29
May 2014, Abuja – The Senate Committee on Finance yesterday recommended
that the Nigerian National Petroleum Corporation (NNPC) should refund
$262 million to the Federation Account. The committee said $665.896m
was yet to be remitted by the NNPC. It also asked the Nigerian
Petroleum Development Company (NPDC) to remit to the Federation Account
$447.817,884, being balance of royalty and Petroleum Profit tax (PPT).
The committee urged the Federal Government to remove fuel subsidy.
The committee, headed by Senator Ahmed Makarfi, since was never any
unremitted $49.8billion as alleged by the suspended Governor of the
Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi. It stated that the
Central Bank of Nigeria, NNPC, Ministries of Finance and Petroleum
agreed that the NNPC should account for $20billion. These assertions
were contained in the report of the committee, which was laid before the
Senate yesterday. The committee noted that the sum of $218.069 million
remains unremitted, being Federation Account share from the Third Party
Financing arrangement.
It said that royalties and taxes amounting to $447.827million, being
Federation Account share from the $6.815billion liftings by NNPC on
behalf of NPDC, remain unremitted. The report urged the Senate to note,
among others, that the “total crude oil liftings January to July 2013
was $67 billion and not $65billion as the CBN Governor had presented.
There was never any unremitted $49.8billion. All the agencies: CBN,
NNPC, Ministry of Finance and Ministry of Petroleum Resources had agreed
after reconciliation meeting that $47billion out of the $67billion had
been credited to the Federation Account. Amount to be accounted for
therefore was $20billion. The sum of $5.254billion PMS subsidy certified
by PPPRA, part of the $20billion to be accounted for, was adequately
covered by the Appropriation Acts 2012 and 2013.
“The sum of $3,512billion DPK subsidy certified by PPPRA for the
period January 2012 – July 2013, being part of the $20billion to be
accounted for, was not appropriated for by the National Assembly. The
total sum certified by PPPRA for Kerosene DPK) subsidy not appropriated
for by the National Assembly was N353.370billion ($2.148billion) for
2013 respectively, making total for the two years N685.91billion
($4.430billion).”
The committee report only covers accounting for $67billion crude oil
revenue between January 2012- July 2013. “The Committee together with
Appropriations Committee will continue its investigation on causes of
shortfall in revenues, which covers issues such as SWAP, Strategic
Alliance etc, as relates to the petroleum industry as par Senate
Resolution S/RES/007/03/13.” The committee recommended among others
that the Senate should accept the subsidy deducted by NNPC from January
2012 – July 2013 of $5.254billion (N823,803billion) since it was
certified by PPPRA and appropriated by National Assembly.
“This is without prejudice to the outcome of the Forensic Audit
conducted by the Office of the Auditor-General for the Federation and
Pricewaterkhouse Coopers Limited (PWC),” the report added. It said
further that: “whereas it may be good policy to encourage indigenous
players by giving them greater participation, however continuing
transfer of Federation OMLs to NPDC who in turn transfer same to Third
Parties with lots of tax and other revenue concessions will deprive the
federation of vital income. Therefore, all such transactions should be
conducted in a transparent and competitive manner and devoid of revenue
concessions. NNPC to refund and remit to the Federation Account the sum
of $262million being expenses it could not satisfactorily defend in
respect of Holding Strategic Stock Reserve; Pipeline Maintenance and
Management Cost; and Capital Expenditure. There is the need for the
subsidy regime to be totally discontinued with. All stakeholders should
be consulted and carried along as much as possible before abolishing the
subsidy.
“Further legislative action by the Senate should be taken after
receipt of the forensic check/audit currently being undertaken at NNPC
by the Auditor-General of the Federation and PWC. The NNPC should
strictly adhere to international best practices in keeping records. NNPC
should not control the revenue account of NPDC in order not to
undermine its separate legal status and make accountability more
difficult. That PPPRA should henceforth not certify subsidy
payments/deductions when there is no appropriation for such.
“NNPC should always ensure due process and diligence in their
operations. The Senate also mandates the Committed to follow up and
receive the forensic audit/checks reports from the Auditor-General for
the Federation and PWC, study same and report back to Senate.”
The committee noted that after a careful study of all submissions, it
found: “That all parties, i.e. CBN, NNPC, Ministry of Finance and
Ministry of Petroleum Resources had resolved through reconciliation
undertaken by them that $47billion had been received into the Federation
Account out of the total oil lifting valued at $67billion between
January 2012 and July 2013. That on the remaining $20billion to be
reconciled, the committee’s findings are as follows:
“The amount deducted /withheld/expended by NNPC on fuel subsidy
between January 2012 to July 2013 was $5.254billion (N823.802billion).
