NNPC fails to remit N726bn in three years as Nigeria loses N100bn to inefficiency


NEITI audit could not trace remittances in relevant accounts at CBN

A government report has indicted the Nigerian National Petroleum Corporation, NNPC, of failing to remit $4.84 billion (726 billion) to the Federation Account between 2009 and 2011.

The money was part of payments the national oil company should have made to the federation account in respect of dividends and repayment of loans by the Nigeria Liquefied Natural Gas, NLNG, between 2009 and 2011.

The report, commissioned by the Nigeria Extractive Industries Transparency Initiative, NEITI, was presented on Thursday in Abuja.

The audit, conducted by Sada Idris and Co., an indigenous audit firm commissioned in March 2012 to carry out independent assessment and reconciliation of financial flows between 2009 and 2011, noted that there is no record in the Central Bank of Nigeria/NNPC JP Morgan Account or the Federation Account that such monies were remitted.

And another loss

NEITI’s Board Chairman, Ledum Mitee, who presented the findings of the audit exercise noted that the country recorded a loss of about N98.3 billion during the period owing to the differential in the conversion rate adopted by the NNPC and the CBN.

Details of the report showed that Nigeria earned about $143.5 billion (N21.5 trillion) from the oil and gas sector for the reporting period. It also showed that the NNPC was indebted to the Federation Account to the tune of about N1.305 trillion as at December 31, 2011.

According to Mr. Mitee, the audit also highlighted the unresolved differences between what government received and what companies claimed to have paid.

He said the total financial flows to Nigeria consisted mainly of proceeds from the sales of equity crude; royalty payments; signature bonuses; concession rentals; gas flaring penalties; petroleum profit tax, PPT; and company income tax, CIT.

“A breakdown of these earnings shows that sales of crude oil and gas within the period under review amounted to $81.9 billion (N12.3 trillion),” Mr. Mitee said, adding that the total revenues that accrued to government from PPT, royalty, signature bonus, gas flaring penalties and concessional rentals amounted to about $45.7 billion (N6.9 trillion).

He also said revenue from companies’ income tax, value added and withholding tax, within the period amounted to $6.1 billion (N915 billion), while about $4.8 billion (N720 billion) was reported as revenue from dividends and repayment of loans by NLNG.

Mr. Mitee said the total revenue flows to states arising from withholding tax and pay-as-you-earn taxes was $1.5 billion (N225 billion), while the total revenue flows to other entities arising from contributions to the Niger Delta Development Commission, NDDC, and education tax is $3.2 billion (N480 billion).

According to him, the total financial flow represents a decrease of four per cent from what government earned in the sector in 2006-2008. In that period (2006-2008), Nigeria earned $148.8 billion (N22.3 trillion) as against the reported government earnings of $143.5 billion (N21.5 trillion) for the period 2009-2011.

A recurring offence

The audit noted that non-remittance of NLNG dividends and payments has been a recurring issue, as about $3.996 billion (N600 billion) was also reported as received, but not remitted by NNPC in the previous audits.

“The audit reveals that NNPC owes N1.305 trillion to the Federation Account as at 31st December, 2011. This is a trade debt. This is because the sum of N928 billion falls within the 90 days permissible period, leaving a balance of N377 billion, which the NNPC is currently paying instalmentally to the federation account”, Mr. Mitee said.

The report recommended, among others, the need for government to confirm the ownership of the 49 per cent equity investment in the NLNG. It also called for the review of the daily crude allocation of 445,000 barrels per day, allocated for local refining, to the level of available local refining capacity to bridge the gaps in the process.

Mr. Mitee also alleged that about N1.4 trillion was illegally deducted by the NNPC as oil subsidy claims from domestic crude sales proceeds before remittance to the federation account, pointing out that this was in contravention of stipulated procedures.

He said the standard practice is for NNPC and other oil marketers to receive their subsidy payments from the Petroleum Support Fund, PSF, after due verification from the Petroleum Products Pricing Regulatory Agency, PPPRA.

Mr. Mitee identified some oil companies, including NECONDE Energy Ltd, SEPTA Energy Limited, Energia Limited and Emerald Energy Resources, that refused to cooperate with NEITI and its auditors during the audit. He said that appropriate sanctions would be imposed on them in accordance with the enabling Act.


    Yet FG fights Oby. Where is Labaran Maku with his running mouth

  • Mamman Bako

    Nigeria National Punishment Corporation (NNPC), the agency has become relentless in punishing Nigeria.