Nigeria: NEITI Audit Uncovers N2.23 Trillion Lost, Unremitted Revenues By NNPC in 2013
The long-awaited Nigeria oil and gas as well as the solid minerals sectors 2013 audit reports by the Nigerian Extractive Industries Transparency Initiative, NEITI, was officially unveiled in Abuja on Monday.
The Minister of Solid Minerals and Chairman, NEITI Board, Kayode Fayemi, who unveiled the report, said the document contained damning revelations about revenues either lost or unremitted by the Nigerian National Petroleum Corporation and its sub-units
About N1.12 trillion, consisting $3.8billion (about N756.2 billion) and N358.3billion, was outstanding revenues from NNPC as unpaid royalties from the divested oil mining leases, OMLs.
The amount also covered cash call refunds from the National Petroleum Investment Management Services, and the Nigerian Petroleum Development Company, and crude liftings from Nigerian Agip Oil Company joint venture.
The report said N1.21 trillion, consisting $5.966billion (about N1.19 trillion) and N20.4 billion, were revenue losses to the Federation due to Offshore Processing Agreement, crude swap, and crude theft during the year.
Besides, the report said about $599.98million(about N119.4 billion) was unrealised revenue in the federation account as a result of under-assessments/under-payments of petroleum profit taxes, PPT and royalties by oil and gas companies due to the use of different pricing methodology by government and the companies due to the absence of a new fiscal regime.
Presenting the report, Mr. Fayemi said total revenue flow to the federation account from all oil and gas sources in 2013 was $58.07billion, which represented eight per cent decline when compared with the $62.9 billion realized in 2012, while total revenue from the solid minerals sector was N33.86 billion.
The decline in oil and gas revenues was attributed to the drop in sales following divestment of federation equity in some oil mining leases, OMLs, crude oil losses as a result of destruction of oil production facilities, pipelines vandalism and crude oil theft.
The report, which also gave total crude oil production during the year as 800.5 million barrels, revealed that total volume of crude oil lifted through the different contract arrangements was 800.34 million barrels.
While urging government to stop granting pioneer status to companies in the oil and gas sector, except those actually pioneering an aspect of the industry, the report called for a comprehensive investigation into the divestments of federation assets by NNPC to NPDC.
Details of the outstanding revenues against NNPC include about $1.7 billion (about N338.3 billion) in respect of the eight oil mining leases, OMLs acquired from NNPC/Shell Petroleum Development Company joint venture between 2010 and 2011 by the Nigerian Petroleum Development Company.
The report revealed that consideration for the OMLs (4, 26, 30, 34, 38, 40, 41 and 42) computed by the Department of Petroleum Resources was undervalued.
Despite an offer of $1.8 billion (N358.2 billion) for the assets, the report said no amount was paid, apart from $100 million (N19.9 billion) paid in April 2014.
Regardless, it said the 2014 forensic audit report by PriceWaterhouseCoopers, PWC on the estimated value of NNPC’s 55 per cent equity transferred to the NPDC was put at about $3.4 billion (about N676.6 billion).
Another $414,000 (about N82.4 million) and N249.2million were also recorded as outstanding cash call refund on OML 26 in the NNPC/SPDC divested asset; N2.17billion outstanding cash call refund on OML 42 divested by the NNPC/SPDC, and $763.41million (about N151.92 billion) in respect of crude oil liftings by NPDC from the Nigerian Agip Oil Company.
Besides, $33.21million (about N6.61 billion) was also outstanding in respect of NPDC crude oil liftings from SPDC JV, while $1.74million (about N346.3 million) was also pending as balance of refund from crude oil lifting in the Mobil Producing Nigeria traced to NPDC Account.
About N351.87billion was captured in the report as unpaid domestic crude debt as at December 2013 after considering subsidy approved by the Petroleum Products Pricing Regulatory Agency, in addition to N3.98billion over recovery under the Petroleum Support Fund (PSF).
About $1.29billion (N256.71 billion) was found as unremitted dividends by the Nigeria LNG for 2013.
“The receipt of NLNG payments of dividends, loan and interest repayments for 2013 was confirmed by NNPC, but could not be traced to the Federation Account,” the report said.
“There was non- remittance of NLNG dividends, interest and loan repayment in the sum of $1.289 Billion in 2013.
“This brings the total outstanding dividends paid by NLNG to NNPC, which has not been accounted for by NNPC from 2005 to 2013 to $12.92 billion.”
On revenue losses to the federation account during the year, the report showed that about $1.17 million (about N232.8 million) was lost by the CrudeOIL MARKETING Department (COMD) of the NNPC for exchange loss for pricing domestic gas in dollars, invoicing in Naira, while payment was made in dollars.
The COMD also lost $20.43million (about N4.07 billion) for pricing methodology on domestic crude oil lifted by the NNPC as well as another $439.72 million (about N87.5 billion) as a result of unexplained differences in crude oil export by under-reporting revenue received.
Similarly, another NNPC subsidiary – Pipelines and Products Marketing Company, PPMC – incurred losses of $518.05 million (about N103.09billion) from Offshore Processing Arrangement (OPA) and Crude for Product Swap arrangement during the year.
The report also disclosed that N13.42 billion was lost by NNPC through non-compliance with the 90 days credit limit set time value of money by the Central Bank of Nigeria, which attracts 12 per cent interest rate.
According to the document, another N4.74billion was also lost through NNPC’s share of crude oil losses due to theft and sabotage from NAOC; Chevron Nigeria Limited, and SPDC JVs (production facilities to terminal).