Posted by admin on february 21, 2015
September 25, 2013
CBN Governor writes to Mr. President alleging that
“between January 2012 and July 2013, NNPC lifted
594,024,107 barrels of crude oil valued at $
65,332,350,514.57. Out of this amount NNPC
repatriated only $15,528,410,098.77 representing
24% of the value. This means the NNPC is yet to
account for, and repatriate to the Federation
Account, an amount in excess of $49.8 billion or
76% of the value of oil lifted in the same period.”
September 26, 2013:
Alison-Madueke, Petroleum Minster
Presidency receives CBN Governor’s letter.
September 27, 2013:
President minutes letter to Hon Minister of
Petroleum Resources to explain the allegations
against NNPC.
September 30, 2013:
HMPR forwards letter to GMD NNPC asking for
explanations:
October 2, 2013
GMD NNPC offers explanations to the HMPR.
October 4, 2013:
HMPR writes to Mr. President with detailed
explanations.
October 4, 2013 to November 6, 2013.
Nothing was heard about the allegation and NNPC
presumed the Presidency and CBN were satisfied
with the explanations given.
December 8, 2013
Contents of CBN’s letter leaked to some online
publications causing national furore.
Senate Plenary directs its Committee on Finance to
investigate the alleged unremitted $49.8 billion.
December 10, 2013
NNPC, in a press release, goes public with its
explanations on the allegation, saying that the CBN
Governor did not understand the workings of the oil
industry and how revenues from oil lifting are
remitted to the Federation Account. It added that the
CBN actually understated the figures of lifting by
NNPC by 4.13 percent.
December 13, 2013
NNPC GMD, Engr. Andrew Yakubu, addresses a
World Press Conference debunking the allegations
made by the CBN Governor. Engr Yakubu stated
NNPC crude oil liftings are made up of the following:
1. Equity crude, 2. Royalty oil, 3. Tax oil, 4. Volume
for Third Party financing and 5. NPDC equity
volume. He stated that remittances of proceeds
from each of the 5 streams are made according to
statutory and production arrangements. He
explained that all remittances due to the Federation
Account had been made into that account.
December 13, 2013
Coordinating Minister of the Economy and Minister
of Finance directs Inter-Agency Committee,
comprising Federal Ministry of Finance, Budget
Office of the Federation, Central Bank of Nigeria,
CBN, NNPC, Federal Inland Revenue Service (FIRS)
and the Department of Petroleum Resources (DPR)
to work to reconcile the different figures given by
the two agencies of Government, namely CBN and
NNPC.
December 18, 2013
Joint Press Conference held at the Federal Ministry
of Finance Headquarters to report the findings of the
Inter-Agency Committee. In attendance were the
Coordinating Minister of the Economy and Minister
of Finance, Minister of Petroleum Resources,
Director General of the Budget Office of the
Federation, Group Managing Director of the NNPC,
Governor of the Central Bank of Nigeria, Chairman
of the Federal Inland Revenue Service, the Director
of the Department of Petroleum Resources and the
Executive Secretary of the Petroleum Products
Pricing and Regulatory Agency, PPPRA.
CME announced that the Inter-Agency
Reconciliation Committee had established that $39
billion of the alleged $49.8 had actually been
remitted to the Federation Account.
CME announced that the Committee was still
working to reconcile the balance of $10.8 bn.
December 18, 2013
At the first sitting of the Ahmed Makarfi led Senate
Committee on Finance, suspended Gov. of CBN
informs the Committee that $12 bn was balance of
unremitted revenue to Federation Account.
CME interjected and told the Committee that $
10.8bn was balance to be verified by the Inter-
Agency Committee.
December 18, 2013
Senator Ahmed Makarfi asks the CME and the
parties to go and complete reconciliation process
and to return to the Committee with their findings.
January 10, 2014:
Following incessant misleading media reports that
the unreconciled $10.8bn was missing and
unaccounted for, a press conference was organized
where the Group Executive Director of Finance and
Accounts, in charge of the Corporation, Mr. Benard
O. N. Otti gave a breakdown of the $10.8 being
reconciled as follows: Unpaid subsidy $8.49 billion,
Maintenance of National Strategic Reserve$0.37
billion, Product and crude oil loses $0.72 billion and
cost of pipeline vandalism and repairs $1.22 billion.
