NNPC failed to remit N2.23trn to federation account in 2005 – 2013 – NEITI

 
Minister of solid minerals and chairman of Nigeria Extractive Industries Transparency Initiative (NEITI), Kayode Fayemi, has disclosed the non-remittance of $12.9 billion (N2.23trn) by the Nigerian National Petroleum Corporation (NNPC) to the Federal Government between 2005 and 2013.

The disclosure, which was contained in an audit report carried out by NEITI and focused on all aspects of the extractive industries, showed that the funds were the sum of dividends, interest and loan payment from the Nigeria Liquefied Natural Gas (NLNG).

The report indicted the NNPC for failing to remit $3.8 billion revenues for itself and its subunit in 2013.


According to Fayemi, “The report revealed that NLNG paid the sum of $1.289 billion as the dividend, interest and loan repayment for 2013. NNPC acknowledged receipt of this amount but did not remit it to either the Federal Government of the federation.

“However, it is important to also note that the 2013 figure brings to $12.9 billion the total NLNG payments received by the NNPC between 2005 and 2013, but not remitted by the NNPC to the Federal Government or the federation.

“The report also showed that revenue inflows from the oil and gas sector into the federal government coffers in 2013 were about $58.07 billion. The decline was attributed to slide in sales of oil and gas which was a result of divestment of federation equity in some oil mining leases, OMLs, crude oil losses as a result of pipeline vandalism, destruction of production facilities and theft of crude products.”

However, industry analysts however said NEITI report was not related and may have been overtaken by events.

Explaining the reasons for the loss, the minister noted: “These revenues were broken down as follows: sum of $3.8 billion and N358.3 billion as outstanding revenues from NNPC and its sub-units in 2013. These outstanding payments were due to unpaid consideration from the divested OMLS (Oil Mining Licenses), cash call refunds from NAPIMS (National Petroleum Investment Management Services) and NPDC (Nigerian Petroleum Development Company), lifting from Nigerian Agip Oil Company Joint Venture (NAOC) JV, etc.

“Total crude oil production in 2013 was 800,488,000barrels. This was made up of production from all sources and various agreements. However, the total volume of crude oil lifted through the different contract arrangements was 800,338,000 barrels. The difference of 150,000 barrels is because not everything produced is lifted” read the report in part,” according to the report.

On the domestic crude allocation and swap arrangement, the report hinted that continuous allocation of 445,000 barrels per day to refineries was not beneficial to the federal government because the refineries were operating at a capacity of about 24 percent. It further stated that, in order to meet the short fall in product supply, NNPC introduced offshore processing agreement.

It further explained that the transactions were not cost-efficient as the value of the products received minus all the costs invited was still less than the value of the original crude.

On the period under review, the report hinted that the value of crude oil losses to the federation as reported by three JV companies, in 2013 is put at $4.7 billion.

For the solid mineral sector, the report noted that revenues from the sector by 7.6 percent from N31.1 billion in 2012 to N33.9 billion in 2013 but it noted that payments from the sector were not well dispersed.

“Five companies accounted for 93 percent of the reconciled payments. These were Dangote Cement, 53 percent; WAPCO, 19 percent; Ashaka Cement, 10 percent; UniCem, 7 percent; and CCNN 4 percent. Also, five states accounted for 72 percent of the total payments for solid minerals in 2013. These were Ogun State, 25 percent; Kogi, 25 percent; FCT, 14 percent; Cross River, 9 percent; and Oyo, 4 percent,” the report stated.

The report recommended that the outstanding payments to the federation account. Second, the government should investigate the status of NLNG dividends.

It added that “NNPC should discontinue alternative importation arrangements and limit itself to the export of crude and import of refined products; NNPC should abide by the federal government financial regulations, and always comply with the 90-day credit period.”

While acknowledging lack of clarity on legal and tax regime, inaccuracy of production data amongst others as highlights of the sector, the report urged government to develop procedures and systems to collect and verify production data declared by companies.

Efforts to get reactions of NNPC failed as the Group General Manager, Public Affairs, Garuba Deen Mohammed did not pick his call while a text message that was sent to him was not responded to.