The audit was conducted by
PricewaterhouseCoopers (PwC) following
allegations that the NNPC did not remit $20
billion into the federation account in a
letter written to President Goodluck
Jonathan in September 2013 by the former
governor of central bank, Sanusi Lamido
Sanusi, who is now the emir of Kano.
Sanusi initially put the figure at $49.8
billion, but after a reconciliation committee
was set up following a media leak
of his letter, he revised the figure to $20
billion.
He was subsequently asked to resign by
Jonathan and suspended when he refused
to do so, but presidency said his suspension
was based on a report by the Financial
Reporting Council of Nigeria (FRC) on his
misdemeanors at the central bank.
The PwC report, which was ordered released
to the public by Jonathan on Monday, did
not corroborate Sanusi's figure but the
findings were no less damning.
PwC stated in the report that in the
payment of subsidies for petrol (PMS) and
kerosene (DPK) between January 2012 and
July 2013, that there were gaps between
what was paid and what was supposed to be
paid.
It put the difference at $980 million
(about N195 billion) and alleged "duplicated
discharges" in subsidy computation.
"Our review of the subsidy documentation
revealed that the subsidy due to NNPC
between January 2012 and July 2013 on
PMS and DPK import was $8.99billion
compared to the $9.97 billion stated by the
Reconciliation Committee.
"The difference was due to the following:
Exclusion of October 2011-December 2011
subsidy claims of $1.2billion. This does not
relate to the review period of January 2012
to July 2013; $0.13billion increase in PMS
subsidy claimed for the 19 months period,
$0.09billion increase in DPK subsidy
claimed for the 19 months period;
duplicated discharges noted in subsidy
computations
"Our examination of the PMS and DPK
import verified by PPPRA revealed that
some discharges were apparently verified
and subsidy advised to NNPC more than
once," the report said.
PwC alleged "repeated subsidy" for PMS
amounting to N3,709,879,190
($23,954,796) and another "repeated
subsidy" for DPK amounting to
N6,169,502,266 ($39,836,652).
It said the there was another $36.05 million
"over-statement" in PPPRA’s PMS subsidy
payment advice to NNPC.
The accounting firm said its review of the
payment advice sent by PPPRA to NNPC for
discharges between January 2012 and July
2013 revealed that PPPRA applied the
pre-2012 Ex-Depot Price (N49.51) on some
discharges in 2012 instead of the approved
Ex-Depot Price of N81.51.
A total of 174,449,778 litres of PMS
were affected in these PPPRA computations,
it said, concluding that the "error" resulted
in an over-statement of PMS subsidy by
N5.6 billion ($36.05 million).
$205m DPK subsidy over-charge
A review of a sample of the copies of the
pro forma invoices (PFIs) issued to the other
marketers of DPK across different
geopolitical zones of Nigeria, PwC said,
revealed that the other marketers bought
DPK from NNPC/PPMC prior to arrival at
NNPC depot in Nigeria at N40.90.
It noted that the marketers were required
to incur the Lightering expenses, NPA
charges, Jetty Throughput Charge and
Storage Charges before bringing the
product into Nigeria. Subsidy is then
calculated as Landing Cost minus Ex-Depot
Price.
"NNPC claimed that this cost is incurred by
both NNPC and the marketers. For the
purpose of this report, we have considered
this cost as a cost incurred by the
marketers. Over-charge of subsidy above
depends on PPPRA’s decision to either
consider this cost in favour of NNPC or in
favour of marketers of kerosene," it
reported.
"Per PPPRA’s template, Landing Cost also
includes the extra expenses incurred by the
other marketers.
"By selling DPK to marketers at N40.90 and
claiming subsidy at an Ex-depot price of
N34.51 without adjusting the Landing Costs
for the extra costs borne by the marketers,
NNPC had over deducted subsidies to an
estimated amount of N31,522,234,881.06
($204 million)."
Under-recognition of NPDC lifting
PwC said liftings by the Nigerian Petroleum
Development Company (NPDC) were
"under-recognised" to the tune of
$0.82billion by the reconciliation
committee.
It reported: "The Reconciliation Committee
put the value of liftings in favour of NPDC
at $6billion. We did not receive any
supporting documentation from NPDC to
validate this figure other than the
submission to the Senate by the former MD
of NPDC, Mr Victor Briggs, who disclosed
the total value of NPDC liftings from all its
assets as $6.82billion.
