NEITI: NNPC did not remit $12.9bn to the federation account

The Nigeria National Petroleum Corporation (NNPC) did not remit $12.9bn to the federation account between 2005 and 2013, an audit report of the Nigeria Extractive Industries Transparency Initiative (NEITI) has alleged.


According to the report which was unveiled on Monday in Abuja‎ by Kayode Fayemi, minister solid minerals and chairman of NEITI board, the unremitted funds were the sum of dividends, interest and loan repayment from the Nigeria Liquefied Natural Gas (NLNG).

“The audit revealed that NLNG paid the sum of $1.289bn as dividend, interest and loan repayment for 2013. NNPC acknowledged receipt of ‎this amount, but did not remit it to either the federal government or the federation. However, it is important to also note that the 2013 figure brings to $12.9 bn the total NLNG payments received by the NNPC between 2005 and 2013, but not remitted by the NNPC to the federal government or the federation,” the report presented by the minister read.

‎The report also revealed that Nigeria lost $518m to offshore processing arrangement and crude for product swap arrangement in 2013.

NEITI recommended that “the NNPC‎ and its sub units refund outstanding payments to the federation.”
“Government should investigate the status of NLNG dividends; NNPC should discontinue alternative importation arrangements and limit itself to export of crude and import of refined products; NNPC should abide by the federal government financial regulations, and always comply with the 90-day credit period,” it added.

Responding to a question on whether the NNPC had returned some of the unremittted funds‎, Fayemi said: “It is possible that certain refunds have been made, but that will not detract from the veracity of the report.”

The audit raised a number of queries and made recommendations to the government on the operations of the oil and gas industry, which is the biggest source of public revenue in the country.

On the strategic alliance agreements (SAA) entered into with private companies by the NPDC, the audit said the transfer of federation equity by NNPC to NPDC should be further investigated.

It said: “The consideration computed by DPR with respect to the eight OMLs assigned to NPDC from SHELL JV between 2010 and 2011 was $1.8 billion and of this amount, no consideration was paid from the dates of transfer up till April 2014 when the sum of $100 million was paid, leaving an outstanding balance of $1.7 billion as at the time of reporting.

“The assignments of the OMLs were not arm’s length transactions and were also adjudged to be undervalued. For instance, the 2014 PWC forensic audit report on NNPC estimated the value of NNPC’s 55% equity assigned to NPDC to be about $3.4 Billion based on commercial value paid by third parties on the sale of SHELL’s 45% equity in the same OMLs.”