Oil sales and NNPC’s controversial remittances

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rilwanu-lukman-111Remittance of oil proceeds to the Federation Account by the Nigerian National Petroleum Corporation, (NNPC),  has been enmeshed in controversy. Central Bank Governor, Mallam Sanusi Lamido Sanusi,  raised the alarm that a huge sum of the proceeds had developed wings without any trace in the Federation Account where it is supposed to be domiciled.  But the management of NNPC came up to say no single kobo was missing.

This led to the Senate Committee on Finance to approve a forensic audit of the receipts from oil into the Federation Account. This report captures what transpired at the public hearing by the Senate Committee on the alleged missing fund.

By Johnbosco Agbakwuru

It has been an issue of accusation and counter accusation since the Governor of Central Bank of Nigeria, CBN, Sanusi Lamido Sanusi, opened the Pandora Box that $49.8 billion being oil proceeds  was missing.
This alarm prompted the Senate, on December 11, 2013, to mandate its Committee on Finance to begin a full-scale investigation into the alleged missing $49.8 billion from the coffers of the Federal Government.

This followed a Point Of Order raised under Matter of Urgent Importance by Senator Olubunmi Adetunbi, APC Ekiti North, who relied on the Senate Order 42, not only to draw the attention of the upper legislative chamber to the allegation but requested that it carry out an indepth probe of the alleged missing fund.

The money, said to be the value of crude oil export and proceeds from the NNPC, was expected to be lodged in the CBN. Adetunbi had alleged, “There has been a raging debate on the issue of missing money from the coffers of the Federal Government of Nigeria. Today, all papers carried the report on $49.8 billion that has not been remitted to the Federation Account.”

He further explained that the nation’s apex bank, the Central Bank of Nigeria, CBN, had written on the account from January 2012 to July 2013, urging the Senate to carry out a holistic investigation on the matter.
But, on December 18, 2013, the CBN Governor reversed himself

Instead, he said $12 billion was the amount discovered not to have been remitted to the account within January 2012 and July 2013 just as he regretted that his communication to President Goodluck Jonathan was leaked to the public.
However, the Minister of Finance, Mrs Ngozi Okonjo-Iweala, countered the CBN Governor’s position, saying: “I just wanted to add that we found about $10.8 billion. He mentioned $12billion.”

Insisting that the letter was meant for the President to launch an investigation into the issue, Sanusi   told the Senate Committee Chairman, Senator Ahmed Makarfi: “I repeat, Mr Chairman, that we did not see the letter as a conclusion of our investigation but an invitation to investigate. So, the conclusion that $49.8billion was missing was wrong even though we had the allegation that it was unremitted.

Difference

Sanusi

Sanusi

However, in another public hearing, Sanusi came up with another figure that he said had not been remitted into the Federation Account which, he said, was $20 billion, explaining that out of the $67 billion crude oil sales that was supposed to be remitted to the Federation Account, only $47 billion was reconciled betweenCBN and NNPC. But Chairman, Senate Committee on Finance, Makarfi, cautioned the CBN Governor over making wide and unsubstantiated allegations without concrete and specific figures to back up the allegations.

Sanusi, while making a new allegation, stated, “All we have said as CBN to which there is no disagreement is that NNPC shipped 67bn dollars worth of crude they have repatriated or we have established that N47bn dollars has come back to the Federation Account. There is a $20bn dollar that has not come back to us. The burden of proof is on NNPC

“We have made suggestions that can help to answer some of the explanation and we believe that even some of that which they (NNPC) claimed were shipped by NPDC does not belong to the NPDC but to the federation.”
He said that some of the issues were subject to investigations which, according to him, had to do with whether NNPC was repatriating money due to the Federation Account or not, adding that it was necessary to investigate the issue because the NNPC had given a number of explanations for why money had not been remitted.

Accounting system
His submission did not go down well with the Group Managing Director of NNPC, Andrew Yakubu, who accused Sanusi of being ignorant of accounting system.
Yakubu said, “We have made submissions but this meeting was not of detailed discussion of the submission. We came here for the Chairman brief us on the programme and agenda on the detailed reconciliation that we are doing.

