NNPC Says Audited Accounts Up to Date, Fails to Make Them Public  

•Corporation’s spokesman: We’ll consider making them public
•Work to commence soon on $2.8bn AKK gas pipeline, project comes under fire
By Chineme Okafor in Abuja
The Nigerian National Petroleum Corporation (NNPC) announced yesterday that it has completed the outstanding audit on its financial statements from the years 2011 to 2016, but it failed to make them public.
The audit backlog, the state-run oil firm said in statement by its spokesman Ndu Ughamadu, has since been formally approved by the NNPC board in line with extant laws governing the operations of the national oil company.
But a visit to the corporation’s website showed that the audited accounts for the six years in question had not been uploaded.
The statement was also silent on if the corporation’s accounts and auditor’s reports had been presented to the Federal Executive Council (FEC) for approval in compliance with the NNPC establishment Act.
The group’s audited financial statement for 2017 is also expected to be ready not later than June 30, 2018, as stipulated by the Act.
NNPC has been publishing its unaudited financial report, which THISDAY in 2016 challenged the former Group Managing Director of NNPC and Minister of State for Petroleum Resources Dr. Ibe Kachikwu, to audit and make public.
When contacted on the issue, Ughamadu said the NNPC Act does not require the corporation to make its audited accounts public but it will consider doing so and publishing them on the NNPC website.
Providing details, the NNPC spokesman said the Chief Financial Office/Group Executive Director, Finance & Accounts of the corporation, Isiaka AbdulRazaq, said the delivery of the audited financial statements would help foster better relations with stakeholders and further promote transparency and accountability in the corporation.
AbdulRazaq said the drive to achieve the clean slate dated back to August 2015, when the current management of the finance & accounts directorate took over the mantle of leadership and inherited 65 unaudited financial statements for NNPC group corporate and its subsidiaries, covering 2011-2014.
“There were, undoubtedly, challenges that led to the backlog which may have been beyond the control of the previous managements. However, the important factor was not to look to the past.
“We saw an opportunity to address the problem and resolved to clear the arrears in the shortest possible time,” the CFO said. 
Moving swiftly, he said the corporation’s management constituted a Project Steering Committee (PSC) under the chairmanship of AbdulRazaq, which met on a weekly basis with the auditors and all relevant stakeholders to identify and isolate key challenges and give them priority attention.
“With this approach, management achieved the first step of concluding the audit of the 2011-2012 financial positions and presented same to the board in 2016 and in recognition of that modest achievement, the NNPC board further mandated management to clear the remaining outstanding reports for the years 2013-2016 and the result today is the delivery and board approval of the audited group financial statements as at 31 December 2016,” he said.
Also, Ughamadu said the Managing Director of the Nigerian Pipeline and Storage Company (NPSC) Mr. Luke Anele has revealed plans by the company which was created out of the old Pipelines and Products Marketing Company (PPMC), to embark on a comprehensive audit of over 5000km of petroleum products and crude oil pipelines under its watch.
According to Anele, the project which has already been approved by NNPC’s management, is to be executed by the National Engineering and Technical Company (NETCO), an upstream subsidiary of the NNPC Group.
“It covers the conduct of integrity tests on crude pipelines, the products pipelines and our depots, with a special emphasis on refinery attached depots and refinery evacuation lines,” Anele said.
The NPSC MD said the outcome of the project would guide the company in arriving at informed decisions and enable appropriate strategies in the planned private-public partnership arrangement for the pipelines.   
NNPC also said yesterday that work on its 40 inch, 614km Ajaokuta-Kaduna-Kano (AKK) gas pipeline and stations would commence in a matter of weeks.
It said the project would cost $2.8 billion and will be financed through a contractor-financing model.
However, an energy expert, Mr. Dan Kunle, has described the gas pipeline project as valueless to the Nigerian economy.
A statement by Ughamadu said work on the project would start soon, following NNPC’s execution of the contract agreements for the engineering, procurement, construction, commissioning, and financing of Lots 1-3 of the project.
He explained that measures had been put in place for the commencement of the project which NNPC described as the single biggest gas pipeline project in the history of Nigeria’s oil and gas industry.
NNPC noted that the project would be completed in 24 months, adding that the pipeline will enable gas supply and connectivity between the eastern, western and northern parts of Nigeria, which is currently not in existence.
It also stated that it would facilitate gas supply and utilisation to key commercial centres in northern Nigeria and ensure that power generation and industrial growth are achieved there.
NNPC provided further details on the contract agreement it signed with the consortia involving indigenous and Chinese entities under a 100 per cent contractor-financing model.
It said Lot 1 with a total length of 200km stretching from Ajaokuta to Abuja was awarded to the OilServe/Oando Consortium at a contract value of $855 million.
Lot 2, it said, has not been awarded yet but would cover a stretch of 193km from Abuja to Kaduna and will be built at a cost of $835 million.
Lot 3 running from Kaduna to Kano, covering 221km, was awarded to the Brentex/China Petroleum Pipeline Bureau (CPP) Consortium and would cost $1.2 billion.
NNPC explained that FEC approved the project on December 13, 2017.
But in his appraisal of the project, Kunle told THISDAY that based on current scenario in the global gas market, the project was uneconomical and would leave Nigeria with more sovereign debts.
He pointed out that most industries like gas-powered electricity generation plants in the southern part of the country where gas is readily produced do not have enough gas for their operations, and as such pushing gas up north through the pipeline would be uneconomical.
Kunle also called on the corporation to open up on the terms of the contractor-financing agreements that it had signed with the different consortia.
He said he wanted NNPC to show Nigerians the details of the construction agreements it signed with them, adding that Nigeria could end up with a huge debt if it failed to meet the sovereign guarantees required under the agreements.
“This project has become a bad project. We missed it a long time ago, and the only way to justify gas pipeline from Ajaokuta to the upper north of Nigeria is if you have excess gas in the southern gas province that you don’t know what to do with it.
“As of today, all the power plants in the south don’t get adequate gas supply. The two power plants in Ajaokuta (Geregu I & II) where the line will take off from are not getting enough gas to operate. Even Dangote Cement (at Obajana) does not get enough gas,” he stated.
“This project is already belated. Let us even look at the past: the Kaduna refinery which was built in the past has not been profitable. Its CAPEX, that is the money used to build it, has not been recovered.
“So, some of this projects that we think we must politically induce to our zones are not economically justifiable anymore because economic theory has proved that heavy industries must be located where you have a comparative and competitive advantage of raw materials and all other supporting enablers,” Kunle added.