Audit report: NNPC yet to remit N326bn to FG not N3.24trn as alleged – Group ED

By The Citizen
Click for Full Image Size
Listen to article

The Nigerian National Petroleum Corporation, NNPC, yesterday, described as erroneous claims by the Auditor-General of the Federation (AuGF) that it failed to remit N3.235 trillion to the Federation Account for the period ended December 31, 2014.

The NNPC, in a statement in Abuja, signed by its Group Executive Director/Chief Financial Officer (Finance & Accounts), Mr. Isiaka Abdulrazaq, disclosed that contrary to the reports by the AuGF, the amount owed the Federation Account by the NNPC, as at January 2015, was N326.14 billion, noting, however, that the amount was still being reconciled.

The NNPC also stated that it had a claim of N1.375 trillion against the federation as at 2009, which is currently being reviewed by the Federal Ministry of Finance's appointed forensic auditors at the instance of the Minister of Finance.

The NNPC further denied transferring $235 million to an undisclosed escrow account, stating that it did not have any secret escrow account.

According to the NNPC, the alleged $235 million represents proceeds from the sale of gas feed stock to Nigerian Liquefied Natural Gas Limited (NLNG) that was used to repay part of the Modified Carry Agreement (MCA) loans, applicable royalty to Department of Petroleum Resources (DPR) and tax to the Federal Inland Revenue Service (FIRS).

MCA loan
The NNPC said the MCA loan was contracted specifically to fund the development of upstream oil and gas projects which transactions were regularly reported to the Federation Account Allocation Committee (FAAC) as part of the reconciliation of the revenues to NNPC, FIRS and DPR.

It said the MCA and all other alternative funding arrangements were annually appropriated by the National Assembly and were, therefore, fully disclosed to FAAC on monthly basis.

The NNPC also accused the Auditor-General of failing to abide by the established process of audit, by refusing to meet with it after the audit and for also failing to furnish it with draft copies of the report.

It said: 'The best practice and established due process is that after any audit, there should be an exit meeting between the auditor and the auditee, where any outstanding issues are finally discussed and explained before the issuance of the audit report. There was no such meeting and NNPC did not receive any draft report from the AuGF's office for comments.

'The NNPC wishes to state that in carrying out its statutory duties, it will continue to maintain the highest level of transparency and accountability. Please be assured that NNPC remains available at all times to provide clarifications on these issues or any other matter relating to our responsibility to the Federation and the Nigerian people.'

The NNPC disclosed that the clarifications became necessary as it deemed it fit and important to correct any misinformation about the activities of the corporation as this will adversely affect its current and future financial and operational plans, if not corrected.

However, the NNPC explained that the declaration by the AuGF might have been borne out of misunderstanding of how revenues from crude oil and gas sales were remitted into the Federation Account.

Giving further clarifications of the amount, the NNPC said: 'As part of its responsibilities, NNPC is allocated 445,000 barrels per day for processing into petroleum products for distribution to the nation. Any unprocessed crude is sold and the proceeds is used to pay for importation of petroleum products.

'The proceeds from the sale of these products are remitted to the federation account after deducting the cost associated with the supply and distribution.

'The total amount of subsidy that has been approved and certified by PPPRA for the period of January 2012 to December 2014 was N2.34 trillion. An additional N7.96 billion subsidy claim is still under reconciliation.

'Losses from crude oil and petroleum products, as a result of vandalism on its network of pipelines for the period of January 2012 to December 2014 were N202.68 billion. Petroleum Product Strategic Holding Cost and Pipeline Repairs and Maintenance Cost for the period of January 2012 to December 2014, amounted to N358.88 billion.

'Consequently, the figure owed to the Federation Account as at January 2015 Federation Account Allocation Committee (FAAC) meeting report was N326.142 billion, which is still being reconciled and not the N3.23 trillion alleged by the AuGF.' - Vanguard.