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To lay to rest the controversy over the exact amount the Nigerian National Petroleum Corporation (NNPC) is yet to remit into the Federation Account, the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, has recommended the setting up of a team of forensic auditors whose work will satisfy the yearnings of all Nigerians.
The minister, who disclosed this at a media briefing in Abuja yesterday, said this was her recommendation to the Senate Committee on Finance which is holding a public hearing with the aim of determining the exact amount that had not been remitted to the Federation Account by the state-run oil corporation.
Her recommendation notwithstanding, NNPC made a spirited defence during the senate hearing on what it insisted was the unremitted sum, maintaining that $10.8 billion was the sum in dispute, and not the $20 billion estimate presented to the committee by the Central Bank Governor, Mallam Sanusi Lamido Sanusi, last week.
It also provided clarification on the Strategic Alliance Agreement (SAA) its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC), has with Atlantic Energy Concepts Limited, which was also fingered by Sanusi for diverting the resources of the federation.
But this did not stop the senate committee from querying the continued retention of the subsidy on kerosene by NNPC, which it declared illegal, since there was no appropriation in the budget for it by the National Assembly.
During her briefing, Okonjo-Iweala said the committee had already sanctioned the recommendation and asked that the first report should be turned in on March 22, 2014.
Going back memory lane, she said the impression should not be created that her ministry was not doing what it should do, as it was the painstaking work of the Finance Ministry that reconciled the initial $49.8 billion mentioned by Sanusi as the unaccounted funds to the $10.8 billion, which was accepted by all parties as the basis for further discussion.
She said the issue of unremitted funds by NNPC was not new, as it has been an ongoing issue at every Federation Account Allocation Committee (FAAC) meeting chaired by the Minister of State for Finance, as evidenced by reports from the monthly meetings.
“As of December 2013, the cumulative unreconciled figure of shortfalls from NNPC payments stood at N1.792 trillion (about $11 billion).
“Let us now focus on the original $10.8 billion which was the shortfall we had as at July 2013. Another reconciliation meeting was held, during which NNPC presented data of how they utilised the balance of $10.8 billion; namely, amount withheld for subsidy ($8.766 billion); holding cost of strategic reserves ($0.4599 billion); crude oil and product losses ($0.761 billion); pipeline management cost ($0.905 billion), for a total of $10.89 billion.
“The data presented were all certified by PPPRA (Petroleum Products Pricing and Regulatory Agency) as being accepted. We asked to see the backup documentation to enable verification.
“Our judgment is that a proper examination of these documents requires technical expertise beyond the capacity of the reconciliation team, etc, and therefore we believe we should have an independent forensic audit, managed independently of these submissions,” she said.
Commenting, on the new sum of $20 billion thrown up by Sanusi, she said the NPDC and third party arrangements featured in the original reconciliation effort in the cascade presented by NNPC.
“However, at the reconvened meeting of this (senate) committee hearing last week, the CBN had re-presented these two aspects as the crux of the new $20 billion amount unaccounted for.
“These new figures include amounts deemed to be due to the Federation Account as proceeds from NPDC’s operation of oil fields previously owned by Shell Petroleum Development Company (SPDC), and unremitted amounts captured as third party financing.
“In looking at these elements, the reconciliation committee concluded that the issues are largely legal and require careful legal interpretation, which would need to be given more detailed attention by legal experts.
“For example, what is the legal status of NPDC and who owns the revenues earned by this entity? Is it the Federation Account or NNPC? The NNPC and CBN have both indicated they will give expert legal opinion on these issues,” she said.
Also during yesterday’s hearing at the senate, the finance minister presented the report of the reconciliation exercise, which according to her was certified by PPPRA.
She submitted that of the $10.8 billion in dispute, $8.76 of it was spent on subsidy on petroleum products, thus confirming THISDAY’s exclusive report yesterday on NNPC’s subsidy claims for kerosene and petrol.
She also reported that NNPC spent $0.76 billion of the sum on crude oil and products losses; $0.46 billion on national strategic reserve; and $0.91 billion on pipeline maintenance and management.
Elucidating further on the figure, PPPRA’s Executive Secretary, Mr. Reginald Stanley, broke the $8.76 subsidy sum into $5.25 billion as petrol subsidy and $3.51 billion as subsidy on kerosene.
Elucidating further on the figure, PPPRA’s Executive Secretary, Mr. Reginald Stanley, broke the $8.76 subsidy sum into $5.25 billion as petrol subsidy and $3.51 billion as subsidy on kerosene.
He affirmed the submission of Okonjo-Iweala that the sum had been certified by his agency.
Okonjo-Iweala, however, added that even though the NNPC data had been certified by PPPRA, there was still the need for a forensic examination of the documents to ascertain their authenticity.
Okonjo-Iweala, however, added that even though the NNPC data had been certified by PPPRA, there was still the need for a forensic examination of the documents to ascertain their authenticity.
On the allegation of non-remittance of $20 billion by Sanusi, which he said included $6 billion unremitted by NPDC, Okonjo-Iweala said the matter required legal expertise to determine the legal status of NPDC before the matter could be resolved.
According to her, both the Ministry of Finance and CBN lacked the expertise to know what NPDC actually owes the Federation Account, adding that such legal opinion would reveal whether $6 billion worth of crude oil allegedly lifted by NPDC, Atlantic Energy and Seven Energy, actually belonged to the companies or the Federation Account.
She added that despite the reservations expressed by Sanusi, Atlantic Energy’s SSA with NPDC could not be completely faulted, as the government cannot work without private sector synergy.
In reaction, the committee chairman, Senator Ahmed Makarfi, who had invited the Attorney General of the Federation (AGF) and Minister of Justice, Mr. Mohammed Adoke, asked him to respond.
But Adoke, who was represented by an official of the Ministry of Justice, said the AGF only got the invitation on February 11 and would therefore require one extra week to present an answer.
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