CRUDE OIL LIFTING SALES PROCEEDS

NNPC failed to remit $49.8bn, Sanusi alleges

An online news medium, SaharaReporters, reported on Monday that the Governor of the Central Bank of Nigeria, Mr. Lamido Sanusi, had accused the Nigerian National Petroleum Corporation of failing to remit $49.8bn (about N8tn) to the Federation Account between 2012 and July this year.

The medium quoted Sanusi as complaining to President Goodluck Jonathan via a letter about the continuing refusal of the NNPC to honour its legal obligations, including failure to remit the said amount, which it said represented 76 per cent of the value of crude oil lifting during the period.

The complaints are contained in the letter to the President dated September 25, 2013.

Sanusi reportedly wrote, "Our analysis of the value of crude oil export proceeds based on the documentation received from pre-shipment inspectors shows that between January 2012 and July 2013, NNPC lifted 594,024,107 barrels of crude valued at $65,332,350,514.57.

"Out of this amount, NNPC repatriated only $15,528,410,098.77, representing 24 per cent of the value. This means the NNPC is yet to account for, and repatriate to the Federation Account, an amount in excess of $49.804bn of the value of oil lifted in the same period."

Drawing attention to an attached table of analysis of the crude oil lifting and repatriations as prepared by the CBN, the governor noted that the failure of the NNPC to repatriate the amounts constituted not only a violation of constitutional provisions but also the country's foreign exchange and pre-shipment inspection of export laws.

Also drawing attention to previous occasion in which he had expressed concern about what appeared to be shortfalls in remittances to the Federation Account in spite of the strong recovery in the price of oil, Sanusi said a point of departure ought to be to insist that the NNPC accounted fully for all proceeds that were diverted from its accounts with the CBN and the Federation Account.

He further wrote, "As an indicator of how bad this situation has become, please note that in 2012 alone, the Federation Account received $28.51bn in petroleum profits and related taxes, but only $10.13bn from crude oil proceeds.

"In the period January-July 2013, the corresponding figures are $16.65bn and $5.39bn, respectively.  This means, Your Excellency, that in the first seven months of the year, taxes accounted for 76 per cent of the total inflow from this sector, while NNPC crude oil proceeds accounted for only 24 per cent."

Sanusi, therefore, recommended to the President to require the NNPC to provide evidence for disposal of all proceeds of crude sales diverted from the CBN and Federation Account; investigate crude oil lifting and swap contracts, as well as the financial transactions of counter-parties for equity, fairness and transparency; and authorise prosecution of suspects in money-laundering transactions, including but not limited to Bureaux de Change, who were unable to account for hundreds of millions of dollars.

When contacted by The PUNCH for the confirmation of the story, the CBN spokesperson, Mr. Ugochukwu Okoroafor, said he was not aware of the said letter, adding that correspondences between the President and the central bank governor were confidential matters between the two of them.

$49.8bn: NNPC Refutes Sanusi's Claim

In a statement signed by the General Manager, Media Relations Department of the NNPC, Dr. Omar Farouk Ibrahim, and made available to the press, the Corporation clarified that the allegation is borne out of misunderstanding of the workings of the oil and gas industry and the modality for remitting crude oil sales revenue into the Federation Account.

"For the avoidance of doubt, it needs to be stated that the figure of 594.024 million barrels of crude oil given by the CBN as the total crude oil lifting for the period of January 2012 to July 2013 does not represent the correct picture of crude oil lifting for the period. From our records, the correct figure is 618.55m barrels. This shows that the CBN understated the actual crude lifting by 4.13%," Dr. Ibrahim stated.

He explained that revenue from crude oil liftings are in various categories, namely Equity Crude; Petroleum Profit Tax, Royalty, Third Party Financing and the Nigerian Petroleum Development Company, NPDC. Revenues from each of these categories are statutorily collected by different agencies of the government. The NNPC collects only one of the aforementioned categories, namely Equity Crude. Petroleum Profit Tax is collected by the Federal Inland Revenue Service, FIRS, Royalty goes to the Department of Petroleum Resources, DPR, Third Party financing goes for Research, Development, Program and Satellite fields Development, while NPDC goes to NPDC for upstream development.

While NNPC pays proceeds from Equity crude directly to the Federation Account with the CBN, the FIRS and DPR pay PPT and Royalty respectively into the Federation Account with the CBN. The sum total of these proceeds make up the alleged unremitted revenues, Dr. Ibrahim stated.

"The 24% of total crude oil revenue receipts which the CBN governor is reported to have acknowledged that NNPC remitted represents the proceeds from the equity lifting which NNPC is directly responsible for. The alleged unremitted 76% was paid to the agencies that are statutorily empowered to receive them for onward remittance into the Federation Account", Dr. Ibrahim explained.

He stressed the need for institutions of the Federal Government and top government functionaries to seek understanding of issues that are not clear to them from relevant agencies rather than go public with misleading information that is capable of creating public disaffection. He expressed NNPC's availability at all times to meet with all relevant stakeholders to clarify issues.

Dr. Omar Farouk Ibrahim

General Manager, Media Relations Dept. NNPC Abuja.

10th December, 2013

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