State oil firm NNPC owes Nigeria $22billion, N316billion says NEITI audit

April 05, 2017 | Government & Regulations, Nigeria

Abuja, Nigeria |  – Nigeria state-owned oil and gas group, the Nigerian National Petroleum Corporation (NNPC) and its subsidiaries have been indicted for non-remittance to the tune of $22 billion and N316 billion to the federal government.

The Nigeria Extractive Industries Transparency Initiative (NEITI) Executive Secretary, Waziri Adio, made the disclosure to newsmen in Abuja yesterday.

Adio said that “audits of the oil and gas sector carried out by NEITI show that the NNPC and its upstream arm, Nigerian Petroleum Development Company (NPDC), have failed to remit $21.778 billion and N316.074 billion to the Federation Account ”.

Waziri Adio said the funds were due from three main sources, which he listed as: federation assets divested to NPDC; the company’s legacy liabilities payment for domestic crude allocation to NNPC; and dividends from investment in Nigerian Liquefied Natural Gas Company (NLNG) paid to the NNPC.

He said the unremitted funds fell under the categories of the full payment for the 12 Oil Mining Leases (OMLs) divested from Shell and Agip Ventures as well as NNPC divestment of 55 per cent of its stake in the Shell JV valued at $1.8 billion by the Department of Petroleum Resources (DPR).

The audit revealed that cash calls amounting to $552 million were erroneously paid on these divested assets by the National Petroleum Investment Management Services (NAPIMS), the investment arm of NNPC.

The NPDC was said to have refunded $424million to NAPIMS, but the money was not remitted to the Federation Account.

NEITI added that the NPDC was yet to refund $148.278 million and N2.42 billion from the cash calls mistakenly paid to it.

It added that unremitted revenues in this category include arrears of liabilities of taxes, royalties and levies, leaving the amount owed by the NPDC at $5.531 billion and N72.435 billion.

The NNPC explained that it withheld the funds to pay for downstream related operational costs and subsidies. “It is not right for government agencies to withhold funds meant for everybody, no matter the excuse they provide,” the Executive Secretary of NEITI, Mr. Waziri Adio, said during the briefing.

The audit body NEITI said the Federal Government should go beyond recovery of the funds to putting in place adequate measures to ensure the revaluation of the assets divested to the NPDC to determine the actual market prices, with a view to recovering the full value of the assets and securing optimal benefits from them.

It said the government should review the relationship between the NPDC, NNPC and the federation to determine and establish effective lines of accountability of the corporation’s subsidiaries, and determine optimal mode of operation in line with global best practices.

It added that the government should review the process of acquisition of Oil Mining Licences by the NNPC and NPDC to ensure that long-term net positive value was realised given the availability of alternative economic options.

Waziri Adio called on the government to recover the money and use it to put the economy on a sound and sustainable footing.

He added that the “OMLs that had not been fully paid for should be retrieved from NPDC, revalued and auctioned to enable the country get proper value for them”

The NEITI chief called on the government to “investigate the status and use of NLNG dividends from 2004 to 2014. “Criminal proceedings should be instituted against anyone found wanting”.