UNREMITTED OIL MONEY:SENATE PANEL INDICTS NNPC

Nigerian Senate in Session

‘Corporation spent billions illegally’

The Senate Committee on Finance has found that the Nigerian National Petroleum Corporation had engaged in illegal withholding and spending of billions of naira between January 2012 and July 2013.

In its long-awaited report on the alleged non-remittance of oil money by the NNPC, the panel also said the corporation illegally used N544 billion to pay kerosene subsidies within the period.

The committee did not clearly state the total amount confirmed to be unremitted by the NNPC within the period, but a review of the report indicate that about $10.632 billion due the Federation Account was withheld and spent by the corporation.

Committee chairman Ahmed Makarfi yesterday submitted the 73-page report to the Senate, following investigations of the allegation by suspended Central Bank Governor Sanusi Lamido Sanusi that $49.8 billion oil money was not remitted by the NNPC from January 2012 to July 2013.

Sanusi first made the allegation in a September 2013 letter to Jonathan which leaked in December. He later said the total unremitted money was $20 billion. It was this allegation, as well the leak of the letter, that cost Sanusi his job. 

NNPC has consistently denied any wrong doing, saying much of the  alleged unremitted funds were spent on its operations.

The Makarfi-committee report made several other findings indicting the NNPC, including overspending on budgeted funds, overstating staff salaries and curious increase in pipeline surveillance cost without corresponding decrease in crude oil theft.

NNPC had said part of the money it was accused of not remitting was actually spent on protecting the oil pipelines.

“Pipeline surveillance cost increased from $2.23 in 2012 to $11.15 million 2013 without corresponding decrease in pipeline oil losses,” the Senate report said.

On the overstated salaries, the report said, “Actual PPMC’s staff salaries and upfront benefit claimed in NNPC submission were overstated by $7.58 million and $29.35 million for the year 2012 and 2013 respectively.”

The report said the monies NNPC is withholding include about $218 million from the $2.4 billion that was due to accrue to the Federation Account from the third-party financing oil lifting.

Royalties and taxes from the Nigerian Petroleum Development Company (NPDC) deal not remitted amounted to about $448 million, it said.

The panel therefore asked NPDC, which is a subsidiary of the NNPC, “to remit to the Federation Account $447.8 million being balance of royalty and petroleum profit tax.”

The panel also asked NNPC to furnish it with details on $200 million it expended in respect of holding strategic stock, crude oil losses and maintenance of installations and pipelines.

“NNPC should refund and remit to the Federation Account the sum of $262 million being expenses it could not satisfactorily defend in respect of Holding Strategic Stock Reserve; Pipeline Maintenance and Management Cost and Capital Expenditure,” the report added.

It went on to recommend that since the president allowed unbudgeted spending to be made on kerosene subsidy, he should submit a supplementary appropriation bill to cover those sums.

“The President should prepare and present to the National Assembly supplementary budget to cover the expenditure in the sum of N90.693 billion ($585 million) for PMS subsidy for 2012 and the sum of N685.910 billion ($4.430 billion) for kerosene subsidy expended without appropriation by the National Assembly in 2012 and 2013,” the committee said.

“The Senate should however note that the proportionate expenditure January 2012 to July 2013 was N813.8 billion ($5.254 billion) for PMS, while DPK was N486.57 billion ($3.512 billion). It is for the National Assembly to approve or not approve such request or take any other measures it deems necessary.”

The committee said NNPC should not pay operational expenditures direct from the Federation funds without appropriation by the National Assembly.

The panel further observed that “there was poor record keeping and non-challant work attitude by the NNPC by not rendering returns on subsidy claims on monthly basis from January 2012 to date which contributed largely to creation of the problem in hand.”

The committee called for the scrap of the fuel subsidy regime as it was found to be mired in fraud. “There is the need for the subsidy regime to be totally discontinued,” it said.

The report, according to Makarfi committee, was without prejudice to the forensic audit of the NNPC instituted by the Federal Government.

The Senate has not fixed a date for the consideration of the report.

Key findings by Senate Committee

1. The total crude oil liftings January 2012 to July 2013 was US$67billion and not US$65billion as the CBN Governor had presented;

2. There was never any unremitted US$49.8 billion.

3. All the agencies CBN, NNPC, Ministry of Finance, and Ministry of Petroleum Resources had agreed after reconciliation meeting that US$47billion out of the US$67billion had been credited to the Federation Account, amount to be accounted for, therefore was US$20biliion;

4. The sum of US$5.254billion PMS subsidy certified by PPPRA part of the US$20billion to be accounted for was adequately covered by the Appropriation Acts 2012 and 2013;

5. The sum of US$3.512 billion DPK subsidy certified by PPPRA for the period January 2012-July. 2013 being part of the US$20 billion to be accounted for was not appropriated by the National Assembly;

6. The total sum  certified by PPPRA for kerosene (DPK) subsidy not appropriated for by National Assembly was N353.370 billion (US$2.282 billion) for the year 2012 and N332.539 billion (US$2.148 billion) for 2013 respectively making total for the two years N685.91 billion (US$4.430 billion);

7. CBN Governor posited that part of the US$6 billion out of the US$20 billion to be accounted for; representing liftings by NNPC on behalf of NPDC should belong to the Federation Account. The amount determined as share of Federation Account was US$2.175,635,436;

8. CBN Governor only demanded for PPPRA certification of N180 billion by NNPC (US$1.2 billion) being fourth quarter 2011 subsidy withheld by NNPC. This was part of the US$20 billion to be accounted for;

9. The National Assembly had appropriated the sums of N888.101 billion and N971.138 billion in 2012 and 2013 for petroleum subsidy;

10. CBN Governor only asked for details and evidences supporting the US$2billion Third Party Financing liftings. This is also part of the US$20biilion to be accounted for;

11. The Honourable minister for Finance and Coordinating Minister for the Economy recommended further forensic audit of the subsidy’ deductions by NNPC and the certification by PPPRA;

12. The Auditor - General for the Federation in conjunction with PWC are currently’conducting forensic checks on NNPC accounts in relation to the issues under consideration and their report will be forwarded to the Senate Committee;

13. This Committee report only covers accounting for US$67billion crude oil revenue between January 2012 – July 2013.

Credit: Daily Trust