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2005 oil bid rounds worry NEITI

ABUJA—The Nigerian Extractive Industries Initiative (NEITI), has expressed grave concern over several mind-boggling findings in the 2005 audit of the Nigerian oil  and gas sector for  which answers are yet to be provided.
NEITI, passed into law in 2007, is the official watchdog of Nigerian extractive sector and is empowered to mete out penalties to erring firms, including licence revocation.

NEITI, in 2005, contracted the Hart Group of London and a Nigerian auditing firm, S. Afemike, to carry out an independent financial, physical and process audit of the Nigerian hydrocarbon sector. The two had earlier done  a similar job for Nigeria that covered between 1999 and 2004.

In his presentation at the a stakeholders’ roundtable on the 2005 audit report of NEITI,  its Executive Secretary, Malam Haruna Sa’eed, made several troubling observations concerning findings in the report.
One of such is the 2005 bid rounds conducted by the Department of Petroleum Resources (DPR).

He noted that while 44 oil blocs were put on sale, the number of those who applied and took part in the bid  cannot be provided by DPR. But, that DPR came out to say that 115 companies won the bids.

“There is enough reason to worry about the process that saw to the emergence of the winners,” he told the stakeholders, who included the Board of NEITI, the Civil Society Organisation, the diplomatic corps, government representatives and the media.

But the most troublesome issue on the 2005 bid rounds  is the  confusion surrounding the signature bonus paid the so-called winners of the oil acreages.

Citing the audit report, he said of the 44 oil fields sold, the expected revenue from the transaction is $2. 658,276 billion but that the actual payments till 2007 is $983.585 million . “And there-in lies the confusion,” he said.

The actual payment made in 2005 for that year’s bid round was $73,964,000.
In 2006 more companies paid about $901,001,000 and in 2007 some firms paid another $8,620,000 to swell government coffers by $983,585 million.

“But according to the 2005 audit report,” he said,” oil companies claimed that they paid $245.805 million and not N73.964 million”, he said. “Strangely”, he went on, “the DPR claimed in the report that it only received $129.011 million”, he said.

This clearly leaves a difference of $116.794 million hanging till date. “And to make matters worse”, he went on, “the Office of the Accountant General of the Federation (OAGF) said it has $126.791milion as  its  records for payment for Signature Bonus of 2005”, he said

The Chairman Board of NEITI, Professor Assisi Asobie, in the same line, pointed out more areas of concern, saying underpaid royalties and taxes; non-remittance by the Nigerian National Petroleum Corporation (NNPC) of what it received from sale of domestic crude are among the ways that government lost resources in 2005, based on the audit report.

“Underpayment to the Niger Delta Development Commission (NDDC) in relation to its receipts  from oil companies and the difference in lifted quantities of crude between the terminal operators and the companies making the lifting, are areas where government has lost revenue in 2005”, said that former ASUU Chairman.

He, however, said that poor record keeping on the part of government agencies in the oil and gas sector was perhaps the most worrisome of the problems.

“For example, the most possible shortfall in the payments of royalty and petroleum profit tax (PPT) resulting from anomaly in the interpretation and application of MOU clauses and the clauses of the relevant laws is estimated at $309.9 million for royalty. Oil companies established that the NNPC owed to the Federation account the sum of N654.825 billion; NNPC claims it owed N651.583, but added that the sun of N222.387 billion was being withheld as part of subsidy payment due to it from the Federal government,” he said.


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