The federal government has lost approximately $518 million to oil swaps and Offshore Processing Agreements (OPAs) in 2013 due to inefficiencies in the operation of the Nigerian National Petroleum Corporation (NNPC) and its subsidiaries.
The Economic and Financial Crimes Commission (EFCC) would soon be involved in investigating and prosecuting major culprits for appropriate sanctions over the revenue losses.
The Executive Secretary of the Nigeria Extractive Industries Transparency Initiative (NEITI), Mr. Waziri Adio, made the disclosures in an interview with the Economic Confidential, an intelligence magazine.
He said the federation lost $211.88million to crude for product SWAP, and $306.16 million of OPA, totaling $518 million.
Adio, who spoke against the backdrop of the just released 2013 Oil and Gas Industry Audit report, noted that the corporation and its subsidiaries also withheld some of the monies due to government.
“For instance, they withheld $3.8billion and N358 billion respectively. Now let us break it down this way. If you remember NNPC divested some of its interests in Shell Joint venture about eight Oil Mining Leases(OMLs) to Nigeria Petroleum Development Company (NPDC), $1.29 billion from NLNG; N354bn from unpaid domestic crude debt; N3.98 billion from subsidy over-recovery in 2012 and N2.17 billion from cash-call refunds,” he said.
Furthermore, he said the report discovered $4.7 billion from theft and vandalism in 3 JVs—Shell, Agip and Chevron; and N20bn from not observing 90-day credit time value of money at 12per cent.
The issues captured, according to him, still need further elaboration.
“Now, NNPC Divested 55per cent in eight assets (OMLs) in Shell JV: OMLs 4, 26, 30, 34, 38, 40, 41, and 42. They were valued by DPR at $1.8 billion, but according to Price Waterhouse Coopers(PWC), they should have been valued at $3.4 billion, given that Shell got $2.72billion for its 45per cent interest in those same assets. This then mean that Shell’s 45per cent valued at 47 per cent higher than Federation’s 55 per cent.
“Let us look at it another way. Given the disparity between $3.4 billion and $1.8 billion, assets valued at 47per cent loss or discount. But even with discount or loss, NPDC paid only $100million, leaving an outstanding of $1.7 billion. This means that NPDC paid only 5.6 per cent of the discounted value of $1.8 billion, and three per cent of actual value of $3.4 billion and yet enjoyed all the benefits, as oil from those assets lifted on behalf of NPDC and not the federation,” he said.
Speaking on the four assets under the Nigeria Agip Oil Company(NAOC) JV similarly divested; OMLs: 60, 61, 62, and 63, Adio noted that no valuation was done on those 4 OMLs; neither consideration paid, and yet oil was lifted on behalf of NPDC, not the federation.
He said despite the fact that 12 OMLs in the Shell and Agip JVs divested to NPDC, and not fully paid for or not paid for at all, NAPIMS paid cash-calls on some of these OMLs, namely, $536million paid as cash call on the 4 OMLs from Agip JV, $389million refunded to NAPIMS, but refund not remitted to federation, apart from an outstanding of $147.8million not paid at all.
“There are also cash-calls also paid on some the divested OMLs from the Shell JV, which include $35.12million refunded to NAPIMS, but refund not remitted to Federation Account. Records from NAPIMS showed request for refund of $414,000 and N249, 272,000 on OML 25 apart from request for refund of $2.17 billion on OML 42. You can’t imagine that these requested refunds were not made as at close of audits,” he said.
Asked to explain the status of the Nigerian Liquefied Natural Gas (NLNG) dividends, the NEITI boss said NLNG paid $1.28 billion to NNPC, and NNPC acknowledged receipts, but the money not remitted to the federation. Again between 2005 and 2103, NLNG paid $12.9 billion to NNPC, NNPC acknowledge receipts, but not remitted to federation.
“If you consider losses to under-assessment/under-payments, you will discover $599.8million was lost due to contested pricing methodology. Out of this amount $432.5million was lost to under-assessment for royalties, and $168.3million was lost to under-assessment for Petroleum Profit Tax (PPT).”
According to him, “From the report we discovered that N1.3 trillion was processed as petroleum subsidies for 2013. This you can see is 34 per cent higher than the N970billion appropriated for fuel subsidies in 2013. A careful look at the figures reveal that it is 26 per cent of the N4.98 trillion of 2013 federal budget; 30 per cent higher than total budget for education, health, water, and SUREP in 2013 budget,” he said.
Adio further disclosed that NEITI is engaging the EFCC continue the investigations and sanctions on the culprits.
He said: “The NEITI Act criminalises some behavior and even put sanctions either in terms of fines and jails terms or both but did not give us powers to prosecute. That is why we are engaging the EFCC.
“The acting Chairman of EFCC has pledged to set up a joint investigative team from both sides to come together and look at possible infractions.”
