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FG, NNPC and ‘missing $16bn’ revenue

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FG, NNPC and ‘missing $16bn’ revenue

Office of the Auditor General of the Federation (AuGF) and the Nigerian National Petroleum Corporation (NNPC) have been at loggerheads over the new audits, which claimed that the latter failed to remit $16 billion to the treasury in 2014. ADEOLA YUSUF reports

 

 

The Federal Government perceived the $16 billion allegedly unremitted by the NNPC to the treasury as a big issue. But the corporation did not. Last Wednesday, the nation’s energy firm actually challenged the official allegations that it had failed to remit revenues worth N3.2 trillion in 2014.

Instead, the NNPC said that it only owed $1.64 billion. The allegation, according to the corporation, did not only show that the auditor-general did not know how the oil industry operates, it also depicts that the auditor-general had failed to account for costs, including fuel subsidy, pipeline vandalism and maintenance.

While the NNPC was unequivocal about its stand that $16 billion was not missing, the Auditor -General, Samuel Ukura, reiterated the audit report, re-emphasising the un-remittance of $16 billion by the NNPC. This has not raised question on whether figures can lie or not, but had thrown up concerns by many.

The allegation

In a report last Monday, the Auditor-General, Samuel Ukura, said that the NNPC withheld $16 billion meant for the federation account in 2014. About N3.2 trillion of excess crude account was not remitted into the federation account in 2014, according to a report the AuGF submitted to the Clerk of the National Assembly, Salisu Maikasuwa.

The report also exposed alleged fraud of N10.4 billion in the National Assembly management in 2014. According to Ukura, payments of N9.5 billion were made without raising payment vouchers at the management department, which is a violation of financial regulation 601.

He said: “Personal advances granted to 112 staff recurrent votes and 50 members of staff General Service vote from July to December 2014, for various purposes, all amounting to N1.2 billion.

“Review of sales profile on sales of Gas to Nigeria Liquefied Natural Gas (NLNG) was not paid to the Federation Account, but transferred to some undisclosed Escrow Accounts. Relevant documents were not made available for verification.”

Buhari’s link

The move to unravel the allegedly missing $16 billion is seen as a major part of the agenda by President Muhammadu Buhari to end the corruption and mismanagement that has stunted the growth of the continent’s biggest economy.

Buhari, who sacked senior NNPC managers – weeks after his inauguration, have approved splitting the company into upstream, downstream, gas power marketing, refinery groups, and ventures divisions in a bid to improve transparency.

This is not the first time that attempts have been made to question the NNPC finances. In 2014, the then Governor of the Central Bank of Nigeria (CBN), Lamido Sanusi, was suspended after accusing the state-run energy firm of failing to pay $20 billion into government coffers between January 2012 and July 2013.

Under the constitution, NNPC must hand over its oil revenue, which makes up about 70 per cent of total income and money is then paid back based on a budget approved by parliament. The allegation made two years ago by Sanusi culminated in his sack by the immediate past administration of President Goodluck Jonathan.

Sanusi, who is now the Emir of Kano, had accused the oil company of failing to remit $20 billion. Nigeria, Africa’s biggest crude exporter, depends largely on crude proceed to service over 85 per cent of its budget.

The nation’s oil exports are, according to Organisation of Petroleum exporting Countries (OPEC), worth about $77 billion annually. But there are allegations that some of these funds are diverted to private pockets.

Development in Africa’s biggest oil producer and largest economy has been stunted by decades of corruption and mismanagement. Government’s anti-corruption fight now seems to be shifting to the oil sector.

It started with investigations into the alleged diversion of $2.1 billion meant for weapons to fight the Islamist insurgency in northeast Nigeria. High profile politicians and some top military officers linked to the alleged arms fraud have been arrested and are being prosecuted. This new discovery may, however, kick-start the full-scale probe of the oil industry, which many Nigerians have been envisaging.

Chain of corruption allegation

Nigeria’s oil and gas industry has witnessed several allegations and discoveries of fraud. In 2012, the Senate investigated the contentious Malabu Oil Field transaction. The Upper House re-opened investigation into an allegation of $1.1 billion round tripping involving the Federal Government and two international oil companies – Shell and Eni (Agip) – over the sale of a contentious OPL 245 oil block.

The National Assembly, in November 2015, also conducted 18 legislative probes into sundry cases of crude theft, pipeline vandalism, misappropriation, joint venture agreements, missing crude revenue in Nigeria’s corruption-tainted oil and gas sector from 1999-2014. According to the outcomes of the selected major probes in the oil sector, about $15 billion was lost to fraud while $6.8 billion subsidy was unaccounted for.

The period also witnessed the alleged missing N500 billion SURE-P claims for oil subsidy for a period of time. Also, about $16 billion was said to be unaccounted for in the power sector while about N2 trillion was unremitted by the ministries, departments and agencies (MDAs).

The National Institute made this information known in a recently released study for Legislative Studies (NILS). The study, made public on October 20, 2015, contained a detailed report of 82 key probes and investigative public hearings undertaken by the National Assembly since inception.

