Oil & Gas
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Even though the Senate Committee on Finance has said in its report that allegations of unremitted funds into the federation account by the Nigerian National Petroleum Corporation had no substance, a member of the Committee says it is not true
| By Vincent Nzemeke | Jun. 9, 2014 @ 01:00 GMT
THE controversy surrounding allegations of unremitted oil funds by the Nigerian National Petroleum Corporation, NNPC, is not likely to abate soon. Just when the Senate Committee on Finance, led by Senator Ahmed Makarfi, tried to put the controversy to rest, Senator Bukola Saraki, a member of the committee, has come out to challenge the purported report which cleared the Corporation of the allegations.
On Wednesday, May 28, the Senate Committee on Finance which was mandated by the Senate to investigate the NNPC over allegations of non-remittance of about $20billion oil money levelled against it by Lamido Sanusi, suspended governor of the central bank of Nigeria, CBN, submitted its report to the Senate. According to the report, there was no evidence to support the allegation that money was missing in the corporation.
Sanusi had, in a letter addressed to president Goodluck Jonathan in October 2013, alleged that the NNPC had failed to remit about $48.9 billion oil revenue into the federation account. The allegation triggered a wave of reactions across the country with many Nigerians accusing the NNPC of being a corrupt organisation.
On December 13, 2013, the NNPC, at a press conference, debunked the allegations as mere fabrications aimed at tarnishing its image. The Corporation added that the press conference was convened to set the records straight and correct the erroneous impressions the accusations had created among Nigerians.
Andrew Yakubu, group managing director, said Sanusi’s accusations was borne out of a surprising lack of understanding of how proceeds from crude oil sales were remitted into the federation account. Yakubu also stated that contrary to Sanusi’s claims, that the NNPC was expected to remit all the proceeds generated from crude oil sales into the federation accounts, “the corporation is statutorily empowered to remit only earnings generated from the lifting of equity crude.
“All NNPC crude oil lifting is made of the following: equity crude, royalty crude, tax oil, volume for third party financing and NPDC equity volume. It is important to stress that the remittance of proceeds from the above are made according to statutory production arrangements. Accordingly, proceeds from equity crude are paid by the NNPC into the federation account which is held by the CBN. Proceeds from royalty oil are paid to the department of petroleum resources, DPR, whose designated account is managed by the same CBN. Similarly, proceeds from tax oil or petroleum profit tax lifted by the NNPC are paid directly into the Federal Inland Revenue Service, FIRS, account which is also managed by the same CBN. It should now be clear to all that the NNPC is by statutory requirement responsible for direct remittance of only one stream of lifting, namely equity crude.”
In a twist of events, Sanusi, after reconciling the CBN’s records with that of the NNPC and other statutory bodies, backtracked in December 2013 claiming that the NNPC had to account for only $10.9 billion.
Observers within and outside the country were still trying to come to terms with the new figures, when the then CBN boss dropped another bombshell during a public hearing organised by the Senate Committee on Finance to look into the matter.
Sanusi told the senators in the presence of representatives of Federal Inland Revenue Service, Nigeria Extractive Industry Transparency Initiative, NEITI, CBN and NNPC officials, that $20 billion was still missing from the federation account. Sanusi’s inconsistencies, among other issues, led to his suspension as the helmsman of the CBN by President Goodluck Jonathan on February 20, 2014.
At the conclusion of its public hearing in March, the Senate committee assured that it would look into the matter objectively with a view to unravelling the truth as everyone eagerly waited for the report which was finally submitted on Wednesday.
In the report, the committee categorically stated that no funds was missing and also cleared the NNPC and the Ministry of Petroleum Resources of any wrong doing.
The Senate Committee also recommended that the subsidy regime be discontinued, and advised that all stakeholders should be consulted and carried along in the process of stopping the subsidy. It also advised that the National Assembly should expeditiously pass the Petroleum Industry Bill.
The committee, however, ordered the NNPC to refund and remit to the Federation Account the sum of $262 million being expenses it could not satisfactorily defend in respect of holding strategic stock reserve, pipeline maintenance and management cost and capital expenditure.
According to the report, the committee said Sanusi was hasty in his allegations and got his figures wrong. The committee wondered how the figure of $49.8b was arrived at by the CBN Governor in the first instance. “That the CBN Governor at the first hearing had put forward the figure of $12 billion as monies to be reconciled and then changed his position to $20 billion at a subsequent hearing.
“At the conclusion of his written submission, he had posited that it could be $20million, $12million, $19.8 million or anything in between. That the CBN Governor, orally or in writing, never outrightly submitted that monies were missing but that monies were not remitted to the Federation Account by the NNPC. That there was poor record keeping and a poor work attitude on the part of the NNPC in not rendering returns on subsidy claims on monthly basis from January 2012 to date which contributed largely to the creation of the problem at hand,” the Committee submitted.
In its findings, the Committee stated that all parties, that is, the CBN, the NNPC, the ministry of finance and the ministry of petroleum resources, had resolved through reconciliation undertaken by them that $47billion had been received into the Federation Account out of the total oil lifting value at 67b between January 2012 and July 2013.
On the remaining $20 billion to be reconciled, the Committee’s findings are as follows: “The amount deducted, withheld, expended by the NNPC on fuel subsidy between January 2012 to July 2013 was $5.254 billion (N 814.892 billion). This was certified by the PPRA. And the national assembly had appropriated funds in 2012 and 2013 for fuel subsidy in the sums of N888.101 billion and N971.138 respectively.”
The Committee also recommended that the Senate accept the subsidy deducted by the NNPC from January 2012 to July 2013 of $5.254 billion since it was certified by the PPPRA and appropriated by the National Assembly. “President Jonathan should prepare and present to the National Assembly a supplementary budget to cover the over-expenditure in the sum of N 90.693 billion for PMS subsidy 2012 and the sum of N 685.910 billion for kerosene, DPK, subsidy expended without appropriation by the National Assembly in 2012 and 2013.
“That the Senate do accept the subsidy deducted by the NNPC in the sum of $1.2 billion for the fourth quarter of 2011 since it was certified by the PPPRA and appropriated by the National Assembly.
“Gross lifting by the NNPC on behalf of the NPDC between January 2012 and July 2013, was $6.815 million. Government’s share of revenue to the Federation Account was $2,175,635, 436. Accountant-general of the federation confirmed the payment to the federation account by the NPDC as the sum of $1,727,817,552. Therefore, the NPDC should remit to the Federation Account the sum of $447,817,884 being the balance of royalty and petroleum profit tax.
“Gross lifting under the third party financing was $2,430,750,973 out of which the amount due to the federation account was as $1,588,242, 004. The AGF confirmed and gave documentary evidence showing that the sum of $1,370,172,650.36 was remitted to the federation account. Therefore the NNPC should remit the balance of $218,069,354.32 to the federation account,” the report said.
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