NNPC owes Federation Account N4.9tn – RMAFC

Available records show that the Nigerian National Petroleum Corporation owe the Federation Account a total of N4.9tn in unremitted funds, the Revenue Mobilisation Allocation and Fiscal Commission has said. The Office of the Auditor-General of the Federation recently said that the NNPC had not remitted N3.2tn, a report that was denied by the corporation. The corporation instead put the unremitted funds at N326bn. But in a new twist on Monday, the RMAFC said between January 2011 and December 2015, the funds not remitted to the Federation Account by the NNPC amounted to N4.9tn. In a statement issued in Abuja, the RMAFC’s spokesperson, Mr. Ibrahim Mohammed, said the figure of N3.2tn was from the 2014 Annual Audit Report obtained from the Federation Accounts Allocation Committee’s Technical Sub-Committee on Domestic Crude Oil Sales and Reconciliation Statement as contained in the NNPC’s mandate to the Central Bank of Nigeria. However, Mohammed said, “Available records at the commission’s disposal indicate that between January 2011 and December 2015, the total indebtedness of the NNPC to the Federation Account was N4.9tn, a figure that included the NNPC’s claims for subsidy on petroleum products, crude and product losses, strategic reserves and pipeline maintenance cost.” The RMAFC spokesman added that while the AUGF’s report claimed that the corporation owed the sum of N3.2tn to the Federation Account in 2014 from domestic crude sale, the commission’s records revealed that the NNPC owed the sum of N1.99tn for the year from domestic crude sales. Therefore, the figure quoted by the Auditor-General of the Federation must have included revenues from other sources, Mohammed said. He added, “With regard to the alleged payment of $235m realised from the sale of natural gas into an undisclosed escrow account by the NNPC, the NNPC on behalf of the NLNG had entered into agreements with three International Oil Companies i.e. Nigeria Agip Oil Company, Shell Petroleum Development Company of Nigeria and Total E&P Nigeria Limited under a Modified Carry Agreement, proceeds from which are deposited in escrow accounts for funding the various gas projects under the NLNG. “The total amount transferred to the various accounts from 2012 to November 2015 was $1.62bn. The commission, through the FAAC Post Mortem, has consistently requested the NNPC to provide it with updated financial statements on the projects, but the NNPC has yet to respond. “The commission has been working with the NNPC to reconcile the figures following a tripartite meeting held with the NNPC, Federal Ministry of Finance and the RMAFC in December 2015, where it was agreed that in view of the subsidy and other claims by the NNPC, the forensic audit of the NNPC was very critical in establishing which party was actually indebted to the other.” Mohammed added that the forensic audit was expected to be concluded by the end of March. In a response to the declaration of the AGF to the National Assembly last week Monday that the NNPC failed to remit the sum of N3.2tn to the Federation Account for the period ended December 31, 2014, the firm stated that the auditor- general was incorrect. The NNPC, in a document signed by its Group Executive Director/Chief Financial Officer, Finance and Accounts, Mr. Isiaka Abdulrazaq, said the AGF’s declaration was inaccurate. He had said, “The Auditor-General of the Federation’s declaration is erroneous. It should also be noted that although this period is before the new NNPC management was appointed in August 2015, the management still deems it fit and important to correct any misinformation about the activities of the corporation as this will adversely affect its current and future financial and operational plans if not corrected. “The declaration by the AGF may have been born out of a misunderstanding of how revenues from crude oil and gas sales are remitted into the Federation Account.” Explaining how the funds were utilised, the corporation stated that as part of its responsibilities, the NNPC was getting an allocation of 445,000 barrels of crude oil per day for processing into petroleum products, which would be distributed across the country. It said any unprocessed crude was sold and the proceeds used to pay for the importation of petroleum products. It stated that the proceeds from the sale of these products were remitted to the Federation Account after deducting the cost associated with their supply and distribution. The costs, it said, included subsidy on petroleum products. The NNPC argued that it was entitled to claims on subsidy from petroleum products sold at government regulated prices, whether imported or locally refined.