abuja by Special Adviser to the President on Media and Publicity, Dr Reuben Abati, advised all stakeholders to ignore the purported PIB in circulation as it was fake.
According to Abati, on completion of work on the Bill, it would be sent to the National Assembly on the seal of the President. The statement read: The Presidency has noted with concern and dismay that a document alleged to be the new Petroleum Industry Bill is now in circulation and has even been published on some websites. Before the country is assailed once again with talk about the promulgation of this very important national law being hindered yet again by the existence of multiple versions, the Presidency wishes to categorically disown the document currently being circulated and published as the new Petroleum Industry Bill.
Following the consideration and approval of its contents by the Federal Executive Council at its meeting last week, the authentic new Petroleum Industry Bill is still being finalised by relevant government departments and readied to be forwarded to the National Assembly by President Goodluck Jonathan. Upon its delivery to the National Assembly under the official seal of the President, the authentic new Petroleum Industry Bill will be available to all interested parties. The general public and all stakeholders in Nigerias oil and gas industry are, therefore, advised to ignore the document currently in circulation as it is totally fake and lacking in authenticity.
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