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How NNPC, oil majors hid $4.4b FG funds -NEITI
GMD, NNPC Kachikwu Ibe

How NNPC, oil majors hid $4.4b FG funds -NEITI

The Nigerian Extractive Industries Transparency Initiative (NEITI), yesterday, accused the Nigerian National Petroleum Corporation, NNPC, and other oil and gas companies of shortchanging the country and failing to remit $4.4 billion and N358.3 billion to the Federation Account in 2013. This comes as Lagos-based indigenous chartered accounting firm, SIAO Partners, had been contracted by NEITI to carry out the 2014 audit, even as it is in the process of procuring auditors for its 2015 audit.

Minister of Solid Minerals and Chairman of NEITI Board, Dr. Kayode Fayemi, who disclosed this in Abuja, during the release of the 2013 Oil & Gas and Solid Minerals’ Audit Reports, also revealed that Nigeria lost $5.966 billion and N20.4 billion in 2013 to crude oil theft, Offshore Processing Agreement, OPA, and Crude Oil for Product Swap Arrangement. Oil, gas earnings The NEITI report further stated that the country earned $58.07 billion from oil and gas sector, dropping eight per cent from $62.9 billion realised in 2012, adding that the sum was earned from crude oil sales, taxes, royalties and other incomes.

Explaining the decline in oil and gas earnings in the year under review, NEITI attributed this to a drop in oil and gas sales, following divestment of federation equity in some oil assets and crude oil losses. In addition, the report noted that N33.86 billion accrued to the federation from the solid minerals sector in 2013. Broken down further, cement manufacturing companies accounted for N30.47 billion or 89.98 per cent of the total; construction companies, N1.98 billion or 5.83 per cent and; mining & quarrying companies, N1.42 billion or 4.19 per cent respectively. Giving a breakdown of the figures in the oil and gas report, Fayemi said NNPC and its sub-units failed to remit $3.8 billion and N358.3 billion in 2013, while $599.98 million was under-assessments/underpayments of petroleum profit taxes and royalties by oil and gas companies.

In the case of the NNPC and its sub-units, the report stated that outstanding payments were due from unpaid considerations from divested Oil Mining Leases, OMLs, cash call refunds from the National Petroleum Investment Management Services, NAPIMS; and Nigerian Petroleum Development Company, NPDC, liftings from Nigerian Agip Oil Company, NAOC, Joint Venture, JV, among others. Under-payments  not true  —NNPC/NAPIMS

But in a quick response, NAPIMS, the investment arm of the NNPC, in charge of vetting and approving oil and gas ventures and expenditure in Nigeria, insisted that it was not true. NNPC’s spokesman, Mr. Mohammed Garbadeen, refused to pick his calls. But his NAPIMS counterpart, Mr. Laminu Ahmed, in a telephone response said: “I also read it (report), but it is not true. Let them cross-check the records because that amount is too high. Nobody can do such a thing and other organisations did not know until now.” Ahmed argued that since NAPIMS approved all of the Joint Ventures, JVs and Production Sharing Contracts, PSCs, and other oil and gas industry investments in Nigeria, such underpayments “are simply not possible.” NLNG dividends Specifically, the report accused the NNPC of failing to remit $1.289 billion Nigeria Liquefied Natural Gas, NLNG, dividends, interest and loan repayment for the year under review, despite acknowledging receipt of the said amount from the NLNG. To this end, the report stated that with the 2013 figure, the total NLNG payments received by the NNPC between 2005 and 2013, but not remitted to the Federal Government or the Federation Account, now stood at $12.9 billion. The report also stated that the NNPC only remitted $100 million in 2014, of a total $1.8 billion expected from the divestment of its 55 per cent equity stakes in eight oil assets from the Shell JV to its subsidiary, the NPDC,  adding that the NNPC failed to pay for crude oil lifted from these oil assets on behalf of the NPDC. Shell, Total, Mobil fingered in  under-payments In the area of oil and gas companies shortchanging the country to the tune of $599.98 million, the report identified Total Exploration and Production Nigeria Limited, TEPNG; Shell Petroleum Development Company, SPDC, and Mobil Producing Nigeria Unlimited, MPNU, as the worst offenders in the area of under-assessment/under-payments in the Petroleum Profit Tax, PPT, validation, while SPDC, Shell Nigeria Exploration and Production Company (SNEPCO) and Pan Ocean were worst offenders in terms of royalty validation. Specifically, Total, SPDC and Mobil were fingered in under-assessments/under-payments of $294.87 million, $53.9 million and $49.207 million respectively in Petroleum Profit Tax; while SPDC, SNEPCO and Pan-Ocean were fingered in $73.16 million, $50.946 million and $28.006 million royalty under-assessments/under-payment in the period under review.

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