Recover N7.2 trillion unremitted funds to solve economic recession, NEITI urges FG

IN order to finally bring Nigeria out the current economic recession, the Nigeria Extractive Industries Transparency Initiative (NEITI), on Tuesday, admonished the Federal Government to put urgent machineries in motion to recover over $21 billion unremitted funds disclosed by its independent reports of the extractive industry.

It observed that recovery of such money would go a long way to fund the nation’s economic recovery plan.

According to the agency, “the total unremitted revenues to government’s treasury amounted to $21.778 billion and N316.074 billion. At current exchange rate, this comes to about N7.2 trillion. Achieving a recovery rate of just 20% would significantly offset the projected deficit for the 2017 budget.

“A third of the computed unremitted revenues would completely eliminate the need to borrow to finance the budget. This has both short and long-term positive implications for the economy”, it stated.

NEITI, in its latest policy brief issued in Abuja, a copy of which was made available to the Tribune Online, further urged the government to go beyond recovery of these funds by putting in place adequate measures to ensure revaluation of the assets divested to Nigerian Petroleum Development Company (NPDC) to determine the actual market prices with a view to recovering the full value of these assets and securing optimal benefits from them.

It further advised the government to review the relationship between NPDC, Nigerian National Petroleum Corporation (NNPC) and the Federation to determine and establish effective lines of accountability of NNPC’s subsidiaries, and determine optimal mode of operation in line with global best practices.

“Review of the process of acquisition of OMLs by NNPC and NPDC to ensure that long-term net positive value is realized given the availability of alternative economic options.

“A breakdown of the unremitted funds disclosed by NEITI reports of the oil and gas industry over the years include outstanding payments of $1.7 billion arising from the transfer of eight OMLs from Shell Petroleum Development Corporation (SPDC) and the sum of $2.2 million from four OMLs from Nigeria Agip Oil Company to the NPDC respectively”, it added.

NEITI reports disclosed that the NPDC was yet to pay for these major national assets that were transferred for its commercial operations.

Also contained in the breakdown of unremitted funds was cash call paid on the transferred OMLs amounting to about $148.28 million.

This, according to the report, was in addition to legacy liabilities amounting to the sum of $1.5 billion and the huge sum of $15.8 billion unremitted to the Federation Account from accrued NLNG dividends between 2000 and 2014.

On the Nigerian Liquefied Natural Gas Company (NLNG) dividends, the NEITI policy brief noted with concern that while there was evidence of payment of dividends from NLNG to NNPC, there was no similar evidence to show that NNPC remitted the dividends to the Federation Account as required by sections 80(1) and 162(1) of the constitution.

“NLNG operates as a private company run by its private partners. Despite owning majority shares, the government of Nigeria is not involved in its management but earns revenues from its investment in the enterprise in form of dividends, interests and loan repayments”, it added.

In a policy brief which focused on unremitted funds, economic recovery and oil sector reform, NEITI noted that the recovery of these huge unremitted funds was more than enough to jump-start the economy.

It said findings from a series of audits of the oil and gas sector carried out by the agency showed that NNPC and its upstream arm, NPDC, have failed to remit $21.778 billion and N316.074 billion to the Federation Account.

“These are amounts due from three main sources: Federation assets divested to NPDC and NPDC’s legacy liabilities; payments for domestic crude allocation to NNPC; and dividends from investment in Nigerian Liquefied Natural Gas Company (NLNG) paid to but withheld by NNPC. Recovery of these funds will significantly enhance government’s fiscal position in the short term”, it said emphatically.

The policy brief then recommended a comprehensive review of the transactions to conform to EITI accountability principles.

It also recommended urgent measures to recover the funds to support the on-going economic recovery plans.