Fresh N2.23trn fraud uncovered in NNPC

Another whopping N2.23 trillion, consisting
$9.75 billion and N378.67 billion, accrued to
the Federation Account as earnings from
various aspects  of operations of the Nigerian
National Petroleum Corporation (NNPC) and
its subsidiaries covering the 2013 audit period
has been reported to have either been lost or
not remitted.
The revelation is contained in the latest audit
report of Nigeria’s oil and gas and the solid
minerals sector released by the Nigerian
Extractive Industries Transparency Initiative

(NEITI) released yesterday in Abuja by its
board Chairman and Minister of Solid
Minerals, Dr. Kayode Fayemi.
He said the audit, which focused on all
aspects of the extractive industries, showed
that a total revenue flow into the Federation
Account from the oil and gas sector in 2013
was about $58.07 billion, representing about 8
per cent decline when compared to the $62.9
billion realised in 2012.
Fayemi said the decline was attributed to the
drop in oil and gas sales following divestment
of federation equity in some Oil Mining Lases
(OMLs), crude oil losses as a result of
destruction of production facilities, pipelines
vandalism and crude oil theft.
“These outstanding payments were due from
unpaid consideration from the divested OMLs,
cash call refunds from NAPIMS (National
Petroleum Investment Management Services)
and NPDC (Nigerian Petroleum Development
Company) liftings from NAOC JV (Nigerian
Agip Oil Company Joint Venture), among
others.
“The sum of $5.966 billion and N20.4 billion
were recorded as revenue losses to the
federation and these losses were due to
offshore processing agreement, crude swap,
crude theft, among others.
The sum of $599.8 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,” he stated.
The report noted however that the continuous
allocation of 445,000 barrels per day to
refineries was not beneficial to the federation
as the refineries were operating at a capacity
of about 24 per cent.
It also noted that the Offshore Processing
Arrangement (OPA) and Crude for Product
Swap (CPS) arrangement introduced by the
NNPC to meet the shortfall in product supply
was not cost-effective as the value of the
products received minus all the costs incurred
was still less than the value of the original
crude. According to report, the loss to the
federation incurred through OPA and SWAP
came to $211.8 million and $306 million
respectively, adding that total value of crude
oil losses to the federation as reported by
three JV companies, in 2013 was put at $4.7
billion.
A total of N33.86 billion also accrued to the
federation from solid minerals sector in the
year under review. According to the report,
out of this, payments from cement
manufacturing companies accounted for
N30.47 billion  representing 89.98 per cent of
the figure, construction companies, N1.98
billion representing 5.83 per cent, mining and
quarrying companies N1.42 billion
representing 4.19 per cent.
However, the management of the NNPC could
not be reached for comment on the report.
The corporation’s Group General Manager,
Public Affairs, Garba Deen Muhammad, only
responded to calls from the reporter that “I
am in a meeting” and could not reply a text
message requesting the position of the
corporation on the report.