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$20b Spent On Petroleum Subsidy In 19 Months – Audit Report - Politics - Nairaland

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Buhari & Osinbajo Said This About Fuel Subsidy In 2011 During GEJ Time(pics) / Government Working On Petroleum Pump Price Reduction — Osinbajo / HRH Sanusi Speaks Again On The Missing $20b And The PWC Report. (2) (3) (4)

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$20b Spent On Petroleum Subsidy In 19 Months – Audit Report by ducii: 9:41am On Feb 06, 2015
As promised Monday by President Goodluck Jonathan, the Accountant-General of the Federation, Samuel Ukura, on Thursday, in Abuja unveiled highlights of the forensic audit on the operations of the Nigerian National Petroleum Corporation (NNPC), which, among others, shows that $20 billion was spent on petroleum products subsidy between January 2012 and July 2013.

The audit conducted by an international audit firm, PriceWaterHouseCoopers, to assess allegations of unremitted funds into the Federation Account, said the amount went into third party financing arrangements and equity crude processing, besides costs directly and indirectly linked to domestic crude.

Others include signature bonuses, petroleum profit tax and royalties which are yet to be paid by the NPDC.

It faulted the NNPC’s operational modalities which it noted is unsustainable, hence the need to urgently review and restructure the oil behemoth.

This is just as it said the NNPC and its upstream subsidiary, the Nigerian Petroleum Development Company (NPDC), should refund about $1.48 billion to the Federation Account over unreconciled transactions.

The report showed that only $100 million from the NNPC’s portion of eight oil leases worth $1.85 billion had been paid to the NPDC, faulting the transfer value which it says ought to be higher.

According to the report, gross revenue from crude lifting during the period stood at $69.34 billion, more than the $67 billion by the Senate’s reconciliation committee earlier set up.

Of this also, $50.81 billion was remitted to the Federation Account from crude oil lifting, instead of $47 billion reported by the committee.

A further breakdown showed that of the $69.34 billion, $28.22 billion was the value of domestic crude oil allocated to NNPC, adding that total amount spent on subsidy for Premium Motor Spirit amounted to $5.32 billion.

It also noted that the sum of $3.38 billion which was not appropriated in the national budget was spent on Kerosene subsidy.

It said although the Petroleum Products Pricing Regulatory Agency and the NNPC relied on a presidential directive of June 15, 2009 to stop subsidy on kerosene, the directive was not gazetted, following which there was no legal instrument canceling the subsidy on kerosene.

Specifically, the PWC audit report said: “Total other third party financing arrangement and equity crude oil processing costs amounted to $1.19 billion. Total costs directly attributable to domestic crude oil amounted to $1.46 billion.

“Other costs incurred by the corporation not directly attributable to domestic crude is $2.81 billion. Revenue attributable to NPDC as submitted by the former Managing Director to the Senate hearing is $5.11 billion.

“PWC stated that this amount needs to be incorporated into the financial statements of NPDC from where dividend should be declared to the federation accounts.

“Signature bonus, Petroleum Profit Tax and Royalty yet to be paid by NPDC is $2.22 billion. Total cash remitted into the Federation Account in relation to crude oil liftings was $50.81 billion and not $47 billion as earlier stated by the Senate Reconciliation Committee for the period January 2012 to July 2013.

“Based on the information available to PwC, and from the above analysis, the firm submitted that NNPC and NPDC should refund to the Federation Account a minimum of $1.48 billion.”

The report, whose release many link to the ongoing brickbat between Prof. Chukwuma Soludo and members of the National Economic Management Team led by Co-ordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, noted that the NNPC is unable to sustain remittances to the Federation Account and meet operational costs from crude oil revenue, hence the resort to third party liabilities to bridge the funding gap.

Ukura said the report was based on three key areas – NNPC costs, ownership of NPDC revenues and kerosene subsidy - noting that 46 per cent of proceeds of domestic oil revenues for the review period was spent on operations and subsidies.

“The corporation is unable to sustain monthly remittances to the Federation Accounts Allocation Committee, and also meet its operational costs entirely from proceed of domestic crude oil revenues, and have had to incur third party liabilities to bridge the funding gap,” it added.

The report said although the NNPC presented a transaction document representing additional costs of $2.81 billion related to the review period, stressing the need to clarify whether such deduction should be made by the corporation as a first line charge before remitting the net proceeds of domestic crude to the federation account.

Consequently, PwC recommended that on the ownership of NPDC revenues, NPDC should remit dividend to NNPC and ultimately to the federation account, based on NPDC’s dividend policy and declaration of dividend for the review period.

But, reacting, a statement by the NNPC said the audit report vindicated its stand that $20 billion was not missing or unremitted.

It said the Minister of Petroleum Resources has directed that $1.48 billion should be remitted to the Federation Account, insisting that the amount is “not part of the alleged unremitted revenues from crude lifting.”

The amount, it continued, was never in dispute as it is made up of statutory payments such as signature bonus, taxes and royalties which are statutory payments that come with assets acquisition.

It said the delay in payment was due to the reconciliation processes between the Department of Petroleum Resources (DPR) and the NNPC.

The corporation stated that the forensic audit report and the Senate Committee on Finance report on the unremitted revenue all alluded to the fact that NPDC reported crude oil revenues of $5.11 billion.

Expatiating further on the kerosene subsidy issue, the corporation said the audit report also clarified that subsidy on “DPK is still in force as the presidential directive of 19th October, 2009, was not gazetted in line with provisions of Section 6 Subsection 1 of the Petroleum Act of 1969.

“The Forensic Audit Report also acknowledged that Section 7 Subsection 4 of NNPC Act empowers the corporation to defray its costs and expenses including the costs of its subsidiaries from crude oil revenues, though it also recommended that the laws be reviewed to make the Corporation meet its costs and expenses entirely from the value it creates.”

President Gooldluck Jonathan had on Monday while receiving the report from the accounting firm requested the Auditor-General of the Federation to study the report and make the key highlights public within the week.

The audit followed allegation by the immediate past CBN Governor, Lamido Sanusi, now the Emir of Kano, in 2013, that about $20 billion oil money was missing from the NNPC, following the diversion of about $49 billion by the NNPC.

The amount was later scaled down to $20 billion, just as he called for investigations after writing to President Goodluck Jonathan. But the government insisted at the time that no money was missing and promised a forensic probe.

The presentation of the report is coming almost 10 months after Dr. Okonjo-Iweala, in April 2014, announced the appointment of PwC to conduct an investigation that was to last about 16 weeks.


http://dailyindependentnig.com/2015/02/20b-spent-petroleum-subsidy-19-months-audit-report/
Re: $20b Spent On Petroleum Subsidy In 19 Months – Audit Report by Nobody: 9:54am On Feb 06, 2015
So nobody is going to jail...where is my torchlight?
Re: $20b Spent On Petroleum Subsidy In 19 Months – Audit Report by sammyj: 9:55am On Feb 06, 2015
.
Re: $20b Spent On Petroleum Subsidy In 19 Months – Audit Report by Caseless: 12:35pm On Feb 06, 2015
Something is 'amiss' here. *grabs my glass and calculator*
gej may God purnish you and your cohorts who have been stealing from us , though, they are not corrupt.
Re: $20b Spent On Petroleum Subsidy In 19 Months – Audit Report by lordizak(m): 12:42pm On Feb 06, 2015
why employing foreign forensic auditors?

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