Nigeria: NEITI, NNPC Resolve 55% Outstanding Audit Issues

23 December 2020

A joint committee of the Nigerian National Petroleum Corporation (NNPC) and the Nigeria Extractive Industries Transparency Initiative (NEITI), set up to reconcile areas of disagreement, have resolved 11 outstanding issues arising from past reports.

In a statement yesterday by the Director of Communications and Advocacy, NEITI, Dr Ogbonnaya Orji, the organisation, however, noted that the issues surrounding revenues from Nigeria LNG remain unresolved.

The NEITI-NNPC joint committee on remediation and mainstreaming was inaugurated on November 21, 2019 by the heads of the two organisations and was charged with reconciling 20 legacy issues, producing a status update, and making recommendations for deepening transparency within the NNPC.

After reviewing documents and deliberating for about a year, the committee has presented its report to the senior management teams of both organisations, which reviewed the report and made some approvals.

The joint committee stressed that 11 issues or 55 per cent of all the matters have been deemed fully resolved; eight issues or 40 per cent partially resolved or ongoing while one, representing five per cent, is yet to be resolved.

"The unresolved issue is the status of NLNG's payments, and it was recommended that NNPC should publish a statement on the status of the NLNG account. NNPC pledged to look into the recommendation and to consult with the account owners," NEITI stated.

NNPC holds 49 per cent stake in NLNG on behalf of Nigeria for which it receives dividends and other payments, which the transparency initiative put at $16.8 billion over a 15-year period.

According to NEITI, the 11 issues deemed fully resolved are: the outstanding liabilities by the Nigerian Agip Exploration (NAE) and the under-reporting of revenues receivable by NNPC as disclosed in the 2014 NEITI report.

Others are: Non-compliance with the 30-day remittance rule by some crude oil and gas traders; payments of cash-call to the Nigerian Petroleum Development Company (NPDC), a subsidiary of the NNPC, after the company acquired federation joint venture assets in NAOC JV and payment of cash-calls to NPDC after it acquired federation joint venture assets in Shell JV.

They also include inconsistencies in records of cash-call payments; expending cash-call on non-cash-call items; issuance of revenue receipts as and when due; payment of consideration on NAOC joint venture assets divested to NPDC; outstanding PAYE liabilities; and outstanding payment from domestic crude allocations.

NEITI added that eight issues deemed partially resolved are: over-recovery by NNPC under the Petroleum Support Fund Scheme (PSF); NPDC's unremitted NDDC levy; accumulated unremitted gas flare penalties and unremitted balance for crude oil lifting from NPDC, Shoreline and Seplat JVs.

"Others are: outstanding NPDC's petroleum profit tax liability; unremitted crude oil royalties for 2014, 2015 and 2016; balance of the value of the eight OMLs assigned by NNPC to NPDC from Shell JV between 2010 and 2011 and upfront deductions from domestic crude allocations," NEITI stated.

It said payment plans had been developed between the national oil company and the beneficiaries and disbursements are being made according to the plans.

The Executive Secretary of NEITI, Mr. Waziri Adio, in his comments, lauded the progress made by both organisations in ensuring more openness in the operations of the NNPC.

"We acknowledge the significant strides towards openness by the current management of NNPC.

While remediation is about looking back, mainstreaming is about looking forward. Both are about being transparent and being accountable.

"And what we have seen on both fronts is concrete commitment. We urge you to keep this up and we want you to know we are always here to partner with you," he said.

On his part, the Group Managing Director, NNPC, Mallam Mele Kyari, said the national oil company is now ready and willing to open its books to Nigerians, who are the shareholders of the NNPC.

"NNPC is committed to expanding the frontiers of transparency and accountability. We believe there should be full disclosure of our transactions, not just in alignment with the EITI, but also because Nigerians need to have full visibility of our operations. We are always eager to work with NEITI on this," Kyari said.

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