Welcome, Guest: Register On Nairaland / LOGIN! / Trending / Recent / New
Stats: 3,143,336 members, 7,780,881 topics. Date: Friday, 29 March 2024 at 02:10 AM

Forensic Audit Indicts NNPC, Corporation To Refund $1.48bn - Politics - Nairaland

Nairaland Forum / Nairaland / General / Politics / Forensic Audit Indicts NNPC, Corporation To Refund $1.48bn (550 Views)

Rot In NNPC: Corporation Failed To Remit N2.5trn In 10 Years —report / NNPC Has Started Refunding Unremitted $1.48bn - Alison-Madueke / Audit Report Indicts NNPC, Corporation To Refund $1.48billion (2) (3) (4)

(1) (Reply)

Forensic Audit Indicts NNPC, Corporation To Refund $1.48bn by Nobody: 5:35pm On Feb 06, 2015
he Nigerian National Petroleum Corporation and the Nigerian Petroleum Development Company were on Thursday indicted by a firm of forensic auditors, PriceWaterHouseCoopers, who investigated the allegation of unremitted funds into the Federation Account levelled against them.

In the report, the auditors asked both organisations to refund to the Federation Account “a minimum of $1.48bn,” representing about N274.54bn at the Central Bank of Nigeria’s inter-bank exchange rate of N185.50 to the dollar on Thursday.

The highlights of the report were released by the Auditor-General for the Federation, Mr. Samuel Ukura, in Abuja.

PriceWaterHouseCoopers was last year hired by the Federal Government to carry out the forensic audit of the NNPC following an allegation by the former Governor of the Central Bank of Nigeria, Lamido Sanusi, that $49bn was not remitted to the Federation Account by the corporation.

Sanusi, who is now the Emir of Kano, had written a letter to Jonathan that $49bn was not remitted to the Federation Account by the NNPC.

But following the controversy, which the letter generated, a committee was set up to reconcile the account.

Sanusi later recanted and said the unremitted fund was $12bn and changed the figure to $20bn.

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

In the report, PwC stated that while the total gross revenue generated from crude oil lifting was $69.34bn between January 2012 and July 2013 and not $67bn as earlier stated by the Senate Reconciliation Committee, what was remitted to the Federation Account was $50.81bn and not $47bn.

Of the $69.34bn, the audit report stated that $28.22bn was the value of domestic crude oil allocated to the NNPC, adding that the total amount spent on subsidy for Premium Motor Spirit amounted to $5.32bn.

The report also concluded that an unappropriated amount of $3.38bn was spent as subsidy on kerosene in the period.

The report stated in part, “Total other third party financing arrangement and equity crude oil processing costs amounted to $1.19bn. Total costs directly attributable to domestic crude oil amounted to $1.46bn. Other costs incurred by the corporation not directly attributable to domestic crude is $2.81bn. Revenue attributable to the NPDC as submitted by the former managing director to the Senate hearing was $5.11bn.

“PwC states that this amount needs to be incorporated into the financial statements of the NPDC from where dividend should be declared to the Federation Account. Signature bonus, Petroleum Profit Tax and royalty yet to be paid by the NPDC is $2.22bn. Total cash remitted into the Federation Account in relation to crude oil lifting was $50.81bn and not $47bn 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 the NNPC and NPDC should refund to the Federation Account a minimum of $1.48bn.”

In arriving at the conclusion, Ukura said the PwC report centred on three key areas – NNPC costs, ownership of NPDC revenues and kerosene subsidy.

On NNPC costs, the report stated, “The corporation operates an unsustainable model. Forty-six 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 Account Allocation Committee and also meet its operational costs entirely from the proceeds of domestic crude oil revenues, and has had to incur third party liabilities to bridge the funding gap.”

The report stated that while the NNPC provided transaction document, representing additional cost of $2.81bn related to the review period, there was a 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.

