Senate constitutes Committee to probe non-remittance of N1tn by NNPC

16 June 2016, Abuja – The Senate wednesday constituted an ad hoc committee to probe the allegation by the National Extractive Industries and Transparency Initiative (NEITI) that Nigerian National Petroleum Corporation (NNPC) failed to remit over N1 trillion to the federation account in 2013.

*Senate Chamber.

*Senate Chambers, Abuja

The move was a spontaneous reaction to the submission by the Executive Secretary of NEITI, Mr. Waziri Adio, before the National Assemblyduring yesterday’s plenary. Adio had been summoned by the Senate last week to appear before it yesterday and brief it on the allegation of non-remittance of over N1 trillion to the federation account by NNPC.
Adio had in his submission, said the audit of the 2013 oil and gas report showed that the country made $58.07 billion out of 800.3 million barrels of crude oil adding that out of this sum, the total outstanding revenue from NNPC stood at $3.787 and another N358.287 billion.

According to him, the total losses to the federation as a result of offshore processing arrangement (OPA) crude oil swap, crude oil theft, among others, stood variously at $5.96 billion and another N20.4 billion adding that the total under-assessment and under payment by companies due to contested pricing methodology was $599.8 million in 2013.
Furthermore, he said the income of $58.07 billion realised in 2013 implied a decline of eight per cent when compared to $62.99 billion generated in 2012.

Also said the decrease in 2013 was largely due to a drop in the sales revenue from crude oil and gas which he attributed to a reduction in production and lifting volume caused by the divestment of the federation equity in some oil mining licence (OMLs) notably a Shell Petroleum Development Company (SPDC) joint venture (JV) calls from which NNPC lifted crude oil on behalf of NPDC instead of the federation.

He also attributed the decline to deferred production and crude oil losses and destruction of production facilities and pipeline oil breakages as well as crude theft. He added that there was a reduction of 25 per cent from $24.580 million in gas flared penalty in 2012 to $18.475 million in 2013.

The NEITI boss said payment was not made for four OMLS in NAOC JV assigned in December 2012 neither was the deed of assignment containing the value paid. He also disclosed that whereas eight OMLS assigned to NPDC from Shell JV between 2010 and 2011 was valued at $1.8 billion only $100 million was paid into the federation account while NPDC allegedly sat on the remaining sum of $1.7 billion.

Adio further told the senators that whereas between 2005 and 2013, Nigeria Liquefied and Natural Gas (NLNG) paid $12.9 billion dollars to NNPC, the corporation only acknowledged the payment but failed to remit the money to the federation account.

After the Senate President, Bukola debated the submission of Adio, Saraki constituted a nine-man committee with the following terms of reference: re-examination of financial processes, fiscal audit of NEITI, financial loss and leakages to the government, among others.

He said: “Based on the fact that the issues we talked about cut across a lot of the different standing committees, and in view of the enormity involved, the general opinion is that we will set up an ad-hoc committee with the responsibility of addressing them; with the terms of reference to reexamine the financial processes and the fiscal audit report of NEITI; the financial loss and leakages to government and all its ramifications; remedial measures and sanctions where necessary, and of course, more importantly any relevant legislative action that would be required to block all forms of leakages.”

Members of the committee are Senators Tayo Alasoadura; Bassey Akpan; Senator Andy Uba; John Enoh; Jibrin Barau; Chukwuka Utazi; Kabir Marafa; Solomon Adeola and Bukar Mustapha. The committee was given four weeks to report back to the Senate.

Meanwhile, the House of Representatives Committee on Maritime Safety, Education and Administration yesterday heard that the Nigerian Maritime Administration and Safety Agency (NIMASA) is being owed $3.78 billion dollars by the Nigerian National Petroleum Corporation (NNPC) and other government agencies.

The debts are default on sundry charges and levies owed to NIMASA over a 10 year period.
The other debtor agencies include the Pipeline Products Marketing Company (PPMC and the National Petroleum Investment Management Services (NAPIMS).

NNPC and PPMC owe $3billion while NAPIMS owes $780 billion.
The Director General of NIMASA, Mr. Dakuku Peterside, in his presentation to the committee noted that the defaults on the three per cent levy on gross freight earning on incoming and outbound cargo are due to double billing, disclaimed and disputed bills and actual debt.

He said no debts were supposed to have incurred on the two percent surcharge contract sum on cabotage operating vessel.

“The debt under the ship-to-ship (STS) is a deliberate attempt by companies not to pay non- remittance by international oil companies to the agency,” he said.

Over 5,300 companies have defaulted on the STS charge, he disclosed.
Dakuku however did not provide the total figure owed to NIMASA by government and private organisations.
The Minister of Transport, Mr. Rotimi Amaechi lamented that NIMASA has acquired a bad image under the last administration.

Amaechi, who was represented by the Permanent Secretary of the Ministry, Mr. S. Zakari added that the current administration therefore decided to carry out full investigations into the activities of the agency.
“Mr. Chairman, the negative image of the Agency consequent upon its actions, the present administration was disturbed that appropriate necessary measures were put in place to amongst others verify the petitions and allegations of unwholesome reckless management of financial and human resources in the agency,” he said.
“Furthermore, and arising from investigations which are ongoing, a number of the agency’s top management and senior staff are either facing trial or are being investigated by relevant agencies. it is also noteworthy that Mr. President has since approved performance audit of the whole maritime agencies. This will holistically address most of these issues and help to block most of the leakages,” Amaechi added.

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