. NNPC failed to remit N936bn crude oil sales money in 2012

. NNPC over-deducted subsidy to the tune of N260bn in 2012

. Foreign crude oil customers owed Nigeria $75m

. $50m illegally moved from NNPC’s JP Morgan account

. There were more damning revelations in 2013 Annual Report – Auditor General

Revelations on extensive corruption in Nigeria’s oil sector, especially during the immediate past PDP-led administration, are gradually unravelling. In this special report, Daily Trust Sunday, in exclusive possession of an audited report on the sector, unfurls high-level fraud in many transactions of the Nigerian National Petroleum Corporation (NNPC).

In activities in the Nigerian oil sector, and especially those of the official regulator, the Nigerian National Petroleum Corporation (NNPC), secrecy, it appears, is the operational word. This may be understandable, as a document from the Office of the Auditor-General for the Federation (AGF) on the NNPC, which the Daily Trust on Sunday exclusively possesses, will explain. The document, the ‘Annual Report of the Auditor-General for the Federation on the Accounts of the Federation of Nigeria for the year ended 31st December 2012’ was said to have been prepared and submitted to the Senate Committee on Public Accounts but had since been kept under wraps.

The report, from the first page to the last, it would seem, is corruption-inked. It is a compilation of, among other defaults, under-remittances, non-declaration of incomes, non-payment of joint venture cash call arrears, excessive domestic crude oil lifting, over-deduction of subsidy approvals, abuse of fuel importation processes and, generally, inadequate accounting records. As the report paints, to the NNPC management, complying with laid-down rules appears to be aberrational.

The report revealed that the NNPC, in 2012, failed to remit a whopping sum of N936 billion accruing from the sales of domestic crude oil. The auditors observed, after an examination of the NNPC mandates to the CBN on domestic crude oil sales, that the oil regulator failed to remit a total sum of N936,027,634,479.81 to the Federation Account within the period under review.

Curiously this was coming at the time the NNPC had just commenced the refund of a N450bn sum, being a previous under-remittance, to the Federation Account.

The report, signed by the AGF, asked the then Group Managing Director (GMD) of the NNPC, through the Accountant-General of the Federation, to explain “the flagrant attitude of withholding domestic crude oil sales revenue” and ordered the NNPC to refund the withheld amount (N936.027bn) urgently. The recovery particulars, the AGF directed, should be forwarded to his office for verification.

Also revealed in the report was that though the NNPC earned a total sum of $998.881.77 as interest on its Joint Venture Cash Call Account (JVCCA) in 2012, it didn’t make any budgetary provision for the amount as income receivable into its JVCCA. The erstwhile GMD was promptly requested to refund this interest as petroleum-related revenue to the Federation Account and forward payment evidence to the AGF’s office for audit confirmation.

Similarly, the NNPC failed to remit the sums of $1.6 million and N171 million, being arrears of the Joint Venture Cash Calls (JVCC) in the period under review. The JVCC is said to be money paid by the joint venture (JV) partners such as Mobil, Shell and Total, according to the equity holdings of the partners for oil or gas project development. The amount is usually determined and paid at the beginning of the year.

Daily Trust Sunday gathered that the NNPC, on behalf of the federal government, owns between 55 per cent for JVC with Shell and 60 per cent for others, while the JV partners (NNPC and oil companies) contribute according to the above percentages to fund the development and exploration of oil fields.

Under sub 3.41 of the report entitled, ‘Arrears of Joint Venture Cash Call $1,664,986.15 and N171,303,701, the report stated that the inability of the NNPC/NAPIMS (National Petroleum Investment Management Services) to meet up with the cash call appeared to impede on the general performance of the joint venture operators, vis-à-vis revenue accruable to the Federation Account, an observation that was said to have been made in previous reports.

NAPIMS is a subsidiary company of the NNPC set up to earn margins arising from investment in the JVCs, PSC (Petroleum Sharing Contracts) and other partnerships entered by the NNPC.

According to the report, the statutory auditors of the joint venture operators only submitted the audited accounts of the operators to NNPC/NAPIMS without the accompanied Management Reports (Letter of weakness). Management Reports on audited financial statements are vital supporting documents detailing weaknesses observed by the auditor in the internal control system of the audited entity. Considering the magnitude of the interest of NNPC/NAPIMS in the operation of the joint venture operators and the nature of the business, the AGF considered it imperative for the NNPC/NAPIMS to have access to the management reports (Letter of weakness) of the operators in order to determine the level of weakness in the internal control system of the operators and make necessary recommendations for improvements.

The report accused the NNPC of making little or no effort to recover total debts of $75m some foreign crude oil customers numbering more than 50 have been owing Nigeria for an upward period of between 5-13 years. Among such customers, according to the report, is the controversial oil trading company Vitol S.A. (Gas), which ranks among the seven companies whose debt profile accounted for about 91 per cent of the $75m debt profile. Other big debtors to the NNPC in this category are Nipco, NLNG, Tema, Vitol SA (Gas), Arcadia, Kyokuto and Coast Oil.

