US$230 million Nigerian oil proceeds unaccounted for

The Chairman of the Economic and Financial Crimes Commission (EFCC), Mallam Nuhu Ribadu, however, vowed to go through the reports so that defaulters would not go unpunished. In the reports prepared by the Hart Group for the NEITI, covering the period 1999 to 2004, some findings were identified as the bane of Nigerian oil sector. According to the report, a major lapse were losses and unaccounted for proceeds of oil sales. For instance, it revealed that around ten million barrels of crude were lost between the flowstations and the loading terminals over the period of five years (1999-2004). The discrepancies were, however, more in the figures of payment being claimed by the oil companies and the CBN, which are completely different. In some cases, the CBN claimed to have received what the oil companies never paid. The CBN, according to the audit report, claimed it received $55 million in 1999 less than what the oil companies allegedly paid into its accounts. But a year later in 2000, CBN had a ‘surplus’ of $90 million, which the oil companies, from their accounts, did not pay. In 2001, the CBN account revealed $120 million less than allegedly receipted from the oil companies. In 2002, the figure rose to $250 million. In 2003, the less receipted figure dropped to $10 million and $25million less in 2004. The said discrepancies, which generated heated debate among various participants at the two-day NEITI North-Central Road Show in Abuja yesterday, could not be easily explained away by the audit firm which presented the report (Hart Group), and officials of both CBN and oil companies who attended the forum. Among other lapses identified in the report were, lack of volume reconciliation in some areas where, according to Mr. Chris Nurse of Hart Group, the amount of crude from the flow stations significantly differs from what eventually gets to the crude terminals. Others are: l Weak accounting system and control, which creates an enabling environment for abuse. l Weakness in the oversight/regulatory agencies. l Losses and unaccounted for proceeds of oil sales. l Discrepancy between the Crude Oil Marketing Department (COMD) figures used for financial audit and the Department of Petroleum Resources (DPR) figures. l Use of different approaches to measure and report volumes of royalty and Petroleum Profits Tax (PPT) calculation process. l Differences in data received from Nigeria National Petroleum Corporation and National Petroleum Investment Management Services (NNPC-NAPIMS) and multinational oil firms. The disaggregated audit reports (Financial, Process and Physical) have annexes running into more than 500 pages, have already been posted on the NEITI website. In her opening remark yesterday, Minister of Solid Minerals and Chairperson of NEITI, Mrs Obiageli Ezekwesili, dwelt on the issues of licensing, project approval, production, gas, export lifting, taxation and royalty, NDDC, gas marketing, crude marketing, refineries, product importation and financial overview She identified limitations and lapses in some of the activities of such government organisations like the National Petroleum Investments Management Services (NAPIMS), CBN, Department of Petroleum Resources (DPR), and the Federal Inland Revenue Service (FIRS) which she singled out for praise for its decision to use the report for internal self-correction. Ezekwesili re-echoed the current administration’s ultimate aim of establishing a climate of preventive transparency in Nigeria,. She called for partnership between the civil society, government and the private sector in a bid to entrench transparency and accountability across all sectors of the economy. She enjoined Nigerians to read the detailed reports so that they can make informed commentaries that would ensure most of the issues within the sector are addressed. In his own remark, chairman of the session, Ribadu, who promised to examine the NEITI report critically in order to find ways to identify the offenders and hold them accountable, echoed her comments. NNPC Group Managing Director, Mr Funso Kupolokun, said he was happy with the report, which he said will disabuse the minds of the Nigerian public about the corporation. Meanwhile, as part of measures to stem the rising agitations in the oil producing areas, the Federal Government yesterday said it would subject the accounts and operations of the Niger Delta Development Commission (NDDC) to the scrutiny of the Nigerian Extractive Industry Transparency Initiative (NEITI). The audit would look into the income and transactions of the commission including how various companies have faired in their mandatory contributions to the development initiative in the region. Ezekwesili shortly after the presentation of the final NEITI-sponsored audit report on the country’s oil and gas, that the transparency agency intends to make the NDDC probe a key focus of its 2005 audit exercise. ‘

April 2006
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