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Some oil marketers were
paid more than once for the same fuel imports based on the recommendations
of the Petroleum Products Pricing Regulatory Agency (PPPRA), the audit report
into the accounts of the Nigerian National Petroleum Corporation (NNPC) has
alleged.
The audit was conducted
by PricewaterhouseCoopers (PwC) following allegations that the NNPC did not
remit US$20 billion into the federation account in a letter written to
President Goodluck Jonathan in September 2013 by the former governor of central
bank, Sanusi Lamido Sanusi, who is now the emir of Kano.
Sanusi initially put the
figure at US$49.8 billion, but after a reconciliation committee was set up
following a media leak of his letter, he revised the figure to US$20
billion.
TheCable report continues:
Sanusi was subsequently asked
to resign by Jonathan and suspended when he refused to do so, but presidency
said his suspension was based on a report by the Financial Reporting Council of
Nigeria (FRC) on his misdemeanours at the central bank.
The PwC
report, which was ordered released to the
public by Jonathan on Monday, did not corroborate Sanusi’s
figure but the findings were no less damning.
PwC stated in the
report that in the payment of subsidies for petrol (PMS) and kerosene
(DPK) between January 2012 and July 2013, that there were gaps between what was
paid and what was supposed to be paid.
It put the difference at US$980
million (about N195 billion) and alleged “duplicated discharges” in
subsidy computation.
“Our review of the
subsidy documentation revealed that the subsidy due to NNPC between January
2012 and July 2013 on PMS and DPK import was US$8.99billion compared to the US$9.97
billion stated by the Reconciliation Committee.
“The difference was due
to the following: Exclusion of October 2011-December 2011 subsidy claims of US$1.2billion.
This does not relate to the review period of January 2012 to July 2013; US$0.13billion
increase in PMS subsidy claimed for the 19 months period, US$0.09billion
increase in DPK subsidy claimed for the 19 months period; duplicated discharges
noted in subsidy computations
“Our examination of the
PMS and DPK import verified by PPPRA revealed that some discharges were
apparently verified and subsidy advised to NNPC more than once,” the report
said.
PwC alleged “repeated
subsidy” for PMS amounting to N3,709,879,190 (US$23,954,796) and another
“repeated subsidy” for DPK amounting to N6,169,502,266 (US$39,836,652).
It said the there was
another US$36.05 million “over-statement” in PPPRA’s PMS subsidy payment advice
to NNPC.
The accounting firm said
its review of the payment advice sent by PPPRA to NNPC for discharges between
January 2012 and July 2013 revealed that PPPRA applied the pre-2012 Ex-Depot
Price (N49.51) on some discharges in 2012 instead of the approved Ex-Depot
Price of N81.51.
A total of 174,449,778
litres of PMS were affected in these PPPRA computations, it said,
concluding that the “error” resulted in an over-statement of PMS subsidy
by N5.6 billion (US$36.05 million).
US$205m DPK subsidy over-charge
A review of a sample of the
copies of the pro forma invoices (PFIs) issued to the other marketers of DPK
across different geopolitical zones of Nigeria, PwC said, revealed that the
other marketers bought DPK from NNPC/PPMC prior to arrival at NNPC depot in
Nigeria at N40.90.
It noted that the
marketers were required to incur the Lightering expenses, NPA charges, Jetty
Throughput Charge and Storage Charges before bringing the product into Nigeria.
Subsidy is then calculated as Landing Cost minus Ex-Depot Price.
“NNPC claimed that this
cost is incurred by both NNPC and the marketers. For the purpose of this
report, we have considered this cost as a cost incurred by the marketers.
Over-charge of subsidy above depends on PPPRA’s decision to either consider
this cost in favour of NNPC or in favour of marketers of kerosene,” it
reported.
“Per PPPRA’s template,
Landing Cost also includes the extra expenses incurred by the other marketers.
“By selling DPK to
marketers at N40.90 and claiming subsidy at an Ex-depot price of N34.51 without
adjusting the Landing Costs for the extra costs borne by the marketers, NNPC
had over deducted subsidies to an estimated amount of N31,522,234,881.06 (US$204
million).”
Under-recognition of NPDC lifting
PwC said liftings by the
Nigerian Petroleum Development Company (NPDC) were “under-recognized” to the
tune of US$0.82billion by the reconciliation committee.
