NEITI demands proof of recovery of N4.4bn subsidy funds from PPPRA

Reginald Stanley 112 August 2013, Abuja – The Nigeria Extractive Industries Transparency Initiative, NEITI, has challenged the Petroleum Products Pricing Regulatory Agency, PPPRA, to show evidence that it remitted about N4.423 billion recovered from oil marketers as over-payment between 2008 and 2009 into the federation account.

NEITI, in further response to the inaccuracy charge on its 2009 to 2011 independent audit report of activities in Nigeria’s oil and gas sector by the PPPRA, stated that claims by PPPRA that it was wrongfully indicted by it on the alleged subsidy fund “over-recovery” remained baseless considering that PPPRA had failed to account for the funds which were recovered from 10 oil marketers within the period covered by the audit.

According to NEITI’s Director of Communications, Orji Ogbonnaya Orji, on Sunday at a briefing with journalists in Abuja, NEITI’s position on the “over-recovery” remained that no form of evidence that the recovered fund was remitted to the federation account had been shown to it by PPPRA, adding that the agency’s claim that NEITI was misleading Nigerians with its audit report was unfortunate.

Apart from the misunderstanding on the subsidy fund “over-recovery”, Orji also shed light on PPPRA’s claims that it never participated in the audit process and indeed “signed off” on the report before it was made public and said the agency duly participated in all of the meetings, including providing additional information two days before the final validation deadline.

He said: “The attention of NEITI has once again been drawn to sustained media campaign by the management of PPPRA in a futile effort to discredit the content of the recently released NEITI independent audit reports of the oil and gas industry as it affects the agency.

“The NEITI reports had recommended among others, that the PPPRA remits over N4.4 billion which the agency recovered from independent marketers to the federation account as required by law. But the PPPRA instead of availing itself of the remedial measures outlined in the report, choose to contest the findings in the media.

“The PPPRA  challenged NEITI on two fundamental issues, that NEITI should explain the basis for its recommendations that it should refund to the federation account the sum of N4.423 billion and to provide proof that it actually participated in the audit process and indeed ‘signed-off’ on the report before it was released to the public.”

On PPPRA’s alleged claim that it did not participate in the audit process, Orji said: “In line with the process, NEITI auditors carried out painstaking procedure of data and information verification, reconciliation and validation held at the Best Western Hotel, Victoria Island Lagos for a period of two weeks. This was to ensure that what the agencies and companies provided was correct. In the particular case of the PPPRA, the agency’s submissions went beyond the two week exercise in Lagos.

“NEITI auditors held series of consultations, meetings and visits all in efforts to lay to rest gaps in the submissions by the agency. When it was clear that some agencies like the PPPRA still had issues to sort out in their submissions, the NEITI board in its wisdom further extended the deadline by another two months.

“When the draft report was finally ready, it was made available to all agencies for their vetting, and more inputs where necessary. I wish to state that the PPPRA received the draft report, reviewed it, and participated in the final reconciliatory meeting. After that meeting from where all other agencies and companies signed-off, the PPPRA still came up with additional information on the 28 of June; clearly two days before the final deadline vie a letter with reference number A4/4/735/c.288/1/687/10. In that letter the PPPRA specifically requested NEITI to consider same as ‘superseding all earlier correspondences on the issues.”

He added that following PPPRA’s letter, NEITI further requested it to urgently provide evidence on its claims such as bank statements of Petroleum Support Fund (PSF) payments for the period covered by the audit, schedule of collection of “over-recovery’’ from marketers and rationale for determination of national demands for petroleum products but PPPRA never responded.

On the N4.423 billion subsidy ‘over-recovery’, Orji said: “We wish to put on record that NEITI audit report discovered that the determined total over-recovery from 10 marketers between 2008 and 2009 amounted to N14.073 billion.

“From this determined collection, the federal ministry of finance deducted at source the sum of N3.127 billion, while the amount of N4.423 billion was paid by independent marketers into the PSF account managed and controlled then by PPPRA during the period. The PPPRA further netted off over-recovery due from the subsidy of marketers to the tune of N2.809 billion and remitted this to the federation account. Therefore, actual payments made by marketers amounted to N7.232 billion which is N4.423 billion plus N2.809 billion.

“However, the NEITI reports further disclosed that the PPPRA could not account for the amount of N4.423 billion, which was paid by the marketers to the agency. The position of NEITI remains that this sum should have been and should be remitted to the federation account by PPPRA, as at the time of this audit there was no evidence that this remittance was made to the federation account.
“NEITI wants to see proof that these remittances ever happened. This is the crux of the matter,” Orji added.

He also explained that NEITI was worried by the seeming lack of transparency in PPPRA’s management of the PSF before it was transferred from it.

According to him: “Beyond these, there was also an important issue ‘over subsidy funds disbursement’. NEITI audit report on page 146 to 170 disclosed that prior to 2009, the Office of the Accountant General of the Federation (OAGF) disbursed funds to the PSF account.

“This account as at this period covered by the report was managed and controlled by PPPRA who processes oil marketers’ subsidy payment applications and issues cheques to marketers, from our audit findings, these transactions which involved huge financial flows weighed very low on the scale of transparency and accountability.

“Another important revelation of the report was that PPPRA provided contradictory information during the audit process. For instance, the agency stated in its audited financial statement, that it paid the sum of N297.11 billion as subsidy in 2009, but in the information PPPRA supplied through the templates used for the audit, which it voluntarily populated and returned to NEITI auditors, the agency claimed it paid N207.80 billion.”

– Chineme Okafor, This Day

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