For the umpteenth time, the 9th session of the House of Representatives on Tuesday called for forensic audit of all accounts being operated by Nigerian National Petroleum Corporation Limited (NNPCL), as well as its assets worth N28 trillion.
The resolution was passed sequel to the adoption of the report/recommendations of Ad-hoc Committee to ascertain the total Inventory, assets, interest and liabilities of the Nigerian National Petroleum Corporation (NNPC) and its Subsidiaries’, chaired by Hon. Uju Kingsley Chima
The lawmakers, after the consideration of the recommendations, resolved that forensic auditors should first audit all NNPC accounts with all the banks with a view to verify the true amount owned any bank as per loan(s) granted; ascertain the exact movements of funds from NNPC accounts, as well as over-charges by banks, which is a huge amount of money and will be a source of additional revenues to the Federal Government and the defaulting banks should be made to refund the sum discovered back to NNPC/Federal Government with interest.
According to the House, “information available to us suggest that some subsidiaries of NNPC, with location in foreign countries, buy crude oil and gas from NNPC without evidence of their payments for the purchases. These companies are indicted to be operating without employees and no fixed assets; yet over 30 billion is traceable to some of them.”
According to the investigation conducted by the House, NNPC is graded to have over 25 subsidiary companies, whose profits, assets and liabilities are transmissible to NNPC Ltd, but NNPC only transmitted records of only 21 subsidiaries.
“NNPC in its latest Group Audited Financial Statement, ended 31 December 2020, reported Total Assets of ₦15.835 trillion and ₦16.2 trillion for 2021.
“However, in direct contrast to that position, NAPIMS alone in its Audited Account for 2020 reported ₦21.04 trillion. That a part has total Assets of ₦4.84 trillion more than the whole is a mystery that needs to be unraveled.
“The issue of Subsidy/Under-Recovery that has bedeviled the nation over the years seems to have reared its ugly head in our findings. There is evidence that the Subsidy/Under-Recovery cost is being over estimated. The same costs seem to be charged against Federation in the Audited Accounts of both NNPC and NAPIMS.
“Nigerian publication on the 3rd of January, 2022, pointed to the fact, that NNPC is asking the Federal Government to pay additional $1.5 billion to five international oil companies (IOCs) as outstanding Cash Call balance. This is additional liability about to be passed on to the NNPC Ltd.
“However, our findings show that, as a matter of fact, the Federation has actually paid the liabilities of over $2 billion through President Muhammadu Buhari’s directive.
“Found a liability of over two trillion that NNPC Ltd is about inheriting on behalf of the Federation. No reasonable basis has been established for this liability which is associated with Nigeria Agip Oil Company (NAOC).
“Available information shows that the NNPC assets are stated at historical cost and written-down values.
“Information available to us suggest that some subsidiaries of NNPC, with location in foreign countries, buy crude oil and gas from NNPC without evidence of their payments for the purchases. These companies are indicted to be operating without employees and no fixed assets; yet over 30 billion is traceable to some of them.
“From findings asset worth $64 billion (about ₦28 trillion) was unveiled by Mr. President but during transfer only $58.8 billion (₦26 trillion at official rate of ₦450 to $1 was transferred, leaving a balance of ₦2 trillion unaccounted, NNPC should be meant to re-assess her accounting system.
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“Non-current NNPC Assets before transferring to NNPC Ltd is valued at.
Property, Plant, Equipment, Oil Assets – ₦79,641,313,542; Deferred Tax – ₦5,520,522,341; Right to use of Assets – ₦2,989,390,000; Financial Assets at Fair Value – ₦70,244,000,000; Restricted Funds – ₦19,269,000,000; Intangible Assets – ₦601,199,000,000;
Investment in Subsidiaries – ₦9,851,000,000; Repayment and Other Assets – ₦23,813,000,000 – Total – ₦30,921,283,000.
The report also put the current assets of NNPCL’s Trade and other Receivable at – ₦2,638,834,010; Cash and Bank Balances – ₦3,480,420,966; Inventories – ₦570,394,870,000; Prepayment and Other Assets – ₦276,096,000,000; Financial Assets and Amortised Cost – ₦5,244,000,000; Asset Classified held for sale – ₦84,000,000,000; Total – ₦3,171,985,269.
The company’s Non-Current liabilities (Lease Liability) stands at ₦4,487,685,000; Provision for De-Commissioning & Restoration – ₦2,977,680,149; Employee Benefits – ₦116,009,435 – Other Accruals – ₦14,963,000; Contract Liabilities – ₦242,249,000; Deferred Tax Liabilities – ₦1,216,596,000; Total – ₦2,171,985,269.
