Alleged Missing $20bn Oil Revenue: Our true story – NNPC

Timelines of a Saga

21 February 2015, Abuja -CBN Governor writes to Mr. President alleging that “between January 2012 and July 2013, NNPC lifted 594,024,107 barrels of crude oil 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 $49.8 billion or 76% of the value of oil lifted in the same period.”

NNPC Towers

NNPC Towers

September 26, 2013:

Presidency receives CBN Governor’s letter.

September 27, 2013:

President minutes letter to Hon Minister of Petroleum Resources to explain the allegations against NNPC.

September 30, 2013:

HMPR forwards letter to GMD NNPC asking for explanations:

October 2, 2013

GMD NNPC offers explanations to the HMPR.

October 4, 2013:

HMPR writes to Mr. President with detailed explanations.

October 4, 2013 to November 6, 2013.

Nothing was heard about the allegation and NNPC presumed the Presidency and CBN were satisfied with the explanations given.

December 8, 2013

Contents of CBN’s letter leaked to some online publications causing national furore.

Senate Plenary directs its Committee on Finance to investigate the alleged unremitted $49.8 billion.

December 10, 2013

NNPC, in a press release, goes public with its explanations on the allegation, saying that the CBN Governor did not understand the workings of the oil industry and how revenues from oil lifting are remitted to the Federation Account. It added that the CBN actually understated the figures of lifting by NNPC by 4.13 percent.

December 13, 2013

NNPC GMD, Engr. Andrew Yakubu, addresses a World Press Conference debunking the allegations made by the CBN Governor. Engr Yakubu stated NNPC crude oil liftings are made up of the following: 1. Equity crude, 2. Royalty oil, 3. Tax oil, 4. Volume for Third Party financing and 5. NPDC equity volume. He stated that remittances of proceeds from each of the 5 streams are made according to statutory and production arrangements. He explained that all remittances due to the Federation Account had been made into that account.

December 13, 2013

Coordinating Minister of the Economy and Minister of Finance directs Inter-Agency Committee, comprising Federal Ministry of Finance, Budget Office of the Federation, Central Bank of Nigeria, CBN, NNPC, Federal Inland Revenue Service (FIRS) and the Department of Petroleum Resources (DPR) to work to reconcile the different figures given by the two agencies of Government, namely CBN and NNPC.

December 18, 2013

Joint Press Conference held at the Federal Ministry of Finance Headquarters to report the findings of the Inter-Agency Committee. In attendance were the Coordinating Minister of the Economy and Minister of Finance, Minister of Petroleum Resources, Director General of the Budget Office of the Federation, Group Managing Director of the NNPC, Governor of the Central Bank of Nigeria, Chairman of the Federal Inland Revenue Service, the Director of the Department of Petroleum Resources and the Executive Secretary of the Petroleum Products Pricing and Regulatory Agency, PPPRA.

CME announced that the Inter-Agency Reconciliation Committee had established that $39 billion of the alleged $49.8 had actually been remitted to the Federation Account.

CME announced that the Committee was still working to reconcile the balance of $10.8 bn.

December 18, 2013

At the first sitting of the Ahmed Makarfi led Senate Committee on Finance, suspended Gov. of CBN informs the Committee that $12 bn was balance of unremitted revenue to Federation Account.

CME interjected and told the Committee that $10.8bn was balance to be verified by the Inter-Agency Committee.

December 18, 2013

Senator Ahmed Makarfi asks the CME and the parties to go and complete reconciliation process and to return to the Committee with their findings.

January 10, 2014:

Following incessant misleading media reports that the unreconciled $10.8bn was missing and unaccounted for, a press conference was organized where the Group Executive Director of Finance and Accounts, in charge of the Corporation, Mr. Benard O. N. Otti gave a breakdown of the $10.8 being reconciled as follows: Unpaid subsidy $8.49 billion, Maintenance of National Strategic Reserve$0.37 billion, Product and crude oil loses $0.72 billion and cost of pipeline vandalism and repairs $1.22 billion.

