NEITI ‘s Misinterpreted Report

Ledun Mitee, NEITI chairman

The Nigerian Extractive Industries Transparency Initiative disowns media reports credited to it that it uncovered $22.8 billion unremitted oil revenue by the Nigerian National Petroleum Corporation

By Anayo Ezugwu  |  Mar. 31, 2014 @ 01:00 GMT

THE Nigerian Extractive Industries Transparency Initiative, NEITI, has disowned its earlier position that it uncovered $22.8 billion unremitted oil revenue by the Nigerian National Petroleum Corporation, NNPC. Orji Ogbonnaya Orji, director of communication, NEITI, in a press release published in NEITI website, also described the media reports attributed to the agency that the nation loses $8 billion annually through crude oil swap as wrong and misleading.

“The media report from that presentation attributed to NEITI that the nation losses $8 billion annually through crude oil swap. This is not only wrong but misleading. What NEITI presented and explained at that hearing was that there is no cost efficiency in the transactions with the offshore processing organisations. By this, we mean that the total cost of offshore processing when compared with the reported price of PMS, DPK, AGO and other retained products proceeds paid to NNPC is not economically beneficial to the country. This is as a result of the under deliveries of petroleum products to the tune of $866 million by the companies involved in the swap,” he said.

According to Orji, the reports that the agency uncovered $22.8 billion unremitted funds to the federation account, carried by several newspapers were equally inaccurate. “What NEITI presented and explained at the public hearing was that the federal government, through the NNPC, entered into alternative funding/financing arrangements with its JV partners in the form of third party financing from external financial markets that is to say banks, and Modified Carry Arrangements, MCA, which are loans from existing JV partners, IOCs. NNPC’s share in the third party financing is paid to the Central Bank of Nigeria, CBN, and the NNPC crude oil and gas dollar revenue account and subsequently swept to the federation accounts while under the MCA, an escrow account is opened at the lenders’ bank into which buyers pay proceeds from the crude oil and gas sales.

“NEITI observed that these transactions which sum up to $22.8billion are off balance sheet items, not disclosed in NNPC’s audited financial statements. The implication is that there may be significant contingent liabilities to the federation that is not being disclosed. We need to state further that it does not mean that NEITI has discovered some funds hidden somewhere or monies that were unaccounted for by the NNPC. That was why NEITI recommended that all alternative funding arrangements should be disclosed in the audited financial statements of NNPC for clarity and openness in line with the EITI principles.”

He, however, expressed NEITI’s concern that the contents of its presentation to the legislative committee have been largely misconceived, misinterpreted and misrepresented by some sections of the media, even as he thanked them for their continued support for the agency. “As an agency with principles, methods, procedures and mandate firmly rooted in transparency, accountability and integrity, we are constrained to make some clarifications on key issues that were certainly not correctly reported by the media following that presentation. This clarification has become necessary in the overriding public interest, NEITI stakeholders, our international partners and the global Extractive Industries Transparency Initiative.”

Orji explained that NEITI’s presentation to the committee was based on the findings and recommendations of its 2009 to 2011 independent oil and gas industry audit report, and that it is in the public domain and on the NEITI website. He added that all relevant government agencies, relevant committees of the National Assembly, companies, the media and civil society have copies of the report which was also made public since last year.

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