12 December 2013, Abuja – Is $49.8billion oil proceeds missing, as alleged by Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi? The Nigerian National Petroleum Corporation (NNPC), which Sanusi says is still owing the Federal Government N22billion, insists no cash is missing.
The debt arose from NNPC’s failure to pay its levies under the Nigerian Export Supervision Scheme (NESS).
Sanusi raised the alarm over the non-remittance of oil proceeds into the Federation Account because of the looming shortfall in revenue accruable to the country.
He said in 2012 alone, the Federation Account received $28.51billion in Petroleum Profits and related taxes, but only $10.13billion from crude oil proceeds.
He also said in the period January-July 2013, the figures are $16.65 billion and $5.39 billion.
He said he had been crying out over shortfall in remittances into Federation Account since 2010.
Sanusi, who made the clarifications in a letter to President Goodluck Jonathan, made eight demands to set the records straight on oil proceeds and clean the Augean stable.
Sanusi said: “I am constrained to formally write your Excellency, documenting serious concerns of the Central Bank of Nigeria (CBN) on the continued failure of the Nigerian National Petroleum Corporation (NNPC) to repatriate significant proportions of the proceeds of crude oil shipments it made in gross violation of the law.
“Sources of Federation Account Revenues include proceeds from Export of Nigeria’s crude oil by the NNPC, Petroleum Profits Taxes, and Penalties for gas flaring, oil exploration licences and concession block allocations etc.
“Our analysis of the value of crude oil export proceeds based on the documentation received from pre-shipment inspectors shows that between January 2012 and July 2014, NNPC lifted 594,024,107 barrels of crude valued at $65,332,350,514.57. Out of this amount, NNPC repatriated only $15,528,410,098.77 representing 24% of the value.
“This means the NNPC is yet to account for, and repatriate to the Federation Account, an amount in excess of $49.804 billion or 76% of the value of oil lifted in the same period.
“Your Excellency, I have attached as an appendix, a table giving the analysis of the crude oil lifting and repatriations as prepared by staff of Trade & Exchange and Banking & Payments System Departments of the CBN based on the firm documentation in their possession.
“The failure of NNPC to repatriate these amounts constitutes not only a violation of constitutional provisions but also of both the Foreign Exchange (Monitoring and Miscellaneous Provisions) Act No. 17 of 1995 and the Pre-Shipment Inspection of Exports Act No. 10 of 1996 which stipulates that ‘An exporter of goods, including petroleum products, shall open, maintain and operate a foreign currency domiciliary account in Nigeria into which shall be paid all exports proceeds corresponding to the entire proceeds of the exports concerned”.
The CBN Governor said his whistle-blowing was not new as he had been drawing the attention of the government to the shortfall in remittances into Federation Account since 2010.
Sanusi added: “Your Excellency, you will recall that as far back as late 2010, I had verbally expressed deep concern about what appeared to be huge shortfalls in remittances to the Federation Account in spite of the strong recovery in oil price.
“At a recent National Economic Management Team (NEMT) meeting in the Presidency, I also expressed a strong view that while Government needs to continue its effort to combat oil thieves, vandals and illegal refineries in the Niger-Delta, the major problem is transactions taking place under legal cover with huge revenue leakages embedded therein.”
He listed eight areas to be looked into by the Federal Government to make NNPC accountable for oil proceeds.
Sanusi said: “Your Excellency, it is my respectful view that a place to begin is to insist on NNPC to account fully for all proceeds that were diverted away from its accounts with the CBN and the Federation Account. There are also other lines of inquiry which your Excellency may wish to authorise and pursue. These include;
•A thorough audit of activity on any domiciliary accounts held by NNPC outside of the CBN. This is because the CBN has no record of either the dollar proceeds of these diverted sales or the naira equivalent being transferred to the Federation Account.