“As you were told in the meeting, we are reconciling at the point of conclusion on the reconciliation process with the various agencies. It is at the end of this that we will submit our detailed reconciled position which the committee will study and then commence detailed review session. That is where and what was reported is exactly the true position of things.

“As you are aware the major chunk of the amount in question over 80 per cent of it is in the subsidy for both PMS and kerosene.
“The issues that were raised are not new at all. You see we came out in details because we don’t have anything to hide and we gave a detailed breakdown of the so called $49billion and we came out clearly to state the various streams that are associated with what he was talking about.

“Now, we also made it clear that NPDC, if we had anything to hide we would not have made it clear that NPDC was part of the stream, because NPDC which is NNPC’s upstream operation, is a limited liability company registered the Companies and Allied Matters Act (CAMA) to do upstream business just like any other independent company”.

Chairman of the Senate Committee on Finance,  Makarfi, cautioned the CBN Governor for making what he described as gross allegations which he said were the same allegations he made in his submission, saying that there was nothing new in what he had said.

In view of the inability to come to terms with the actual financial position of NNPC as regards the remittance of the subsidy proceeds, on Thursday, the Minister of Finance and the Senate agreed agreed that there was the need for independent forensic audit of the NNPC account.
Besides, the Minister of Petroleum Resources, Mrs. Diezani-Madueke, called for court interpretation on the legality of kerosene deduction, saying there was no gazette that authorized withdrawal of subsidy on kerosene.

The Finance Minister and the Coordinating Minister for the Economy, Dr. (Mrs.) Ngozi Okonjo-Iweala, said going by the controversy that had surrounded the remittance of the oil fund, there was the need for external auditors to carry out a forensic auditing of NNPC accounts.

She said the services of forensic experts were needed to verify data submitted by the NNPC which the Petroleum Product Pricing and Regulatory Agency, PPPRA, had certified to ascertain whether the claim was true or not as only the PPPRA and the Ministry of Finance alone could establish the veracity of the claim.
According to her, with the services of external forensic auditing, it would certify not only the ministry, but also all Nigerians that matter.

On his part,  Makarfi corroborated the position of the Finance Minister over forensic auditing of the NNPC accounts and gave the minister one month to carry out the auditing.
He said, “The CBN said part of the NNPC transaction, though it was not in a position to know the exact amount should be lodged in the Federation Account. We have agreed that, that will be sorted out on technical grounds.

“Our own forensic examination of the document will make us take a decision as to whether the document support the expenses incurred. The expenses are part of the accounting for the money”.
The Minister of Petroleum Resources, Mrs. Diezani Allison-Madueke,  said there was no record of gazette where authority was given on the withdrawal on kerosene subsidy and that there was the need for legal interpretation.

Alison-Madueke said,  “For years, the issue of the Presidential directive given by Yar’Adua had been brought up over and over again. At the time, an inter ministerial meeting was held both ministers of finance and that of petroleum at that time, were parties to that meeting and at that time,   a decision was taken to stay action on the memo because kerosene was very crucial to Nigerians. “

The Group Managing Director of NNPC, Yakubu, said no subsidy fund was missing and that the CBN and the Federal Ministry of Finance were clearly aware of the outstanding amount and the issues relating to its non-realization.

According to him, unpaid petroleum products was $8.76 billion, crude oil and product losses was $0. 76 billion, $0.46 billion was for national strategic reserve holding, while pipeline maintenance and management   cost $0.91 billion.He said, “We don’t have any problem with forensic audit but what we are saying is that there is a procedure that had been put in place through bodies like the PPPRA, DPR to cross check our data and certificate them for payment.

So we have no problem.  In the upstream industry, we have five agencies that oversee our business, so we are used to interacting with the agencies.
“We are happy for anybody to come in and look at it, but the question is what value is it going to bring because we have gone through these things over and over?”

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