NEITI Audit: NNPC Failed to Remit $13bn NLNG Earnings in Eight Years

    Nigeria earned $58bn from oil in 2013, but lost $6bn

The 2013 audit and financial report of Nigeria’s oil and gas industry undertaken by the Nigeria Extractive Industries Transparency Initiative (NEITI) has revealed that the Nigerian National Petroleum Corporation (NNPC) did not remit the $12.9 billion it received from the Nigeria Liquefied Natural Gas (NLNG) Company over an eight-year period to the federal government.

The report was presented monday in Abuja by the Minister of Solid Minerals Development and Chairman of the NEITI board, Dr. Kayode Fayemi.
The report said the NLNG remittance shortfall from NNPC was from 2005 to 2013.
It further noted that as at 2013 which the report focused on, the state oil firm did not remit $1.29 billion it got from the NLNG. NNPC, it said, acknowledged receipt of the sum from NLNG.
The report added that at the time it was signed off, there were no traces of NNPC’s remittance of the sum into the Federation Account or to the government.
“The audit revealed that Nigeria Liquefied Natural Gas (NLNG) Company paid the sum of $1.289 billion as dividends, interest and loan repayment for 2013. NNPC acknowledged receipt of this amount but did not remit it to either the federal government or the federation,” said Fayemi in his disclosure of the audit highlights.
He said: “However, it is important to also note that the 2013 figure brings to $12.9 billion the total NLNG payments received by NNPC between 2005 and 2013 but not remitted by NNPC to the federal government or the federation.”
He added that Nigeria earned $58.07 billion from her hydrocarbon industry in 2013, eight per cent lower than the $62.9 billion earned in 2012.
The country, Fayemi said, produced a total of 800,488,000 barrels of crude oil in 2013.
According to him, the sums of $5.966 billion and N20.4 billion was lost by the country within the period, mainly from NNPC’s operation of the Offshore Processing Agreements (OPA), crude oil swap arrangements and through product theft.
The audit, according to the minister, equally showed that the sums of $3.8 billion and N358.3 billion were still outstanding payments due to the federation from the NNPC and all of its subsidiaries.
“These outstanding payments were due from unpaid consideration from the divested OMLs, cash-call refunds from NAPIMS, and NPDC liftings from the NAOC (AGIP) JV,” Fayemi explained.
He also stated that due to the absence of a new fiscal regime for the industry, the sum of $599.98 million was reported in the audit as underpayments to the federation from petroleum profit taxes and royalties by oil and gas companies as a result of the use of different pricing methodology by the government and the companies.
On audited crude oil and product losses, Fayemi said: “The report put the total value of crude oil losses to the federation, as reported by three JV companies in 2013, at $4.7 billion.”
This, he explained, represented an increase of 46 per cent over 2012.
“For downstream, COMD (Crude Oil Marketing Department of NNPC) records showed that out of 38.263 million barrels allocated to the refineries in 2013 for local refining, 2.401mb were lost through theft and vandalism.
“The report noted that the integrity of the pipelines network that supplies products has been severely battered over the years from damage by vandals,” added Fayemi.
The report also condemned the grant of pioneer status to oil and gas companies, saying it had greatly undermined the optimal collection of revenues due from petroleum profit taxes.
“The legal framework governing the pioneer status is a subsidiary legislation of the Company Income Tax Act (CITA). The CITA does not apply to oil and gas companies, as oil and gas companies are taxed under PPT,” Fayemi noted.
On metering, the report also noted that very little progress had been made on the implementation of enhanced measurement arrangements for both downstream and upstream hydrocarbon flows.
Similarly, Fayemi said N33.86 billion accrued to the federation in 2013 from the solid minerals sector, amounting to an increase of 7.6 per cent over the N31.5 billion generated in 2012
He said of this amount, payments from cement manufacturing companies accounted for N30.47 billion (89.98 per cent); construction companies – N1.98 billion (5.83 per cent); and mining and quarrying companies – N1.42 billion (4.19 per cent).
He explained: “The distribution of revenues among government agencies showed that N28.954 billion was collected by the Federal Inland Revenue Service (FIRS); N1.343 billion by the Mines Inspectorate Department (MID) and N704 million by the Mining Cadastral Office (MCO).
He said unilateral disclosures by companies not reconciled in the audit scope came to N2.861 billion while N748 million was reported as unilateral disclosures by government entities.

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Posted: at 24-05-2016 07:06 AM (7 years ago) | Upcoming

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Posted: at 30-05-2016 05:10 PM (7 years ago) | Addicted Hero