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You are here:Home>>Strategic Research & Analysis>>Okonjo-Iweala summons NNPC over unremitted $8.476b
Tuesday, 30 July 2013 13:47

Okonjo-Iweala summons NNPC over unremitted $8.476b

Written by John Ofikhenua - The Nation
Mrs Okonjo-Iweala Mrs Okonjo-Iweala Photograph: Ramin Talaie/EPA

Okonjo-Iweala summons NNPC over unremitted $8.476b NLNG dividends


NEITI unveils $1.7b exchange rate difference, N175.9b discrepancies


The Coordinating Minister of the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala yesterday summoned the Nigeria National Petroleum Corporation (NNPC) Group Managing Director (GMD), Andrew Yakubu, for the corporation’s refusal to remit a total of $8.476billion as reported by the previous Nigeria Extractive Industries Transparency Initiative (NEITI) audit.


She said the NNPC received $4.84billion as dividends and repayment from the Nigerian Liquiedfied Natural Gas (NLNG), which it was yet to remit to the Federation Account. Besides, the report revealed that the corporation received another $3.99billion without remitting it to the Federation Account.

The minister spoke at the public presentation of the the NEITI 2009-2011 oil and gas physical and audit report in Abuja. She asked the GMD to see her for private discussions on the financial issues. Okonjo-Iweala noted that after a robust discussion with the NNPC boss, she , as the Minister of Finance could afford to depend on the remittance for additional revenue.

Her words: “GMD, you are welcome back. I missed you because I was citing some of the words from NEITI and I said some of us are assembled here (the right people) because they pointed out some remittances from NLNG, amounting to over $8billion for a period of time-2006-2009, which we need to discuss.


“As the Minister of Finance, I don’t want it on the floor here. We need a very robust conversation about this money because I can depend on it as a Minister of Finance that this is additional revenue. “ The minister also drew attention of the stakeholders at the event to the issue of exchange rate.

She said that the areas of discussion with the corporation, included the exchange rate differences, which were not resolved in the declaration of revenue by NNPC. The NEITI chairman, Mr. Ledum Mittee said the NEITI report observed poor inventory management, which accounted for the difficulty in determining balances for imported products.

The report, said Mittee, noted, “NEITI also discovered a lingering worrisome situation where there is no agreed pricing methodology between NNPC and the companies for determination of fiscal values for royalty and PPT computations.


“In addition, the MoU for joint venture partners JV’s which expired in 2008 is yet to be renewed, yet the companies covered by JV are still using the expired MoU in their transactions with Nigeria, resulting in a difference between NNPC and covered entities positions over $1.7billion between 2009-2011, which are reported by the auditors as revenue losses to the Federation.”


On decline of the government crude oil productions, crude liftings and revenue accruable to the Federation, the report identified that there was inadequate funding of the JV operations.


It also noted that all refineries are operating below their name plate capacities resulting in a situation where 80 per cent of crude oil allocated to local refineries is exported for off-shore processing, crude oil and product exchange.


Mr. Andrew Yakubu Group Managing Director - NNPCr. A

ndrew Yakubu Group Managing Director - NNPC

The chairman explained, “the report has negative consequences on revenue accruable to the Federation Account. According to the report, “the combined loss to Nigeria in the Offshore Processing, Crude and Products Exchange within the period under review was over $866million.”


NEITI disclosed that Nigeria made total subsidy payments of N3trillion to importers of refined petroleum products.


It said: “This is made up of N1.4trillion fuel subsidy claims by the NNPC for the period 2009-2011 and a total of N1.60trillion paid to other marketers during the same period. The report observed that the disparity between subsidy claims paid from the Federation Account and that made by the Petroleum Products Pricing Regulatory Agency (PPPRA) was N175.9billion during the same period.”


Mr Mittee however said Nigeria recorded a total crude oil production of over 2.5billion barrels, an increase of 4.8 per cent over 2006-2008.

Meanwhile, the Group Managing Director of the NNPC has reiterated the commitment of the Corporation to work with the NEITI in the pursuit of its mandate in ensuring transparency and accountability in the oil and gas industry and the entire extractive industry in general.


John Ofikhenua -  The Nation

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