*N142bn deducted for under-recovery in 2017
Abuja — The Nigeria Extractive Industries Transparency Initiative, NEITI, Thursday, indicted the Nigerian National Petroleum Corporation, NNPC, for the under-remittance of N77.92 billion, being proceeds of the sale of domestic crude oil allocated to the corporation in 2017.
In a statement on the release of the report of a pilot study on the sale of Nigeria’s share of crude oil and gas produced in 2017, NEITI also stated that when confronted, NNPC acknowledged the under-remittances, but claimed that it was been owed N797 billion by the federation and that both the corporation and the government was undergoing reconciliation of the said indebtedness.
In the statement signed by its Director, Communications and Advocacy, Dr. Orji Ogbonnaya Orji, NEITI further stated that the NNPC deducted N297 billion from total earnings from the domestic crude oil it statutorily allocates to itself in 2017, claiming the amount was for costs and losses.
From the total deductions of N297 billion, NEITI stated that the NNPC claimed N141.6 billion was for under-recovery on petroleum products; N25 billion was for crude oil and petroleum products losses; while N130.4 billion was for pipeline repairs and maintenance.
“The sum of N77.92 billion was under-remitted by NNPC to the Federation Account from Domestic Crude Allocation in 2017. NNPC acknowledges the under-remittance and states that there is an ongoing reconciliation to net off the N77.92 billion from ‘the established Federation indebtedness to the Corporation of N797 billion, arising from KPMG forensic audit of the Corporation at the instance of the Federation,’” NEITI stated.
NEITI disclosed that total revenue from the sale of the federation share of oil and gas for 2017 was $14.5 billion, comprising $13.18 billion or 90.8 per cent from crude oil and $1.32 billion or 9.1 per cent from gas.
NEITI added that findings from the report revealed that total crude oil production for 2017 was 692 million barrels, stating that out of this volume, the share that went to the federation was 240.9 million barrels representing 35 per cent of the total crude oil production for the year 2017.
“A trend analysis for the year under review shows that the 2017 federation share was four per cent higher than the 231.6 million barrels in the same category for 2016 but was 19 per cent lower than the 297.8 million barrels for 2015. This shows that while there was a slight improvement on the figure for 2016 (a year characterized by vandalism and sabotage of oil facilities), crude production for 2017 was about a fifth less than the 2015 level,” it noted.
Commenting on the report, Executive Secretary of NEITI, Mr. Waziri Adio, stated that the special report was undertaken in furtherance of the recent decision of the global Extractive Industries Transparency Initiative, EITI, to add commodity trading transparency to its scope of coverage through stand-alone and in-depth reports.
The objective, Adio stressed, was to ensure adequate returns to governments, increasing competition and efficiency in commodity trading, and ensuring greater public scrutiny of the resultant revenues.
He said, “Resource-rich countries receive shares of minerals produced in their territories as equity shares or as in-kind payments, and these minerals are usually sold directly or indirectly to commodity traders through state-owned enterprises.
“However, the process and details of these sales are mostly shrouded in secrecy, even when more than half of the revenues from the extractive sector come from these sales. This is why the EITI resolved to beam more search-light on commodity trading. Nigeria is one of the five EITI-implementing countries selected to pilot this enhanced focus.”