NNPC spent N799.5bn in 2018 without an appropriation – NEITI


THE Nigeria Extractive Industries Transparency Initiative, NEITI, has accused the Nigerian National Petroleum Corporation, NNPC, of spending N799.5 billion without necessary appropriation in the 2018 fiscal year. NEITI, in its 2018 Audit of the Nigerian Oil and Gas Industry noted that the amount was utilised as cost of under-recovery for imported petroleum products, cost of crude and product losses and part of pipeline maintenance and management cost.

Giving a breakdown of the unlawful spending, NEITI stated that N722.256 billion was spent as cost of under-recovery for imported petroleum products and N28.329 billion was spent on crude oil and product losses. NEITI added that N48.909 billion of the unlawful spending resulted from the spending of N138.945 billion on pipeline maintenance and management as against N90.036 billion provision in the approved national budget.

On the issue of computation of the amount for the under-recovery, NEITI said: “NNPC deducted the sum of N722.256 billion as Under Recovery cost in 2018. The cost is incurred when the government augments the landing cost of imported white products (PMS) to the country. The recovered sums are determined exclusively by the NNPC.

“Since these sums are computed end-to-end by the NNPC, it is our considered opinion that the process may be prone to abuse, therefore rendering the process not transparent. The report proposes that the PPPRA, an agency of government with the mandate (by law) and requisite capacity, to participate in the under/over recovery computations. This collaboration provides a form of check and balance. It will improve the overall transparency and accountability required by the process.”

Furthermore, NEITI noted that the NNPC classified downstream deductions as first-line charges, while it identified the downstream deductions to include, cost of pipeline repairs and maintenance, cost of under-recovery, and cost of crude and product losses. To this end, NEITI recommended that periodic audit to be undertaken by the federal government to verify the utilisation of amount deducted for pipeline maintenance and repairs.

Going forward, it stated that the Federal Government should consider allocating specific crude volume to the NNPC to cater for their operational costs; consider a specific percentage of their revenue collection to cater to their costs, and define the ceiling to be expended in defraying their costs.

At the conclusion of 2018 audit period, NEITI observed that “NNPC still deducts from the sales proceeds of domestic crude oil. However, the sum of N90.036 billion for pipeline maintenance and management was appropriated for in the approved national budget.”

– May 15, 2020 @ 15:32 GMT |

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