The Central Bank of Nigeria and the Nigerian National Petroleum Corporation are still at daggers drawn over the alleged unremitted revenue from crude oil sales into the federation account
THE clash between the Central Bank of Nigeria, CBN, and Nigerian National Petroleum Corporation, NNPC, over the alleged unremitted revenue accruing to the country to the Federation Account is not yet over. The crisis resonated at the Senate Committee on Finance Public Hearing on February 4, where Sanusi Lamido Sanusi, governor of the CBN said that he has established that of the $67 billion worth of crude shipped by the NNPC between January 2012 and July 2013, only $47 billion was remitted to the Federation Account. But Andrew Yakubu, group managing director of the NNPC was quick to counter saying that this is not the first time the CBN Governor had made wild allegations about the NNPC and has come to admit his mistake.
At the Senate hearing, Sanusi said that it was up to the NNPC given all issues raised, to produce the proof that the $20 billion unremitted did not belong to the Federation or was legally and constitutionally spent. Sanusi had earlier written President Goodluck Jonathan on the alleged irregularities from the NNPC last September which was leaked to the public last December, generating a lot of public debate on the issue.
At the public hearing, the governor of the Central Bank of Nigeria also declared that claims by the NNPC of spending money on kerosene subsidy are not credible. According to Sanusi, the burden of proof was now on the NNPC to substantiate that the $20 billion unremitted either did not belong to the Federation or was legally and constitutionally spent. He alleged that the NNPC, by paying kerosene subsidy, confessed to a number of serious infractions. Referring to the data provided by the National Bureau of Statistics, NBS, the governor stressed that kerosene was not a subsidised product, adding that the so-called subsidy was rent generated for the benefit of those in the kerosene business.
Producing evidence that former President Yar’Adua had issued a presidential directive eliminating subsidy payment on kerosene as from July 2009, Sanusi said the huge losses inflicted on the Federation Account have not been appropriated. The CBN Governor said the burden of proof was on the NNPC to show where it obtained authorisation to purchase kerosene at N150/litre from Federation funds and sell at about N40/litre, knowing full well that the product sells in the market at N170-N220/litre.
Citing records of the Nigeria Ports Authority, NPA, Sanusi said the records suggest that the NNPC imports about four to six vessels of kerosene a month. Similarly, he said based on industry sources, the Federation Account loses $100 million monthly due to racketing in the industry.
He listed three outstanding issues that the NNPC needed to prove. These were the $12 billion out of the domestic crude sales yet to be remitted; the $6 billion shipped on behalf of the NNPC; and the $2 billion “third-party” financing as well as other claims bothering on pipelines repairs, maintenance and strategic reserves among others.
Concluding his submission, the CBN Governor proffered five recommendations for protecting the economy from what he described as unsustainable losses. He advised that the NNPC should stop collecting 440,000bbl daily as Domestic Crude and that all crude for product swaps should be terminated and crude should be exported and sold at market price.
Among others, he said, where the NNPC needs to generate cash flow to fund PMS import, such could be borrowed on the approval of the finance minister, for 90-120 days.
He suggested that all the SAAs entered into by the Nigerian Petroleum Development Company, NPDC, should be investigated for constitutionality, adding that the tax arrangements entered into with the parties should be reviewed and all revenues due to the Federation Account collected.
“If possible, the SAAs should be terminated and the NNPC should be prohibited from entering into any SAA in the future”, Sanusi added, reiterating that the NNPC should account for subsidies claimed in 2010-2013 by producing documentary proof of legitimacy in addition to producing their authorization for paying kerosene subsidy after July 2009.
But the NNPC on Tuesday dismissed the CBN governor’s allegation during his presentation before the Ahmed Markafi-led Senate Committee probing the allegation of unremitted $49.8billion oil proceeds. In a chat with Journalists on the margins of the Senate Committee Hearing Room, Yakubu stated that Sanusi’s claim of the existence of an unremitted $20 billion is far from the reality on ground, and this will be proven when investigations are concluded.
“The CBN boss had alleged that revenue from NPDC, a subsidiary of the NNPC, was not being remitted to the Federation Account,” Yakubu said, expressing surprise that even after extensive clarification on the matter, the CBN is still confusing the role of NPDC as part of NNPC’s upstream operations. He faulted Sanusi’s claim that NPDC’s gross earnings ought to be remitted to the Federation Accounts explaining that the Company is a limited liability outfit registered under CAMA to do business.
‘‘Let me make this point clear, CBN is a banking outfit, not a petroleum outfit. It is therefore understandable why they keep making unsubstantiated claims, which a little understanding of the technicalities of the oil industry would have saved them from making. CBN is not an auditing outfit. But what it is doing is now auditing. We have no problem with auditing, but let the professionals, the certified bodies and agencies that are charged with this responsibility of auditing, to do their work’’ he said.
The group managing director explained that the issues raised by Sanusi are not fresh at all and will be eventually reconciled by the Inter Agency Committee established to settle the $49.8 billion saga.
‘‘Our position remains the same and we remain open to all stakeholders. These are issues that are currently before the reconciliation committee and before now it has been a subject of monthly verification before FAAC and other stakeholders,” Yakubu said.
A statement signed by Omar Farouk Ibrahim quoted Yakubu as reiterating what the director-general of Budget had said at the hearing that a lot of progress had been made in the reconciliation of the $10.8 billion expressing hope that by the time the committee meets next week the final report would be ready, and NNPC will be vindicated.
— Feb. 17, 2014 @ 01:00 GMT