Billions of Dollars Lost to Sharp Financial Practices in the Oil and Gas Sector in 2013 – NEITI Boss

The Executive Secretary, Nigeria Extractive Industries Transparency Initiative (NEITI), Waziri Adio, said Nigeria lost billions of dollars in 2013 to non-remitted, underpaid monies in the oil and gas sector.

Adio stated this while briefing the Senate on the agency’s 2013 audit report on the oil and gas sector and solid minerals sector in Abuja on Wednesday.

He said that the country lost 5.9 billion dollars and N20 billion to inefficient practices and theft, among other things, and that 1.7 billion dollars was still owed to the federation from oil mining leases (OML).

Adio said that the country lost $5.9 billion and N20 billion to inefficient practices and theft, among other things, and that 1.7 billion dollars was still owed to the federation from oil mining leases (OML).

“In 2013 the country produced 800.3 million barrels and out of that, the country made $58.07 billion  and that represents an eight-per cent reduction from the $62.9 billion the country made in 2012. The issue is that there are some monies that were withheld, lost or underpaid for different reasons.

The first is in the category of the non-remitted, and the non-remitted amounted to $3.8 billion and N358 million.

The second category is the category of losses. Because of some inefficient practices and theft among other things, the country lost $5.9 billion and N20 billion.

N20 billion was lost because the Nigerian National Petroleum Corporation (NNPC) did not observe the 90 days credit grace.

Looking at the time value of money, if you calculate at 12 per cent interest, the country lost N20 billion.

Under the category of the under-accessed, the country lost $599.8 million.

When we look at the non-remitted, $1.7 billion is still being owed the federation for OMLS.

Those are the monies we have established that should have been paid to the federation and were not paid,” he said.

Adio also said that the audit report revealed that the NNPC divested some monies that should have been transferred to the federation account.

“NNPC, between 2010 and 2011, divested eight assets that belong to the federation to its upstream subsidiary, Nigerian Petroleum Development Company (NPDC).

So, NNPC divested 55 per cent of the shares being held on behalf of the federation to the NPDC.

These eight OMLS are valued at $1.8 billion dollars by Department of Petroleum Resources (DPR).

NPDC paid only $100 million out of the $1.8 billion, meaning there is an outstanding of $1.7 billion and even the $100 million was paid two years after.

What this means is that NNPC lifted oil on behalf of NPDC not on behalf of the federation in spite of the fact that NPDC has not fully paid for those assets,” he said.

The NEITI boss said that the audit report revealed infrastructural deficit in the oil and gas sector, revealing that lack of metering among other things, had serious implication on the country’s revenue and security.

He said that though the country could account for exports, it could not say authoritatively the quantity of oil produced. He attributed the losses incurred in the sector to systemic and governance issues that needed to be addressed.

After the briefing, the Senate set up a nine-member ad hoc committee to examine the financial losses and leakages contained in the report.

In his remarks, the President of the Senate, Dr Bukola Saraki, announced Chairman, Committee on Petroleum (Downstream), Senator Jibrin Barau, as chairman of the ad hoc committee.

He said that the “outrageous” amount of money lost in the oil and gas sector as contained in the report will be taken seriously by the National Assembly.

According to him, the ad hoc committee will be saddled with the responsibility of scrutinizing the financial loss and leakages to government and come up with measures to tackle the problem.

“In view of the enormity involved, the general opinion is that we will set up an ad hoc committee with the responsibility of addressing them. The terms of reference are that the committee is to re-examine the financial processes and the fiscal audit report of the NEITI, the financial loss and leakages to government and all its ramifications. The others are remedial measures and sanctions where necessary, and of course and more importantly, any relevant legislative action that will be required to block all forms of leakages,” Barau said.

The members of the committee are Senator Tayo Alasoadura, who is the Chairman, Petroleum (Upstream); Senator Bassey Akpan, Chairman, Committee on Gas and Senator John Enoh, Chairman, Finance Committee.

Others are Senator Chukwuka Utazi, Chairman, Anti-Corruption Committee; Senator Kabir Marafa, Senator Solomon Adeola and Senator Bukar Mustapha.

The committee is expected to complete its assignment and report back to senate in four weeks.