A Review of the Nigerian Energy Industry

NEITI’s audit report, inaccurate and misleading – PPPRA

Reginald Stanley 105 August 2013 – The Petroleum Products Pricing Regulatory Agency, PPPRA, has debunked the recent oil and gas industry audit report of the Nigeria Extractive Industries Transparency Initiative, NEITI, that said it should remit about N4.423 billion to the federal government representing “over-recovery” on payment for petrol subsidy claims.

The Executive Secretary of the PPPRA, Mr. Reginald Stanley, stated Sunday in Abuja that the report “is steeped in inaccuracies and gross misrepresentation of facts.”

“The report has glaring potentials to mislead the public and further cast aspersions on the activities of the PPPRA as a key administrator of the Petroleum Support Fund (PSF),” Stanley said.

On July 29, NEITI released its 2009-2011 audit report on the oil and gas sector, recommending that the PPPRA should remit N4.423 billion, arising from “over-recovery” collected from the Federation Account for the period in review.

The report also ordered other establishments to refund various sums of money to the federal government.

But Stanley stated: “The PPPRA wishes to state unequivocally that the statement credited to the NEITI chairman is misleading and a gross misrepresentation of facts.

We note with dismay, NEITI’s admission to the fact that it had no absolute control of its sources of data as they were derived from information and data provided through its own independent auditors as well as companies doing business in the sector.

“Such over-reliance on secondary data must have accounted for the glaringly flawed computations presented in the report.”

He explained that the N4.423 billion over-recovery that the PPPRA was asked to remit, was not correct, noting that only the NNPC still had an outstanding payment of about N3.98 billion to be paid into Central Bank of Nigeria, CBN’s, account.

“The total over-recovery advised for the nine marketers in 2008-2009 amounted to N14,073,783,779.74, the total amount paid to the account with CBN was N6,966,185,316.65, with the sum of N3,126,587,419.98 net-off by the Federal Ministry of Finance. The PPPRA does not disburse or warehouse subsidy funds as suggested by the report,” he said, stating that the agency only process documents submitted by marketers for subsidy payments.

According to him: “PPPRA merely verifies and processes import subsidy documents as submitted by marketers, while forwarding same to the Federal Ministry of Finance, which is statutorily charged with the responsibility of approval of payment under the PSF scheme.”

Stanley further said there was need for NEITI to meticulously cross-check its facts and figures with relevant agencies before making its report public, adding that it was instructive to note NEITI’s admission of the fact that it had no absolute control of its sources of data.

“Such a possibly deficient source must have accounted for the glaringly subjective computations presented in the report,” he noted.

He said the agency was alarmed to discover that most observations and clarifications earlier made to the preliminary report were ignored and not reflected in the final report released to the public.
“We wish to advise that NEITI takes a second look at our initial observations and clarifications, while reconciling its figures with those of both the PSF and the Federation Accounts. There was no discrepancy in PPPRA’s records and the CBN where the PSF account was domiciled,” he said.
The executive secretary further stated that the responsibility of payment shifted from PPPRA to the Ministry of Finance, following the introduction of the Sovereign Debt Statement (SDS) and the Sovereign Debt Note (SDN) in 2009.
He also added that the administration of the PSF contained checks and balances, which made it extremely, difficult, if not impossible for just one organisation within the group to connive with marketers.
According to him, the PPPRA has been in the forefront of enthroning transparency and accountability in the subsidy scheme with the introduction of improved import documentation and inspection.
“The PPPRA has continued to serve the Nigerian economy with effective supply and distribution of petroleum products in the last two years.

In December 2011, having observed the anomalies and challenges in the administration of the PSF scheme, the agency commenced a process of reforms to sanitise the system and regain the confidence of Nigerians and stakeholders in the scheme.
“These initiatives, under the directive of the Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, have recorded huge successes, resulting in improved import documentation regime and guaranteeing accountability of volume supplied.

“There was reduction in quantity of petrol consumed, improved petrol availability nationwide and we also banned loading from non-refinery/blending plant facilities in West Africa to prevent round-tripping and increased petrol days’ sufficiency,” he stated.

Continuing, Stanley said: “Similarly, PPPRA has effected reduction in PMS subsidy, reduction in the number of marketers under the subsidy scheme as well as even management of annual PMS subsidy budget, using LAYCAN programming.

“From the foregoing, we wish to advise that NEITI takes a second look at our initial observations and clarifications, while reconciling its figures with those of both the PSF and Federation Accounts. In as much as the PPPRA as a responsible and responsive government agency is not disinclined to constructive criticisms of any kind, it shall appreciate every effort by relevant organisations to adequately confirm their information before taking such to the public domain.”

He thus, re-assured Nigerians of the commitment of the PPPRA to service delivery and adequate supply and distribution of petroleum products nationwide.

– Chineme Okafor, This Day

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