"While we were unable to verify the $6.82
billion directly at NPDC, we performed a
recomputation of the values of liftings
using information provided by COMD
(NNPC's Crude Oil Marketing Department)
and arrived at a value of $5.65 billion.
Discussions with COMD revealed that lifting
data captured by COMD for NPDC might not
be complete as COMD does not capture
liftings done directly by NPDC’s Strategic
Alliance Partners. Volumes recorded by DPR
for NPDC did not contain the necessary
pricing information for valuation."
PwC said cash payments of $863 million by
NPDC to FIRS were not captured by
reconciliation committee.
Computation of Crude Oil loss
PwC also raised observations on the
computation method adopted by the NNPC
to arrive at crude oil loss - a major source of
revenue leak in the upstream sector.
"NNPC used a conversion rate of $100/
barrel to value differences between the
quantity of crude oil pumped at the
terminals and quantity received at the
refineries. We adopted the monthly average
Platts price to value the losses, considering
that the revenue generated from Crude oil
lifted during the review period had been
accounted for using such Platts information
instead of a fixed rate. Applying the
monthly average Platts price to value the
crude oil losses amounted to
$73,851,144.93," PwC said.
TIMELINE
25 September 2013
Sanusi Lamido Sanusi, former CBN
Governor, writes a letter to the President
stating that from January 2012-July 2013,
NNPC had lifted $65bn worth of crude on
behalf of the FGN but remitted only
$15.2bn, thus $49.8bn was outstanding.
13 December 2013
The former GMD NNPC (Andrew Yakubu)
responds that no money is missing. A
revenue reconciliation meeting was set up
by the FGN to look into the allegations.
18 December 2013
After the reconciliation meeting, a joint
press statement was issued by all the
parties. Actual value of crude lifted over the
period was $67bn which was accounted for
as follows: Revenues which directly accrued
to NNPC (for the Federation Account) of
$14bn. Additional revenues lifted by NNPC
on behalf of other parties as follows: FIRS
($15bn), DPR ($2bn), NPDC ($6bn), Other
third party financing ($2bn), domestic crude
lifted by the NNPC ($28bn).
The Ministry of Finance acknowledged that
all crude lifted was remitted apart from
domestic crude remittances with a shortfall
of $10.8bn, made up of: Unpaid subsidy
claims – USD 8.77billion, Holding costs of
strategic reserves – $0.46billion, crude oil
and product losses – $0.76bn, Pipeline and
management costs – $0.91billion.
CBN governor stated that the shortfall is
$12bn because, of the $28bn due from the
domestic crude, NNPC had only remitted
$16bn. NNPC insisted that the shortfall
is $10.8bn and the difference was due to
$1.2bn subsidy payments it claimed to have
made between Jan-Mar 2012 (relating to
October – December 2011 discharges), and
which had been certified by the PPPRA. CBN
did not recognize it as no documents were
provided by NNPC to support the
explanation.
4 February 2014
The CBN Governor appearing before the
Senate Committee on Finance stated that
NNPC needs to account for $20bn
discounting some of the initial explanations
provided by NNPC (the lifting in favour of
NPDC, other third party financing and
certified subsidy claims). The Governor
stated that out of the $67billion worth of
crude oil lifted by the NNPC, only $47billion
had been appropriately accounted for as
follows:
· NNPC payment for FGN crude - $14bn
FIRS crude - $15bn
· Domestic crude - $16bn
· IOC payment (Royalty) - $2bn
· Total - $47bn
13 February 2014
The NNPC accounted for the $20bn
shortfall as follows: NPDC $6bn, Other
third party financing $2bn, Jan – Mar
12 certified subsidy $1.2bn, DPK
subsidy $3.5bn, PMS
subsidy $5.25bn, Crude oil product losses
$0.76bn, Maintaining the strategic
reserves $0.46bn, Pipeline maintenance
and management costs $0.91bn, Total
$20.08bn.
The Minister of Finance and Coordinating
Minister of the Economy, recommended
that there should be an independent
forensic audit of the amounts constituting
the $10.8bn as stated on 18 December
2013.


Source: THE CABLE

More event to unfold especially when this clueless administration exit power !!!!