A Review of the Nigerian Energy Industry

‎NNPC fails to account for $11.6bn LNG dividends – NEITI

NNPC Towers
NNPC Towers

*Demands investigation into transfer of eight oil wells sold by NNPC to NPDC
*Says subsidy regime is fraudulent

*NNPC claims reconciliation is still ongoing

Oscarline Onwuemenyi

10 June 2015, Sweetcrude, Abuja – The Nigeria Extractive Industries Transparency Initiative (NEITI) has accused the Nigerian National Petroleum Corporation (NNPC) of failure to remit about $11.6 billion outstanding total dividends arising from loans and interest repayments from the federal government’s investment in the Liquefied Natural Gas (LNG) into the government’s coffers

The agency therefore called on President Muhammadu Buhari’s administration to intercede in the matter with a view to recovering the said sum from of the Corporation.

The Executive Secretary of NEITI, Mrs. Zainab Ahmed, who disclosed this at an Oil and Gas Conference in Abuja, said amount was uncovered in the agency’s 2012 oil and gas audit together with previous audits.

According to her, “Our 2012 audit report discovered that total dividend loans and interest repayment from the LNG paid to the NNPC in 2012 was $2.8 billion, however, in the course of the NEITI’s audit, the NNPC was unable to provide any evidence that the funds were remitted to the federation as required by law.

“The total amount received by the NNPC from the LNG under the same circumstances which have not been remitted to the federation account stands at $11.6billion.”

Ahmed assured that NEITI is ready and willing to provide every information and data to assist the government to recover the funds, adding that at a time when the new administration is in dire need of funds to tackle complex problems facing the nation, the recovery of the funds should be pursued vigorously with all the political will and seriousness it deserves.

The report, she noted, also highlighted the over $7.5 billion to be recovered from oil and gas companies operating in Nigeria as a major priority for Buhari’s economic policy.

“The $7.5 billion represents clear cases of underpayments, under-assessments of taxes, royalties, rents, etc, revealed by the NEITI in its several independent audit reports which have not been adequately addressed in the past,” a statement released yesterday by the agency’s director of communications, Orji Ogbonnaya Orji, said.

Ahmed also used the opportunity to call for full investigation into the transfer of eight oil wells sold by the NNPC to the Nigeria Petroleum Development Company (NPDC) in 2010 and 2011.

“The position of NEITI is that the whole transaction is not transparent the federal government needs to carry out a full investigation into the sale to ascertain the actual cost of the oil blocks and revenue loss to the federation in the whole transaction,” she stated.

She also conveyed NEITI’s position for the removal of fuel subsidy to save the nation from huge revenue loss and embarrassment that the management of the exercise has represented.

“It has been the position of NEITI that the oil subsidy regime is a fraud that should not be allowed to stand any longer the amount spent so far annually is enough to repair the refineries or even build new ones, oil subsidy should be removed,” Ahmed stated.

She further advised the new administration to provide the necessary political will required for implementation of the other findings and recommendations contained in NEITI’s independent reports, which she noted are quite comprehensive and insightful to guide the government to reform the sector.

The Conference was convened for experts in the oil and gas industry to articulate an advisory agenda that will help the new administration in its plan to reform the oil and gas industry.

NNPC claims reconciliation is still ongoing                                                                                                                               In its reaction to the NEITI disclosure contained in a statement made available to our correspondent the Corporation disclosed that contrary to the impression created by NEITI that nothing was being done to get the money remitted, the matter has since been referred to the Inter-Ministerial Task Team (IMTT) for reconciliation and resolution.

“At the last meeting of the IMTT, it was resolved that the Minister of Petroleum, Chairman of NEITI, Executive Secretary of NEITI, and the Group Managing Director of NNPC should meet on the issue of NLNG dividends and report back to the IMTT.
“Unfortunately, that meeting has not held. However, another meeting of the IMTT is coming up next week and the issue will be taken up from there.
“NEITI as a member of the IMTT is aware of the ongoing efforts to reconcile and resolve the issue of NLNG dividend remittance.”
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