The Nigeria Extractive Industries Transparency Initiative queries the Nigerian National Petroleum Corporation’s claim of ignorance regarding the ownership of Nigeria Liquefied Natural Gas shares, insisting the corporation failed to remit $15.8 billion dividends to the federation account between 2000 and 2014

|  By Anayo Ezugwu  |  May 15, 2017 @ 01:00 GMT  |

THE Nigeria Extractive Industries Transparency Initiative, NEITI, has questioned the Nigerian National Petroleum Corporation, NNPC, claim of ignorance as regards the true ownership of the Nigerian Liquefied Natural Gas, NLNG, shares in its possession. According to NEITI, in its latest Policy Brief, entitled, “Unremitted Funds, Economic Recovery, and Oil Sector Reform,” the NNPC had failed to remit about $15.8 billion NLNG dividends from 2000 to 2014 to the federation account blaming it on lack of clarity of ownership of the shares.

According to the NEITI, “NNPC once stated that it had spent part of the NLNG dividends on gas projects. NNPC maintained that this was done in line with approvals from the federal government. The NNPC had also stated that it thought that the shareholdings were owned by the federal government and not the federation. However, it is doubtful if this alibi on the lack of clarity on ownership can hold up to scrutiny.”

“The NNPC is the joint venture partner with international oil companies on behalf of the federation in all oil mining projects. NNPC also does all the lifting of crude oil for the federation. Can it now be said that revenue accruing from such lifting belongs to the federal government alone because the NNPC is an agency of the federal government?

“Analogously, the NNPC holds shares in NLNG on behalf of the federation and cannot possibly claim that such shareholding is for the federal government alone. It is also doubtful that even revenue belonging to the federal government can be expended without appropriation. The issue of lack of clarity seems to have been settled in 2015, when President Muhammadu Buhari directed that the NLNG dividends for that year be paid into the federation account. However, it is important for the NLNG dividends due between 2000 and 2014 be paid to the federation account,” it said.

The NEITI said, “Though NNPC claims that the NLNG account is one of the most transparent accounts, it is doubtful if the entire $15.8 billion due from 2000 to 2014 is still intact. It will be important to investigate if any part of the NLNG has been spent, whether such expenditure followed due process, and to ascertain if the expenditure was for specified purposes.”

It argued that the failure of government agencies to remit revenue to the treasury had significant implications for Nigeria’s economy, stating that the questionable practice of withholding revenues due to the treasury is partly implicated in government’s current fiscal struggles. It maintained that the withheld funds offer huge and interest-free opportunity to stimulate the economy much easier and much better to access than internal and external borrowings, depending on government’s capacity and willingness to use its machinery to recover the unremitted funds.

It disclosed that from its computations, total unremitted revenues to government’s treasury amount to $21.778 billion and N316.074 billion, stating that at current exchange rate, this comes to about N7.2 trillion. “Achieving a recovery rate of just 20 per cent would significantly offset the projected deficit for the 2017 budget. A third of the computed unremitted revenues would completely eliminate the need to borrow to finance the budget. This has both short and long-term positive implications for the economy.”

The NEITI believes that at the institutional level, enforcing collection of arrears of revenues accruing to the federation but withheld by NNPC and NPDC would significantly advance the accountability objective of government, which is the main pillar of President Buhari’s administration. However, recovering the outstanding revenues without reforming the system that allowed the anomalies in the first place will be a missed opportunity, it said.