New audit shows trillions missing from Nigeria’s oil funds

08 March 2012, Sweetcrude, ABUJA – A new audit carried out by the Nigeria Extractive Industries Transparency Initiative (NEITI) on the country’s oil sector has uncovered financial irregularities involving billions of dollars (trillions of naira) in missing cash and unaccounted for oil production.

The audit covers the period 2006 to 2008 and has been presented to the government since the end of January.

The findings, reported by Reuters, reveals alarming payment discrepancies, including a shortfall of $540 million from $1.675 billion in signature bonuses paid by oil companies on the award of field licences.

Also, state-owned Nigerian National Petroleum Corporation (NNPC) is reported to have received $3.789 billion in dividends from the Nigerian Liquefied Natural Gas (NLNG) project over the period, but, there is no record of these monies ever being paid into federal accounts.

Besides, the audit shows there is 3.1 million barrels of oil output missing from NNPC’s declarations about its joint ventures, compared with figures released by its international partners.

There are no exact figures of Nigeria’s crude oil production, but the government estimates production at between 2 million and 2.6 million barrels per day.

“Right now, no one can tell you exactly how much of our crude is extracted from our soil,” Orji Ogbonnaya Orji, a member of the board of directors of NEITI, told Reuters. “We depend on records from the oil companies. That clearly has to change.”

An NNPC spokesman did not respond to requests for comment to elaborate on the alleged irregularities found in the audit.

NNPC’s managing director, Austin Oniwon, was recently reported as saying that claims of corruption at the corporation were exaggerated, stating that it was “in the imagination of some people”.

The audit further stated that foreign companies had underpaid petroleum profit tax by more than $1 billion and recommended a review of the tax returns of US giants ExxonMobil and Chevron.

A Chevron spokesman said the company “complies with all laws and regulations in the locations where we operate”, adding “as a matter of long-standing policy, Chevron does not release specific financial details”.

ExxonMobil officials were not immediately available to comment.
An earlier audit carried out by international accounting firm, KPMG, was submitted to Nigeria’s Petroleum Ministry more than a year ago but has still not been published and no action has apparently been taken on it.

However, a copy obtained by Reuters reveals that NNPC invoices for domestic crude in US dollars but pays the government in naira and that “exchange rates used by NNPC were lower than (those) … published by the CBN (central bank)”, causing a loss of 86.2 billion naira ($550 million) to the treasury from 2007 to 2009.

KPMG also said fuel subsidy claims were based on unverified declarations of fuel imported or refined rather than actual retail sales at pump stations.

“Some of the issues that were revealed were shocking,” the head of the House of Representatives’ fuel subsidy probe, Farouk Lawan, said.

He added government officials had understated NNPC payments by billions of naira. Daily consumption of petrol is 35 million litres, yet importers were being paid for 59 million litres a day.

President Goodluck Jonathan has since pledged to clean up the oil sector after widespread public protests in January triggered by the removal of state subsidies on petroleum products that led to a hike in gasoline prices, but also fuelled by perceived corruption in the oil sector.

Petroleum Resources Minister, Diezani Allison-Madueke, announced the same month that two accounting firms had been hired to audit the oil industry.

At a recent industry conference, where she spoke on corruption in the industry, she said the government was still mindful of the challenges within the sector.
Citing “financial leakages and other deep-rooted inefficiencies”, she said there was need for change.

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  • this is the right time to scrape this so call NNPC which has been used over the time as a conduit to siphone our resources. revelation upon revelation from house of rep to neiti enough of this attrocity. ribadu panel has a lot to do in cleanson this rotten entity by discarded away all the senile and feckless corrupt ridden management.