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Tuesday 04th August 2020,
Hope for Nigeria

Missing $20bn Oil Money – FG to hire forensic auditors

The Federal Government is to hire independent forensic auditors to examine the books of the  Nigerian National Petroleum Corporation, NNPC,  with a view to ascertaining whether or not it has failed to remit  oil revenues to the Federation Account, as alleged by the Governor of the Central Bank of Nigeria, CBN, Mallam Sanusi Lamido Sanusi.

The Minister of Finance, Dr. Ngozi Okonjo-Iweala disclosed this at a press briefing in Abuja, yesterday, after appearing before the Senate Committee on Finance which is investigating the alleged unremitted fund.

At a public hearing in the Senate last week, the CBN Governor revealed that records available to the bank showed that the total amount generated from crude oil sales was $67.8 billion while records of remittance to the Federation Account by the NNPC was $47.8 billion with a shortfall of $20 billion not accounted for.

Mallam Sanusi, who also appeared before the committee was, however, not convinced by the explanations put forward by both the NNPC and the Finance Minister and insisted that $20b was missing.

At the committee hearing, yesterday, the Minister of Finance said going by the controversy that had surrounded the remittance of the subsidy fund, there was the need for external auditors to carry out a forensic auditing of NNPC account on the issue.

She said the services of forensic experts were needed to verify data submitted by NNPC which the Petroleum Products Pricing and Regulatory Agency, PPPRA had certified to ascertain whether the claim was true or not as  the PPPRA and the ministry of finance alone cannot establish the veracity of the claim.

She said: “Our judgment is that a proper examination of these documents requires technical expertise beyond the capacity of the reconciliation team and, therefore, we believe we should have an independent forensic audit, managed independently of these submissions.

“We have decided to let the forensic auditors examine the accounts (of the NNPC) and let Nigerians fully know what is going on.

“We understand that this kind of forensic audit requires experts who have some knowledge of the petroleum industry because it is very specialized.  What the NNPC submitted was a mountain of documents on shipping, loading, when ships arrived and all that. It requires specialized forensic auditors to work on it”.

Dr. Okonjo-Iweala admitted that the nation’s oil account was complex but assured that there was a proper process for accountability.

Her words:  “There is a proper process going in this country and all those writing should know that there is due process in this country.  Reconciliation has been going on in the last two years.

“The oil account is a very complex business. For example, oil is lifted to pay back what is called “carry arrangement “ in which oil is supplied for loans taken by NNPC in the past and is to be paid back in crude oil to those creditors who gave NNPC those loans. So when you look at it, someone can say there is a missing x number of barrels which should have been accounted for.  But it is used in paying for debt owed by the NNPC.

“That is why we are asking for forensic audit so that we can have all these things clearly verified. You can’t just look at the balance of payment numbers- you will not get it right.  Those are some of the reasons why we said it is a complex issue. Let us get the experts into this and let them give account to Nigerians”.

She added that “the issue of unremitted funds by NNPC is not new and all attempt to make it look as if the work that should be done in this country to reconcile accounts by the Ministry of Finance is not true.

“The finances of the country that come into the budget have been managed very transparently to the point that the budget of the country is so detailed that people can tell how much is spent in the State House to buy forks and knives and be able to criticize.

“Even if they don’t like it, they have the information and we should be proud of that as a country. There is no country from my experience of over 60 countries that have the details released by the budget office of this country.

“The issue is that where is that money, how is it being accounted for and we have led the process. We asked both the NNPC and the PPPRA to produce their documents and they had produced certified copies for the $10.8bn and we have asked for an independent audit.

“A lot of accusations are being made in this country and the only way to be satisfied is to have an independent audit.”

Subsidy withdrawal: Legal interpretation needed — Alison-Madueke

In her submission, the Minister of Petroleum Resources said that there was nowhere in the government gazette where authority was given on the withdrawal of kerosene subsidy and that there was the need for legal interpretation.
Alison-Madueke said: “For years, the issue of the Presidential directive given by late President Musa Yar’Adua had been brought up over and over again. At the time, an inter-ministerial meeting was held, both ministers of finance and that of petroleum at that time were parties to that meeting and at that time, a decision was taken to stay action on the memo because kerosene was very crucial to Nigerians.

“Masses of Nigerians deal with it today. The landed cost is N150  but it was being subsidized at N150 because we cannot effectively move the products around the country because of the damage done to our facilities.

“The reason for staying action is because if we remove the Subsidy on kerosene suddenly, obviously the price of kerosene will escalate. It will cause a major problem for the economy and the government. There will be untold hardship for the Nigerian masses.

“The GMD at that time wrote two memos to the Finance Minister for clarification despite a presidential directive but no clarification came, hence the subsidy remained. The issue of deduction at source happened because the product landed at N150 and was sold at N50.

“There is a N100 gap which must be covered and it is not budgeted for. The NNPC was unable to retrieve the amount. In this case, based on the first line charge in the Appropriation Act, it means that NNPC would have gone under long time ago under the weight of the Subsidy and it would have affected the economy of other countries in West Africa.

“I do think the law court should decide on the legality or otherwise on the deduction of subsidy on kerosene.

“The business of kerosene had become a very distracting and messy business in terms of all what is happening and what is being said in the polity. It will be very simple for the NNPC and the Ministry of petroleum to withdraw from the issue of kerosene but there is no marketer that wants to go into the business.
“They will come in but it will take time before they take over the distribution but before then the price of kerosene will go up astronomically and we all know that. We have to establish a balance so that the masses of this country do not suffer.

