. Orders PPPRA to pay N4.4b to govt
. NNPC, others to refund N3.7b
. Corporation owes govt N1.305 tr
. Nigeria loses $10b to oil theft
AN audit report covering the period of 2009 to 2011 which was released on Monday by the Nigeria Extractive Industries Transparency Initiative (NEITI) was a catalogue of fraudulent deals in the oil and gas sector.
Shocked by its findings, NEITI has recommended that key government’s agencies should refund various amounts to the country’s treasury.
Presenting the NEITI’s independent audit report Monday in Abuja, Chairman of NEITI Board, Ledum Mitee, quoted the report as demanding that the Petroleum Products Pricing Regulatory Agency (PPPRA) should return N4.423 billion to the Federation Account just as it recommended the Nigerian National Petroleum Corporation (NNPC) and other unnamed oil firms to pay N3.715 billion being ‘over-recovery’ for the period under review into the national account.
Apart from the various sums of money the identified agencies are to return, the report blamed the lack of co-ordination of pricing methodology for most of the pricing conflicts.
He added: “Our report also recommended that the PPPRA should remit all funds amounting to N4.423 billion arising from the over-recovery collected to the Federation Account. From the findings of the report, the subsidy payments made through NNPC increased from N198 billion in 2009 to N416 billion in 2010 and nearly doubled when it rose to N786 billion in 2011. During the same period, subsidy paid through PPPRA increased from N208 billion in 2009 to N278 billion in 2010 and also increased astronomically to N1.12 trillion in 2011.
“Other key findings made by the audit include poor inventory management, which accounted for the difficulty in determining depot balances for imported products. The report noted that the amount of N4.423 billion being over-recovery collected from some marketers is yet to be remitted to the Federation Account while NNPC and two other companies are yet to refund N3.715 billion being over-recovery for the period under review. NEITI also discovered a lingering worrisome situation where there is no agreed pricing methodology between NNPC and the companies for the determination of fiscal values for royalty and PPT computations.”
The report said: “The Control Account shows that NNPC owes N1.305 trillion to the federation as at December 31, 2011. The opening balances in the debtors’ accounts have been reconciled to the 2008 NEITI audit report. It should be noted that the above opening and closing balances do not include outstanding payments on subsidies as these are still being verified by the respective agencies of government.
“Furthermore, the funding of cash call in 2009 of N198.6 billion paid to CBN/NNPC Cash Call Naira Account was a one-off transaction as cash calls are financed from CBN/NNPC JP Morgan Oil and Gas Revenue Account and CBN/NNPC JP Morgan Gas Revenue Account.”
The report also revealed that crude oil theft, deliberate sabotage and vandalism resulted in the loss of over 136 million barrels which are estimated at $10.9 billion within 2009 and 2011.
The lost fund represented 7.7 per cent of the total revenue which accrued to the federation in the audit period.
The figure was in addition to a loss of about 10 million barrels valued at $894 million as a result of pipeline vandalism in downstream operations.
Painting a further worrisome scenario, the report said the MoU for joint venture partners, which expired in 2008 and was yet to be renewed, may have cost the nation another staggering $1.7 billion between 2009 and 2011.
While there has been no rapid improvement in the standard of living of the people and the ever-expanding population of the poor population, Nigeria recorded a total crude oil production of over 2.5 billion barrels, an increase of 4.8 per cent over the 2006-2008 period.
Providing the breakdown, the NEITI report highlighted that this was made up of 780.9 million barrels in 2009. This figure rose to 894.5 million in 2010 and slightly declined to 866.2 million barrels in 2011. From this production, the federation earned a total revenue of $143.5 billion from equity crude sales, royalty, signature bonuses, taxes, among others.
The report recommended that government must move swiftly to review, among others, the Modified Carry Arrangements in the context of government’s adequate funding of JV operations, the allocation of 445,000 bpd to the NNPC to be refined locally for domestic consumption since the local refineries are in state of disrepair and product supply and fuel subsidy management which represented a huge cost for government.
The report also recommended a deliberate policy on construction of new refineries through private sector initiatives, and privatisation of existing ones. It also underlined the need for the NNPC to speed up all cases of arbitration so that government would not continue to lose revenue due to inappropriate computation of taxes paid to government by the companies.
It added: “The report equally observed that all refineries are operating below their … capacities resulting in a situation where 80 per cent of crude oil allocated to local refineries is exported for off-shore processing, crude oil and product exchange. From our report, this has negative consequences on revenue accruable to the Federation Account. According to the report, the combined loss to Nigeria in the Offshore Processing, Crude and Products Exchange within the period under review was over $866 million.”
Other recommendations included the need to install inlet metering devices to measure production from the flow-stations to the tank farms as well as measures to embrace approved standard measurement in the upstream and downstream operations in the oil and gas industry.
The report recommended that the Federal Government should set up a committee to review and agree on a new fiscal regime and governance frame-work for the oil and gas industry and define a clear roadmap for implementation while pushing for early passage of the Petroleum Industry Bill (PIB).
Earlier, the Executive Secretary of NEITI, Zainab Ahmed, revealed that the procurement process for the next NEITI industry for the year 2012 for both the solid minerals sector and oil and gas sector had almost been concluded.
She pointed at the inability of government to implement NEITI audit reports as the greatest challenge confronting the organisation.
Her words: “One of the challenges facing NEITI is the implementation of remediation issues. Although we have in place a comprehensive remediation plan, we are concerned that it is not enough to turn out reports which findings and recommendations will not be implemented. However, we are encouraged by the President’s promise to re-constitute and strengthen the Inter-Ministerial Task Team to implement the remediation issues contained in NEITI reports.
No comments:
Post a Comment