Minister of Finance, Dr. Ngozi Okonjo-Iweala
| credits: File copy
| credits: File copy
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, on Monday verbally queried the Group Managing Director, Nigerian National Petroleum Corporation, Mr. Andrew Yakubu, over the non-remittance of about N8bn into the Federation Account.
The minister, who was the keynote speaker at the public presentation of the 2009 to 2011 oil and gas physical and process audit report by the Nigerian Extractive Industries Transparency Initiatives in Abuja, wondered why the corporation owed the Federal Government such huge amount of money.
This is coming as NEITI, in the report, indicted the NNPC, Petroleum Products Pricing Regulatory Agency and two other companies over non-remittance of N272.9bn into the Federation Account.
The minister, who came in when the event was about rounding up, turned to the NNPC boss during her presentation and said, “Just to cite one or two examples because I know that the people here are the right stakeholders involved with respect to some of the issues; I am looking for the NNPC GMD.”
She was then told that Yakubu had just stepped out.
Okonjo-Iweala, however, continued, “Some of the things that they (NEITI) pointed out, they stated that about N4.48bn was received by the NNPC but has not been remitted, and another about N3.9bn that was received was not also remitted.”
While she was still speaking, the NNPC boss walked in and immediately Okonjo-Iweala said, “GMD, you are welcome back. I was (speaking) on some of the works of NEITI and I said that the right people are assembled here because they (NEITI) pointed out that non-remittance by the NNPC was amounting to about N8bn over a period of time and I think we need to discuss.”
The minister was interrupted by delegates at the event as they cheered her remarks, but she went further, “As the Minister of Finance, I don’t want to put you (Yakubu) so much on the spot here for we are all in it together, but we need to know how this fund is managed.”
Okonjo-Iweala gave an assurance that the findings and recommendations of NEITI would be implemented and indicted firms would be brought to book.
Reacting to the minister’s statement, Yakubu said he was pleased that the corporation had made some progress within the period under review.
“I am glad that the chairman (of NEITI), in his remark, clearly stated that there is a remarkable improvement between the past and today. So, we will get there,” he said.
Meanwhile, NEITI said the country lost over $11bn to crude oil theft and pipeline vandalism between 2009 and 2011.
The Chairman, NEITI, Mr. Ledum Mitee, said this at the public presentation of the organisation’s audit reports for the oil and gas sector for the period, 2009 to 2011, and the solid minerals sector audit for the period, 2007 to 2010.
The report, which was compiled by NEITI auditors, highlighted the transaction and revenue flows between government agencies and international oil companies operating in the country.
According to the report, more than 136 million barrels of crude oil estimated at $10.9bn have been lost to theft and sabotage within the period under review.
Mitee said, “This amount, which was 7.7 per cent of the total revenue accruing to the federation in the audit period, is considered significant.
“This was in addition to a loss of about 10 million barrels valued at $894m as a result of pipeline vandalism in downstream operations.”
The report said that the nation recorded over 2.5 billion barrels of crude oil production amounting to total revenue of $143.5bn from equity crude sales, royalty, signature bonuses and taxes within the period under review.
The report also noted that the Federal Government paid N3tn as subsidy to marketers of refined petroleum products during the period.
It said that the NNPC accounted for N1.4tn of the subsidy claims, while other marketers claimed the remaining N1.60tn.
Mitee said, “From the findings of the report, the subsidy payments made through the NNPC increased from N198bn in 2009 to N416bn in 2010, and nearly doubled in 2011 to N786bn.
“During the same period, subsidy paid through the PPPRA increased from N208bn in 2009 to N278bn in 2010, and astronomically to N1.12tn in 2011.”
The report also uncovered a disparity of N175.9bn between the subsidy claims paid from the Federation Account and the one made by the Petroleum Product Pricing Regulatory Agency.
The NEITI chairman said, “The Office of the Accountant-General of the Federation reported to NEITI auditors a total subsidy payment of N2.825tn, while the PPPRA disbursed N3tn to marketers during the same period.
“Some marketers disagreed with the amount ascribed to them by the PPPRA, especially in 2010, when a marketer claimed N2.56bn as fuel subsidy. The PPPRA recorded payment of N1.5bn, leaving an un-reconciled difference of N1.04bn.”
Mittee said findings by the audit indicated that N8.173bn, being over-recovery collected from some oil marketers, had yet to be remitted to the Federation Account by the NNPC and two other companies.
There was also a revenue loss by the Federal Government of over $1.7bn (N264.79bn) following the non-renewal of Memoranda of Understanding between the Joint Venture companies and the NNPC.
This, he said, made the JVs to transact businesses with expired MoUs since 2008.
The total unremitted fund, according to Mittee, stands at N272.9bn.
He said, “The report noted that the amount of N4.423bn, being over-recovery collected from some marketers, has yet to be remitted to the Federation Account, while the NNPC and two other companies have yet to refund N3.715bn, being over-recovery for the period under review.
“The audit report also revealed revenue loss by the Federal Government of over $1.7bn following the non-renewal of MoUs between the Joint Venture companies and NNPC, which made the JVs to transact business with MoUs, which had expired since 2008.”
Mittee said NEITI also discovered a worrisome situation where there was no agreed pricing methodology between NNPC and the companies for the determination of fiscal values for royalty and Petroleum Profit Tax computations.
According to the report, all refineries are operating below their name plate capacities, resulting in a situation whereby 80 per cent of crude oil allocated to local refineries are being exported for off-shore processing, crude oil and product exchange.
Mittee announced that the oil and gas industry recorded a total crude oil production of over 2.5 billion barrels, an increase of 4.8 per cent over the figures for the 2006 to 2008 period.
This, he said, was made up of 780.9 million barrels in 2009, which rose to 894.5 million barrels in 2010 and declined to 866.2 million barrels in 2011.
He added that the federation earned a total revenue of $143.5bn from equity crude sales, royalty, signature bonuses and taxes, among others, adding that Nigeria made total payments of N3tn to importers of refined petroleum products during the period under review.
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