Forensic audit of NNPC to be made public

May 23, 2011 | Africa, Government & Regulations

Nigeria_NNPC

The forensic audit of the account of the Nigerian National Petroleum Corporation (NNPC) has been completed by the ministry of finance. The actual financial state of the NNPC, cash-cow of the Nigerian economy had hitherto generated ripples at the presidency leading to the resignation of the former minister of state for finance, Remi Babalola.

Minister of Petroleum Resources, Diezani Alison-Madueke confirmed that her counterpart at the ministry of Finance, Olusegun Aganga had eventually supervised the completion of a successful audit of the NNPC account.

She told a gathering of senior journalists in Lagos on Thursday that she was at a meeting with Aganga on Wednesday night, after which she got a final confirmation on the audit, maintaining that the account would be made public this week.

On whether the NNPC is broke or not, the minister maintained that the finances of the corporation are rather complicated, as they show that the government and the NNPC are indebted to each other.

Less than 48 hours after a declaration by the then Minister of State for Finance, Babalola, that the NNPC was insolvent, the Federal Executive Council on July 14, 2010 declared his statement as untrue.

Babalola had said the corporation was unable to meet its financial obligations because it owed the Federal Government N450 billion.

The FEC however, said through the former Minister of Information and Communications, Dora Akunyili that the NNPC is not broke.

“NNPC, from the auditor’s account, is a going concern, and does not have solvency issue as a corporation. Therefore, categorically, NNPC is not insolvent,” she said.

She added that there is always an outstanding balance between the Federal Government and the oil giant because of the regular transactions between them.

Akunyili, further explained: “Given the nature of NNPC, there are regular transactions between the Federal Government and NNPC, and as a result, there are always outstanding balances between the corporation and the Federal Government.”

In the same vein, the Group General Manager, Group Public Affairs of the Corporation, Levi Ajuonuma, in a statement, said the corporation was not incapable of meeting its financial obligations to its partners and stakeholders.

Ajuonuma said: “We cannot be classified as insolvent when we have a healthy cash flow, and we can pay for our crude and product importation obligations.

“While it is true that the national indebtedness to the NNPC is putting pressure on our operations, nonetheless, we are able to meet all our obligations. We, therefore, cannot be said to be insolvent.”

Dr. Ajuonuma had, while supporting his claims that the corporation was not insolvent, explained that the corporation is being owed N1.156 trillion by the Federal Government as a result of petroleum subsidies, adding that if reimbursed, this will enable it to offset the N450 billion debt being owed the Federation Account Allocation Committee, FAAC.

He assured that the NNPC will continue to play its central role of ensuring steady and efficient supply of petroleum products throughout the country, and urged Nigerians and its Joint Venture Partners to remain calm.

At a media briefing then, Aganga, tried valiantly to clarify Babalola’s stand.

In an effort to clarify the issue his state counterpart referred to as “debt owed the Federal Government”, he said: “We have so many different transactions between the NNPC and the Federal Government. In some form of the balances, it may be a daily balance and in another, it may be a trade balance. You need to make all of these things up.

“What you saw was just balances arising from two types of transactions that we have made, and that was the point they we’re trying to make. So it is incomplete, and it doesn’t give you the complete picture.

“Once reconciliation is done, payment goes back and forth, between the two entities. Payment to NNPC is done regularly, but as you know, NNPC’s great concern is involved in all the joint venture we have in the country, is involved with all IOCs. We still have all the wells and all other parastatals related to the NNPC.”

He, however, added that the imbalances would be sorted out when the forensic audit, which was ongoing, was completed.

“If you are worried about NNPC, that is a different matter. You are aware that there is a forensic audit that the president asked us to undertake, and that is happening now. If you ask when it will be out, I will say that it is roughly going to be about eight weeks,” Aganga conclude.

Alison-Madueke also spoke on the Petroleum Industry Bill. “The PIB, which will be laid on the table of Mr. President for his signature already has a provision for the commercialisation of the NNPC.

“We have been assured by the National Assembly that the bill will be signed into law by next week.

“The president is also waiting for the bill to append his signature, while he also assured that once the bill is sent to him he will not hesitate to sign immediately,” she said.

On the gas master plan, the minister said that this will go a long way in creating jobs and enhancing socio-economic development of Nigeria.

She continued: “We have to look at the physical term on how it will affect our indigenous companies positively.

“The gas frame work has also shown to other industrialised countries that Nigeria is gas oriented.”