The 2013 oil and gas and solid minerals sectors independent audit commissioned by the Nigeria Extractive Industries Transparency Initiative (NEITI) has uncovered a total of $3.8 billion and N358.3 billion revenue which the Nigerian National Petroleum Corporation (NNPC) and its sub-units failed to remit to the federation account in 2013.
This is even as the report disclosed that the total revenue flows to the federation from all sources in the oil and gas sector, such as crude oil sales, taxes and royalties in 2013 was $58.07 billion, while N33.86 billion accrued from the solid minerals sector in the same year.
According to the report, the revenues realised from the oil sector in 2013 represented a decline of 8 per cent when compared with the $62.9 billion realised in 2012. This decline was attributed to the drop in oil and gas sales following divestment of federation equity in some Oil Mining Leases (OMLs) and crude losses as a result of destruction of production facilities, pipeline vandalism and oil theft.
The report disclosed that total crude oil production in 2013 was 800,488,000 barrels, made up of production from all sources and various agreements, while the total volume of crude oil actually lifted was 800,338,000 because not all volume produced was lifted.
Meanwhile, the report which was presented in Abuja yesterday by the Chairman of the NEITI Board, Dr. Kayode Feyemi, indicated that the outstanding unremitted revenues are from payments due from unpaid consideration from the divested OMLs, cash call refunds from National Petroleum Investment Management Services (NAPIMS), and Nigeria Petroleum Development Company (NPDC) liftings from Nigeria Agip Oil Company (NAOC) Joint Venture (JV) among others.
A breakdown of the unremitted revenue include the sum of $1.289 billion paid as dividend, interest and loan repayment for 2013 by the Nigeria Liquified Natural Gas (NLNG), the report stated.
“The NNPC acknowledged receipt of this amount but did not remit it to either the federal government or federation,” the report noted, adding 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 federation account.”
The breakdown further include $536.92 million paid in 2013 by NAPIMS for four OMLs in NAOC JV assigned to NPDC in December, 2012, in addition, proceeds of crude oil lifted by NNPC from the said OMLs paid into NPDC account.
“However, NAPIMS provided evidence of a refund of $389 million by NPDC in 2014, leaving an outstanding balance of $147.86 million. The refund was not paid by NAPIMS to the federation,” the audit revealed.
Similarly, the audit uncovered that cash calls were paid by NAPIMS on assets divested to NPDC from the Shell JV. It observed that refund of $35.12 million was made on OML 42, but there is no evidence of transfer to the federation, even as a review of NAPIMS documents also indicated request for outstanding refunds of $414 million and N249 million on OML 26, and N2.17 billion on OML 42, the report added.
Furthermore, the report showed that the federation lost the sum of $5.966 billion and N20.4 billion to Offshore Processing Agreement (OPA), crude swap, crude theft, among others, while another $599.98 million was lost as a result of under-assessment /underpayments of petroleum profit taxes and royalties by oil and gas companies in the year under review, due to the use of different pricing methodology by the government and companies because of the absence of a new fiscal regime.
Crude oil and product losses to the federation as reported by the three JV companies in 2013 was put at $4.7 billion, representing an increase of 46 per cent over that of 2012.
“For downstream, records showed that out of 38.263 million barrels of crude allocated to the refineries in 2013 for local refining, 2.401 million barrels were lost through theft and vandalism,” the report pointed out, adding that the integrity of the pipelines networks that supply products has been severely battered over the years from damages by vandals.
The audit which covered 41 oil and gas producing companies and sixteen government agencies, also revealed that a total of N1.3 trillion was processed as petrol subsidy payments for NNPC and other oil marketers in 2013.
Other key findings of the audit include the fact that gas flaring penalties reduced from $24.58 million in 2012 to $18.475 million in 2013, due to reduced gas flaring and increased gas utilisation, while under assessment in royalty payments decreased from $465 million fined 30 companies in 2012 to $168.3 million, for 16 companies, in 2013, representing a decrease of 64 per cent.
The report further recommended that a comprehensive investigation be conducted into the divestment of assets to NPDC, while the NNPC should discontinue alternative importation arrangements and limit itself to export of crude and import of refined products.
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