19 December 2013, Abuja – Minister of Finance, Dr. Ngozi Okonjo-Iweala, has said that the controversy between the Central Bank of Nigeria and the Nigerian National Petroleum Corporation over the missing $49.8bn has been resolved.
Okonjo-Iweala spoke on Wednesday in Abuja at a joint news conference with the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke; CBN Governor, Mr. Lamido Sanusi; Director-General, Budget Office of the Federation, Dr. Bright Okogu; and the Group Managing Director, NNPC, Mr. Andrew Yakubu.
However, the officials, who appeared before the Senate earlier on Wednesday openly contradicted one another on the amount of shortfall between what was supposed to accrue to the Federation Account from crude oil sales and the actual accrual.
While Sanusi said $12bn shortfall had been discovered by all the agencies involved during their reconciliation meetings, Okonjo-Iweala quickly interjected that $10.8bn was the actual amount involved.
He said a lot had happened since he raised the alarm about the unremitted funds because the CBN, ministries of Finance and Petroleum Resources, Federal Inland Revenue Service and the Department of Petroleum Resources set up a joint committee to reconcile their differences.
He said the committee had made a lot of progress, especially with the NNPC explanation that $24bn of the amount in question, which was put at $67bn, was actually not its crude but that which was shipped on behalf of third parties.
He said the third parties included oil companies that paid taxes in crude and the Nigerian Petroleum Development Company for third party financing, adding that “that already addresses half of the figure ($49.8bn).
Sanusi added that the second part of the alleged missing funds was about domestic crude lifting, which was put at $28bn and “from which we feel there is a shortfall and we had a press conference and talked about that shortfall.”
The CBN boss said, “There is a general consensus among us that there is a shortfall even though the amount is being disputed; for us in the central bank, the shortfall is about $12bn.
“Now, we are still in the process of reconciling that figure and we have not yet started talking about the export sales tax, which is $20bn, which we will reconcile.
“The finance ministry has told us that even before this letter, there had been ongoing negotiations and discussions with the NNPC and the FAAC, and these numbers have always been discussed at the level of convenience of the finance (ministry).
“So, since the objective of this committee and for all of us on this side is actually to get to the bottom of it and find out exactly the amounts that need to be remitted and what needs to be done and recommend action, what I will like to do is that given the progress, we have made a request to be given more time to continue with this process and come back with a final position among us”
However, Okonjo- Iweala interjected and said, “I just want to add that what we found out was $10.8bn, he (Sanusi) mentioned $12bn.”
She said although the shortfall had been acknowledged by the NNPC, its magnitude was still being disputed by the corporation.
Okonjo-Iweala said, “We have been able to get to the bottom of the $49.8bn that was indicated in the CBN memo. But also due to the way that the accounting for the crude was read, some of it that was being lifted for other parties to the tune of $24bn was said to be missing, but it has been accounted for.
“So, the bulk of the sum of $49bn has been accounted for and that is what the reconciliation exercise is about. So, it is very clear that this is not missing.
“However, both finance (ministry) and NNPC have been in discussion to reconcile. We do so every month after the Federation Accounts Allocation Committee meeting. We reconcile our figures. It is not an easy thing.
“In the course of the reconciliation, from January 2012 to July 2013, we have looked at a shortfall of about N1.7tn, the equivalent of $10.8bn.
“That is the amount that we have been discussing; and of course, the NNPC has been disputing some of it, but it is an ongoing reconciliation. We will still continue; we do it every month.
“We will continue our work after now until we can come to terms with what is actually the shortfall and what is due to come to the Federation Account.”
Sanusi had said the fact that he raised the alarm about the alleged missing money was not a conclusion that it was diverted but that he was merely performing his role as banker to the Federal Government.
He said, “The governor of the central bank did send that letter with those contents because the CBN, the finance ministry and the Federal Government were very concerned over the years by the very low rate of accretion to the reserves, particularly the depletion of the Excess Crude Account in spite of what seemed to be very high level of oil sales.
“Now, in investigating and trying to understand where the revenue leakages were, our attention was drawn to the huge difference between what appeared to be exports of crude made by the NNPC and the amount repatriated into the crude account of the Federal Government.
“The numbers were $65bn exported by NNPC and $15bn repatriated to the Federation Account out of that. Now, in keeping with our duty as bankers to the government, we have the responsibility to alert the President to the situation and request a thorough investigation of this matter.
“I repeat that we did not see the letter as the conclusion of the investigation, but an invitation to investigate; so, the conclusion that $49.8bn is missing was wrong as we had the allegation that it was not remitted.”
But explaining the reason for the shortfall, the NNPC, in a joint statement with the CBN and the Ministry of Finance, blamed it on subsidy claims, undiscovered crude, product losses and cost of strategic petroleum product storage not currently captured in the Petroleum Products Pricing and Regulatory Agency’s template for refunds.
The corporation said the figures were well known to all stakeholders at the Federation Accounts Allocation Committee, adding that the shortfall was always updated on monthly basis.
It, however, said all parties concerned were working through the ongoing reconciliation efforts to resolve the shortfall.
Admitting that there was some level of shortfall in the amount remitted to the Federation Account, Alison-Madueke argued that the deficit had been known for a long time.
She said, “We have come to a very clear understanding that there is a listed amount of which most part has been accounted for. There is a shortfall, which has already been mentioned but that shortfall has been known for quite some time.
“It has been acknowledged by the NNPC, but the extent of the shortfall has also been disputed by the NNPC for quite some time now. The NNPC has always participated in the reconciliation meetings with the CBN, FIRS and DPR, and that will continue.”
According to her, the reconciliation efforts are in order to come to an agreed figure. She stressed that crude oil production in Nigeria had been under a lot of scourge due to the high level of theft.
“We have been very aggressive to increase our production and reduce the level of theft. In terms of our efforts, we have over the last two weeks seen an increase from a drop of 2.2 million barrels per day to what it is today, which is 2.38mbpd,” the minister said.
At the Senate, the President of the upper legislative chamber, David Mark, described the issue of the $49.8bn as very important, hence, the decision of the Senate to ask its committee to establish the facts.
December 2013, Abuja –