NEITI REPORT: NNPC CORNERED N2.1TRN OIL PROCEEDS IN 2 YEARS

In a rather consistent trend, the 2009-2011 report of the oil
and gas sector audit conducted by the Nigeria Extractive Industries
Transparency Initiative (NEITI) has again revealed that the federation lost
about N2.153 trillion to unwholesome activities of the Nigeria National
Petroleum Corporation (NNPC).

The report released yesterday also showed that the federal
government earned a total of $143.5 billion, about N22.24 trillion (at N155 to
$1) from the oil and gas sector between 2009 and 2011.

A breakdown of the revenue lost to the activities of the NNPC as
contained in the report showed that financial flows from the Nigeria Liquefied
Natural Gas (NLNG), including  dividends and repayment of loans, of which
$4.84 billion was received by the NNPC, was not remitted by the Corporation.

The report which was presented by NEITI chairman, Ledum Mitee,
confirmed that the amounts had not been remitted either to the CBN/NNPC JP
Morgan accounts or to the federation account.

It stated that “this has been a recurring issue as an amount of
$3.996 billion was also reported as received but not remitted by NNPC in
previous audits.”

The audit exercise, which commenced on March 1, 2012, also
revealed that NNPC owed N1.305 trillion to the federation account as at
December 31, 2011.

The report further accused the NNPC of continuing to
short-change the federation through inaccurate conversion rate to the tune of
N98.3 billion.

“The derived average conversion rate by NNPC differs from the
annual average CBN rate and, therefore, results in apparent losses of N98.3
billion during the years under review,” it stated.

The audit, which was conducted by indigenous firm, Sada Idris
& Co., also revealed that the NNPC still drew subsidy payments directly from
domestic crude sales before remittances to the federation account, noting that,
as a result, the sum of N1.40 trillion was claimed during the period by NNPC as
oil subsidy payments.

This, it noted, clearly contradicts the practice where subsidy
payments are claimed from the Petroleum Support Fund (PSF) through the
Petroleum Products Pricing Regulatory Agency (PPPRA) by all qualified oil
marketing companies.

According to the report, subsidy payments claimed by NNPC
increased by 110 per cent within the period of review.

“It rose from N198 billion in 2009 to N416 billion in 2012. In
2011 alone, it rose to N786 billion. The increase between 2009 and 2011 alone
was 186 per cent,” the report stated.

According to the NEITI review, the revenue that accrued to the
federation from the oil sector within the period was mostly made up of proceeds
from crude oil sales, royalty, signature bonus, concession rentals, gas flaring
penalties as well as petroleum profit and companies income taxes.

A breakdown of the earnings showed that crude oil and gas sales
within the period of review amounted to $81.9 billion, while a total of $45.7
billion accrued to the government from Petroleum Profit Tax (PPT), royalty,
signature bonus, gas flaring penalties and concessional rentals.

Revenue from companies’ income tax, value added and withholding
taxes within the period amounted to $6.1 billion while the sum of $4.8 billion
was reported as revenue from dividends and repayment of loans by NLNG.

It was observed that the earnings represented a decrease of 4
per cent in total financial flows from what government earned within the same
period of 2006 – 2008 due to adjustments in oil price.

“Unresolved differences between what government received and
what companies claimed that they paid within the period was $68.4 million while
the sum of $311.85 million, representing flows to the federation account, were
claimed to have been paid by covered entities to the relevant accounts, but
such payments were not confirmed to the CBN bank statements,” the report noted.

The covered entities were all major oil and gas companies,
including Shell, Total, Agip, and Chevron, among others, as well as federal
government agencies which either receive, regulate or manage revenue accruing
from the oil and gas sector, such as CBN, FIRS, NNPC, DPR and the OAGF.

Mitee, however, disclosed that NECONDE Energy ltd, SEPTA Energy
Ltd, Energia Ltd and Emerald Energy Resources refused to cooperate with NEITI
and its auditors during the process, and gave assurance that NEITI would impose
sanctions on the companies in accordance with the enabling Act.  

Giving the report credibility, Mitee said: “Let me explain that,
by the very nature of the NEITI process, all the companies and government
agencies covered by the audit were actively involved at all stages, including
the crucial stages of reconciliation and validation of data.

Therefore, this report being presented now is based on the
audited account of the companies as well as information and data statutorily
provided by relevant agencies through a designed template mutually agreed upon
by NEITI and covered entities.”

Efforts to get reactions from the NNPC were unsuccessful as the
acting spokesperson of the Corporation, Ms. Tumini Green, did not answer calls
to her phone or respond to a text message sent to her.