The Nigerian National Petroleum Company Limited (NNPC Ltd.) has denied recent reports that it owes $6.8 billion to international oil traders and has not remitted any revenue to the Federation Account since January 2024.
In a press release issued on Sunday, 2024, Femi Soneye, the Chief Corporate Communications Officer of NNPC Ltd., addressed these allegations, providing detailed clarifications to set the record straight.
The state oil company explained that in the oil trading business, it is standard practice to engage in transactions on credit. As a result, it is normal for balances to exist at various points in time. However, the company emphasized that it manages these credit lines responsibly.
“NNPC Ltd., through its subsidiary, NNPC Trading, has many open trade credit lines from several traders. The company is paying its obligations of related invoices on a first-in-first-out (FIFO) basis,” the statement read.
This means that the company prioritizes payments based on the order in which they were received, ensuring that all obligations are met promptly.
The company said the clarification is crucial because the oil trading business involves complex financial arrangements, and misunderstanding these practices can lead to inaccurate reports. By explaining the FIFO payment system, NNPC Ltd. aims to reassure stakeholders that it is managing its financial responsibilities effectively and that any outstanding balances are part of normal business operations.
The allegation that NNPC Ltd. has not remitted any money to the Federation Account since January 2024 was also addressed in the press release. NNPC Ltd. stated that it regularly remits taxes to the Federal Inland Revenue Service (FIRS), contrary to the claims made in the media report.
The company highlighted its significant role as a major contributor to Nigeria’s tax revenue. “NNPC Ltd. and all its subsidiaries remit their taxes to the Federal Inland Revenue Service (FIRS) regularly. This is in addition to payments of CIT to road contractors under the Road Investment Tax Credit Scheme,” the statement continued. This scheme allows companies to use their tax liabilities to finance critical road infrastructure, contributing to national development.
NNPC Ltd. also emphasized that it is the largest contributor to the tax revenue shared monthly at the Federation Account Allocation Committee (FAAC). The FAAC is responsible for distributing revenues among the three tiers of government—federal, state, and local—based on a predetermined formula. NNPC Ltd.’s contributions are therefore vital to the functioning of government services across the country.
The company further clarified that it has no regulatory role in this process. Instead, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) is the independent body responsible for these activities.
“NNPC Ltd. has no role whatsoever as it is not a regulator,” the statement asserted.
“NNPC Ltd. is not averse to inquiries by the media into issues on and around its operations before dissemination to the public either through the print or electronic channels of communication,” the statement said.
NPC Ltd. is Nigeria’s state oil company and plays a central role in the country’s economy. Established in 1977, the company is responsible for the exploration, production, and marketing of petroleum and petroleum products. Over the years, NNPC Ltd. has undergone several reforms aimed at improving its efficiency and transparency.