$49.8bn: Adoke Says It's Legal For NNPC To Deduct Costs Before Remitting To Federation Account

Source: thewillnigeria.com

SAN FRANCISCO, February 20, (THEWILL) - The Attorney General of the Federation, Mohammed Bello Adoke, on Thursday told the Senate that the Nigerian National Petroleum Corporation (NNPC) was not bound by law to remit all revenues derived from upstream petroleum operations to the Federation Account.

He also accused the suspended Central Bank of Nigeria (CBN) Governor, Malam Sanusi Lamido Sanusi, of attempting to subvert the constitutional powers of the Attorney General.

Adoke was before the Senate Committee on Finance, organisers of the public hearing to provide legal opinion on some of the issues raised during the investigative hearing on the alleged missing $49.

8bn oil funds.
He therefore, declared that despite the constitutional provisions requiring that all revenues be paid into the Federation Account, NNPC could still deduct its cost of business.

"Thus, it is my considered view that the provision of section 162 which requires all revenue to be remitted to the Federation Account does not preclude the deduction of NNPC's expenditure or cost of business.

'This is more so as the federating units do not contribute to the funding of upstream petroleum operations of the NNPC and its subsidiary," he said.

According to him, "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 dividend and its crude oil proceeds to the NNPC (as its holding company) and the NNPC will in turn pay that into the Federation Account.

'Consequently, what the NNPC is required to pay into the Federation Account is the 'net revenue' as opposed to the gross revenue.

'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.

'This position is further reinforced by the decision of the Supreme Court in A.

Ogun State & Ors v.
Federation (2002) 18 N.
R (Nigeria Weekly Law Report) (Part 798) 232 at 284, where the Court recognized 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.
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.

' The committee thus directed the CBN to provide a more specific assertion on how much it alleged that NNPC ought to pay to the Federation Account out of the $6 billion it said had been paid to the Nigeria Petroleum Development Company (NPDC).

The Committee had sought to know the legality of such transfer.

Meanwhile, the NPDC said on Thursday that the only money it deducted was what was budgeted for its operations.

Managing Director of NPDC, Victor Briggs, however promised to provide details of its budget to the committee before the end of this month.

Adoke also said that the NNPC could legitimately transfer its participating interest in the Oil Mining Lease to its wholly owned subsidiary, the NPDC.

On alleged attempt by Sanusi to undermine his powers, Adoke said: "The resort by the CBN governor to paid legal opinion from private counsel on the interpretation and application of certain constitutional provisions, the enabling statutes of government wholly owned corporations, regulatory agencies and policies, is not only irregular, but a deliberate attempt to whittle down the powers of the Attorney General of the Federation as the Chief Law Officer of the Federation as enshrined in section 150 of the constitution.

" Sanusi had in a leaked letter to President Goodluck Jonathan alleged that the NNPC had short changed the federation account to the tune of $49.

8 (USD).
However, his unguarded outbursts and flip flops over the controversy are believed to have led to his suspension by the President.