As a result of this, PwC recommends, “The NNPC model of operation must be urgently reviewed and restructured, as the current model, which has been in operation since the creation of the corporation, cannot be sustained.”

On the ownership of NPDC revenues, the PwC report stated that the organisation should remit dividends to the NNPC and ultimately to the Federation Account based on its dividend policy and declaration of dividend for the review period.

On kerosene subsidy, the report stated that while 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, and as such, there was no legal instrument cancelling subsidy on the product.

The report, therefore, recommended that an official directive be written to support the legality of the kerosene subsidy cost.

This, it noted, should be followed by adequate budgeting and appropriation for the costs.

The NNPC incurred a total of $3.38bn as subsidy cost for kerosene within the review period.

Meanwhile, the Federal Government has directed the NNPC to pay to the Federation Account $1.48bn being outstanding signature bonus, taxes and royalties of the NPDC.

The directive was given few hours after the report of the forensic audit of the NNPC was made available to journalists.

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, in a statement made available to journalists in Abuja, directed the corporation “to defray the signature bonuses, taxes and royalties in line with the recommendation of the forensic audit report.”

But the NNPC argued that the report had absolved it of culpability over the allegation of non- remittance of $20bn, adding that what was due for remittance to the Federation Account was $1.48bn, being signature bonus, taxes and royalties on the assets transferred to the corporation’s upstream subsidiary, the NPDC.

“The release of the forensic audit report has finally laid to rest the controversy surrounding allegations of missing oil revenue or non-remittance to the Federation Account,” the corporation said.

The NNPC denied that it was indicted by the report as the $1.48bn recommended for refund to the Federation Account was not part of the alleged unremitted revenue from crude lifting.

It explained that the $1.48bn was never in dispute as it was made up of statutory payments such as signature bonus, taxes and royalties, which came with asset acquisition.

It stated that the delay in payment of the fund was due to the reconciliation processes between it and the Department of Petroleum Resources.

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

It further explained that the forensic audit acknowledged that the total cash remitted into the Federation Account in relation to crude lifting in the period under review was $50.81bn and not $47bn, and that subsidy on PMS and Dual Purpose Kerosene stood at $8.7bn.

Expatiating further on the kerosene subsidy issue, the corporation stated that the forensic audit report also clarified that subsidy on DPK was still in force as the presidential directive of October 19, 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 the 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,” the NNPC added in the statement

http://www.punchng.com/news/forensic-audit-indicts-nnpc-corporation-to-refund-1-48bn/

Re: Forensic Audit Indicts NNPC, Corporation To Refund $1.48bn by freeradical(m): 5:40pm On Feb 06, 2015
If only our politicians would stop seeing the nnpc as the geese which lays the golden egg and allow the management professionally deal with the company issues of remittance would be more transparent and the corporation would be more profitable to this nation. Whatever this report says we all know there has been a lot of foul play from oil lifting down to d claimed royalties and dividend payments.


By God's grace this country will survive corruption. I believe one day we will be free
Re: Forensic Audit Indicts NNPC, Corporation To Refund $1.48bn by Kennywills7(m): 6:03pm On Feb 06, 2015
So 20million dollars is not missing?
Apc pls come and fault d report o

(1) (Reply)

This Couple's 15years Love Story Will Make You Cry / Finally Presidential Election Has Been Postpone Till March 28 / Tax Fraud In Europe By The Rich(hsbc Bank)imagine 9ja Saying Gej Corrupt

(Go Up)

Sections: politics (1) business autos (1) jobs (1) career education (1) romance computers phones travel sports fashion health
religion celebs tv-movies music-radio literature webmasters programming techmarket

Links: (1) (2) (3) (4) (5) (6) (7) (8) (9) (10)

Nairaland - Copyright © 2005 - 2024 Oluwaseun Osewa. All rights reserved. See How To Advertise. 24
Disclaimer: Every Nairaland member is solely responsible for anything that he/she posts or uploads on Nairaland.