“Delayed collation of debt is a drain on revenue accruable to the Federation Account. It should be noted that since foreign sales of crude oil is subject to only a thirty (30) days credit facility, it would appear that enough efforts were not made for the recovery of these debts”, the report said.

A sum of $50m was also alleged to have been illegally moved from the NNPC/JP Morgan account: The NNPC operates a JP Morgan Chase (a US-based bank) account where proceeds from the sales of Nigerian crude are deposited, usually on monthly basis. Daily Trust Sunday learnt that the NNPC normally instructs the CBN to move the funds from the dollar domiciliary account into the Federation Account with the CBN. However, in the report, under sub 3.47 titled, ‘Unauthorized Movement of Fund - $50,000,000.00’, it was revealed that the said amount was illegally moved from the NNPC JV Cash Call Account with JP Morgan Chase to another unidentified foreign account without mandate or authority.

Also contained in the report is that the NNPC deducted at source from the proceeds of crude oil and gas sales in 2012 the sum of N260b instead of N229.74b approved by the PPPRA. The NNPC GMD was promptly asked to refund the subsidy over-deduction, pay it into the Federation Account and forward the recovery particulars to the AGF’s office. Funds for subsidy payments are usually drawn from the Petroleum Support Fund (PSF).

The report also uncovered an irregularity in which subsidy claims were not subjected to the usual practice of pre-payment audit by auditors appointed by the Federal Ministry of Finance before or after subsidy had been claimed by the NNPC. As the AGF declared, this practice would appear to be irregular since the NNPC claimed almost 50 per cent of subsidy paid in 2012. He fumed in the report that this particular anomaly had been “a subject of his report since 2010 without the NNPC GMD and the Executive Secretary of the PPPRA had been informed through the Accountant General of the Federation to provide explanation why subsidies claimed by the NNPC were not subjected to pre-payment audit.
Report indicts DPR.

The Department of Petroleum Resources (DPR) also came under scrutiny in the Auditor-General’s report. The document accused the DPR of failing to remit N109.7b unpaid royalty from 21 oil companies in 2012, thereby denying the Federation Account of the amount. Oil and gas companies usually pay certain percentages of their production as royalty to government on the land, and on property used to produce crude oil and gas.

The DPR also allegedly failed to account for N2.1b gas flare penalty owed by 33 oil companies. The DPR is saddled with the responsibility of enforcing compliance with oil laws.

More revelations in 2013 Annual Report
The Auditor-General for the Federation Mr. Samuel Ukura confirmed to Daily Trust on Sunday via telephone that his office prepared the said report and, thereafter, sent it to the National Assembly for necessary action. He informed that the NNPC and other agencies queried in the report had not responded to the queries.

Mr. Ukura added that the Annual Report for 2013 had also been prepared by his office and sent to the National Assembly, stressing that more of such damning revelations were contained therein.

Contacted, the spokesman of the NNPC, Mr. Ohi Alegbe said he could not comment on the damning report because he was not aware of its contents.

http://dailytrust.com.ng/sunday/index.php/top-stories/21239-inside-secret-report-on-nnpc

ok

Just probe them!

Following

Funny enough the dullard of a president is yet to tell us the right amount he met at the treasury... Virtually empty indeed... There is no way we can link or find missing money without knowing the amount that the Dullard met at the treasury

why dont they start from 1999 when OBJ was there or does it mean NNPC was perfect during OBJ's time? i see this as witch hunting.

MusaIbrahim1:
Funny enough the dullard of a president is yet to tell us the right amount he met at the treasury... Virtually empty indeed... There is no way we can link or find missing money without knowing the amount that the Dullard met at the treasury

You don't have to kill him names nah.

So Sanusi was right...thank God GEJ is out.

If the present govt lead by pmb can not probe the past govt lead by gej, then they should short the hell up and move on. We are tired of this and that, go stright into action and stop talking too much. Campaign is over face reality now

Read the report and just felt like crying.
When I now realised that this AGF report was for the year ending 2012 and it says that of 2013 was also available and contains more damning indictments, I saw a tear almost dropping.
When I then also realised that its an open secret that the years 2013-early 2014 were characterized by whole scale looting in d oil industry, never before seen in Nigeria, by the past govt,the tears did finally come down.
No matter how bad and clueless the last govt was,I still cannot fathom how such monumental stealing in the oil industry,possibly up to N10trillion ($50b) could have been allowed to take place.It just doesn't make sense because I believe that there is a point when people would steal and they themselves would put a self restraint on the stealing knowing they have stolen to insane levels,but with GEJ govt,no amount,no matter how outlandish,was too much to steal from the national treasury!
Yet some people are even advicing that these monies should just be recovered and no one should go to jail for such crime that is tantamount to economic treason?This too doesn't make sense to me!!