Fresh N2.23trn fraud discovered in NNPC

 Another whopping N2.23 trillion, consisting $9.75 billion and N378.67 billion, accrued to the Federation Account as earnings from various aspects  of operations of the Nigerian National Petroleum Corporation (NNPC) and its subsidiaries covering the 2013 audit period has been reported to have either been lost or not remitted.

The revelation is contained in the latest audit report of Nigeria’s oil and gas and the solid minerals sector released by the Nigerian Extractive Industries Transparency Initiative (NEITI) released yesterday in Abuja by its board Chairman and Minister of Solid Minerals, Dr. Kayode Fayemi.

He said the audit, which focused on all aspects of the extractive industries, showed that a total revenue flow into the Federation Account from the oil and gas sector in 2013 was about $58.07 billion, representing about 8 per cent decline when compared to the $62.9 billion realised in 2012.

Fayemi said the decline was attributed to the drop in oil and gas sales following divestment of federation equity in some Oil Mining Lases (OMLs), crude oil losses as a result of destruction of production facilities, pipelines vandalism and crude oil theft.

“These outstanding payments were due from unpaid consideration from the divested OMLs, cash call refunds from NAPIMS (National Petroleum Investment Management Services) and NPDC (Nigerian Petroleum Development Company) liftings from NAOC JV (Nigerian Agip Oil Company Joint Venture), among others.
 

“The sum of $5.966 billion and N20.4 billion were recorded as revenue losses to the federation and these losses were due to offshore processing agreement, crude swap, crude theft, among others.

The sum of $599.8 million as under-assessments, under-payments of petroleum profit taxes and royalties by oil and gas companies as a result of the use of different pricing methodology by the government and the companies because of the absence of a new fiscal regime,” he stated.

The report noted however that the continuous allocation of 445,000 barrels per day to refineries was not beneficial to the federation as the refineries were operating at a capacity of about 24 per cent.

It also noted that the Offshore Processing Arrangement (OPA) and Crude for Product Swap (CPS) arrangement introduced by the NNPC to meet the shortfall in product supply was not cost-effective as the value of the products received minus all the costs incurred was still less than the value of the original crude. 

According to report, the loss to the federation incurred through OPA and SWAP came to $211.8 million and $306 million respectively, adding that total value of crude oil losses to the federation as reported by three JV companies, in 2013 was put at $4.7 billion.

A total of N33.86 billion also accrued to the federation from solid minerals sector in the year under review. According to the report, out of this, payments from cement manufacturing companies accounted for N30.47 billion  representing 89.98 per cent of the figure, construction companies, N1.98 billion representing 5.83 per cent, mining and quarrying companies N1.42 billion representing 4.19 per cent.‎

However, the management of the NNPC could not be reached for comment on the report.

The corporation’s Group General Manager, Public Affairs, Garba Deen Muhammad, only responded to calls from the reporter that “I am in a meeting” and could not reply a text message requesting the position of the corporation on the report.