Page 15 - DMEA Week 30 2021

DMEA NEWS IN BRIEF DMEA

forecast on four key assumptions which are shall not, without the approval of the National Refinery is a blatant disregard of section 16
the following: Brent crude oil prices: $63/per Council of Ministers, borrow any sum of (2) (c) of the Constitution which provides
barrel in 2021, $55/per barrel in 2022 and $53/ money whereby the amount in aggregate that “the economic system is not operated in
per barrel in 2023-2024; Upstream production outstanding on any loan or loans at any such a manner as to permit the concentration
recovering to around 13 million barrels of oil time exceeds such amount as is for the time of wealth or the means of production and
equivalent per day by 2022; Annual dividend being specified by the National Council of exchange in the hands of few individuals or of
pay-out of $75bn until 2024; and Capital Ministers.” From the information at our a group.”
expenditures (Capex) at $35bn-$37.5bn per disposal the NNPC did not seek the approval TPAP-M noted that any loan given to the
annum in 2021-2024. of the Federal Executive Council to borrow Corporation is unlawful and a contravention
The report says that Saudi Aramco’s the said sum of $3.2bn. of the Act guiding borrowing in the country.
business profile is very strong. Its lifting Furthermore, under the current political “Therefore, any lending carried out by any
costs ($3/boe in 2020) and upstream Capex dispensation the power of government at financial institution in contravention of the
($4/boe) are much lower than those of all tiers to borrow is regulated by the Fiscal Act is unlawful in every material particular.
international integrated majors and some Responsibility Act, 2007. As one of the According to the Management of the NNPC,
national oil companies — a significant parastatals under the Ministry of Petroleum arrangements had been concluded with a
advantage in times of volatile oil prices. The Resources the NNPC is required to comply consortium of financial institutions that
business profile also benefits from a very large with the provisions of the Fiscal Responsibility would provide the loan. The attention of such
scale of production and long proved reserve Act pursuant to section 21 thereof. Indeed, for institutions ought to be drawn to section 45
life in excess of 50 years. the avoidance of doubt, the NNPC is one of of the Act which states that “All banks and
SAUDI GAZETTE the Corporations, agencies and government- financial institutions shall request and obtain
owned companies listed in the Schedule proof of compliance with the provisions of
made pursuant to Section 21 of the Act. By this Part before lending to any Government
REFINING virtue of section 41 (1) (a) of the Act the in the Federation,” the statement said, “The
power of Government to borrow is limited to movement insisted that the “NNPC would
TPAP-M faults NNPC’s “capital expenditure and human development, have been required to “specify the purpose for
which the borrowing is intended and present
provided that, such borrowing shall be on
proposed acquisition of concessional terms with low interest rate and a cost-benefit analysis, detailing the economic
with a reasonable long amortization period
and social benefits” of the loan of $3.2bn to
stake in Dangote refinery subject to the approval of the appropriate invest in a private Refinery when the nation’s
refineries have been abandoned.”
legislative body where necessary”. It is
The Peoples Alternative Political Movement undoubtedly clear that the federal government TRAP-M went further to say that having
(TPAP-M), has faulted the decision of the did not seek the approval of the National done its findings, it discovered that the federal
Nigeria National Petroleum Corporation Assembly to borrow the said sum of $3.2bn. government granted approval for the Dangote
(NNPC) to acquire 20 per cent stake in “In view of the undeniable fact that the Refinery to be sited in the Free Economic
Dangote refinery. NNPC has neither sought the approval of the Zone in Lagos, granted duty waivers in
In a statement by Comrade Omotoye Federal Executive Council and the National respect of the imported machinery and special
Olorode for TPAP-M Secretariat, the Assembly to borrow the sum of $3.2bn to concession to purchase foreign currencies at
movement said as a government agency, invest in Dangote Refinery we call on the the official rate. Thus, the contribution of the
NNPC lacks the powers to take a loan to fund Honourable Minister of Petroleum Resources federal government to the Dangote Refinery is
a private business. to restrain the Management of the NNPC to more than $4bn.
“However, upon a critical review of the stop the illegal transaction without any further “TPAP-M wants to remind Nigerians
relevant provisions of the Constitution and delay. However, if the NNPC is allowed to about the looting they call privatization
other relevant statutes TPAP-M has found take the loan TPAP-M will not hesitate to which handed the banking and power sectors
that the NNPC lacks the power to take a invoke section 51 of the Fiscal Responsibility especially to those who ruined these sectors
loan from financial institutions to fund the Act which states that “A person shall have which then continue to be saved (“bailed out”)
enterprise owned by a private corporate legal capacity to enforce the provision of this from complete collapse with public funds!,” it
body or individual. It is pertinent to point Act by obtaining prerogative orders or other added.
out that the power of the NNPC to borrow remedies at the Federal High Court, without BLUEPRINT
is circumscribed by section 82 of the NNPC having to show any special particular interest.”
Act which provides that “The Corporation “The planned investment in the Dangote

Week 30 29•July•2021 www. NEWSBASE .com P15