February 13, 2014

At resumed hearing of the Senate Committee on Finance, CME informed members and the public that the Inter-Agency Committee had completed its assignment and had certified and signed off on the claims of NNPC to the tune of $8.7 billion for petroleum products subsidy. She said that the Committee had no technical competence to verify the other claims of $2.1 billion for pipeline repairs and maintenance, strategic reserves etc., and suggested that a forensic audit of the claims including what PPPRA (the statutory agency responsible for verifying products importation and subsidy claims) had certified and signed off be undertaken. In making the suggestion, CME had noted that even though the claims of NNPC had been certified, given the extraordinary times, it may be necessary to invite forensic auditors to do a forensic examination.

CME equally called for a legal opinion on the status of NPDC and Third party financing alliances by NPDC

The CBN Governor was asked if he agreed with the finding of the Inter-Agency Committee to which he answered in the affirmative, adding that since the agencies responsible for certification of products importation and subsidy claims have certified the claims of NNPC, CBN was satisfied.

But in a prepared address the CBN Governor said that the amount unremitted to the Federation Account was now $20 billion not the $12 billion that he had earlier said or the $10.8 given by the CME and the Inter-Agency Committee CBN Governor gave a breakdown of the $20 billion to include the outstanding $12 billion (contrary to the $10.8 billion given by the CME and Inter-Agency Committee), $6 billion being gross revenue earned by Nigerian Petroleum Development Company Limited NPDC, a subsidiary of the NNPC and $2 billion being payments to Third parties.

CBN Governor posited that NPDC being a subsidiary of the NNPC must remit all its revenue to the Federation Account in line with the constitutional requirement in Section 162 (10) c.

He also questioned the legality of NNPC floating subsidiaries to do business and keep their funds.

Finally he questioned the propriety of the process of incorporating NPDC and the strategic Agreements it entered into.

CBN Governor informed the Committee that he had sought legal opinion from Senior Advocates of Nigeria before making his presentation.

Senator Makarfi ruled that the Attorney General of the Federation and Minister of Justice be invited to come and give legal opinion on the issue of whether NPDC could defray costs of operations before remitting net to the Federation Account; whether NNPC could float a company to do business and whether the process of floating NPDC was proper and if the strategic alliance entered into with Third parties followed due process.

February 14, 2014

HMPR speaks to Makarfi-led Committee on the reasons why kerosene subsidy still subsists. HMPR informed the Committee that going by the Act establishing the Corporation, for any change of products price to be effected the Honourable Minister of Petroleum must have the new price gazette. She noted that the then Honourable Minister of Petroleum did not gazette the decision to remove subsidy on kerosene. She also recalled the reactions of Nigerians to the attempt by the Jonathan administration in 2012 to remove subsidy on PMS, as a prelude to removing subsidy on kerosene, noting that if Nigerians would not accept PMS subsidy removal, how could they accept kerosene subsidy removal considering that it is the fuel used by the majority of the poor people of the country.

NNPC accounts for unremitted $10.8bn to Federation Account with submission of documents to Senate Committee on Finance. NNPC stated that the relevant agencies had signed off on the subsidy claims of the Corporation in the sum of $8.7 billion and that documents supporting losses from crude oil and products theft, pipelines vandalism and maintenance, security and maintenance of strategic reserves etc are being submitted to the Senate Committee for verification.

Even though the CBN Governor had admitted that not all gross revenue earned by NPDC is to be remitted to the Federation Account, he did not determine how much of the $6 billion is to be remitted. Yet, his allegation of unremitted $20 billion was made up of all the gross revenue of $6 billion from NPDC.

The Committee asked NNPC to explain the rationale behind strategic alliances between NPDC and its partners.

February 20, 2014

In response to the Senate Committee’s enquiry Attorney General of the Federation informs Senate Committee that NNPC is legally empowered to defray cost of operations from its revenue. Secondly he confirms that NNPC was empowered to float companies to do business. On the third issue, namely whether due process was followed in signing the strategic partnership agreements, he informed the Senate that he was yet to study the documents he received on that as he got them on his way to the Senate.

February 24, 2014

Commenting on a question about subsidy on kerosene during a Media chat, President Jonathan confirmed NNPC’s position that subsidy on kerosene had not been removed by the Government.

February 25, 2014

Following media reports that NPDC denied receiving $6bn from NNPC, being NPDC’s revenue during the period under review, the Managing Director of NPDC, Mr. Victor Briggs, issued a press statement confirming that NNPC remitted the said amount into the NNPC/NPDC account which warehouses all of NPDC’s earnings from its operations.

