*$1.48bn signature bonus resolved

By Chris Ochayi

The recent clean bill of health issued Nigerian National Petroleum Corporation (NNPC) by PriceWaterhouseCoopers, which conducted forensic audit report on the alleged missing $20bn unremitted oil revenue, has laid to rest months of controversies generated by the allegation.

The allegations, which took a tide of whirlwind and nearly smeared the reputation of NNPC, started in late 2013, when Lamido Sanusi Lamido, then Central Bank governor wrote to President Goodluck Jonathan  asserting that billions of dollars were not accounted for by NNPC.

The CBN Governor’s letter to Mr. President alleging that “between January 2012 and July 2013, NNPC lifted 594,024,107 barrels of crude oil valued at $65,332,350,514.57. Out of this amount NNPC repatriated only $15,528,410,098.77 representing 24% of the value. This means the NNPC is yet to account for, and repatriate to the Federation Account, an amount in excess of $49.8 billion or 76% of the value of oil lifted in the same period.”

This degenerated into a lot of arguments with many Nigerians expressing different opinions on the issue. While many dismissed the claim with a wave of the hand and others insisted the monies were actually missing, the alleged missing money was to be later reduced to about $20 by Sanusi himself.  The opposition, rightly, latched onto this embarrassment.

The Federal Government, incensed by the claim, appointed an audit firm to carry out a forensic audit of NNPC account. But before then the Senate Committee on Finance waded into the allegations with a view to unraveling the authenticity or otherwise of the allegation.

Petroleum Minister, Diezani Alison-Madueke

At the hearing of sitting of the Ahmed Makarfi-led Senate Committee on Finance, the public learnt that the Inter-Agency Committee had completed its assignment and had certified and signed off on the claims of NNPC to the tune of $8.7 billion for petroleum products subsidy.

The Minister of Finance and the Co-ordinating Minister for the Economy, CME, Ngozi Okonjo-Iweala, said that the Committee had no technical competence to verify the other claims of $2.1 billion for pipeline repairs and maintenance, strategic reserves etc., and suggested that a forensic audit of the claims including what PPPRA (the statutory agency responsible for verifying products importation and subsidy claims) had certified and signed off be undertaken.

In making the suggestion, CME had noted that even though the claims of NNPC had been certified, given the extraordinary times, it may be necessary to invite forensic auditors to do a forensic examination.

CME equally called for a legal opinion on the status of NPDC and Third party financing alliances by NPDC

The former CBN Governor was asked if he agreed with the finding of the Inter-Agency Committee to which he answered in the affirmative, adding that since the agencies responsible for certification of products importation and subsidy claims have certified the claims of NNPC, CBN was satisfied.

The Senate Committee at the end of the probe, submitted its report to the Senate. Some of the observations and recommendations of the Committee include:

“That no oil revenue amounting to $49.8bn, $20bn, $12bn, or $10.8bn as alleged by the former CBN governor is missing

“That the total expenditure on kerosene subsidy for the period (January 2012 – July 2013) which was unbudgeted was $4.43 billion. It is not anywhere near $8.7bn that the APC lying machine is bandying about.

“That a Supplementary Appropriation Bill covering the amount be sent to the National Assembly for approval considering the ambiguity in government policy on kerosene subsidy and the fact that the PPPRA has verified the importation of the products.

“That NNPC should remit the sum of $262 to the Federation Account being “expenses it could not satisfactorily defend in respect of Holding Strategic Stock Reserve; Pipeline Maintenance and Management Cost; and Capital Expenditure.

“The report of the Committee was debated on the floor of the Senate at plenary and it adopted most of the recommendations of the Committee”.

It particularly resolved, based on the recommendation of the Committee that the allegation of the former Central Bank Governor that some money was missing was to all intents and purposes false and that no money (be it $49.8bn, $20bn, $12bn, or $10.8bn) was missing.

The senate also advised President Goodluck Jonathan to prepare and present to the National Assembly a supplementary budget “to cover the expenditure in the sum of N90.6bn for PMS (premium motor spirit) subsidy 2012 and N685.9bn for kerosene subsidy expended without appropriation by the National Assembly” based on the Committee’s finding that the expenditure was not based on a flagrant disobedience to the laws of the land in the light of the ambiguity surrounding the issue of kerosene subsidy removal.

The report of the Forensic Audit conducted by the internationally reputable accounting firm, PriceWaterhouseCoopers (PwC), on NNPC over the alleged unremitted $49.8bn was submitted by the firm to President Goodluck Jonathan at the State House, Abuja on February 2, 2015.

The President immediately handed over the report to the Auditor-General of the Federation with a directive to study it and make the key findings of the report public.

The Auditor-General, has made the highlights of the Forensic Audit Report known to the public. The highpoint of his disclosure was that the report recommends that NNPC and its Exploration & Production subsidiary, the Nigerian Petroleum Development Company (NPDC) are to  remit the sum of $1.48bn being “signature bonus due for divested assets and taxes/royalties”.

What the Auditor-General failed to explain to the public is that the signature bonuses, royalties and taxes on the oil wells divested by Shell and assigned to NPDC were not part of the oil lifting revenues ($49.8) which the former CBN Governor (now Emir of Kano) alleged was unremitted by NNPC and which was the reason for the Forensic Audit.

The recommendation to pay the signature bonus for the divested oil wells was not an indictment in any way over the alleged unremitted $49.8 or any of the latter versions of the amount that the former CBN Governor came up with.

Following the barrage of media reports claiming that NNPC was indicted in the PwC Forensic Audit Report because of its recommendation that NNPC should pay the sum of $1.48bn to the Federation Account, the Group Managing Director of NNPC, Dr. Joseph T. Dawha, addressed a press conference to explain the recommendation and why it does not amount to an indictment.

The GMD explained that the $1.48bn represents the balance of the book value of the assets assigned to NPDC upon divestment by Shell as computed by the DPR.

He further explained that the full book value of the assets as computed by DPR was $1.847bn out of which NNPC had paid over $300m as a token to indicate its interest in acquiring the assets pending when NNPC and DPR come to terms on a mutually acceptable estimate of the book value of the assets as NNPC had raised concerns over some of the parameters that DPR used in arriving at its figures.

On deductions and kerosene subsidy, the GMD explained that the PwC’s report was unequivocal that the NNPC Act empowers NNPC to defray its costs from crude oil sales proceeds and so NNPC could not be blamed for doing what the law prescribes, adding however that NNPC was ready for the legal reform proposed in the PIB.

It is now a statement of fact that, the Forensic Audit Report, like the Senate Committee on Finance’s Probe Report before it, clearly stated that all the revenue generated from FGN crude lifting for the period of 1 January 2012 to 31 July 2013 amounting to $69.34bn was fully accounted for.

Nowhere in the report was it stated that NNPC was indicted over the allegation of unremitted or missing oil revenue.

The alleged issue of missing oil revenue to the tune of whatever amount ($49.8bn, $20bn, $12bn, $10.8bn?) has been laid to rest by the Senate of the Senate of the Federal Republic of Nigeria and an independent audit firm, PwC.

However, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has since directed the NNPC to defray the signature bonuses, taxes and royalties in line with the recommendation of the forensic audit report.