FACT CHECK: Claims That NAPIMS Spent N89.9bn On ‘Public Relations’ FALSE

On Wednesday, there were reports in some media platforms (NOT THE WHISTLER) that the management of the National Petroleum Investment Management Services spent the sum of N89.9bn on ‘Public Relations’ in 2021.

The Report had claimed that the amount represented an increase of 335 per cent against the N20.69bn spent by the Company in 2020.

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But in coming up with the N89.9bn claimed to have been spent on “Public Relations,” the Reports published in the media platforms did not take the modus operandi of NAPIMS into consideration.

As a background, NAPIMS manages Nigeria government’s investments in the upstream sector, to maximize return on its investments through effective supervision of the Joint Venture, Production Sharing Contract and Sharing Contract using best industry practices.

It engages in direct exploration of the frontier basins in order to open it for investors. The Company also represent the Nigeria government’s equity holdings through the Nigerian National Petroleum Company Ltd in the Joint Venture operations with Shell Petroleum Development Company Limited, Mobil Producing Nigeria Unlimited, Chevron Nigeria Limited, Total Exploration and Production Nigeria Limited, Nigeria AGIP Oil Company Limited, and Pan Ocean Oil Corporation.

In addition, the Company also supervises the mechanism of funding the Joint Venture Operations through the Cash-Call Process.

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Findings by THE WHISTLER showed that the Company alone could not have wholly incurred such expenditure without its Joint Venture Partners.

For instance, analysis of the Audited Financial Statements showed that NAPIMS represents the equity share in the 13 Joint Venture arrangements in the upstream sector of Nigeria’s Oil and Gas industry.

The implication of this is that all the accrued revenues from its equity crude oil and gas lifted, and other incomes and expenditures incurred by all the Joint Venture Operators are consolidated to prepare the NNPCL/NAPIMS Audited Financial Statements in respect of the NNPCL Upstream Petroleum activities.

What this means is that the amount of N89.92bn reported by some media outlets as ‘public relations’ represents NNPC/NAPIMS equity share of expenditure on Community Development and Public Relations by all Joint Venture Operators in the Upstream Oil and Gas sector.

For the sake of clarity, the bulk of this expense relates to NNPCL/SPDC JV made up of NNPCL (55%), Shell (30%), TOTAL Energies (10%) and the Nigeria Agip Oil Company NAOC (5%).

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Further analysis of the Audited Financial Statement showed that a significant component of the NNPCL/SPDC JV expenditure is the N83,835,000,000 ($207m) spent on spillage clean-up activities, rehabilitation of polluted areas, and pollution compensation in the Niger Delta Region.

A breakdown of this amount showed that N40,095,000,000 ($99m) was spent for the Ogoni Clean-up under the auspices of HYPREP; while N25,515,000,000 ($63m) was used to settle the Agbara Judgement fine.

Further breakdown of the expenses revealed that N6,075,000,000 ($15m) went for Ogoni Restoration Project; while N12,150,000,000 ($30m) was incurred as expenditure under Global Memorandum of Understanding Fund for Host Communities (GMOU).

Similarly, the balance of N6,095,250,000 ($15.05m) of the total reported amount of N89,928,429,000 ($222.05m) was the expenditures incurred by the other 12 Joint Venture Companies.

It must be noted that NAPIMS’s expenditure only accounts for N88m ($217,284) which represents only 0.098% of the reported N89,928,429,000 ($222.05m).

Another claim in the media reports is that the department spent N11.76bn on consultancy, N2.22bn on transportation and travelling cost, N65m and N1.1bn on advertisements and entertainment, respectively, in the year under review.

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But analysis by THE WHISTLER of the Audited Financial Statement showed that this expenditure line on consultancy, transportation and travelling is the consolidation of costs from all Joint Venture arrangements.

What this means is that this expenditure line collectively represents the NNPCL/NAPIMS equity share of such expenditures incurred by the various JV Operators as recorded in the 2021 Audited Financial Statement.

Based on the accounting framework, the expenditures incurred by NNPCL/NAPIMS Joint Venture Operators on behalf of each JV are based on approved annual work programmes, budgets, and monthly reported expenses.

Such expenditures are also validated through the monthly, quarterly, half-yearly and Full Year Performance review sessions to determine NNPC/NAPIMS equity.

In addition, all expenses from the NNPC/NAPIMS JV Operators are audited annually before they are included in the Audited Financial statement.

CONCLUSION:


Based on the foregoing, it can be stated that the claims made in the media reports that NAPIMS spent N89.9bn on ‘public relations’ is FALSE.

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