A crucial meeting between key government offices concerning the Central Bank of Nigeria (CBN) declaration that the Nigerian National Petroleum Corporation (NNPC) has failed to remit to the Federation Account the sum of $49.8 billion between 2012 and 2013 has concluded that only about $10.8 billion appears to be unaccounted for.
That figure was referred to only as a “shortfall” in domestic crude oil receipts.
The NNPC, meanwhile, admitted at the meeting thatNigeria’s earnings from crude oil exports over the period in question were $67.12 billion: $1.79 billion higher than the revenues reported by the CBN.
In attendance at the meeting which was billed as a “reconciliation meeting” were the CBN, the NNPC, the Department of Petroleum Resources, the Federal Inland Revenue Service, the Office of the Accountant General of the Federation, the Budget Office of the Federation, the Federal Ministries of Finance, and the Federal Ministry of Petroleum Resources.
In a “summary of findings” issued after the meeting, which lasted until 2a.m,” the group said the $10.8 billion “shortfall” was acknowledged by NNPC but that the corporation at the same time disputed its magnitude.
“This shortfall has been acknowledged by NNPC, but the magnitude of the shortfall is still disputed by NNPC. The shortfall is explained to be the result of subsidy claims, unrecovered crude/product losses, and cost of strategic petroleum storage (which is currently not captured in the PPPRA template for refunds). This figure is also well-known to all stakeholders at the Federation Account Allocation Committee (FAAC), and is reported and updated on a monthly basis. However, all parties concerned are working assiduously through the ongoing reconciliation efforts to resolve this.”
A source at the meeting confirmed that the overriding reason the institutions resolved that not to drag the issue further is because the NNPC and the Minister of Petroleum Resources managed to“convince” those at the meeting that the monies had somehow been remitted.
The discrepancies first leaked through a letter written to President Goodluck Jonathan by CBN Governor Lamido Sanusi Lamido, which was published. Since the letter leaked to the media,Mr. Sanusi has been put under immense pressure by President Goodluck Jonathan and the Minister of Petroleum Resources, Diezani Allison-Madueke.
Our source said that despite the bogus accounting undertaken by the NNPC, the agency could still not account for as much as $12 billion from proceeds of crude oil lifted and sold on behalf of Nigeria.
“At this meeting, the NNPC noted that the actual proceeds from crude oil exports over the period amounted to USD67.12 billion, and was thus about USD1.79 billion higher than the revenues reported by the CBN (possibly due to timing differences and NPDC liftings which were not included in the CBN report),” the group said
According to the statement, “The Federation Account indicates that over the period January 2012 to July 2013, a shortfall of USD10.8 billion was recorded from the domestic crude oil receipts. This shortfall has been acknowledged by NNPC, but the magnitude of the shortfall is still disputed by NNPC. The shortfall is explained to be the result of subsidy claims, unrecovered crude/product losses, and cost of strategic petroleum storage (which is currently not captured in the PPPRA template for refunds). This figure is also well-known to all stakeholders at the Federation Account Allocation Committee (FAAC), and is reported and updated on a monthly basis. However, all parties concerned are working assiduously through the ongoing reconciliation efforts to resolve this.”
It was also observed that rather than focus on the issue at hand, the stakeholders instead took the opportunity to urge the National Assembly to pass the Petroleum Industry Bill, as though it was the reason the NNPC was stealing state funds.
After today’s meeting, another source at the meeting said it was discovered that another set of funds from crude oil lifted between September and December have also not been remitted by the NNPC.
Text of the statement
17th December 2013
Revenue Reconciliation Meeting among the Central Bank of Nigeria, Nigerian National Petroleum Corporation, the Department of Petroleum Resources, the Federal Inland Revenue Service, the Office of the Accountant General of the Federation, the Budget Office of the Federation, and the Federal Ministries of Finance and Petroleum Resources.
Summary of Findings
1. The Central Bank of Nigeria (CBN) recently reported that about USD49.8 billion could not be accounted for from crude oil exports by the NNPC over the period January 2012 to July 2013. The CBN raised this concern in the context of low accretion to the foreign exchange reserves despite sustained high oil prices. This note is the outcome of a reconciliation exercise among the aforementioned stakeholders, held at the Ministry of Finance, to clarify the issues raised by the CBN.
2. According to the CBN, based on data from pre-shipment inspection agents, over the period January 2012 to July 2013, a total of 594.02 million barrels of crude oil were lifted by the NNPC, amounting to about USD65.3 billion. However, the amount remitted into the Federation Account at the CBN amounted to only USD15.53 billion. This prompted the CBN to raise the issue of an observed gap in expected revenues.
3. A revenue reconciliation meeting was therefore convened among the CBN, NNPC, the Federal Ministry of Finance and other stakeholders to clarify the observed sources of discrepancy. At this meeting, the NNPC noted that the actual proceeds from crude oil exports over the period amounted to USD67.12 billion, and was thus about USD1.79 billion higher than the revenues reported by the CBN (possibly due to timing differences and NPDC liftings which were not included in the CBN report).
4. According to the NNPC’s records, the total revenues of USD67.12 billion, was comprised of revenues which directly accrued to NNPC (for the Federation Account) of USD14 billion; and additional revenues lifted by NNPC on behalf of other parties as follows: for FIRS (USD15 billion), for DPR (USD2 billion), for NPDC (USD6 billion) and for other third party financing (USD 2 billion). In addition, domestic crude lifted by the NNPC amounted to about USD28 billion. This domestic crude component was not reflected in the CBN’s foreign accounts, but rather paid directly in Naira into the Federation Account. Taking account of these various exports conducted on behalf of the non-NNPC parties, the total of USD67 billion was mostly accounted for. This substantially addresses the issues raised by the CBN.
5. The Federation Account indicates that over the period January 2012 to July 2013, a shortfall of USD10.8 billion was recorded from the domestic crude oil receipts. This shortfall has been acknowledged by NNPC, but the magnitude of the shortfall is still disputed by NNPC. The shortfall is explained to be the result of subsidy claims, unrecovered crude/product losses, and cost of strategic petroleum storage (which is currently not captured in the PPPRA template for refunds). This figure is also well-known to all stakeholders at the Federation Account Allocation Committee (FAAC), and is reported and updated on a monthly basis. However, all parties concerned are working assiduously through the ongoing reconciliation efforts to resolve this.
6. To tackle this shortfall in revenues, the Government has initiated various steps to address these challenges from both security and operational fronts.
7. As a result of the changing structure of the business arrangements – from joint ventures to production sharing contracts, alternative financing arrangements, and the impact of the fiscal regime on gas development – the government take in recent years has been declining. In this regard, a quick passage of the Petroleum Industry Bill (PIB) will help to reverse this trend.
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