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NNPC Fails to Remit Billions of Oil Money to Govt. Treasury
United STATES Finance Industry agency, Bloomberg reports that Nigeria's National Petroleum Corporation, NNPC is currently in an audit quagmire over huge revenue totaling about $6.3 billion from oil most of which the company failed to remit to public treasury.
This is “despite President Muhammadu Buhari's anti-corruption stance, according to a report by the National Resource Governance Institute (NRGI).” Bloomberg reports.
NNPC is said to have sold about $6.3 billion worth of oil in the second half of last year but remitted only $2.1 billion to the Treasury according to Bloomberg quoting authors Aaron Sayne and Alexandra Gillies in a report by the London-based group.
The report notes that NNPC retained “12 percent higher than the withholdings under Goodluck Jonathan in 2013 and 2014.”
The report quoting NNPC spopkesman, Garba Deen Muhammad, notes that a government ordered audit is expected to answer questions “about how much the NNPC has received, how much has been remitted and how much is outstanding.”
It should be noted that President Buhari, was elected last year on his anti-corruption stance and has since embarked on reforms of the NNPC and other government agencies. A big part of the reform was the establishment of a single treasury account requiring all government agencies to remit all revenue to government coffers. NNPC, controlling Nigeria's main revenue earner, crude oil, was reorganized with mergers of many administrative units and placed directly under the Presidency with Dr. Ibe kachikwu as Minister of State responsible for day to day administration.
RenAfrique notes that the NNPC has previously said such accusations failed to account for its costs. The constitution requires NNPC to hand over its oil revenue and money is then paid back based on a budget approved by legislature. But the act establishing the company allows it to cover costs before remitting funds to the government.
However, NRGI in its report, noted the absence of clear, legally enforceable rule governing which revenues NNPC can keep and how they can be spent and urged President Muhammadu Buhari to establish one. Otherwise, oil sector corruption and waste could return to their prior devastating levels or prices rise. The report added that the government should move to curb the corporation's discretionary, unaccountable use of much-needed public funds.
On Friday, April 1, 2016, NRGI posted a statement on its website in which it said NNPC had offered to hold talks over its report. “NNPC has invited NRGI to meetings where NNPC will clarify its position. “NRGI appreciates NNPC's open doors and willingness to engage, and will post further updates based on these discussions,” it said.
The non remittance of earnings was also raised by the Auditor General of the Federation in a Report to the National Assembly in March in which he stated that NNPC failed to remit over 3 trillion naira to the Federation Account in 2014.
Systematic resistance by oil workers under the umbrella of NUPENG and PENGASSAN to transparent operations at the NNPC were noted by NRGI. “NNPC's management has a history of resisting outside scrutiny. The corporation discloses very little about its finances and operations, even though more than half of public revenues flow through it. Officials from other government bodies say they cannot independently verify or challenge the oil sale figures provided by NNPC.
Past reviews have also described NNPC's internal oil sale data management practices “as disorganized, secretive and inaccurate”. For example, one government task force found two separate sets of oil sale books that diverged at times by more than $100 million per year. “Corporation officials have faced few consequences for mismanagement—at most, they tend to be retired or transferred to other posts.”
In another allegation, in February, the Executive Secretary of Nigerian Extractive Industries Transparency Initiative (NEITI), Zainab Ahmed, told the National Assembly joint committee on Petroleum Resources Upstream, Downstream and Justice that the NNPC failed to account for another $22.8 billion (about N3.65 trillion) during the 2009-2011 audit exercise.
Mrs. Ahmed, who was addressing the committee probing allegations of massive corruption involving the NNPC and two Swiss oil companies, Vitol and Trafigura, urged the lawmakers to compel the corporation to disclose in its audited reports all alternative funding arrangements it enteredinto.
The House Committee on Finance also accused the NNPC of withholding about N105 billion of independent revenue from the Consolidated Revenue Fund of the Federation. Chairman of the committee, Jubrin Abdulmumin, said records from the Budget Office of the Federation revealed that the money had not been remitted to the Federation Account.
NEITI also faulted NNPC for the use of exchange rate different from that provided by the CBN in its transactions, which resulted in the loss of about N98.3billion to the Federation between 2009 and 2011.
Analysts are waiting for the ongoing audit result to determine the effectiveness of Buhari's anticorruption crusade, especially if the agency is shown not to have complied with the new norms of financial accountability ordered by the President.