13 April 2017, Sweetcrude, Abuja – The Nigeria Extractive Industries Transparency Initiative has revealed that the Nigerian Petroleum Development Company, NPDC – the upstream arm of the Nigerian National Petroleum Corporation, NNPC, was owing the federation $5.531 billion and N72.435 billion,
According to NEITI, the amounts represented unremitted funds by the company to the Federation Account.
It stated that stated that the unremitted funds from the NPDC fell under three categories, adding that the first was the full payment for the 12 Oil Mining Leases divested from the Shell and Agip joint ventures.
Explaining how the debt of the NPDC to the federation came about in its latest policy brief, which focused on unremitted funds, economic recovery and oil sector reforms, the agency stated that the NNPC’s divestment of 55 per cent of its stake in the Shell JV was valued at $1.8bn by the Department of Petroleum Resources.
“However, considering the figure from Shell’s divestment of between 30 and 45 per cent of its own share in the same joint venture, the PwC arrived at an alternative commercial valuation of these assets of $3.4bn. This means the eight OMLs were undervalued by, or valued at a discount of 47 per cent.
“Despite this, the NPDC has paid only $100m on these OMLs divested between 2010 and 2011, leaving an outstanding of $1.7bn of the discounted valuation. The four assets divested in 2012 by the NNPC to the NPDC under the Agip JV were not valued until four years later. In the third quarter of 2016, the DPR valued these four OMLs at $2.225bn. The NPDC has asked for clarification of the basis of the valuation. Therefore, the NPDC owes the federation $3.925bn for these 12 divested assets.”
NEITI said its audits also revealed that cash calls amounting to $552m were erroneously paid on these divested assets by the National Petroleum Investment Management Services, the investment arm of the NNPC.
It observed that although the NPDC refunded $424m to NAPIMS, which was not refunded to the Federation Account, the NPDC had yet to refund $148.278m and N2.42bn from the cash-calls mistakenly paid to it.
The agency further stated that the third element of unremitted revenues in this category related to arrears of liabilities of taxes, royalties and levies.
NEITI said its 2014 audits revealed that as of December 2014, the NPDC had failed to remit $1.458bn for royalty oil and royalty gas, among others.