•An examination of banking records of companies involved in Oil lifting and swap deals, including audit trails of regular payments to third-parties;
•An independent review of the terms and condition of Oil lifting and swap contracts for fairness and equity and transparency;
•Investigation and prosecution of Bureau de change (BDC) that have purchased hundreds of millions of dollars from the inter-bank market and are unable to account for these monies. We have compiled a list of these companies with recommendations for prosecution under Anti-money Laundering Laws;
•Investigation of obvious avenues for money laundering, such as companies that sell private jets to Nigerians.
“The Central Bank stands ready to render full assistance and provide as much data as possible to assist these inquiries.
“Your Excellency, as an indicator of how bad this situation has become, please note that in 2012 alone, the Federation Account received $28.51billion in Petroleum Profits and related taxes but only $10.13billion from crude oil proceeds. In the period January-July 2013 the corresponding figures are $16.65 billion and $5.39 billion, respectively. This means, Your Excellency, that in the first seven months of the year, taxes accounted for 76% of the total inflow from this sector, while NNPC crude oil proceeds, accounted for only 24%.
“You will also note, Your Excellency, that NNPC liftings amounted to 64% of total oil liftings from Nigeria during the reference period, and yet its remittance represented only one-third of the taxes paid by the oil companies that exported the balance of 54%.
“Finally, your Excellency, we would like to report that NNPC has failed to keep up with payments of its levies under Nigerian Export Supervision Scheme (NESS), in line with this law, and currently owes the Federal Government N22 billion.
“As banker to the Federal Government and Economic adviser to the President, I am obliged to draw the President’s attention to these serious issues of which you have most probably never been aware in this detail.
To summarise, my recommendations are to respectfully advise the President to:
•Require NNPC to provide evidence for disposal of all proceeds of crude sales diverted from the CBN and the Federation Account;
•Investigate crude oil lifting and swap contracts, as well as the financial transactions of counter-parties for equity, fairness and transparency; and
•Authorise prosecution of suspects in money-laundering transactions, including but not limited to BDCs who are unable to account for hundreds of millions of dollars.
“I trust your Excellency will find the content of this letter useful and hereby reaffirm the support of Central Bank of Nigeria for your Government’s transformation agenda and effort to serve the Nigerian people.”
But the Nigerian National Petroleum Corporation (NNPC) has faulted the claim.
The corporation said it had not withheld the $49.8bn representing 76% of the total crude oil revenues from January 2012 to July 2013.
The NNPC stated its position in a release by its General Manager, Media Relations Department of the NNPC, Dr. Omar Farouk Ibrahim.
The statement said: “For the avoidance of doubt, it needs to be stated that the figure of 594.024 million barrels of crude oil given by the CBN as the total crude oil lifting for the period of January 2012 to July 2013 does not represent the correct picture of crude oil lifting for the period. From our records, the correct figure is 618.55m barrels.
“This shows that the CBN understated the actual crude lifting by 4.13%.
He explained that revenues from crude oil liftings are in various categories, namely Equity Crude; Petroleum Profit Tax, Royalty, Third Party Financing and the Nigerian Petroleum Development Company, NPDC. Revenues from each of these categories are statutorily collected by different agencies of the government.
The statement added: “The NNPC collects only one of the aforementioned categories, namely Equity Crude. Petroleum Profit Tax is collected by the Federal Inland Revenue Service, FIRS; Royalty goes to the Department of Petroleum Resources, DPR, Third Party financing goes for Research, Development, Program and Satellite fields Development, while NPDC goes to NPDC for upstream development.
“While NNPC pays proceeds from Equity crude directly to the Federation Account with the CBN, the FIRS and DPR pay PPT and Royalty respectively into the Federation Account with the CBN. The sum total of these proceeds makes up the alleged unremitted revenues.
“The 24% of total crude oil revenue receipts, which the CBN governor is reported to have acknowledged that NNPC remitted, represents the proceeds from the equity lifting which NNPC is directly responsible for. The alleged unremitted 76% was paid to the agencies that are statutorily empowered to receive them for onward remittance into the Federation Account”
The statement advised institutions of the Federal Government and top government functionaries to “seek understanding of issues that are not clear to them from relevant agencies rather than go public with misleading information that is capable of creating public disaffection”.
– The Nation