The Company’s current liabilities (Other Liabilities and Provision) stands at ₦1,377,792,000; Lease Liabilities – ₦749,000,000; Employee Benefits Liabilities – ₦36,003,000 – Current Liabilities – ₦143,190,000; Royalty Liabilities – ₦329,347,000; Trade Other Payables – ₦5,914,113,804; Contract Liabilities – ₦350,763,142,000; Alternative Funding Arrangement – ₦66,045,823,000; Total – ₦8,218,003,769,000.
From the information above, 80 companies supposedly owe the sum $5,763,278,112.39 on Royalties, $1,004,072,578.72 on Gas Flare Penalty, Concession Rental is $13,173,747.70, and Royalty Gas is $409,577,101.66 while Royalty Gas in Naira is ₦39,815,152,946.95. Hence, recommendation is to recover the above debts and transmit to NNPC Ltd. or confiscation of Assets Value of the debt from the debtors and transfer to NNPC Ltd.
“NNPC spent over ₦1.48 trillion ($396 million) on Rehabilitation of Refineries (4) between 2015-2022 without significant outcome Port-Harcourt Refineries received about $1.5 billion for total rehabilitation to Technimont SPA Italy. Whereas the same refinery awarded contract for equipment of the refinery for over $250 million, yet to be delivered.
NNPC’s 2021 Financial Statement Account also put the company’s total current liabilities at ₦13,458,175,000,000; Total Liabilities – ₦13,458,175,000,000; Total Equity and Liabilities ₦16,265,034,000.000, respectively.
“The Ministry of Petroleum Resources, Ministry of Finance, Budget and National Planning, Central Bank of Nigeria [CBN], Auditor-General of the Federation, Accountant-General of the Federation could not provide the Committee with exact Monetary Value of total Assets and Liabilities of NNPC. The Central Bank of Nigeria [CBN] was only able to provide how much was paid into Federation Account by NNPC and Deposit Banks of the Organization.
“The Ministry of Petroleum Resources informed the Committee vide letters on 9th and 15th of March 2022 that, it has sought for same information from NNPC.
“The Accountant-General of the Federation’s office, OAGF was able to furnish the Committee with total amount payable to the Federation Account by NNPC, amount deducted at source by NNPC and audited financial statements from 2018- 2020.
“Auditor-General of the Federation’s office informed the Committee that, they are limited by the virtue of the provision of Section 85 [3] Act [4] of the constitution of the Federal Republic of Nigeria (CFRN 1999) as amended. And that, Auditor General’s Office (OAUGF) has been forwarding report on NNPC Audited Financial Statements to National Assembly.
“The Auditor-General of the Federation, further informed the Committee that the information requested for will require a special audit to ascertain the value of total Inventory, Interest and Liabilities of defunct NNPC and its subsidiaries.
“The Group Chief Executive Officer of the Nigeria National Petroleum Company Limited, Mele Kyari has said the Assets of NNPC are worth $60 billion (about ₦25.29 trillion) he also said that, already-transferred Assets of the Company of about $59.8 billion, representing 80% of the total assets due to NNPC Limited and that the Current Assets been transferred to NNPC Limited was being evaluated.
To this end, the House urged “NNPC, Federal Government should work modalities that will ensure removal of subsidy in accordance with Petroleum Industry Act (PIA) that stipulates that subsidy be removed within 6 months of operation of PIA.
“Investments and operations of International Oil Companies (IOCs) should be further investigated and scrutinized present budget before implementation and Fund for Innovation Development (FID);
“That external Auditors should the liabilities of over N2 trillion being inherited by NNPC Limited on behalf of the Federation.
“There is need to further establish the current market values of NNPC, especially under a devalued Naira regime.
“That Federal Government should investigate foreign desk offices of NNPC subsidiaries with locations abroad, and make International Oil companies to establish offices in Nigeria and develop a framework that will make the companies answerable to the Laws of Nigeria;
“That, forensic auditors to first audit all NNPC accounts with all the banks to verify the true amount owned any bank as per loan(s) granted; ascertain the exact movements of funds from NNPC accounts, as well as over-charges by banks, which is a huge amount of money and will be a source of additional revenues to the Federal Government and the defaulting banks should be made to refund the sum discovered back to NNPC/Federal Government with interest.
“That, NNPC should Auction the Equipment and transfer proceed of equipment awarded for Port-Harcourt refinery in the sum of $250 million (yet to be supplied) to NNPC Limited.”
and then