The Nigerian National Petroleum Corporation (NNPC) has reacted to the report of the audit of the oil and gas industry undertaken by the Nigeria Extractive Industries Transparency Initiative (NEITI) for 2009-2011, which was released last week by the agency, saying its disclosures were fundamentally inaccurate.
NNPC in a statement Sunday night in Abuja said that the contents of the report were also misleading and that it has become necessary for it to refute some aspects of it, adding that NEITI has continued to embarrass it in the eyes of the Nigerian public without precise knowledge of its operations.
NNPC acknowledged that it had only received the draft report and was reviewing its contents to reconcile the differences when NEITI publicly presented the report, observing that NEITI had breached the standard audit processes with such action.
The statement partly read: "The attention of the management of the Nigerian National Petroleum Corporation (NNPC) has been drawn to aspects of the NEITI oil and gas audit report for the years 2009-2011 currently in circulation.
"The NEITI draft report was made available to NNPC on 17 January, 2013 and the corporation was in the process of reviewing same for reconciliation when it was hurriedly made public and released to the press.
"Standard audit procedure requires close-out between the auditor and the auditee before it is finalised and put in the public domain. The 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."
Reacting to claims in the report that it owed the federation a total of N1.3 trillion, NNPC said: "For the avoidance of doubt, the statement credited to NEITI is not correct and is misleading.
"The following is a detailed account of the N1.3 trillion: NNPC has 90 days moratorium for the payment of domestic crude. This implies that at every year end, the corporation will have outstanding three months balances not yet due for payment.
"However, the debt portion of the N928 billion 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 cognisance of this process in the report to avoid misrepresenting NNPC's debt profile.
"The N377 billion purported debt was a carry-over of 2004-2005 when NNPC was directed to buy crude oil for domestic consumption at international market price while the sale of petroleum products was at subsidised prices without appropriate instrument to recover the shortfall.
"NEITI's report ought to have identified the anomaly and vindicated NNPC of the N377 billion imposed debt repayment."
The corporation further picked holes in its alleged disregard for due process in the reimbursement of petrol subsidy, saying: "The report questions both the process and NNPC's right to re-imbursement under the subsidy scheme.
"This was amplified by the media as 'illegal', 'cornered', 'took', etc, giving the impression that there is no due process and transparency in the payment of subsidies due to the NNPC.
"All our subsidy claims are duly verified, approved and authorised for payment by relevant agencies. 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."
It further stated: "On the total amount of N1.4 trillion 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 per cent of the price build-up for petroleum products.
"Other factors include increase in volumes consumed, variations in exchange rates and increase in freight rates especially in 2011.
"It should be noted that as fallout of the subsidy crisis of 2012, other players that constitute over 50 per cent of the market share in the downstream refused to import petroleum products from their supply obligation.
"NNPC being the supplier of last resort under the NNPC Act continued to supply the nation at a huge cost while still maintaining the strategic reserve obligation. NNPC should be commended in this regard."
Also on domestic crude exchange rate differential, NNPC explained that "the report asserted that the corporation underpaid the federation to the tune of N98.30 billion between 2009-2011 as a result of the application of the wrong exchange rate in monetising the value of crude lifted.
"The above assertion is wrong in view of the fact that the 445,000 barrels per day crude oil purchased by NNPC for domestic consumption is a naira denominated transaction and is paid in naira based on the equivalent exchange rate on FAAC date in the month of lifting.
"For the purpose of clarity, only export crude oil and gas sales are denominated in dollars."
NNPC added: "From the foregoing, NEITI without taking cognisance of the extant laws and regulations, guidelines and terms of relevant contracts in NNPC's operations has continued to portray the corporation to the public in bad light.
"While we conclude our review of the draft NEITI report, we await formal engagement with NEITI to close out the report."
NNPC said it also remained committed to conducting its business in a transparent and accountable manner, in compliance with existing laws.