The House of Representatives and management of Nigerian National Petroleum Corporation (NNPC) differed on the alleged non-remittance of $5 billion accrued from the sale of crude oil between 2005 and 2019.
Speaking at the resumed investigative hearing, Chairman, Ad-hoc Committee investigating crude oil theft, Hon. Peter Akpatason who expressed grave concerns over the discrepancies in the various documents submitted by NNPC and other agencies, explained that the Ad-hoc committee was set up to identify and proffer lasting solutions to the various challenges of oil losses.
While noting that the effects of crude oil theft cannot be overemphasized, Hon Akpatason who doubles as Deputy Majority Leader, noted that the illicit exercise has lasted too long.
“As responsible citizens, it is our collective responsibilities to see to the end of the economic crisis in the oil sector.”
While reiterating the Ad-hoc committee’s resolve to collaborate with various stakeholders including Nigerian National Petroleum Corporation (NNPC) in the oil sector and the nation’s economy, he expressed displeasure over the failure of the stakeholders to provide relevant documents that will aid the investigation.
“It is however very worrisome that the Ad-hoc Committee requested for some specific information particularly the certified true copies of oil royalty, PPT, the entitlement of proceeds of production sharing contract for 2005 and 2019, after a long delay, the submission received works from 2003 to 2009, leaving out the chunk of the years that we are supposed to be looking at.
“I will like to bring a notice that in the cause of this investigation the Ad-hoc committee through forensic analysis of whatsoever submission from various stakeholders in the sector observed huge discrepancies in their submissions made by various agencies of government, particularly DPR and NNPC.
“These variances range from figures on offshore processing of crude oil, DSDP swap, processed crude oil by the three refineries, conversion of crude oil to export, FIRS borrowing crude oil to … non-remittance of funds amounting to about $5 billion into the Federation account.”
According to him, aside from the unaccounted crude oil, the committee also observed that there were other sources of crude oil losses that directly affect the revenue generation, especially in the area of joint venture, crude under-lifting of the nation’s share of crude oil.
“Records have it that under-lifted between 2005 and 2019 is averaged loss of about 604,000 barrels per day. The aforementioned are some of the areas the Ad-hoc committee will like to request for some clarification as the proceeding proceeds,” he said.
In his submission, NNPC Group Managing Director, Mr Mele Kyari observed that “From where it was in 2015 till today, there’s a significant decline in the losses that we suffer in terms of other things or vandals in the country. And this didn’t come from the blues, but there were concerted efforts by the industry, by NNPC and also I must commend the security agencies to curtail the excesses but they still do occur.”
He expressed the readiness of the Corporation to share relevant data with the Ad-hoc Committee around the Corporation’s transactions, including those that are yet to be submitted.
“And I take responsibility for whatever gaps, we will provide them so that the House will be properly provided with the information that are required for further action and analysis that you will like to take.”
He maintained that “there are always discrepancies in the data between NNPC and other agencies of government, even between us and our partners. And this is also not surprising because typical practice in the industry is the point of recording, audit, the timing of recording always determines what numbers that you return with because it’s a very very mobile environment because the data you have today is not the same thing tomorrow.”
He added that there are a number of forensic audit exercises taking place over the years and they always end up reconciling to extreme margin and non-existence.
Mr. Kyari, however, noted that there are platforms today on the Japan petroleum resources database that provides actual data on time and on real-time so that we are all looking at set of data.
While responding to the allegation on under-lifting of crude oil, he said: “this may not be far from the very fact that even though you have an average of 57% equity in all our JVs, belonging to the NNPC, you do not have the right to lift 57% of the that equity or almost 60% as the case may be. In some assets we have 60%, in some, we have 55.
“In all cases, you cannot lift that equity level because there are a number of financing arrangements that are on the ground which mandate you to cede some of your production to your partners so that you can pay up for their own contribution to those loans. So to that extent, you see it as under-lift but when the details are brought on the table, you will discover that those are unavoidable and you so have to pay back for loans that you have taken.”
He also affirmed that there are cases of reporting for under-lifting for production sharing contract because, under the PSC environment, the lifting right was based on taxation and royalty, which varies from month to month and from year to year, hence the need for reconciliation in dollar not in volume.”
While responding to allegations on the shortfall in the revenue remitted into the Federation Account, Mr. Kyari said: “When you have multiple accounts of government on taxes and for royalties, and for profit oil all of them end up in the consolidated crude revenue account so when you look at them in isolation it will appear as if there’s an underpayment or short payment on many of these accounts but in reality, when the consolidated accounts are looked at they will turn out to be correct.
“Very often we also expect 100% payment of these values of the crude oil and that is all not possible because of the existing fiscal arrangement that is in place which mandates or out the burden on NNPC to carry out certain projects of Government or on behalf of all of us and ultimately the net value you deliver to the Federation will be less than the value of the crude oil that you see. So every often auditors pick it up an under-remittance forgetting also the responsibilities that are there for you to bear all your cost before delivering to the Federation Account.”
YOU SHOULD NOT MISS THESE HEADLINES FROM NIGERIAN TRIBUNE
In spite of the huge investment in the water sector by the government and international organisations, water scarcity has grown to become a perennial nightmare for residents of Abeokuta, the Ogun State capital. This report x-rays the lives and experiences of residents in getting clean, potable and affordable water amidst the surge of COVID-19 cases in the state.