Recovering unremitted $19 billion from NNPC


Group Managing Director, NNPC, Dr. Joseph Dawha

UNDER past administrations, especially the Goodluck Jonathan epoch, calls for the recovery of outstanding revenues from oil companies fell on deaf ears. The demand resonated recently in the Nigeria Extractive Industries Transparency Initiative reminder to President Muhammadu Buhari of the $19.1 billion still outstanding, part of which the Nigerian National Petroleum Corporation collected but refused to pay into the Federation Account as required by law.

A statement by NEITI’s spokesman, Ogbonnaya Orji, said that some oil companies were in default in the payment of royalties and rents, just as under-assessment of taxes was rampant, all of which amounted to $7.5 billion. There was also the $11.6 billion paid by the Nigeria Liquefied Natural Gas to the Federal Government, which the NNPC sequestered for inexplicable reasons for years.“Our 2012 Audit Report discovered that total dividend loans and interest repayment from LNG paid to the NNPC in 2012 was $2.8 billion; however, in the course of NEITI’s audit, the NNPC was unable to provide any evidence to prove that the funds were remitted to the federation as required by law. The total amount received by the NNPC from LNG under the same circumstances, which has not been remitted to the Federation Account stands at $11.6 billion,” NEITI said.

In the run-up to the last elections earlier in the year, a meeting between the House of Representatives Committee on Public Accounts and NLNG threw up a similar finding, which prompted the committee to demand bank statements from the NNPC to confirm lodgement of the funds into federal coffers. But rather than comply, it dispatched a sassy missive to the committee, questioning its powers to look into its books.

Such impunity has all along defined the operations of the corporation, and it explains why oil revenues are not accounted for. Lamido Sanusi as Governor of the Central Bank of Nigeria in February 2014 noted that the NNPC accounts had not been audited since 2005. This is in addition to the $20 billion crude oil proceeds he alleged the corporation had not remitted to the Federation Account. Sanusi’s audacity unnerved Jonathan, and he wasted no time in removing him from office.

Worse still for the administration, a face-saving forensic audit of the NNPC’s account ironically confirmed the abysmal mess. PriceWaterHouseCoopers, the firm that did the job, could not vouch for the integrity of the audit as relevant government agencies refused to oblige the auditors with all the documents required for a thorough forensic inquest. “The procedures we performed did not constitute an examination or a review in accordance with generally accepted auditing standards or attestation standards,” PwC said. Yet, the immediate past Minister of Petroleum, Diezani Alison-Madueke, in an attempt to hoodwink Nigerians, claimed that the audit report had exonerated the NNPC from any culpability.

As oil is the country’s cash cow, and the NNPC, the hub of its management, implicated in serial scamming of the public treasury, Buhari is advised to begin his anti-corruption war from there. It is laughable that the corporation, which ignored a parliamentary enquiry on accountability, suddenly admitted that it had not remitted funds in its custody for four years running.

The claim by its spokesman, Ohi Alegbe, shortly after the NEITI salvo that accounts reconciliation was the reason for the delay is deceitful, illogical and unacceptable. The NNPC should shop for other reasons for its breach of trust. It is curious that every transaction involving it is enmeshed in an endless cycle of reconciliations – crude oil revenues, fuel marketers’ claims, and now dividend revenue received for mere transfer to the Federation Account.

Apart from this, other financial misdeeds are no less embarrassing. Buhari is already aware of some of them, including not knowing all the bank accounts it has, and failure to satisfactorily explain what it does with the 445,000 barrels per day crude oil swap with some local and international firms.

However, a Swiss non-government advocacy group – Berne Declaration – in a report in 2013 entitled: “Swiss Traders Opaque Deals in Nigeria,” detailed how the NNPC and its confederates in some Nigerian fuel importers and foreigners drain billions of dollars through some “Letter Box Companies.” The Swiss firms were said to have defrauded Nigeria of $6.8 billion in the process, as they bought crude oil below the market value.  

Instructively, Buhari has not been able to release his ministerial list because of his quest for critical information on government’s finances and the oil industry, which his transition committee, headed by Ahmed Joda, has now put together. Faced with a dim financial outlook as crude oil prices in the global market have dwindled by half, since mid-last year, his government can overcome this crunch by recovering these unremitted funds.

As a corrupt and incompetent national oil company, the NNPC failed to renew the Memorandum of Understanding for Joint Venture partnership with the international oil companies, which expired in 2008. The consequence, NEITI noted in its report that covered 2009 to 2011, was that “companies covered by the JVs still use expired MOU in their transactions with Nigeria, resulting in revenue loss of the difference between NNPC’s and the covered entities’ position of over $1.7 billion.”

Because the NNPC is impervious to transparency and accountability, some oil companies have adopted its dodgy template in their operations, which has cost the country dearly. Without delay, these oil firms should be compelled to embrace international best practices in their operations as they do abroad. We believe that the implementation of past NEITI reports, criminally ignored by past governments, would breathe fresh air into the oil sector.

Indeed, these squalid features of the NNPC and the oil industry at large are too glaring and damaging to be overlooked by the government. If the depraved characters that masterminded these obscene rip-offs are not brought to book under the Buhari government, then, the country would have irredeemably lost the battle to entrench good governance structures in the sector the way other oil producing nations have done.

SOURCE: The Punch.

Leave a Reply

Your email address will not be published.