4 February 2013

Nigeria: NEITI Report Misleading, Inaccurate - NNPC

The Nigerian National Petroleum Corporation, NNPC, has accused drafters of the 2009-2011 audit report of the Nigerian Extractive Industry Transparency Initiative, NEITI, of misinforming the general public over N1.4trillion subsidy claims made by the corporation and unremitted funds to the federation account.

In a statement from the corporation's headquarters, it said all subsidy claims were duly verified, approved and authorized for payment by relevant agencies.

The NNPC said, "However subsidy claims due to NNPC are not "cash payments" as amounts duly approved are backed out from the Gross Domestic Oil revenue due to the Federation Account in any given month.

This is the extant process for this transaction. "On the total amount of N1.4trn deducted, the report deliberately ignored and or omitted the factors responsible for the increasing amounts paid especially the price of crude oil which accounts for 82% of the price build-up for petroleum products."

Other factors, it said, include increase in volumes consumed, variations in exchange rates and increase in freight rates especially in 2011. It also denied owing the Federal Government N1.3 trillion, insisting that the statement credited to NEITI is not correct and is misleading.

It gave detailed account of the N1.3trn as: "NNPC has 90 days moratorium for the payment of domestic crude. This implies that at every year end, the Corporation will have outstanding 3 months balances not yet due for payment.

"However, the debt portion of the N928billion had been paid in the first quarter of 2012 on the relevant due dates. This can be verified with the relevant authorities. One would have expected NEITI to take cognizance of this process in the report to avoid misrepresenting NNPC's debt profile."

The NNPC said the N377bn purported debt was a carry-over of 2004-2005 when the corporation was directed to buy crude oil for domestic consumption at international market price while the sale of petroleum products was at subsidized prices without appropriate instrument to recover the shortfall.

The statement said, "NEITI's report ought to have identified the anomaly and vindicated NNPC of the N377bn imposed debt repayment."

NNPC added that, "the NEITI report contains fundamental inaccuracies which are misleading and constitutes misinformation to the generality of the public. Given that the NEITI audit report is expected to be factual in all respects, it has become necessary to make the following observations and clarifications."

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