By Dele Sobowale
“There is a long running dispute between NNPC and PSC operators as to the calculation of the cost of oil, tax oil, and royalty oil under the PSCs. This meant that the parties cannot agree on the entitlements to amounts being lifted by NNPC and the contractors. Amounts reported for reconciliation revealed different interpretations for the same lifting transactions.”
Hart Group and S.S. Afemikhe & Co, in their audit report.
Oil was first discovered at Oloibiri in 1957 and Nigeria had been exporting crude since the late 1950s – that was over 60 years ago. The government agency responsible for crude oil transactions was first called the Nigerian National Oil Corporation, NNOC, which was dissolved in 1977 and replaced by the current NNPC.
Nigerians, indeed the entire international business community, would be shocked to discover, or rather re-discover, as the Hart Group and Afemikhe & Co did, that 62 years after the first discovery, disputes still arise concerning calculations on any transactions.
In plain language, this means that 62 years after, we are still not sure how much this country should be receiving from the export of its crude oil as well as gas. The discrepancies on gas exports will not be fully dealt g country”, meaning that our gas reserves far exceed our known crude oil reserves.
How on earth could successive governments fail to have insisted on agreements which take gas exploitation into account? Surely, nobody is stupid enough to believe that the PSCs have not been taking advantage of this lapse for their own benefit – and against our own interests.
Incredibly, all the present revelations by the Hart Group & Afemikhe in 2011 are not new. The Hart Group had been engaged in 2006 by the NEITI when similar outcry for transparency and accountability in the transactions concerning petroleum products, from crude to imported, was raised by patriotic Nigerians.
Then, as now, the Hart Group found wide differences between the figures reported at loading stations and those admitted at destinations everywhere. In addition, the Hart report of 2006, revealed definite and deliberate patterns of tax evasion by the International Oil companies and other operators engaged in crude lifting.
Furthermore, even after acknowledging, generally, falsified, volumes of crude lifted, the operators delay payments beyond agreed payment periods without penalties – for one fraudulent reason. By so delaying payments, they are guaranteed that the records would be so muddled up “reconciliation” would become necessary. That means more loss of revenue for Nigeria. (See “Deleleaks” Ch. 10).
President Obasanjo, as the de facto Minister of Petroleum Resources, was so embarrassed, he threw a copy of the report on the floor and ordered the Economic and Financial Crimes Commission, EFCC, under Malam Nuhu Ribadu, to go and investigate the allegations contained in the 2006 report.
It was a masterful ploy because with virtually all the fingers pointing to Aso Rock as the source of all corrupt practices, Ribadu wisely ignored the instruction. Till today, nothing has been done about the greatest scandal in the nation’s history. And given presidential indifference or benign neglect or deliberate cover-up, the NNPC returned to business as usual – until now.
If there are audit firms which can be relied upon to undertake a professional audit, the Hart Group and Afemikhe are the best for the job. Perhaps at this stage, the two firms need to be introduced. Unlike NNPC, which has no good reputation to protect, they have carved niches for themselves as being above reproach in their conduct of audit. To call the NNPC a treasure trove of scandal would amount to a compliment; the place stinks!!!
Already, there is sufficient material to write several books on the institutionalised corruption called NNPC; so much so that one expects patriotic executives of the organisation, to, for once, discard their ingrained self-centredness and help our country for a change. They have amassed enough money as it is.
S.S. Afemikhe & Co, whose Managing Director is Sam Afemikhe, was established in 1985 and started business in 1986. For more than ten years, the firm had been involved with the Nigerian oil and gas industry; which it knows inside out.
The Managing Director is probably the leading expert on Value for Money reviews and consultancy services and he is the author of several books and articles on the subject. He also provided the intellectual underpinnings to the Due Process Unit established by President Obasanjo and headed by Dr Oby Ezekwesili then. A more patriotic Nigerian will be very difficult to imagine or find.
The Hart Group, partners to Afemikhe, had since 1988 been involved in 26 countries worldwide and on every continent on the planet. Their track record of professional accomplishment will be difficult to match not to talk of surpassing. The Hart Group had competed successfully in the toughest parts of the world for auditing practice.
Definitely, their report must be viewed with all the seriousness it deserves and the fact that the NNPC is jittery is a pointer to the possibility that there are truths which some people want buried – forever.