PTDF: Nigeria spent N120 billion on project whose impact ‘cannot be ascertained’

The Petroleum Technology Development Fund (PTDF) has not delivered visible impact in the Nigerian petroleum industry, a Nigerian Extractive Industries Transparency Initiative (NEITI) report has said.

The transparency agency said despite government’s huge investment in the operations of the Fund, the impact of its capacity-building efforts on the oil and gas industry ”cannot be ascertained.”

It recommended an impact assessment of the Fund’s operations by reviewing its activities to ensure the huge investment by the government since its inception would promote Nigeria’s local content.

But, on Friday the Fund reacted to the report, describing the recommendation as “presumptive and illegitimate conclusion.”

PTDF mandate

The PTDF was set up to undertake the training and education of Nigerians, develop indigenous manpower, and ensure technology transfer/acquisition in various critical sectors of the oil and gas industry.

The agency’s mandate includes promoting petroleum technology and manpower development through research and training to make Nigeria a human resource centre for the West African sub-region.

Also, the agency was mandated to make suitable endowments to faculties in Nigerian universities, colleges or institutions; supply suitable books and training equipment, and sponsor regular visits to oil facilities, refineries, petrochemical and other plants in the petroleum industry.

NEITI fiscal allocation audit

The findings and recommendations were contained in the NEITI Fiscal Allocation and Statutory Disbursement (FASD) Audit for the period 2012 to 2016.

The audit approved by the Executive Council of the Federation in December 2012 covered revenue receipts and disbursements from the Federation Account from the oil and gas sector.

Findings

To realise its mandate, the report said over the period, about N118.9 billion was remitted to the PTDF from the total revenue inflow of N221.9 billion from signature bonus realised by the Department of Petroleum Resources.

NEITI said findings showed the Fund spent about N116.3 billion from the remitted revenue for its services for the period.

Details showed that about N42 billion, or 36 per cent, was spent on PTDF-assisted projects; scholar-related expenditures took N29.6 billion, or 25.5 per cent, and staff cost/administrative cost took N22.6 billion, or 19 per cent.

The remaining N22.7 billion, or 19.5 per cent, covered training expenses, workshops & seminar, travelling and accommodation costs.

Operating cost differential

However, the report said actual capital expenditure for the period ”differed significantly from the approved budget for the Fund’s capacity building programmes”.

In 2012, the report said the PTDF incurred N23 billion gross deficit as a result of not receiving a signature bonus during the year.

But, in 2013, 2015 and 2016 fiscal years, the report said the agency recorded 20 per cent, 41 per cent and 39 per cent operating surpluses respectively.

Operating surplus is the net balance of revenue an agency or organisation realises after expenditure on all core business activities and recurrent expenses for the fiscal year.

Part IV, section 22 of the Fiscal Responsibility Act, 2007 requires government agencies to maintain operating surplus and general reserve funds.

Regardless of the laws regulating their operations, the agencies are expected to allocate 20 per cent of their operating surplus to reserve at the end of each financial year.

The balance of 80 per cent is, mandatorily, expected to be paid into the federal government’s Consolidated Revenue Account not later than a month following the statutory deadline for publishing its accounts.

Accumulated Cash Surplus

But, NEITI said PTDF may have defaulted from complying with the law, as it allowed its operating surpluses to accumulate, resulting in huge cash balances left utilised over the period.

From about ₦19 billion in 2012, NEITI said its finding showed the Fund’s accumulated operating surplus rose to N62 billion by 2016.

Despite these huge expenditures and accumulated operating surpluses, NEITI said it was difficult to ascertain the fund’s impact on the petroleum industry through the exercise of its mandate.

“Of the numerous numbers of schools funded by the Fund (PTDF) under the overseas scholarship scheme (OSS), it is difficult to ascertain the production of successful scholars who returned after their study programmes and integrated into the Nigerian oil and gas industry,” NEITI said in its report.

Recommendations

To reverse the trend and fast track the Fund’s realisation of its mandate, NEITI urged the government to review its priority on overseas scholarship awards and focus attention on domesticating its interventions.

It urged the PTDF to drastically cut down on the costs of sponsorship of foreign programmes and said revenues saved could be redirected from foreign training institutions and organisations to the benefit of Nigerian institutions.

Given the level of investment since inception, NEITI called for an impact assessment of the Fund’s mandate to ascertain how its capacity building programmes have impacted the development and promotion of Nigeria’s local content in the oil and gas industry.

PTDF, unimpressed

In his reaction, the spokesperson of the PTDF, Kalu Otisi, in a response to PREMIUM TIMES on Friday, said the recommendations contained in NEITI’s report were ‘presumptive’ and ‘illegitimate’ conclusions.

Mr Otisi said some of the ex-scholars of the fund have since been engaged by the oil majors, like ExxonMobil, Chevron, while the agency is making a meaningful impact in other areas of its intervention.

“Apart from the Master’s programme, those in the PhD category are targeted at the university lecturers. Those awarded the scholarship have the condition precedent to go back to their various universities and apply the knowledge they acquired, by teaching young students in oil and gas-related disciplines.

“The recommendation for the review of the Fund’s capacity building activities is not suggestive of failure to fulfil its mandate. It is an illegitimate conclusion. The basis for the recommendation is presumptive because the scholarship scheme is only one aspect of our capacity building interventions.

“There is also the research, which has the PTDF Endowment, the annual research grant competition, and the institutional capacity intervention to upgrade the universities.

“Both have recorded substantial breakthroughs that have been patented. The idea is to use the research findings to solve specific problems in the oil and gas industry, like the problem in the refineries,” Mr Otisi said.