By Etuka Sunday
Nigeria Extractive Industries Transparency Initiative (NEITI), yesterday in its 2013 Audit Report for the Oil and Gas Industry, put the total revenue losses of the Federal Government at N1.208 trillion.
The report also revealed a total sum of N1.115 trillion as outstanding revenues from NNPC and its sub-units in 2013.
The report further revealed a sum of $599.89 million as under-assessments/under-payments of 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 because of the absence of a new fiscal regime.
Giving the breakdown, the Minister of Mines and Still Development, who doubles as the Chairman of the National Stakeholders Working Group (NSWG), which is the Board of NEITI said:
“the audit revealed that Nigeria Liquefied Natural Gas (NLNG) 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.”
According to the report, the 2013 figure brought 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.
On Cash Call payments on the Divested OMLS, the audit disclosed that “$536.92 million was paid in 2013 by NAPIMS for the four OMLs in NAOC JV that had already been assigned to NPDC since December 2012.
In addition, the proceeds of the Crude Oil lifted by NNPC from the said OMLs were also paid into the account of NPDC. However, NAPIMS provided evidence of refund of $389 million by NPDC in 2014, leaving an outstanding balance of $147.86 million.
According to the report:
“The refund was not paid by NAPIMS to the Federation. Similarly, the audit uncovered that cash calls were paid by NAPIMS on the assets divested to NPDC from the Shell JV. Refund of $35.12million was made on OML 42, but there is no evidence of transfer to the Federation. Review of NAPIMS documents also indicated request for outstanding refunds on OML 26 ($414 and N249) and on OML 42 (N2.17bn.).”
The report underlined that the continuous allocation of 445, 000 barrels per day to refineries was not beneficial to the Federation, because the refineries were operating at a capacity of about 24%.
In order to meet the shortfall in product supply, NNPC introduced the Offshore Processing Arrangement (OPA) and Crude for Product Swap arrangement.
The audit stated that these transactions were not cost-efficient as the value of the products received minus all the costs incurred was still less than the value of the original crude.
The loss to the Federation incurred through OPA and SWAP came to $211.8 million and $306 million respectively, both totalling $518 million.
According to the audit, N1.3 trillion was processed as subsidy payments for NNPC and the independent marketers in 2013.
The report however, recommended that the Federal Government should conduct a comprehensive investigation into the divestments of Federation assets by NNPC to NPDC.
It said, NNPC and its sub-units should refund outstanding payments to the Federation. Discontinue alternative importation arrangements and limit it to export of crude and import of refined products; abide by Federal Government Financial Regulations and always comply with the 90-day credit period.
It said, Government should investigate the status of NLNG dividends.
The report said, NNPC, DPR, FIRS, OAGF and CBN should prioritise fixing remedial issues identified in their operations.