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NEITI Alleges Loss Of $5.959bn Of Oil Revenue

The Nigeria Extractive Industries Transparency Initiative (NEITI), at its stakeholders’ forum in Abuja, where it presented its 2013 Audit Report, alleged that the Federal Government lost $5.959 billion of oil revenue.

In its breakdown of the losses, NEITI disclosed that the Crude Oil Marketing Department (COMD) of the Nigerian National Petroleum Corporation (NNPC) lost $1.17 million as a result of gas sales valued in dollars, but invoiced in naira.

The oil and gas watchdog equally stated that COMD recorded $20.43 million losses due to NNPC’s pricing methodology on domestic crude oil lifted, while $439.72 million was lost as a result of under reporting of revenue receivable, noting that no explanation was given for this difference in the report.

According to NEITI, NNPC also lost N13.42 billion due to its non-compliance to 90-day credit limit by NNPC, which was time value of money applying Central Bank of Nigeria (CBN) 12 percent interest rate. Equally, NNPC lost $4.74 billion due to oil theft and sabotage from Nigerian Agip Oil Company (NAOC), Chevron, Shell joint ventures’ production facilities to terminal.

The Pipeline and Product Marketing Company (PPMC), which is a subsidiary of NNPC, lost $240.12 million due to theft on the domestic allocated crude to refineries, from terminal to refineries, while Nigerian Petroleum Development Company (NPDC), also a subsidiary of NNPC, lost N7 billion over unaccounted lifting to refineries from Forcados Terminal between May to December, 2013.

The executive secretary of the Nigeria Extractive Industry Transparency Initiative (NEITI), Mr. Waziri Adio, while presenting NEITI 2013 audit report in the oil and gas sector at the Senate, disclosed that the NNPC did not remit $12.9 billion to the federation account? between 2005 and 2013.

Adio said that Nigeria was only sure of the amount of crude oil it exports, but could not say the quantity of the commodity it produced, explaining that the lack of accurate information on the actual quantity of crude oil, which Nigeria produces, was compounded by the absence of a proper metering system.

He said: “In 2013, the country produced 800.3 million barrels and out of that the country made $58.07 billion and that represents an eight percent reduction on the $62.9 billion that the country made in 2012.

“The second issue is that there are some monies that were withheld, lost or underpaid for different reasons. These monies are in three tranches. The first is in the category of the unremitted, and the unremitted amounted to $3.8 billion and N358 million.

“The second category is the category of losses, because of some inefficient practices and theft among other things, the country lost $5.9 billion and N20 billion. Under the category of the under-assessed the country lost $599.8 million.

“When we look at the unremitted $1.7 billion is still being owed the federation for OMLS. Also, $1.29 billion from the NLNG dividends and N351 billion from unpaid domestic crude debt, N2.17 billion from cash calls refunds,” he stressed.

According to him, those were the monies that should have been paid to the federation account but were not paid, explaining the second category of losses by NNPC and its subsidiaries.

He added: “Out of the $5.9 billion, N4.7 billion was lost to theft and vandalism. N20 billion was lost because the NNPC did not observe the 90 days credit grace and when you look at the time value of money, if you calculate at 12 percent interest the country lost N20 billion.

“There are other issues in the report. The first is about the assets divested by NNPC to NPDC. NNPC between 2010 and 2011 divested eight assets that belong to the federation to its upstream subsidiary, NPDC. So NNPC divested 55 percent of the shares being held on behalf of the federation to the NPDC.

“These eight OMLS are valued at $1.8 billion by Department of Petroleum Resources (DPR). NPDC paid only $100 million out of the $1.8 billion meaning there is an outstanding of $1.7 billion, and even that $100 million was paid two years after.

“What this means is that NNPC lifted oil on behalf of NPDC not on behalf the federation despite the fact that NPDC has not fully paid for those assets. Another issue that came out of the audit is the NLNG dividend. NLNG in 2013 paid $1.28 billion, but the money was not remitted to the federation account.

“Beyond this between 2005 and 2013 NLNG paid $12.9 billion to NNPC and NNPC acknowledged receiving it, but the money was not remitted to the federation account.

“Another is the losses incurred from swap and OPA. This is the arrangement where NNPC exchanges crude for product and the country lost $518 million due to the inefficiency of the swap and OPA. $211 million was lost to product swap and $306 million was lost to OPA.”

Adio said N1.3 trillion was posted for petroleum subsidy in 2013 which was 30 percent higher than the total for budget education, health, water and SURE-P.

He also said that he discovered that for infrastructural deficit, the country could only say what it exports and cannot say authoritatively what it produces which has always been an issue.

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