February 13, 2014
At resumed hearing of the Senate Committee on
Finance, CME informed members and the public that
the Inter-Agency Committee had completed its
assignment and had certified and signed off on the
claims of NNPC to the tune of $8.7 billion for
petroleum products subsidy. She said that the
Committee had no technical competence to verify
the other claims of $2.1 billion for pipeline repairs
and maintenance, strategic reserves etc., and
suggested that a forensic audit of the claims
including what PPPRA (the statutory agency
responsible for verifying products importation and
subsidy claims) had certified and signed off be
undertaken. In making the suggestion, CME had
noted that even though the claims of NNPC had
been certified, given the extraordinary times, it may
be necessary to invite forensic auditors to do a
forensic examination.
CME equally called for a legal opinion on the status
of NPDC and Third party financing alliances by
NPDC
The CBN Governor was asked if he agreed with the
finding of the Inter-Agency Committee to which he
answered in the affirmative, adding that since the
agencies responsible for certification of products
importation and subsidy claims have certified the
claims of NNPC, CBN was satisfied.
But in a prepared address the CBN Governor said
that the amount unremitted to the Federation
Account was now $20 billion not the $12 billion that
he had earlier said or the $10.8 given by the CME
and the Inter-Agency Committee CBN Governor
gave a breakdown of the $20 billion to include the
outstanding $12 billion (contrary to the $10.8 billion
given by the CME and Inter-Agency Committee), $6
billion being gross revenue earned by Nigerian
Petroleum Development Company Limited NPDC, a
subsidiary of the NNPC and $2 billion being
payments to Third parties.
CBN Governor posited that NPDC being a subsidiary
of the NNPC must remit all its revenue to the
Federation Account in line with the constitutional
requirement in Section 162 (10) c.
He also questioned the legality of NNPC floating
subsidiaries to do business and keep their funds.
Finally he questioned the propriety of the process of
incorporating NPDC and the strategic Agreements it
entered into.
CBN Governor informed the Committee that he had
sought legal opinion from Senior Advocates of
Nigeria before making his presentation.
Senator Makarfi ruled that the Attorney General of
the Federation and Minister of Justice be invited to
come and give legal opinion on the issue of whether
NPDC could defray costs of operations before
remitting net to the Federation Account; whether
NNPC could float a company to do business and
whether the process of floating NPDC was proper
and if the strategic alliance entered into with Third
parties followed due process.
February 14, 2014
HMPR speaks to Makarfi-led Committee on the
reasons why kerosene subsidy still subsists. HMPR
informed the Committee that going by the Act
establishing the Corporation, for any change of
products price to be effected the Honourable
Minister of Petroleum must have the new price
gazette. She noted that the then Honourable
Minister of Petroleum did not gazette the decision to
remove subsidy on kerosene. She also recalled the
reactions of Nigerians to the attempt by the
Jonathan administration in 2012 to remove subsidy
on PMS, as a prelude to removing subsidy on
kerosene, noting that if Nigerians would not accept
PMS subsidy removal, how could they accept
kerosene subsidy removal considering that it is the
fuel used by the majority of the poor people of the
country.
NNPC accounts for unremitted $10.8bn to
Federation Account with submission of documents
to Senate Committee on Finance. NNPC stated that
the relevant agencies had signed off on the subsidy
claims of the Corporation in the sum of $8.7 billion
and that documents supporting losses from crude
oil and products theft, pipelines vandalism and
maintenance, security and maintenance of strategic
reserves etc are being submitted to the Senate
Committee for verification.
Even though the CBN Governor had admitted that
not all gross revenue earned by NPDC is to be
remitted to the Federation Account, he did not
determine how much of the $6 billion is to be
remitted. Yet, his allegation of unremitted $20 billion
was made up of all the gross revenue of $6 billion
from NPDC.
The Committee asked NNPC to explain the rationale
behind strategic alliances between NPDC and its
partners.
February 20, 2014
In response to the Senate Committee’s enquiry
Attorney General of the Federation informs Senate
Committee that NNPC is legally empowered to
defray cost of operations from its revenue.
Secondly he confirms that NNPC was empowered to
float companies to do business. On the third issue,
namely whether due process was followed in
signing the strategic partnership agreements, he
informed the Senate that he was yet to study the
documents he received on that as he got them on
his way to the Senate.
February 24, 2014
Commenting on a question about subsidy on
kerosene during a Media chat, President Jonathan
confirmed NNPC’s position that subsidy on
kerosene had not been removed by the
Government.
February 25, 2014
Following media reports that NPDC denied receiving
$6bn from NNPC, being NPDC’s revenue during the
period under review, the Managing Director of
NPDC, Mr. Victor Briggs, issued a press statement
confirming that NNPC remitted the said amount into
the NNPC/NPDC account which warehouses all of
NPDC’s earnings from its operations.
