A Review of the Nigerian Energy Industry

Jonathan announces audit of NNPC to unravel missing oil revenue

President-Goodluck-Jonathan25 March 2014, Sweetcrude, Lagos – President Goodluck Jonathan Tuesday said that because of a controversy over billions of dollars in oil export revenue unaccounted for by state oil company NNPC, the government has authorized a forensic audit of the behemoth.

A statement by presidential spokesman Reuben Abati quoted Jonathan saying in a meeting with Nigerian community members in the Netherlands, that the Petroleum Industry Bill (PIB), a piece of legislation intended to radically overhaul Nigeria’s oil industry, including unbundling the Nigerian National Petroleum Corp., would be passed into law before the current parliament ends its session next year.

“There are issues in NNPC [accounting for missing money], but we are on it,” Jonathan said in the statement.

“To reassure Nigerians of [the government’s] commitment to openness, transparency and probity, the Federal Government had authorized a professional forensic audit of NNPC accounts,” the president said.

NNPC manages the Nigerian government’s interests in joint ventures with foreign oil companies and also manages the four state-owned refineries.

Suspended Nigeria’s Central Bank Governor Sanusi Lamido Sanusi told parliament in February that NNPC had failed to remit $20 billion of the $67 billion it earned from crude sales between January 2012 and July 2013 into the federation.

Jonathan, however, said the conflicting figures given by the bank’s governor, first $49.8 billion and later $20 billion on missing oil money were misleading.

Jonathan’s administration faced criticism by opposition the oil money could have been siphoned off to fund campaigns ahead of general elections next year.

NNPC has repeatedly denied allegations of impropriety, saying the money was used to offset the costs of fuel subsidies, repairing vandalized pipelines and the potential revenue lost to oil theft.

Several earlier investigations by parliament and the government have criticized NNPC for lacking transparency and for alleged corruption, but there has been a lack of political will to execute any recommendations resulting from the various probes, analysts said.

Meanwhile, Jonathan said the long delayed oil sector reform legislation, the PIB, would be passed by the seventh session of parliament before it winds up next year.

“The National Assembly will, as soon as it completes work on the 2014 budget, continue with the PIB as their inability to ensure its passage into law at this time will amount to its transfer to the eighth assembly,” Jonathan also said in the statement.

“This is a situation that will not be seen as being popular, since the bill was brought forward from the sixth assembly,” Jonathan said.

Despite repeated promises by Jonathan’s administration in the past, analysts said PIB was unlikely to be passed into law before the 2015 elections.

The legal uncertainty over the PIB’s future has stalled billions of dollars of investment, unwelcome news for a country dependent on oil revenues for 80% of government funding.

The complex piece of legislation will alter everything from the fiscal framework for offshore deepwater developments to a new royalty and taxation regime for oil companies and local ownership and production in the sector.

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