It reported: “The
Reconciliation Committee put the value of liftings in favour of NPDC at
$6billion. We did not receive any supporting documentation from NPDC to
validate this figure other than the submission to the Senate by the former MD
of NPDC, Mr Victor Briggs, who disclosed the total value of NPDC liftings from
all its assets as US$6.82billion.
“While we were unable to
verify the $6.82 billion directly at NPDC, we performed a recomputation of the
values of liftings using information provided by COMD (NNPC’s Crude Oil
Marketing Department) and arrived at a value of $5.65 billion. Discussions with
COMD revealed that lifting data captured by COMD for NPDC might not be complete
as COMD does not capture liftings done directly by NPDC’s Strategic Alliance
Partners. Volumes recorded by DPR for NPDC did not contain the necessary
pricing information for valuation.”
PwC said cash payments of
US$863 million by NPDC to FIRS were not captured by reconciliation committee.
Computation of Crude Oil loss
PwC also raised
observations on the computation method adopted by the NNPC to arrive at crude
oil loss – a major source of revenue leak in the upstream sector.
“NNPC used a conversion
rate of US$100/barrel to value differences between the quantity of crude oil
pumped at the terminals and quantity received at the refineries. We adopted the
monthly average Platts price to value the losses, considering that the revenue
generated from Crude oil lifted during the review period had been accounted for
using such Platts information instead of a fixed rate. Applying the monthly
average Platts price to value the crude oil losses amounted to US$73,851,144.93,”
PwC said.
Timeline
25 September 2013
Sanusi Lamido Sanusi,
former CBN Governor, writes a letter to the President stating that from January
2012-July 2013, NNPC had lifted US$65bn worth of crude on behalf of the FGN but
remitted only US$15.2bn, thus US$49.8bn was outstanding.
13 December 2013
The former GMD NNPC
(Andrew Yakubu) responds that no money is missing. A revenue reconciliation
meeting was set up by the FGN to look into the allegations.
18 December 2013
After the reconciliation
meeting, a joint press statement was issued by all the parties. Actual
value of crude lifted over the period was $67bn which was accounted for as
follows: Revenues which directly accrued to NNPC (for the Federation Account)
of US$14bn. Additional revenues lifted by NNPC on behalf of other parties as
follows: FIRS (US$15bn), DPR (US$2bn), NPDC (US$6bn), Other third party
financing (US$2bn), domestic crude lifted by the NNPC (US$28bn).
The Ministry of Finance
acknowledged that all crude lifted was remitted apart from domestic crude
remittances with a shortfall of US$10.8bn, made up of: Unpaid subsidy
claims – US$ 8.77billion, Holding costs of strategic reserves – US$0.46billion,
crude oil and product losses – US$0.76bn, Pipeline and management costs – US$0.91billion.
CBN governor stated that the shortfall is US$12bn because, of the US$28bn due
from the domestic crude, NNPC had only remitted US$16bn. NNPC insisted that the
shortfall is US$10.8bn and the difference was due to US$1.2bn subsidy
payments it claimed to have made between Jan-Mar 2012 (relating to October –
December 2011 discharges), and which had been certified by the PPPRA. CBN did
not recognize it as no documents were provided by NNPC to support the
explanation.
4 February 2014
The CBN Governor
appearing before the Senate Committee on Finance stated that NNPC needs to
account for US$20bn discounting some of the initial explanations provided by
NNPC (the lifting in favour of NPDC, other third party financing and certified
subsidy claims). The Governor stated that out of the US$67billion worth of
crude oil lifted by the NNPC, only US$47billion had been appropriately
accounted for as follows:
- NNPC payment for FGN crude – US$14bn FIRS crude – US$15bn
- Domestic crude – US$16bn
- IOC payment (Royalty) – US$2bn
- Total – US$47bn
13 February 2014
The NNPC accounted for
the $20bn shortfall as follows: NPDC US$6bn, Other third
party financing US$2bn, Jan – Mar 12 certified subsidy US$1.2bn, DPK
subsidy US$3.5bn, PMS subsidy US$5.25bn, Crude oil product
losses US$0.76bn, Maintaining the strategic reserves $0.46bn, Pipeline
maintenance and management costs US$0.91bn, Total US$20.08bn.
The Minister of Finance and
Coordinating Minister of the Economy, recommended that there should be an
independent forensic audit of the amounts constituting the US$10.8bn as
stated on 18 December 2013.
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