$4.2bn Missing from NNPC Under Buhari’s Government

$4.2bn Missing from NNPC Under Buhari's Government

$4.2bn Missing from NNPC Under Buhari’s Government

$4.2bn Missing from NNPC Under Buhari’s Government as a new report released by the Natural Resource Governance Institute (NRGI) yesterday March 31st claims that NNPC under the Buhari led administration has failed to remit $4.2 million into the Federation account.

Read the report below…

The Nigerian National Petroleum Corporation (NNPC) continues to withhold billions of dollars in oil sale revenues from the treasury under President Muhammadu Buhari’s administration, a new report said.

The report released yesterday by the Natural Resource Governance Institute (NRGI) said in the second half of 2015, NNPC’s sales of export crude, domestic crude and oil from its subsidiary the Nigeria Petroleum Development Company (NPDC) totaled $6.3 billion.

Of this amount, only $2.1 billion entered the Federation Account while $4.2 billion (N827.4 billion) was not remitted, representing 66 percent of proceeds from crude oil sales for the six months, according to the NRGI report titled “NNPC Still Holds Blank Check”.

“This was 14 percent more than the corporation’s withholdings under Goodluck Jonathan in the first half of 2015, and 12 percent higher than the share withheld in 2013 and 2014,” the report, authored by Aaron Sayne and Alexandra Gillies, said.
The latest report, which is a follow up to a previous one by NRGI in 2015, themed “Inside NNPC Oil Sales: A Case for Reform,” however said some of NNPC’s withholdings cover known costs, notably its share of joint venture operating expenses.

“The corporation has not fully explained others; especially revenues retained from domestic crude and NPDC sales,” it said.
The report said that NNPC spending raises questions about fiscal responsibility–especially at a time when public finances are stretched and the federal government is looking to fund more of its budget with debt.

Makeshift practices remain
While acknowledging some of the ongoing reforms instituted by the Buhari administration in the oil sector, the report said the plans have not yet addressed how NNPC retains revenues.

On how NNPC sells the country’s oil in two streams-export sales to foreign buyers and domestic crude allocation, the report said, “This simple two-part system has broken down, however. As NNPC’s financial debts and operational problems have deepened, it has introduced more types of ad hoc oil sale transactions to work around these challenges.”

The NRGI report, which tried to unravel where the $4.2 billion of NNPC oil sales that didn’t enter the federation account went to, found that some of the money went to pay JV cash call liabilities, rather than entering the government budget while some others were spent in an unknown manner.

“In one especially questionable case, we found evidence that NNPC has retained all earnings from the offshore Oil Mining Lease (OML) 119, a field owned wholly by NPDC that produces around 30,000 barrels per day of Okono grade crude,” the report said.

The report recommended that the Buhari government should establish a clear, legally enforceable rule governing which revenues NNPC can keep and how they can be spent.

It also advised the government to move to curb the corporation’s discretionary, unaccountable use of much-needed public funds.

When contacted for comments, the NNPC said it was preparing a response to the NRGI report. But the response did not come at the time of going to press.
Daily Trust reports that the Auditor-General of Federation recently reported that the NNPC failed to remit N3.2tr ($16bn) in oil revenues to the federation account in 2014.

A week later, the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) put the amount not remitted by the NNPC between 2011 and 2015 at N4.9tr ($25 bn).

NNPC disputed the auditor-general’s claims by putting out a third set of figures, saying what it owed the Federation Account was N326bn which is still being reconciled. NNPC has also promised that a forensic audit, due soon, would validate its position.

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