NNPC versus endless allegations of unremitted funds

Refinery-2• Firm Denies Wrongdoing, Admits Owing N326b • Adeosun Moves To Reconcile Remittances
• All Govt Revenue Must Go To TSA, Says Eweagbara

Again, Nigeria’s national oil company, the Nigerian National Petroleum Corporation (NNPC), is in the news for the wrong reasons.

The Office of the Auditor General of the Federation in its latest Government Accounts Report accused the company of not remitting a whopping N3.2tn, being a part of oil minerals revenue collected on behalf of the country in 2014, to government.

The auditor general’s office alleged that the NNPC failed to pay the sum into the jointly-operated Federation Account to be distributed at the Federation Account Allocation Committee (FAAC) meetings in the year in question.

But the NNPC has, in a swift reaction, denied the allegation, describing it a hoax, which it believes is in the mold of similar false accusations in the past that are yet to be substantiated.

It would be recalled that about three years ago, apart from the usual allegations by the states at FAAC meetings that the NNPC was under-remitting revenue, the former Central Bank of Nigeria (CBN) Governor and now Emir of Kano, Lamido Sanusi, accused the national oil company of withholding about $12b from the Federation Account.

Disturbed by the accusation, especially as the figures quoted by Sanusi kept fluctuating with every public pronouncement, former President, Goodluck Jonathan, ordered the Auditor General of the Federation, Mr. Samuel Ukura to undertake a forensic audit of the NNPC to determine the veracity of the apex bank henchman’s claims.

Ukura then engaged the services of an independent auditing firm — PricewaterCoopers (PwC), which gave the NNPC a clean bill of health at the end of the exercise.

Sanusi’s whistleblowing, coupled with other face-offs with Jonathan’s administration, later cost him his seat at the apex bank and set the pace for a keener look at the vault of the NNPC.

However, according to the recently released Report on the NNPC for the year 2014, “From the examination of NNPC mandates to the CBN on domestic crude oil sales and reconciliation statement of technical sub-committee of Federation Account Allocation Committee meeting held in January, 2014, the sum of N3, 234,577,666,791.35 was not remitted to FAAC.

“The transfer to escrow accounts amounts to $235,685,861.00. The review of profile on sales of gas to Nigeria Liquefied Natural Gas (NLNG) was not paid to the Federation Account but transferred to some undisclosed Escrow Accounts. Relevant documents were not made available for verification.”

It added, “Sales profile on gas in respect of gas export sales due to the Federation were stated to have been paid and received through the NGL Funding Account. No statements or documents were made available to confirm the receipts as well as the utilisation of these payments made through the named account.”

But the NNPC, in a statement by its Executive Director, Finance and Accounts, Mr. Isiaka Abdulrazaq, denied the allegations, stating that it didn’t withhold the alleged sum, but rather owed government N326.14bn, which was still being reconciled.

It described the AGF’s declaration as inaccurate and erroneous, noting, “Although this period is before the new NNPC management was appointed in August 2015, the management still deems it fit and important to correct any misinformation about the activities of the corporation as this will adversely affect its current and future financial and operational plans if not corrected .

“The declaration by the AGF may have been borne out of misunderstanding of how revenues from crude oil and gas sales are remitted into the Federation Account.”

He, however, acknowledged that as part of its responsibilities, the NNPC got an allocation of 445,000 barrels of crude oil per day for processing into petroleum products for distribution across the country, noting that proceeds from the sale of the products are remitted to the Federation Account after deducting the cost associated with the supply and distribution.

The costs, he added, included subsidy on petroleum products, recalling that the total sum for subsidy that had been approved and certified for the corporation by the Petroleum Products Pricing Regulatory Agency (PPPRA) for the period of January 2012 to December 2014 was N2.34tn.

He said an additional N7.96bn subsidy claim was still under reconciliation.

Meanwhile, as the controversy rages, the Finance Minister, Mrs. Kemi Adeosun, is making efforts to erase confusion in reconciling between cost and receipts in the Federation Account.

She has devised improved mechanism to enhance transparency in the operation of the account.

The Finance Ministry, she said, would appoint financial analysts to improve accountability, strengthen and increase the capacity of the Post-Mortem of FAAC.