March 13, 2014
At the resumed hearing of the Senate Committee, a
Director from the Office of the Accountant General
of the Federation, Mr Salawu Zubairu, told the
Committee that from their records NNPC had
remitted all the funds meant for remittance into the
Federation Account within the period under review.
At the same hearing, a representative of the
Department of Petroleum Resources, DPR, Mr Alfred
Ohiani, also confirmed to the Committee that NNPC
paid all royalties on crude oil liftings during the
period under review into the DPR account with the
Central Bank of Nigeria.
The Committee also took evidence from Third Party
Operators (JV partners from Total E & P and Mobil
Producing Nigeria Unlimited) who were represented
by Mr Chidi Momah and Mr Olusegun Banwo. The
two representatives confirmed that their companies
received the amounts stated by NNPC as having
been paid to Third Parties during the period under
review.
The Committee adjourned sine die to enable
members go into a technical session to review all
the presentations in order to be able to come up
with their conclusion.
May 28, 2014
The Committee submitted its report to the Senate.
Some of the observations and recommendations of
the Committee include:
a.) That no oil revenue amounting to $49.8bn, $
20bn, $12bn, or $10.8bn as alleged by the former
CBN governor is missing
b.) That the total expenditure on kerosene subsidy
for the period (January 2012 – July 2013) which
was unbudgeted was $4.43 billion. It is not
anywhere near $8.7bn that the APC lying machine
is bandying about.
c.) That a Supplementary Appropriation Bill covering
the amount be sent to the National Assembly for
approval considering the ambiguity in government
policy on kerosene subsidy and the fact that the
PPPRA has verified the importation of the products.
d.) That NNPC should remit the sum of $262 to the
Federation Account being “expenses it could not
satisfactorily defend in respect of Holding Strategic
Stock Reserve; Pipeline Maintenance and
Management Cost; and Capital Expenditure.
July 10, 2014
The report of the Committee was debated on the
floor of the Senate at plenary and it adopted most of
the recommendations of the Committee. It
particularly resolved, based on the recommendation
of the Committee that the allegation of the former
Central Bank Governor that some money was
missing was to all intents and purposes false and
that no money (be it $49.8bn, $20bn, $12bn, or $
10.8bn) was missing.
The senate also advised President Goodluck
Jonathan to prepare and present to the National
Assembly a supplementary budget “to cover the
expenditure in the sum of N90.6bn for PMS
(premium motor spirit) subsidy 2012 and N685.9bn
for kerosene subsidy expended without
appropriation by the National Assembly” based on
the Committee’s finding that the expenditure was
not based on a flagrant disobedience to the laws of
the land in the light of the ambiguity surrounding the
issue of kerosene subsidy removal.
Other Salient Issues
– On the recommendation by the Senate that NNPC
should refund, the sum of $262bn which it expended
on holding strategic stock reserves and
maintenance and management of pipelines, it must
be understood that NNPC by the law establishing it
(the NNPC Act) is meant to act the supplier of last
resort of petroleum products in the country. This
role entails that it must ensure the availability of
petroleum products to the Nigerian public at all
times irrespective of circumstances.
– The operation and holding of strategic stock
reserve to guard against supply shocks is essential
to the fulfillment of NNPC’s role as a supplier of last
resort.
– The maintenance and management of a network
of pipelines is also strategic to the effective
performance of the function the supplier of last
resort.
– Unfortunately, there is no budgetary provision for
these activities that are essential to the efficient
performance of the statutory role of supplier of last
resort.
– The PPPRA template does not make provision for
the recovery of pipeline maintenance and
management cost.
– If NNPC does not hold strategic reserves and
maintain the pipelines whenever they are broken it
cannot guarantee efficient supply of petroleum
products across the country in keeping with its
statutory role as a supplier of last resort.
– The same National Assembly that wants NNPC to
refund the $262bn expended on these two strategic
activities is usually the first to summon the
Management of the Corporation whenever there is a
hitch in products supply and distribution resulting in
fuel scarcity.
– By this recommendation, NNPC is being put in a
very difficult position to perform its statutory role as
the supplier of last resort.
– On the issue of kerosene subsidy, the committee
observed that there was some ambiguity regarding
government policy on the issue which made the
Ministry of Finance and the Ministry of Petroleum to
toe different lines on the matter.
– Whereas the Ministry of Finance and the National
Assembly acted on the Presidential memo directing
the Minister of Petroleum and NNPC to remove
kerosene subsidy by stopping appropriation for
kerosene subsidy, the Ministry of Petroleum could
not act on effect the Presidential directive because
of impracticability of the directive which instructed
the Minister of Petroleum to remove subsidy on
kerosene without making it public. The Petroleum
Act stipulates that prices of petroleum products
should be increased by the Minister of Petroleum
Resources after announcing such increment in
public media and the Federal Government Gazette.
