DEBUNKING THE TOP 5 MISINFORMATION ON THE PETROLEUM INDUSTRY ACT (PIA) 2021:
1. NNPC is being privatized?
No, NNPC is not privatized. NNPC is only becoming a limited liability company subject to CAMA, to be named NNPC Ltd (C will also now mean Company, not corporation). The share is still 100% government owned.
A major difference is, prior to PIA, NNPC had its own law: NNPC Act 1977, which guided it. Now, NNPC Ltd will be subject to law guiding other companies in Nigeria. PIA repeals (abolishes in layman’s term) the NNPC Act.
NNPC Ltd will run like a company with full profit/commercial motive (did it ever have loss motive?). 20% of its profits to be retained for its own growth and 80% remitted to government as its shareholder.
2. 30% frontier exploration fund (FEF) is bigger than 3% host community levy (HCL)
There are two things wrong with this info. Firstly, the bases of computation are different. The basis for FEF is profit oil/gas, the basis for HCL is prior year operating expenses.
Secondly, the 30% FEF applies only on NNPC’s profit oil/gas, while 3% HCL applies on opex of all upstream companies in Nigeria and there are over 50 of them. So mere comparison of the headline % without regard to bases and number of companies in each bucket, is misinformation.
Noteworthy that I also personally think that that commitment to FEF is too big in light of country’s financial situation, dire need of revenue for other things, but the facts stated above need to be corrected.
3. NNPC to contribute 30% of its profits to FEF
This is wrong. There is a difference btw NNPC profits vs NNPC profit oil & profit gas. The former is the corporate accounting profit, as in when all its expenses as a company are deducted from its revenues, what is left.
This is not the profit the PIA is talking about as the basis of the 30% of FEF. What PIA is talking about is profit oil and profit gas from NNPC’s upstream oil & gas contracts (production sharing, profit sharing & risk sharing contracts).
Profit oil/gas is what is left after
royalty, tax and operating cost are deducted from crude oil or crude gas production in any of the contract types above. It’s an upstream thing, so it means profits from NNPC subsidiaries like NGC are not part of it. In short, it’s not the corporate profit of NNPC as group.
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Source:: Nigerian Chatter(Visited 1 times, 1 visits today)