The House of Representatives has summoned the Group Managing Director of Nigerian National Petroleum Corporation (NNPC) Mele Kyari, and Governor of Central Bank of Nigeria (CBN) Godwin Emefiele over a non-remittance of N3.235 trillion ($19.253 billion) revenue accrued from sales of domestic crude oil in 2014.
The Chairman, House Committee on Public Accounts, Hon. Wole Oke, issued this directive on Sunday, explaining that the intervention of the Green Chamber is predicated on audit queries issued by the office of the Auditor General of the Federation (OAuGF) for the period under review.
According to the details of the query, OAuGF observed that from the “examination of NNPC mandates to CBN on Domestic Crude Oil Sales and Reconciliation Statement of Technical Committee of Federation Account Allocation Committee (FAAC) meeting held in January 2014 that a total sum of N3,234,577,666,791.35 was not remitted to the Federation Account by NNPC within the period under review.”
It would be recalled that the NNPC GMD had a fortnight ago failed to honour the invitation sent to him the penultimate week, on the illegal withdrawals of $20.301 billion from the Nigerian Liquefied Natural Gas (NLNG) Limited’s Dividends Account.
Kyari, who has yet to appear before the lawmakers on the NLNG matter, had elsewhere denied the allegation that he refused to respond to an audit query issued against the corporation he heads.
The query further read, “Cost estimated for crude and product losses was N55,964,682,158.99, which is about 50 percent of pipeline management cost of N110,402,541,010.88. Names of contractors, location, and the amount paid to each for the pipeline maintenance were not sighted for audit verification.
“Over 31 percent – N826,506,271,231.26 – divided by N2,636,390,514,777.18 multiply by 100 percent – of the realised crude sales for the year were earmarked as other expenses, apart from the direct cost of production stated in NNPC reports for the year 2014. The breakdown of other expenses was not provided for audit.
“From the above analysis, it means that the Federation Account is losing 31 percent (N826,506,271,231.26) being an additional estimated cost from the total amount that should have accrued to Federation Account.”
The auditor-general added, “From the total revenue of N3,234,577,666,791.35 as at 14th January 2015, payable to the Federation Account by NNPC during the year, the corporation deducted the sum of N826,506,271,231.26, i.e. N660,139,048,061.39, N55,964,682,158.99, and N110,402,541,010.88, for subsidy estimate, crude and product losses and pipeline management cost, respectively, at source thereby resulting to the net amount withheld figure of N2,408,041,395,560.33 shown in the above table to the Federation Account. All these deductions at source by NNPC were not approved by FAAC.”
The OAuGF, therefore, requested the Accountant General of the Federation to inform the NNPC’s GMD to explain the flagrant withholding of domestic crude oil sales revenue by the corporation. According to the auditor, there has been no positive response to similar issues raised in 2012.
The auditor-general consequently asked the GMD of NNPC to ‘provide names of the contractors, location, the amount paid, to each for the pipeline maintenance for verification and the process being used by PPPRA for the repayment of subsidy to the oil marketers should be used for NNPC instead of the latter deducting the subsidy at the source.”
The office also declared that deduction at source by NNPC must stop “henceforth as this is a contravention of Section 162(1) of the 1999 Constitution, which stipulates that all revenue proceeds should be paid to the Federation Account.”
While the Reps committee reviewed the response of the auditor-general, Oke and members of the panel insisted that the NNPC and CBN bosses should cause appearance in persons, as the OAuGF could not provide sufficient evidence on the audit query of such magnitude.
The state-run NNPC, which holds interests of around 60 percent in the joint ventures that produce most of Nigeria’s total oil output, is widely regarded as the source of much of the country’s corruption and political patronage.
NNPC is supposed to pass on the proceeds from the sale of its shares of crude to the government, being funded itself by a treasury hand-out, but there are often allegations that not all of the cash is remitted. Then CBN governor Mallam Lamido Sanusi in early 2014 claimed that at least $10.8 billion, or as much as $49.8 billion, had not been passed on over an 18-month period, but he was dismissed for saying so.
President Muhammadu Buhari had promised an investigation into the allegation when he assumed office in 2015 and to “speedily” pass the Petroleum Industry Bill (PIB), a re-writing of the country’s oil laws, which multiple governments have attempted to pass over the past 20 years. But progress has stalled.
The new bill offers a radical departure from past norms and among other objectives, will transform the NNPC into “a commercially-oriented and profit-driven national petroleum company” independent of government and audited annually. The corporation is likely to get a new senior management team and then split into four new entities.
Such reform, which the state oil firm is said to resist, would play a “vital role in addressing the inefficiencies plaguing the NNPC as well as promote transparency in Nigeria’s administration of petroleum resources,” writes NJ Ayuk, executive chairman of the African Energy Chamber.
But as it has been over the past two decades, the passing of the long-awaited and contentious legislation may be further delayed. After passing its second reading on October 20, Senate president Ahmed Lawan said that the upper chamber would adjourn until November 24 so ministers could concentrate on the 2021 budget. That means it may not become law until late December or even next year.