By Oscarline Onwuemenyi
ABUJAâ€”THE NigeriaÂ Extractive Industries Transparency Initiative, NEITI, yesterday, accused the Nigerian National Petroleum Corporation, NNPC, of consistently defaulting in remitting funds into the Federation Account over the years.
It said this was responsible for the confusion arising from the status of transactions between the corporation and the Federal Government.
NEITI added that it had begun a fresh audit of the oil and gas industry to cover the periods of 2006-2008, even as it indicated that it had advertised for expression of interest for the 2009 audit, which would equally focus on the solid minerals sub-sector.
Chairman of the National Stakeholders Working Group, NSWG, of NEITI, Prof. Assisi Asobie and the Executive Secretary of NEITI, Alhaji Haruna Yunusa Saâ€™eed, made the remarks in Abuja while giving updates on the Validation, Remediation and Implementation of NEITI Audit Reconciliation Reports of 1999-2004 and 2005.
Saâ€™eed said the agencyâ€™s audit report of 1999-2004 and 2005 showed that the actually owed about N654 billion to the Federation Account, insisting that the money was yet to be paid into government coffers.
He said: â€œWe did not sit down with the FAAC to share notes on the level of the governmentâ€™s transaction with the NNPC, but as far as we know, the N654 billion debt that was captured in the 2005 audit by NEITI has not been paid into the Federation Account.â€
He admitted that as a going concern, the financial state of the national oil and gas company was bound to change since the last audit of its transactions with government in 2005, stressing: â€œHowever, we did not even conduct an audit of the NNPC back then; what the audit looked at was the flow of activities, especially with regards to the quantity of oil that was received or bought by the NNPC from the country.
â€œNNPC also performs the role of selling oil for the country and bringing the money into the Federation Account. The money we said the corporation owes the Federation Account has to do with the domestic activity, in terms of lifting oil for use by local refineries and for their own sale.â€
The NEITI Executive Secretary added: â€œWe cannot say if the corporation is insolvent or not, but the issue boils down to default, which could be intentional.
If the NNPC is incapable of paying its debt, it could be said to be insolvent but if the NNPC has the fund and does not intend to pay, the issue of default would be raised.â€
Lamenting the alleged â€œgross corruptionâ€ in the nationâ€™s extractive industries as a result of the inefficiency in the monitoring and remittance structures within the system, Saâ€™eed said: â€œOn the issue of cost determination, we have found many lapses there. Our discoveries in that area are very interesting because, so far, we have identified a number of things that have rendered past remissions to be very poor.
â€œIn the area of tax, the government is being owed over $925 million, while royalties amount to over $665 million. There are still other grey areas that we are yet to sort out, such as costs (not including operating costs) of over N2.2 billion, which even if written back as profit should generate millions in taxes to the country.
â€œIn the 2005 report, $605.7 million in taxes was not remitted; $175 million royalties to government was not paid, and more than $37 million and N1.5 billion on levies and other unconcluded areas amounting to over $1.677 billion.
Peculiar situation in Nigeria
â€œWe have a peculiar situation in Nigeria, where we cannot just rely on the claim of these companies that they have paid to the government or even governmentâ€™s claim that it has received.
We do our best to dig in deeper and find out the veracity of these claims. This is the only way we can check corruption and instill transparency. We are still meeting with the agencies and oil companies to show them why they have not done the right thing.â€
Prof. Asobie said the agency had sent its report to the National Assembly, which had constitutional mandate to act on the reports.
He noted: â€œThese questions that are being asked about the NNPCâ€™s debt ought to be raised at the National Assembly, because it has the constitutional role on oversight. The civil society also needs to start asking question that will lead to greater accountability.
â€œWe have concentrated on the oil and gas sub-sector of the extractive industries for so long, but that would no longer be the case.”
We are ready to delve into other areas of the industry such as the mining and mineral resources sub-sector. Particularly, we shall be asking questions on how the 13 percent derivation given to oil producing states is spent, and on what.â€
Speaking on efforts by the agency to attain compliance status as required by the Extractive Industries Transparency Initiative, EITI, Prof. Asobie observed that NEITI had submitted its EITI Validation report as approved by the NSWG before the March 9, 2010 deadline.
He noted, however, that because the EITI Validation Committee had not had time to study and comment on the report, the report was regarded as â€˜Draft Reportâ€™ and NEITI was therefore advised to apply for extension.