March 13, 2014

At the resumed hearing of the Senate Committee, a Director from the Office of the Accountant General of the Federation, Mr Salawu Zubairu, told the Committee that from their records NNPC had remitted all the funds meant for remittance into the Federation Account within the period under review.

At the same hearing, a representative of the Department of Petroleum Resources, DPR, Mr Alfred Ohiani, also confirmed to the Committee that NNPC paid all royalties on crude oil liftings during the period under review into the DPR account with the Central Bank of Nigeria.

The Committee also took evidence from Third Party Operators (JV partners from Total E & P and Mobil Producing Nigeria Unlimited) who were represented by Mr Chidi Momah and Mr Olusegun Banwo. The two representatives confirmed that their companies received the amounts stated by NNPC as having been paid to Third Parties during the period under review.

The Committee adjourned sine die to enable members go into a technical session to review all the presentations in order to be able to come up with their conclusion.

May 28, 2014

The Committee submitted its report to the Senate. Some of the observations and recommendations of the Committee include:

a.)  That no oil revenue amounting to $49.8bn, $20bn, $12bn, or $10.8bn as alleged by the former CBN governor is missing

b.)  That the total expenditure on kerosene subsidy for the period (January 2012 – July 2013) which was unbudgeted was $4.43 billion. It is not anywhere near $8.7bn that the APC lying machine is bandying about.

c.)  That a Supplementary Appropriation Bill covering the amount be sent to the National Assembly for approval considering the ambiguity in government policy on kerosene subsidy and the fact that the PPPRA has verified the importation of the products.

d.)  That NNPC should remit the sum of $262 to the Federation Account being “expenses it could not satisfactorily defend in respect of Holding Strategic Stock Reserve; Pipeline Maintenance and Management Cost; and Capital Expenditure.

July 10, 2014

The report of the Committee was debated on the floor of the Senate at plenary and it adopted most of the recommendations of the Committee. It particularly resolved, based on the recommendation of the Committee that the allegation of the former Central Bank Governor that some money was missing was to all intents and purposes false and that no money (be it $49.8bn, $20bn, $12bn, or $10.8bn) was missing.

The senate also advised President Goodluck Jonathan to prepare and present to the National Assembly a supplementary budget “to cover the expenditure in the sum of N90.6bn for PMS (premium motor spirit) subsidy 2012 and N685.9bn for kerosene subsidy expended without appropriation by the National Assembly” based on the Committee’s finding that the expenditure was not based on a flagrant disobedience to the laws of the land in the light of the ambiguity surrounding the issue of kerosene subsidy removal.

Other Salient Issues

–  On the recommendation by the Senate that NNPC should refund, the sum of $262bn which it expended on holding strategic stock reserves and maintenance and management of pipelines, it must be understood that NNPC by the law establishing it (the NNPC Act) is meant to act the supplier of last resort of petroleum products in the country. This role entails that it must ensure the availability of petroleum products to the Nigerian public at all times irrespective of circumstances.

– The operation and holding of strategic stock reserve to guard against supply shocks is essential to the fulfillment of NNPC’s role as a supplier of last resort.

–  The maintenance and management of a network of pipelines is also strategic to the effective performance of the function the supplier of last resort.

–  Unfortunately, there is no budgetary provision for these activities that are essential to the efficient performance of the statutory role of supplier of last resort.

–  The PPPRA template does not make provision for the recovery of pipeline maintenance and management cost.

– If NNPC does not hold strategic reserves and maintain the pipelines whenever they are broken it cannot guarantee efficient supply of petroleum products across the country in keeping with its statutory role as a supplier of last resort.

–  The same National Assembly that wants NNPC to refund the $262bn expended on these two strategic activities is usually the first to summon the Management of the Corporation whenever there is a hitch in products supply and distribution resulting in fuel scarcity.

– By this recommendation, NNPC is being put in a very difficult position to perform its statutory role as the supplier of last resort.

–  On the issue of kerosene subsidy, the committee observed that there was some ambiguity regarding government policy on the issue which made the Ministry of Finance and the Ministry of Petroleum to toe different lines on the matter.