The Minister of Petroleum Resources at that time
could not straighten out this contradiction in the
directive with the late President Umaru Yar’Adua
before his illness got worse and he eventually died.
– The Minister of Petroleum Resources, Mrs
Diezani Alison-Madueke, explained in the course of
the Senate Committee hearing that she did not see
any logic in withdrawing subsidy from kerosene
which is the fuel relied upon by the very poor for
cooking and lighting while retaining subsidy on
petrol which is fuel powering cars by the rich.
– President Goodluck Jonathan also threw light on
the issue in one of his media chats when he
explained that kerosene subsidy was not removed
and that it was not published in the Gazette as
stipulated by law.
– In the light of the above, that funds were
expended for kerosene subsidy without a valid
appropriation by the National Assembly as required
by law was not exactly an illegality as the lying
machine of the APC tried to portray it.
– Indeed, the Committee recommended that the
President could send in a Supplementary
Appropriation to cover for the amount spent on
kerosene subsidy so as to straighten out the whole
issue.
February 2, 2015
– The report of the Forensic Audit conducted by the
internationally reputable accounting firm,
PriceWaterhouseCoopers (PwC), on NNPC over the
alleged unremitted $49.8bn was submitted by the
firm to President Goodluck Jonathan at the State
House, Abuja.
– The President immediately handed over the report
to the Auditor-General of the Federation with a
directive to study it and make the key findings of
the report public
February 5, 2015
– The Auditor-General, in a press conference,
made the highlights of the Forensic Audit Report
known to the public. The highpoint of his disclosure
was that the report recommends that NNPC and its
Exploration & Production subsidiary, the Nigerian
Petroleum Development Company (NPDC) are to
remit the sum of $1.48bn being “signature bonus
due for divested assets and taxes/royalties”.
– What the Auditor-General failed to explain to the
public is that the signature bonuses, royalties and
taxes on the oil wells divested by Shell and
assigned to NPDC were not part of the oil lifting
revenues ($49.8) which the former CBN Governor
(now Emir of Kano) alleged was unremitted by NNPC
and which was the reason for the Forensic Audit.
– The recommendation to pay the signature bonus
for the divested oil wells was not an indictment in
anyway over the alleged unremitted $49.8 or any of
the later versions of the amount that the former
CBN Governor came up with.
February 11, 2015
– Following the barrage of media reports claiming
that NNPC was indicted in the PwC Forensic Audit
Report because of its recommendation that NNPC
should pay the sum of $1.48bn to the Federation
Account, the Group Managing Director of NNPC, Dr.
Joseph T. Dawha, addressed a press conference to
explain the recommendation and why it does not
amount to an indictment.
– The GMD explained that the $1.48bn represents
the balance of the book value of the assets
assigned to NPDC upon divestment by Shell as
computed by the DPR.
– He further explained that the full book value of the
assets as computed by DPR was $1.847bn out of
which NNPC had paid over $300m as a token to
indicate its interest in acquiring the assets pending
when NNPC and DPR come to terms on a mutually
acceptable estimate of the book value of the assets
as NNPC had raised concerns over some of the
parameters that DPR used in arriving at its figures.
– On deductions and kerosene subsidy, the GMD
explained that the PwC’s report was unequivocal
that the NNPC Act empowers NNPC to defray its
costs from crude oil sales proceeds and so NNPC
could not be blamed for doing what the law
prescribes, adding however that NNPC was ready
for the legal reform proposed in the PIB.
Conclusion:
– The Forensic Audit Report, like the Senate
Committee on Finance’s Probe Report before it,
clearly stated that all the revenue generated from
FGN crude lifting for the period of 1 January 2012 to
31 July 2013 amounting to $69.34bn was fully
accounted for
– Nowhere in the report was it stated that NNPC
was indicted over the allegation of unremitted or
missing oil revenue.
– The alleged issue of missing oil revenue to the
tune of whatever amount ($49.8bn, $20bn, $12bn,
$10.8bn?) has been laid to rest by the Senate of the
Senate of the Federal Republic of Nigeria and an
independent audit firm, PwC.
– In the light of the above, anyone or organization
still circulating information about any unremitted or
missing oil revenue or that NNPC was indicted in
any report over the allegation is only either being
mischievous or displaying his or its disdain for truth
and only needs to be pitied.
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