In 2000, a 14-member House ad-hoc committee investigated the Federal Government’s crude exports and refined imports amongst other oil and gas industry issues for the period of May 1999 to 2000.

The Ibrahim Ganyama- led House ad-hoc committee, in its findings, reported that Nigeria lost $80 million crude revenue from January to August 2000 as a result of NNPC’s failure to follow the statutory empowerment of lifting 300,000 barrels per day.

The ad-hoc committee described NNPC’s operations, record keeping and tendering processes as “shoddy” and “fraudulent.” The 2000 probe stated: “Illegal sale of petroleum products becomes a booming business as Petroleum Equalisation Fund (PEF) continues to pay equalisation claims, while NNPC continues with endless bridging and DPR went to sleep in the exercise of monitoring.”

In 2007, a Senate ad-hoc committee investigated allegations of impropriety in the handling of the Petroleum Technology Development Fund (PTDF). The Senator Victor Ndoma-Egba-led committee, in its report, gave three controversial rulings: (a) that (former) President Olusegun Obasanjo acted outside the law, but should be advised to follow the due process in the future; (b)that (former) Vice President Atiku Abubakar, diverted and mismanaged public funds and should be sanctioned; and (c) that certain other persons, Adamu Maina Waziri, Ahmed Vanderpuye, Hussein Jallo, Hamisu Abubakar and Otunba Johnson Fasawe, should refund money to the Federal Government and face prosecution. In 2008, the House probed former NNPC Group Managing Director, Gaius Obaseki, over the mismanagement of funds of the corporation.

Similarly, Obaseki was indicted for wasting over N2 billion in less than four years on hotel accommodation. Also in 2008, the House probed operations of NNPC and its subsidiaries from 1999 to 2007.

The investigation uncovered “deliberate and unaccounted” increase in the daily quota of petroleum production against OPEC allocation. It also uncovered that funds budgeted for Turn-Around Maintenance (TAM) of the country’s refineries were “misappropriated.” Nigeria also lost $5.74 billion crude revenue as a result of NNPC’s shady deals with marketers and “manipulation of prices” of crude allocation to its refineries. In 2011, the Senate probed oil subsidy expenditure.

The Senator Magnus Abe-chaired joint committee found that the NNPC paid itself N847.94 billion even after it had been paid N844.94 billion by the Petroleum Products Pricing and Regulatory Agency in 2011, suggesting that the NNPC had been making double withdrawals for years from the public treasury. Also in 2012, a petroleum subsidy probe conducted by the Farouk Lawan-led House ad hoc committee was rocked by a bribery scandal.

The probe, however, revealed that $6.8 billion oil revenue was unaccounted for. The House, in 2013, investigated the propriety of contracting the protection Nigeria’s waterways and pipelines to private firms reportedly owned by ex-militants.

In 2013, a Senate Committee that investigated a “missing” N500 billion SURE-P fund reported that the NNPC could not account for the N32 billion removed as subsidy on each litre of petrol sold from January 2012 to September 2013. Also in 2013, the House launched a forensic inquest into NNPC’s Joint Venture agreements with some multinationals. No report was however, submitted.

In 2014, the Senate probed allegations that NNPC failed to remit $49.8 billion. At the end of the probe, the committee’s report debunked the claim. It also accused Sanusi (now Emir of Kano) of jumping to conclusions and generating falsehood allegation against the NNPC. In the same year, former Petroleum Minister, Diezani Alison- Madueke, was investigated over allegations of financial recklessness.

The probe was inconclusive. Meanwhile, apart from the numerous probes of the oil sector by the National Assembly, there were other investigative hearings into other areas of national life, some of which produced no tangible outcomes and the one that came close to the $16 billion missing oil revenues, which has just been made, is the probe instituted by the House of Representatives into the about $16 billion allegedly spent on the power sector.

NNPC’s defence

NNPC has not hidden its disdain for the allegation of massive fraud against it and the new claims of “missing $16 billion” by the AuGF were not an exemption. While the spokesperson for the corporation had, for the umpteenth time, stood up in defense of NNPC, its Chief Financial Officer, Isiaka Abdulrazaq, took the heat this time around. He said: “The latest figures on OPEC’s website states that Nigeria’s oil exports are worth around $77 billion a year.

However, the act establishing the state oil company allows it to cover costs before remitting funds to government. “The declaration by the AuGF (Auditor General of the Federation) may have been borne out of misunderstanding of how revenues from crude oil and gas sales are remitted into the Federation Account.”

Consequently, he said: “NNPC wishes to state in strong terms that the AGF’s declaration is erroneous”, adding that the auditor-general had failed to account for costs including a fuel subsidy, pipeline vandalism and maintenance.

“Consequently, the figure owed the Federation Account as at January 2015 Federation Account Allocation Committee (FAAC) meeting report was N326,142,137,205.79 ($1.64 billion)… and not the N3.23 trillion alleged by the AuGF,” he said.

Conclusion

The AuGF office and NNPC are agencies of government. They should harmonise their positions on this critical issue to save Nigeria the embarrassment of being tagged a confused state among the comity of nations. The president, on the other hand, must intervene by floating a special inquiry into the issue and punish whoever is found to have contravened the law.

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