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 license 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 nigerian that covered the periods between 1999 and 2004.
In his presentation at the a stakeholders’ roundtable on the 2005 audit report of neiti , the executive secretary (es) of neiti, mallam haruna sa’eed made several troubling observation concerning findings in the audit report.
One of such is the 2005 bid rounds conducted by the department of petroleum resources (dpr).
He noted that while 44 oil blocks were put on sale, the number of those who applied and took part in the bid cannot be provided by the dpr. But, that the dpr came out to say that 115 companies won the bids.
â€œthere is enough reason to worry about the process that saw to the emergence of the winnersâ€, he told the stakeholder, who included the board of neiti, the civil society organasiation, the diplomatic core, government representatives and the press
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 that 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 . â€œand there-in lies the confusionâ€, he said
Amount reported by companies as paid =Â $245,805,000; Amount reported by DPR as received =Â Â Â Â Â $129,011,000;
Difference is $116,794,000
Amount reported by OAGF as received = $126,791,85
(source: NEITI, 2009)
The actual payments 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.
â€œBut according to the 2005 audit reportâ€, he said,â€ oil companies claimed that they paid $245.805 million and not N73.964 millionâ€, he said. â€œStrangelyâ€, he went on, â€œthe DPR claimed in the report that it only received $129.011 millionâ€, he said.
This clearly leaves a difference of $116.794 million hanging till date. â€œAnd to make matters worseâ€, he went on, â€œthe Office of the Accountant General of the Federation (OAGF) said it has $126.791milion as its records for payment for Signature Bonus of 2005â€, 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.
â€œUnderpayment to the Niger Delta Development Commission (NDDC) in relation to its receiptsÂ 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 2005â€, said that former ASUU Chairman.
He however said that poor record keeping on the part of government agencies in the oil and gas sector is perhaps the most worrisome of the problems.
â€œFor exampleâ€, he told the gathering, â€œthe 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 royaltyâ€, he said. â€œOil 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.
â€œThe auditors are right in saying that the NNPC should first pay what it has accepted as owing and then demand payment of the subsidy later, It should also pay the sum of N3.242 billion over and above the total sum that the NNPC claimed it was owing the federation account.
â€œThe auditors lamented the lack of reliable data about gross production at the well heads as well as the non corporation of companies operating offshore in providing few data about the volume produced by the,. They were also concerned that the DPR provided data on the volume of production that differed from those provided by the companies as a result of these it was difficult to determine preciselyÂ the lose of oil occurring between the wellÂ and the terminalâ€, he said.