According to her, the Post-Mortem Sub-Committee is to enhance accountability, improve reconciliations and ensure transparent process in respect of all the revenues accruable to the Federation Account.

The sub-committee, she noted, is saddled with the responsibility of examining the books of accounts of all revenue agencies, including the Federal Inland Revenue Service (FIIRS), the Nigerian National Petroleum Corporation (NNPC), Customs Service, Department of Petroleum Resources (DPR) and Ministry of Mines and Steel.

Adeosun said, “Though the unreconciled differences are no longer there, with the increased oversight of the Federal Ministry of Finance and the transparency of the NNPC, it will be easy for the sub-committee to achieve better result. This is because the committee, which reports to the Federation Account on a monthly basis, was originally set up to encourage revenue reconciliation and block leakages through the use of technology.”

But reacting to the accusations and plans by the Finance Ministry to hire consultants, a development economist, Mr. Odilim Eweagbara, advised government not to toy with the Auditor General’s report but rather take proactive measures to ensure that every kobo belonging to the Federation is not tempered with.

Noting that those that are privileged to be appointed to supervise government establishments shouldn’t be given undue access to the public till, he advised government to repeal the country’s fiscal legislation, which authorises revenue generating agencies to keep part of their operating surpluses.

He alleged that the NNPC must have been using the fiscal provision to rip the country blind.

According to him, “I strongly believe that the Auditor-General is right. This is not the first time NNPC has been accused of short-changing government in remitting revenues. In February 2013, during a House of Representatives’ Finance Committee hearing on why government agencies were not remitting the revenues they generated to government, it was shocking to hear that NNPC and it’s subsidiaries which generated N6.132tn between 2009 and 2011, remitted no money.

“Their reason being that their operating costs led to negative operating surplus and capitalized on provisions of section 22 (1) of the Fiscal Responsibility Act of 2009, which allowed all revenue generating agencies of government to just remit 80 percent of their operating surplus. In other words, NNPC and its subsidiaries implied that having corruptly pushed their operating costs to 100 per cent, they have no money to remit to government since 80 per cent of zero operating surplus is zero naira.

He argued that the section 22 (1) of the act which allowed for such actions should be repealed, a situation which runs counter to the full implementation of the TSA policy, especially since government has been ushered into an era of accountability.

“ I strongly suggest that rather government revenue generating agencies being allowed to remit 80% off their operating surplus, the law should insist that all government revenue generating MDAs should remit to government’s TSA all their revenue generated within 24 hours. In the meantime, they should send forward their budget estimate covering their operating costs and should monthly render full account of their cost expense.

“To reconcile their differences, we need a public hearing on this to be jointly conducted by the two chambers of the National Assembly with all major stakeholders in participation. There is no better way to ensure transparency and accountability on the part of NNPC and its subsidiaries than mandating them to make all their revenues remitted to TSA since what they generate is above all government’s money,” he said.

Economic Expert and President of Institute for Service Excellence and Good Governance, Mr. Tope Fasua, who insisted that he was not holding brief for the NNPC, noted there is need for caution on the manner accusations are leveled against public officials and institutions without regard to due process.

He recalled how the suspended Pension Transitional Arrangement Directorate (PTAD) Director General Ms. Nelly Mishakk, was accused of earning a monthly salary of N60 million and expressed the need for circumspection by government in its communication with the people.

He hinted that the controversy must concern offshore receipts by the NNPC hence the need for the Federal Government to quickly undertake measures to ensure that it extends the TSA beyond the shores of Nigeria.

Said he, “I suspect that the controversy must be in terms of reconciliation of overseas receipts by the NNPC. That is why it is important that the Federal Government quickly extends the TSA to all its overseas revenue generation sources. That way, like is happening here, it would solve a lot of problems and confusion.

“Above all, I think our public establishment and officials are over-regulated and monitored. Some have been vilified for no just cause with phantom allegations, which are publicised in the media. I think we can do better than this and find a more dignify way of communicating with our officials. I support the investigation of this allegation to ascertain its veracity and also a quick way out of it so as to strengthen our reporting processes.”



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