This was certified by PPPRA and the National Assembly has appropriated
funds in 2012 and 2013 fuel subsidy in the sums of N888.101 billion
($5.737billion) and $971.274 billion ($6.274billion respectively. The
amount expended on subsidy on kerosene (DPK) between January to July
2013 was $3.512billion (N543.890billion). This was certified by PPPRA.
This was not appropriated for by the National Assembly in both 2012 and
2013 Appropriation Acts.
“The subsidy deduction in the sum of N180billion ($1.2billion) by
NNPC in 2012 bug relating to fourth quarter 2011 was certified by PPPRA.
The CBN position was that this deduction needed PPPRA certification.
PPPRA verification alluded to on the NNPC subsidy claims are in practice
book keeping verification rather than physical verification of products
and claims.” The committee said it also found that on Third Part
Financing liftings by NNPC which CBN put at $2billion and called for
more explanations, as follows: “That the actual value of Third Party
Financing lifting was $2,430,750,973. That the amount confirmed by the
Accountant-General as having been remitted into the Federation Account
between January, 2012 and July, 2013 was $1,370,172,650.36. That the
share belonging to Mobile Producing Nigeria Limited in Third Party
Financing arrangement with NNPC confirmed by them orally and in writing
was $848,687,581.
“That the amount confirmed by the Accountant-General of the
Federation as having been remitted into the Federation Account in
December, 2013 which is outside the period January 2012 – July 2013 was
$300,000,000. Therefore, the sum of $218,069,354 remains outstanding or
unremitted by NNPC which it explained was in escrow account and will be
remitted when it matures.” On the $6billion liftings by NNPC on behalf
of NPDC, which CBN observed that part of the revenue belongs to the
Federation Account, the committee said it found as follows:
“NPDC strategic alliance are within the laws of the Federation as
submitted by the Attorney-General for the Federation and Minister of
Justice. Total liftings during the period in question was
$6,815,188,626. Share of revenue to go to the Federation A. Lung was
$2,175,635,436. Amount of Petroleum Profit Tax (PPT) confirmed received
by Federal Inland Revenue Service (FIRS) from the NPDC and remitted to
the Federation Account was $863,000,000. Amount of Royalty confirmed
received by Department of Petroleum Resources (DPR) from NPDC and
remitted to the Federation Account was $864,817,552. Royalties and
Taxes not remitted to the Federation Account by NPDC within the period
under consideration was $447,817,884.”
On other expenses and crude losses, which the Committee appointed
Independent Professional Accountants to audit, the committee said it
found as follows: “Crude and refined oil losses were certified by
Committee Consultants as $0.809billion against the $0.760 reported by
NNPC. Pipeline surveillance cost increased from $2.23million in 2012 to
$11.15million in 2013 without corresponding decrease in pipeline oil
losses. Actual PPMC’s Staff Salaries and upfront benefit claimed in NNPC
submission were overstated by $7.58million and $29.35million for the
2012 and 2013 respectively.”
The committee gave the amount expended above budgeted or not budgeted
for at all in respect of PMS and DPK in 2012 and 2013 as follows: “2012
PMS = N90.693billion ($585million)
2013 PMS = “Over expenditure expected since certification of Aug-Dec
2013 was only an interim one. 2012 Kerosene (Expended but not budgeted)
N353,370,145,245.07 ($2.282billion),
2013 kerosene (amount expended but not budgeted) N332,539,367,830.95
($2.148billion).” In respect of a motion moved by Senator Babajide
Omoworare (Osun East) that N700million was expended illegally on
Kerosene subsidy daily, the committee said it found based on PPPRA
certification that: “In year 2012 amount expended was N353.370billion
which gives N965.49million daily; and
“In year 2013 (interim) amount expended was N332.539 billion which gives N908.578 million daily.”
- The Punch
Justice
Olotu, who denied the claim in a chat with Vanguard, yesterday in
Benin, Edo State, explained that the domiciliary account which she
opened with First Bank, United Kingdom, was contained in the Code of
Code Form which she had earlier submitted to the body, adding that the
account had no substantial money in it.
29
May 2014, Abuja – The Senate Committee on Finance yesterday recommended
that the Nigerian National Petroleum Corporation (NNPC) should refund
$262 million to the Federation Account. The committee said $665.896m
was yet to be remitted by the NNPC. It also asked the Nigerian
Petroleum Development Company (NPDC) to remit to the Federation Account
$447.817,884, being balance of royalty and Petroleum Profit tax (PPT).
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