No amount of fund is missing — NNPC boss

The Group Managing-Director of  NNPC Andrew Yakubu in his own submission, said no amount of the subsidy fund was missing and explained that the CBN and the Federal Ministry of Finance were clearly aware of the outstanding amount and the issues relating to its non-realization.

According to him, unpaid amount on petroleum products was $8.76 billion; crude oil and product losses was $0. 76 billion, $0.46 billion was for national strategic reserve holding, while pipeline maintenance and management  cost $0.91 billion.

He said: “We don’t have any problem with forensic audit but what we are saying is that there is a procedure that had been put in place through the bodies like the PPPRA, DPR to cross check our data and certify them for payment, so we have no problem, in the upstream industry we have five agencies that oversee our business, so we are used to interacting with agencies.

“We are happy for anybody to come in and look at it, but the question is what value is it going to bring because we have gone through these things over and over, but all the same we have no problem.”

$20bn still unremitted, Sanusi insists

But the CBN Governor could not be moved by the explanations made by the NNPC authorities, though he acknowledged that the Finance Minister had made some explanations on that.

He said: “We established that the NNPC shipped about $67bn worth of crude and about $47bn came back to the federation account so there is $20bn unremitted.
“As far as the CBN is concerned, the most important point to establish is that there is a difference of $20bn between what the NNPC shipped and what it repatriated. We have presented documents from the PPPRA and the presidency that in our view, there is no subsidy on kerosene, first of all and that the payment of kerosene subsidy is a violation of a written presidential directive.

“We ask question about the oil produced in blocks under strategic align agreement with Atlantic Energy to indicate that our concern was not even whether the NPDC is a subsidiary or not or whether the revenue that was transferred to Atlantic Energy was a revenue that legitimately belonged to it.
“Apart from the legal opinion of the Finance Minister, we will also bring our lawyers to come and defend our legal position and once it is established the part that belong to the federation should come to the federation and what goes to the National Petroleum Development Company.

“We have made no comments about the $2bn third party documentation because we have been given no documentation; even the $6bn for NPDC did not come to any account in CBN but we have taken the words of NNPC. For us, there is a question mark over that gap. The PPPRA has done the certification but there is a question of certifying the actual amount of subsidy that NNPC took, and whether the NNPC should have taken subsidy on kerosene.
“For us in the CBN, our task ends with establishing there is $20bn unremitted, after that, it will be left to the committee and the Finance ministry to establish that the $20bn was properly accounted for.

“On the NPDC figure, I cannot accept the claims that the $6bn did not belong to the federation account because I believe part of it should come to the account. I do not know how much oil had been produced on both wells. I do not know how much crude had been taken and at what value. It is not what the CBN can do.

“If we agree with the Finance Minister that part of the money should go to the federation account, some oil industry experts should go and properly audit how much crude has been taken, how much had been sold, how much revenue was remitted to the federation account and how much ought to have come in.

“Once it was established that $20bn had not been repatriated to the federation account, then we are okay. Without appropriation, can NNPC pay subsidy on kerosene or do they have superior authority to pay it?

“PPPRA had presented a certification of $8.54bn subsidy on kerosene. It was done by the Executive Secretary, Mr. Reginald Stanley on his own responsibility and I have no reason to question him but if any information comes to light, we will raise question. We do not accept the legality of the kerosene deduction.”

Senate committee Chairman agrees with Finance Minister

On his part, Chairman, Senate Committee on Finance, Senator Ahmed Makarfi agreed with the position of the minister of finance on forensic auditing of the account and gave the minister one month to carry out the auditing.

He said: “The CBN said part of the NNPC transaction, though it was not in a position to know the exact amount, should be lodged in the federation account. We have agreed on that; that will be sorted out on technical grounds.

“Today is a rewarding, fruitful day. We have narrowed down what the issues are, but that is not to say that we have come into conclusion on all issues. These bunch of documents and submissions by the NNPC, which the committee members will study, and we are going to the ministry of finance, the CBN and others that relate to the crude oil product losses.

“Our own forensic examination of the document will make us take a decision as to whether the document support the expenses incurred. The expenses are part of the accounting for the money.
“The major issue laid to rest substantially, is the issue on the Subsidy on petrol which is $5.254bn, because the PPPRA has satisfied it even though to further reassure Nigerians ministry of finance had suggested that and undertaken to independently have it forensically examined to further reassure Nigerians that the certification is indeed in order.

“We have also received certification for kerosene subsidy but the key issue is the appropriation to it and we have all agreed here that no appropriation has been made to it.

The implications of spending money that is not appropriated, is well known to everybody and the whole world is hearing this. I don’t want us to joke or play with this. It is the most central issue.

“All agencies that have spoken have confirmed to the whole world that this money was not appropriated and I want people to absorb the import of this confirmation. We will deliberate on how to deal with the past, how we will deal with the future is critically important and this is the best time to deal with the issue to avoid further contravention.

“We also heard from the CBN that they are questioning part of the $10.8bn. They believe that part of it should belong to the federation account but that they are not technically competent at this stage to state how much it is.

“We have agreed to see how we will engage technical experts to determine which part of the amount, if any, belongs to the federation account. The question which is certain is that it is not all of it but part of it but at this stage, we don’t know exactly. That is what is yet to be ascertained.

“We have also agreed and the Attorney – General had confirmed to us that he will be available next week Thursday to give the legal opinion which also concerns the NPDC issue to give the ministry of finance, legal advice on the issue. Those directly involved would be on ground.”


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