31 January 2013

Nigeria: NNPC Yet to Remit N1.305 Trillion to Federation Account - NEITI Report

Photo: Vanguard
Nigerian National Petroleum Corporation cartoon.

The Nigeria Extractive Industries Transparency Initiative (NIETI) says the NNPC has yet to remit N1.305 trillion to the Federation Account as at December 2011.

Mr Ledum Mitee, Chairman, NEITI National Stakeholders Working Group, disclosed this on Thursday in Abuja at a public presentation of its independent audit report for the oil and gas industry spanning 2009 to 2011.

"The audit report reveals that NNPC owes N1.305 trillion to the federation account as at Dec. 31, 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 in installments to the federation account," he said.

Mitee also alleged that N1.40 trillion was illegally deducted by the NNPC as oil subsidy claims from domestic crude sales proceeds before remittance to the federation account.

He said it contravened the stipulated procedure as the NNPC and other oil marketers were expected to receive their subsidy payments from the Petroleum Support Fund, after due verification from the Petroleum Products Pricing Regulatory Agency.

The report stated that N198 billion was claimed by NNPC as subsidy payment in 2009 while N416 billion was claimed in 2010 and N786 billion in 2011.

Mitee who gave a breakdown of the audit report, said 143.5 billion dollars was generated as revenue from the oil and gas sector between 2009 and 2011.

"This amount is made up of proceeds from sales of equity crude, royalty, signature bonus, concession rentals, gas flaring penalties, petroleum profit tax and companies income tax, among others."

He said that sales of crude oil and gas within the period amounted to 81.9 billion dollars while revenues from petroleum profit tax, royalty, signature bonus and others amounted to 45.7 billion dollars.

"The actual direct revenue flows to the federation account during the period was 133.8 billion dollar

"Revenue flows to states amounted to 1.6 billion dollars, while the flows to other Federal Government entities such as NDDC and Education Tax Fund, amounted to 3.2 billion dollars.

"This brings the earlier reported government earnings to 143.5 billion dollars."

The report also noted that the average conversion rate by the NNPC deferred from the annual average Central Bank of Nigeria rate, thereby resulting in losses of N98.3 billion during the period under review.

Mitee said that some oil companies, including NECONDE Energy Ltd, SEPTA Energy Ltd, Energia Ltd and Emerald Energy Resources, refused to cooperate with NEITI and its auditors during the audit.

He said NEITI would take appropriate actions in accordance with the enabling Act and impose sanctions on the erring companies.

As part of its recommendations, the report urged the NNPC to pay its debt to the federation account.

It urged the Federal Government to review the deduction of subsidy claims from domestic crude by NNPC in line with due process.

The 2009/2011 report was carried out for the first time by an indigenous auditing firm.

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