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Following the $25bn contract row that ravaged the Nigerian National Petroleum Corporation (NNPC), the corporation will now go into the Treasury Single Account (TSA) and all its multiple accounts closed.

A government source reportedly said “The President is actually not blind to the rot in NNPC, and he is addressing the challenges gradually. He is not granting anybody indulgence in the corporation. For instance, the President has directed the NNPC to close all its multiple accounts in Nigeria and abroad. All the revenues of the corporation are now to be paid into the Treasury Single Account (TSA).

“The procedures of closing all the accounts have started but not fully accomplished. Compliance is being fully monitored by the government.”

On some issues raised in the August 30 memo of the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, the source added: “The government will consider the observations as part of the ongoing reforms of the agency.”

In a related development, Vice President Yemi Osinbajo has released the details of the approvals he granted on the financing arrangements to replace the traditional Joint Venture Cash Call obligations.

The Vice President made the clarifications in a statement issued by the Senior Special Assistant to the President on Media & Publicity (Office of the Vice President), Mr. Laolu Akande.

The statement said: “Our attention has been drawn to some misleading reports suggesting that the Vice President approved certain procurement contracts for the Nigerian National Petroleum Corporation (NNPC).

“This is totally false as the approvals referred to were actually for financing arrangements in replacement of the traditional Joint Venture Cash Call obligations.

“In the statement of NNPC recently released in response to allegations made by the Minister of State for Petroleum Resources, reference was made to various financing arrangements with NNPC’s Joint Venture Partners, which were approved by the Presidency under the current administration.

“There were three such loan financing arrangements made for: (i)NNPC/Chevron Joint Venture Project; (ii) NNPC/Chevron Accelerated Upstream Production Project; (iii)NNPC/Shell/Total/Agip Joint Venture Accelerated Upstream Production Project.

“While the first was approved by the President in person, the second and third were approved by the Vice President as Acting President.

“The NNPC Act, Cap. N. 123, Laws of the Federation, (updated to 2010), authorises the Corporation to borrow such sums as it may require in the exercise of its functions.

“Sub section (2) goes further to specify the only precondition: “The Corporation shall not, without the approval of the President, borrow any sum of money whereby the amount in aggregate outstanding on any loan or loans at any time exceeds such amounts as is for the time being specified by the President.”

“Furthermore, subsection (4) provides that “Where any sum required aforesaid – (a) is to be in currency other than Naira; and (b) is to be borrowed by the Corporation otherwise than temporarily, the Corporation shall not borrow the sum without the prior approval of the President.

“These financings are purely commercial loans obtained by NNPC and its Joint Venture partners, mainly from local and foreign banks, to perform their exploration and production activities. Repayments are also made out of revenues from the crude oil produced directly by the funded project.  Unfortunately, they are being confused with contracts for goods and services.

“The alternative financing arrangements became necessary as inability of Government to meet its cash call obligations had stalled further investments in the petroleum sector and reduced the country’s production capacity.”

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