–  Whereas the Ministry of Finance and the National Assembly acted on the Presidential memo directing the Minister of Petroleum and NNPC to remove kerosene subsidy by stopping appropriation for kerosene subsidy, the Ministry of Petroleum could not act on effect the Presidential directive because of impracticability of the directive which instructed the Minister of Petroleum to remove subsidy on kerosene without making it public. The Petroleum Act stipulates that prices of petroleum products should be increased by the Minister of Petroleum Resources after announcing such increment in public media and the Federal Government Gazette. The Minister of Petroleum Resources at that time could not straighten out this contradiction in the directive with the late President Umaru Yar’Adua before his illness got worse and he eventually died.

–  The Minister of Petroleum Resources, Mrs Diezani Alison-Madueke, explained in the course of the Senate Committee hearing that she did not see any logic in withdrawing subsidy from kerosene which is the fuel relied upon by the very poor for cooking and lighting while retaining subsidy on petrol which is fuel powering cars by the rich.

– President Goodluck Jonathan also threw light on the issue in one of his media chats when he explained that kerosene subsidy was not removed and that it was not published in the Gazette as stipulated by law.

–  In the light of the above, that funds were expended for kerosene subsidy without a valid appropriation by the National Assembly as required by law was not exactly an illegality as the lying machine of the APC tried to portray it.

–  Indeed, the Committee recommended that the President could send in a Supplementary Appropriation to cover for the amount spent on kerosene subsidy so as to straighten out the whole issue.

February 2, 2015

–  The report of the Forensic Audit conducted by the internationally reputable accounting firm, PriceWaterhouseCoopers (PwC), on NNPC over the alleged unremitted $49.8bn was submitted by the firm to President Goodluck Jonathan at the State House, Abuja.

–                                    The President immediately handed over the report to the Auditor-General of the Federation with a directive to study it and make the key findings of the report public

February 5, 2015

– The Auditor-General, in a press conference, made the highlights of the Forensic Audit Report known to the public. The highpoint of his disclosure was that the report recommends that NNPC and its Exploration & Production subsidiary, the Nigerian Petroleum Development Company (NPDC) are to remit the sum of $1.48bn being “signature bonus due for divested assets and taxes/royalties”.

–  What the Auditor-General failed to explain to the public is that the signature bonuses, royalties and taxes on the oil wells divested by Shell and assigned to NPDC were not part of the oil lifting revenues ($49.8) which the former CBN Governor (now Emir of Kano) alleged was unremitted by NNPC and which was the reason for the Forensic Audit.

–  The recommendation to pay the signature bonus for the divested oil wells was not an indictment in anyway over the alleged unremitted $49.8 or any of the later versions of the amount that the former CBN Governor came up with.

February 11, 2015

–   Following the barrage of media reports claiming that NNPC was indicted in the PwC Forensic Audit Report because of its recommendation that NNPC should pay the sum of $1.48bn to the Federation Account, the Group Managing Director of NNPC, Dr. Joseph T. Dawha, addressed a press conference to explain the recommendation and why it does not amount to an indictment.

–  The GMD explained that the $1.48bn represents the balance of the book value of the assets assigned to NPDC upon divestment by Shell as computed by the DPR.

–  He further explained that the full book value of the assets as computed by DPR was $1.847bn out of which NNPC had paid over $300m as a token to indicate its interest in acquiring the assets pending when NNPC and DPR come to terms on a mutually acceptable estimate of the book value of the assets as NNPC had raised concerns over some of the parameters that DPR used in arriving at its figures.

–  On deductions and kerosene subsidy, the GMD explained that the PwC’s report was unequivocal that the NNPC Act empowers NNPC to defray its costs from crude oil sales proceeds and so NNPC could not be blamed for doing what the law prescribes, adding however that NNPC was ready for the legal reform proposed in the PIB.


– The Forensic Audit Report, like the Senate Committee on Finance’s Probe Report before it, clearly stated that all the revenue generated from FGN crude lifting for the period of 1 January 2012 to 31 July 2013 amounting to $69.34bn was fully accounted for

–  Nowhere in the report was it stated that NNPC was indicted over the allegation of unremitted or missing oil revenue.

–  The alleged issue of missing oil revenue to the tune of whatever amount ($49.8bn, $20bn, $12bn, $10.8bn?) has been laid to rest by the Senate of the Senate of the Federal Republic of Nigeria and an independent audit firm, PwC.

– In the light of the above, anyone or organization still circulating information about any unremitted or missing oil revenue or that NNPC was indicted in any report over the allegation is only either being mischievous or displaying his or its disdain for truth and only needs to be pitied.


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