Pipeline repairs cost Nigeria N112bn in 2016 – NNPC

Over N112 billion revenue from domestic crude oil sales that should have gone to the Federation Account was spent by the Nigerian National Petroleum Corporation (NNPC) to fix vandalised pipelines last year.

Figures obtained from NNPC’s latest operations report revealed that the monies were spent between January and December 2016 under the heading, “Pipelines Repairs and Management Cost.”

These costs are NNPC’s internally incurred expenses which are funded from domestic crude oil sales revenue before the monies are remitted to the Federation Account.

NNPC in replies to past audit enquiries categorized pipeline maintenance and management costs to include pipeline vandalism repair cost, pipeline security and community costs, salaries and upfront benefits of staff, among others.

A comparative analysis of past reports showed that the cost of pipeline repairs rose by N9 billion from N103 billion in 2015 to N112 billion in 2016.

In 2016, repairs of breached pipelines denied the Nigerian coffers the highest amounts of over N14 billion in the months of February, N14.8bn in July and N14.9 billion in August. The lowest amount of N880 million was spent in January before the uptick of militant attacks on pipelines.

Further analysis of the reports showed that the cost of pipeline repairs remained high in 2016 despite the fact that the “NNPC recorded a marked reduction in the cases of pipeline sabotage.”

The reports showed that a total of 2,560 vandalised points were recorded between January and December 2016 while “a total of 2,832 vandalised points were recorded between January and December 2015.”

NNPC said the huge costs of fixing the pipelines continued to cost it and the nation huge amount of financial and human resources.

Pricewaterhouse Coopers in a 2012/2013 forensic audit, reviewed and analysed pipeline repairs spending claimed by NNPC and found that most of the expenses were unsubstantiated cost.