Using man-made accounting and auditing methodologies to look for the missing oil revenue earnings in the books of the Nigerian National Petroleum Corporation (NNPC) could best be described as ‘ghosts hunt/looking for spirit beings at Eko/CMS Bus Stop. Without mincing words, the release of the Nigerian National Petroleum Corporation (NNPC) forensic audit report contrary to what the nation’s apex oil concern and the Petroleum Minister want us to believe, has not in any way laid to rest the controversy surrounding allegations of “missing oil revenue” or non-remittance to the Federation Account.

So the order by the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, on Thursday 5 February 2015 to the NNPC to repay into the Federation Account the alleged outstanding $1.48billion in the Nigerian Petroleum Development Company (NPDC) signature bonus, taxes and royalties in line with the recommendation of the forensic audit report handed to President Jonathan Monday 2 February, was hasty and a quick attempt to score cheap political points.

The $1.48bn that the audit firm recommended the Corporation to remit to the Federation Account was not part of the alleged unremitted revenues from crude lifting. This particular amount was never in dispute as it is made up of statutory payments such as signature bonus, taxes and royalties which are statutory payments that come with assets acquisition.

The NNPC’s offence here was that it deliberately withheld payment of this money into the Federation Account though the corporation wants us to believe that the delay in the payment was due to the reconciliation processes between the Department of Petroleum Resources (DPR) and the NNPC.

It was the height of self-deceit by people in government to expect PriceWaterHouseCooper to unravel the mystery of the massive fraud in our crude oil sales business. How does anybody expect the auditors to discover missing monies in transactions that were deliberately done without records? It has been said severally that the epicentre of the massive fraud in the NNPC’s crude oil sales is in the packaging of the evil-inspired crude oil -for -products -swap arrangement with Swiss commodity traders including Trafigura amongst several others. This is where all the probe should focus but the tragedy is that most of the transactions under the deal have no records that an outsider can look at.

First, the former CBN governor alleged that about $67billion was not remitted by the NNPC as revenue from crude oil liftings between January 2012 and July 2013. Then findings by PriceWaterHouse showed that the total amount involved was $69.34 billion. Is it not embarrassing to the government that figures of proceeds from crude oil sale as registered in the CBN books were completely different from what the NNPC recorded in its own books? So where is the synergy between the two parastatals of the federal government responsible for receipts and disbursements of everything the nation earns from oil and gas? The situation is even more curious as these two conscriptions report directly to the same Office of the President.

The Nigerian National Petroleum Corporation (NNPC) claim that it has been vindicated by reports of this audit investigation carried out by accounting firm PriceWaterHouseCoopers over allegations of missing $20billion, was both mischievous and well-intended to divert discussions from the real crux of the matter which at best has remained unaddressed.

Did the report not raise questions centred on NNPC costs, ownership of NPDC revenues and DPK subsidy? Did the report not remark that the nation’s representative in everything that has to do with oil and gas was operating an “unsustainable model”?

How could NNPC claim it was not indicted when all the questions raised by the audit report border on the corporation’s blurred financial transactions either in accounting for the proceeds of crude oil sale in its joint venture operations or statutory payment defaults by its production subsidiary, the NPDC? The truth is that the report in plain language outrightly indicted the corporation for various questionable transactions.

Let’s look at the highlights of the recommendations by PriceWaterhouseCoopers, PwC Nigeria: First, The Nigerian Petroleum Development Company, NPDC, the upstream subsidiary of the NNPC, was ordered to refund a total of $1.48billion (about N300 billion) to the Federation Account for various unreconciled transactions.

On ownership of NPDC revenues, the report noted that out of about $1.85billion realized from NNPC’s 55 percent stake in the oil mining leases, OMLs, involved in the Shell Petroleum Development Company of Nigeria’s divestment from eight OMLs, only $100 million has so far been remitted to government coffers. The report also noted that the NPDC had conducted a self-assessment of Petroleum Profit Tax and Royalty it collected, about $470 million was yet to be remitted, while there were no records to suggest that the company had done the assessment for the period under review.

“NPDC should remit dividend to NNPC and ultimately to the Federation Accounts based on NPDC’s dividend policy and declaration of dividend for the period,” the report said.

According to the report, total revenue submitted by the NPDC, after petroleum profit tax and Royalty were deducted amounted to $5.11billion and this amount, as recommended, needs to be included in the financial statements of the company from where dividend should be declared to the Federation Account. Did the report not disclose that signature bonus, tax and royalty yet to be paid by NPDC to the government stood at about $2.22billion for the period under review?

“Total cash remitted to the Federation Accounts in relation to crude oil liftings for the period from January 2012 and July 2013 was $50.81billion and not $47billion,” the report said. Based on the information available to PwC and from the analysis above, the firm submitted “that NNPC and NPDC should refund to the Federation Accounts a minimum of $1.48billion.”

Then on diesel subsidy, the report said information obtained from the Petroleum Products Pricing Regulatory Agency, PPPRA, revealed that NNPC incurred about $3.38billion cost relating to subsidy for diesel for the period. This was despite a correspondence by the Presidency confirming a 2009 presidential directive stopping payment of subsidy on diesel, and another from the PPPRA to the CBN governor clarifying that the agency had ceased to grant subsidy on the product.

If NNPC came out clean on its subsidy accounts why would the audit report recommend that “an official directive be written to legalise the presidential directive on cancellation of subsidy payment on diesel, while also issuing same to support the directive on kerosene subsidy, both of which were not gazette”?

While 46 per cent of the revenues realized from domestic crude oil for the period was spent on its operations and payment and subsidies, the NNPC was unable to either sustain its monthly obligation to remit to the Federation Account Allocation Committee, FAAC, or meet its operational costs from such revenues.

To bridge the funding gap between available revenue and third party liabilities, the report said transaction documents valued at about $2.81 billion, representing additional costs for such funding arrangements based on the NNPC Act No. 33 of 1977 required further clarification to justify such deductions by NNPC as a first line charge.

The conclusion of this matter is that our politicians are not sincere, they say one thing but mean a completely opposite of what they are shouting about. Whether those in government or those angling to takeover, they are same bunch of selfish financial criminals. This is the truth, the whole truth and nothing but the truth.

Those who are shouting loudest about the findings of this forensic audit report are the same bunch that has vowed that the Petroleum Industry Bill (PIB) would not be allowed to be passed into law because of myopic selfish and sectional agenda. The summary of the PriceWaterHouse forensic audit report as submitted was that there is an urgent need to thoroughly review and restructure the NNPC operational model to bring it up to the global standard. Is this not what the PIB is all about? Let’s keep deceiving ourselves and see whether this country would ever make a single progress in accountability in government. God Bless Nigeria!
(IFEANYI IZEZE is an Abuja-based Consultant and can be reached on:[email protected]; 234-8033043009)

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