CONFIDEN TIAL DRAFT output at flow stations be metered henceforth. It would also mean that Royalty is due on all the oil in the pipeline network between the flow stations and the terminals. If this is implemented, and assuming that the oil in the pipelines between the flow stations and terminals is the equivalent of 20 million barrels, at an estimated oil price of $50/bbl and average royalty rate of 10%, monies potentially accruable to the Federation is in the order of $100million.
44. Domestic Crude Sales
1. No deductions should be made from the amounts payable to the Federation Account
No deductions should be made from the amounts payable to the Federation Account, and amounts due to the Federation Account should be settled gross. Furthermore, in the determination of subsidy amounts, a proper review of the Domestic Crude Oil allocations scheme should be made. The current basis of calculation does not seem to take into consideration, all of the elements involved in the domestic crude allocation and utilisation. These include proceeds from sale of refined products, proceeds from sale/exchange of unutilised domestic crude, proceeds from sale of other by-products of refining crude oil, cost of domestic crude, cost of refining, cost of importation of refined products, other incidental selling costs.
2. Domestic crude oil should be sold at international competitive prices The findings clearly show a pattern of under-pricing. This practice should be stopped forthwith and domestic crude should be paid for at competitive international market prices. Preferential prices should not be given to NNPC subsidiaries. The FGN should also block the leakages within the conversion process to refined goods in order to make the business of conversion profitable and worthwhile.
3. Compliance of NNPC with prevailing CBN exchange rates for remittance of crude oil proceeds The practice of remitting domestic crude oil payments to the Federation Account using exchange rates different from the CBN s should be stopped forthwith. The duty to comply with the 161