17 March 2016, Sweetcrude, Abuja – The Nigerian National Petroleum Corporation, NNPC, has faulted the claim by the Auditor-General of the Federation, AuGF, that it failed to remit N3.235 trillion to the federation in 2014.
It will be recalled that the Auditor-General of the Federation had, on Monday, disclosed that the NNPC failed to remit N3.235 trillion to the Federation Account for the period ended 31st December 2014.
“The declaration by the AuGF (Auditor General of the Federation) may have been borne out of misunderstanding of how revenues from crude oil and gas sales are remitted into the Federation Account,” said NNPC Chief Financial Officer Isiaka Abdulrazaq in a statement.
“NNPC wishes to state in strong terms that the AuGF’s declaration is erroneous,” he said, adding that the auditor-general had failed to account for costs including a fuel subsidy, pipeline vandalism and maintenance.
“Consequently, the figure owed to the Federation Account as at January 2015 Federation Account Allocation Committee, FAAC, meeting report was N326,142,137,205.79 ($1.64 billion) and not the N3.23 trillion alleged by the AuGF,” he said.
According to him, the report did not include NNPC’s claim of N1,374 trillion as at 2009, against the federation. “All the stakeholders in FAAC meeting are familiar with the N326.14 billion and it is already in the public domain since then to date.
He added that the N1.374 trillion claims against the federation were currently being reviewed by Ministry of Finance appointed Forensic Auditors at the instance of the Minister of Finance.
In 2014, the then central bank governor, Lamido Sanusi, was suspended after accusing the NNPC of failing to pay $20 billion into government accounts between January 2012 and July 2013.
Abdulrazaq further stressed that, “It should also be noted that although this period is before the new NNPC Management’s appointment in August 2015, the management still deems it fit and important to correct any misinformation about the activities of the corporation.”
He added that such misinformation, if not corrected, it would adversely affect the Corporation’s current and future financial and operational plans.
According to Abdulrazaq, since the new management was appointed, it has placed great emphasis on transparency, accountability and integrity. This, it said could be seen with the initiatives such as the publication of NNPC monthly Financial and Operations Reports in all major newspapers as well as on its website.
Others include focus on cost reduction across board which had yielded a drop in monthly operational losses from N30 billion in August 2015 to three billion naira in January 2016. “Restructuring of NNPC is focused on improving the performance and profitability of all NNPC operations,” he said.
Clarifying the remittance process, Abdulrazaq said NNPC was allocated 445,000 barrels per day for processing into petroleum products for distribution in the nation.
He said that any unprocessed crude sold, the proceeds were used to pay for importation of petroleum products. “The proceeds from the sale of these products are remitted to the federation account after deducting the cost associated with the supply and distribution.”
According to him, the total amount of subsidy that had been approved and certified by PPPRA for the period of January 2012 to December 2014 was N2.34 trillion. He added that an additional N7.96 billion subsidy claim was still under reconciliation.
Abdulrazaq said that losses from crude oil and petroleum products as a result of vandalism on its network of pipelines for the period of January 2012 to December 2014 was N202.68 billion. “Petroleum Product Strategic Holding Cost and Pipeline Repairs and Maintenance Cost for the period of January 2012 to December 2014 amounted to N358.88 billion,” he said.
On the alleged $235 million transferred to undisclosed Escrow account, he said that NNPC did not have any secret Escrow accounts.
He added that the alleged $235 million represent proceeds from the sale of gas feedstock to Nigerian Liquefied Natural Gas Limited (NLNG) used to repay part of the Modified Carry Agreement (MCA) loans, applicable royalty to DPR and tax to FIRS.
“The MCA loan was contracted specifically to fund the development of upstream oil and gas projects whose transactions are regularly reported to FAAC as part of the reconciliation of the revenues to NNPC, FIRS and DPR.
“The MCA and all other alternative funding arrangements are annually appropriated by the National Assembly and are therefore fully disclosed to FAAC on monthly basis,” he stated.
He further noted that in carrying out its statutory duties, NNPC would continue to maintain the highest level of transparency and accountability.
The statement said that NNPC was ready to provide clarification on any matter relating to the federation and Nigerian people.