01 February 2013, Sweetcrude, Abuja – The Nigerian National Petroleum Corporation illegally paid itself the sum of N1.4tn between 2009 and 2011 as petrol subsidy, as it was also revealed that it owes the Federation Account, a whopping N1.3tn.
All these were contained in the Nigerian Extractive Industry Transparency Initiative audit report for 2009 – 2011.
According to the report presented by the Chairman of NEITI, Mr. Ledum Mitee, to journalists in Abuja, it showed that the corporation received $4.48bn from the Nigerian Liquefied Natural Gas which it has yet to remit to the Federation Account.
The report also alleged that NNPC engaged in foreign exchange scam by using exchange rates lower than what was obtainable at the Central Bank of Nigeria in its transactions.
The scam led to the loss of N98.3bn by the government within the period of three years (2009 – 2011).
Also during the period under review, the report shows that operators in the oil and gas sector engaged in under reporting quantities they produced for the purpose of Petroleum Profit Tax assessment, resulting to a loss of $2.65bn.
Mitee said, “The financial report clearly underlines that contrary to the practice where subsidy payments are claimed from the Petroleum Support Fund through the Petroleum Products and Pricing Regulatory Agency by the qualifying oil marketing companies, the NNPC draws subsidy payments directly from domestic crude sales proceeds before remittances to the Federation Account.
“As a result, a sum of N1.4tn was claimed during the period by the NNPC as oil subsidy payments. Subsidy payments claimed by the NNPC increased by 110 per cent. For example, it rose from N198bn in 2009 to N416bn in 2010.
“In 2011 alone, it rose to N786bn. The increase between 2009 and 2011 alone was 186 per cent. The physical and process audit expected to be released in March is currently carrying out further validations on subsidy payment transactions to include other marketers.
“Another important revelation of the report is that financial flows from the NLNG include dividends and repayment of loans of which an amount of $4.84bn was received by the NNPC.
“The report confirmed that these amounts have not been remitted neither to the CBN/ NNPC JP Morgan Account nor the Federation Account.
“Furthermore, the report observes that this has been a recurring issue as an amount of $3.99bn was also reported as received but not remitted by the NNPC in the previous audits.
“The audit report also reveals that the NNPC owes N1.31tn to the Federation Account as of December 31, 2011. This is a trade debt. This is because the sum of N928bn falls within the 90 days permissible period, leaving a balance of N377bn which the NNPC is currently paying by installment to the Federation Account.”
When contacted, NNPC’s General Manager, Media, Dr. Omar Ibrahim, said the corporation had yet to see the report.
“We have not seen the report. When we see it, we will study it and then respond. What we can assure Nigerians is that many of such reports had come out and they turned out to be false. A typical example is the Auditor- General’s report that was released last year,” he said.
The total fund accruing to the nation, according to the report, came through proceeds from the sales of equity crude, royalty, signature bonus, concession rentals, gas flaring penalties, PPT and companies income tax.
Mitee said, “A breakdown of these earnings shows that sales of crude oil and gas within the period under review amounted to $81.9bn. The total sum of revenues that accrued to government from PPT, royalty, signature bonus, gas flaring penalties and concessional rentals amounted to $45.7bn; revenue from companies income tax, value added tax and withholding tax within the period amounted to $6.1bn, while the sum of $4.8bn was reported as revenue from dividends and repayment of loans by the NLNG. “The total cash flow to states arising from withholding tax and PAYE was $1.5bn while the total cash flow to other entities arising from the contributions to Niger Delta Development Commission and education tax was $3.2bn.
“The total financial flow represents a decrease of four per cent from what government earned in the sector in 2006 to 2008 when compared to total flow of $148.8bn as against the reported government earnings of $143.5bn for 2009 – 2011.”
Mitee explained that the decrease was largely due to adjustments in the applicable average oil price despite fairly consistent production volumes. Mitee said from the alleged scam of under reporting that led to under assessment of $2.65bn, a total of $442m had been recovered while some operators affected in the allegation were threatening legal actions.