Nigeria lost over 146 million barrels of crude oil estimated at about $11.794 billion (about N1.852 trillion) to theft, deliberate sabotage, and pipeline vandalism between 2009 and 2011, the latest audit report by the Nigerian Extractive Industries Transparency Initiative (NEITI) released on Monday revealed.
NEITI Chairman, Ledum Mitee, who was speaking at the public presentation of reports, which covered the audit of oil and gas industry for the period 2009 and 2011, and the solid mineral industry for the period 2007 and 2010, said the amount lost represented about 7.7 per cent of about $143.5 billion (about N2.253 trillion) realised as total revenue from equity crude oil sale, royalty, signature bonuses and taxes during the period.
Mr. Mitee said the figure captured only those incidents reported by three multinational oil companies operating in the country during the period, including Shell Petroleum Development Company (SPDC), Chevron Nigeria Limited (CNL) and Nigerian Agip Oil Company (NAOC). The reports presented by the Minister of Finance and Coordinator for the Economy, Ngozi Okonjo-Iweala, showed that the Nigerian National Petroleum Corporation (NNPC), the Petroleum Products Pricing Regulatory Agency (PPPRA) and two other agencies are to refund over N8.138 billion to the Federation Account as fuel subsidy over-recovery collected from petroleum products marketers between 2009 and 2011.
The figure is made up of about N4.423 billion collected from some marketers, which is yet to be remitted to the Federation Account by the PPPRA, while NNPC and two other companies are yet to refund N3.715 billion collected for a similar purpose during the period. In addition, Mrs. Okonjo-Iweala said the NNPC was also yet to reconcile the remittance of another N8.62 billion it received, including dividend payment by the Nigeria LNG Limited, which is yet to be remitted to the Federation Account since 2009.
The report presented in Abuja, is the first comprehensive audit of the country’s extractive industry by NEITI since Nigeria signed on to Extractive Industries Transparency Initiative (EITI) principles in 2003. In the latest report, Mr. Mitee said Nigeria’s total crude oil production increased by 4.8 per cent over the 2006 figure to 2.5billion barrels in 2008, made up of 780.9 million barrels in 2009; 894.5 in 2010, and 866.2 million barrels in 2011.
The report showed that contrary to the claim that about N3 trillion (made up of N1.4trillion to the NNPC and N1.6trillion to other fuel marketers) was paid to importers of refined petroleum products as subsidy, there was a disparity of about N175.9billion between claims paid from the Federation Account and disbursements by the PPPRA during the period.
Similarly, while the Office of the Accountant General of the Federation (OAGF) reported a total subsidy payment of N2.825 trillion, the PPPRA said it disbursed N3 trillion to marketers, apart from an un-reconciled difference of N1.04 billion reported following disagreements by some marketers over the N2.56 billion ascribed to them by the PPPRA in 2010, against N1.52 billion recorded for them as payment. In addition, the report noted that subsidy payments of N198 billion through NNPC in 2009 increased to N416 billion in 2010 and N786 billion in 2011, with subsidy payment through PPPRA increasing from N208 billion in 2009 to N278 billion in 2010 and astronomically to N1.12 trillion in 2011.
Noting a decline in government crude oil productions, crude lifting, and revenues accruable to the Federation Account, the report attributed it to inadequate funding of Joint Venture operations, and recommended an urgent review of the Modified Carry Arrangements in the context of government adequate funding of JV operations.
On refineries, the report noted that the industry suffered a combined loss of over $866 million (about N135.962 billion) to the Federation Account as a result of over 80 per cent of crude oil allocated to local refineries being exported abroad for off-shore processing, crude oil and product exchange, because all the four refineries were operating below their installed capacities. On the controversial OPL 245, the report noted the lack of transparency, accountability and due process, particularly in the Bid Process and Signature Bonus payment, pointing out that while Shell claimed it paid about $207 million as Signature Bonus on the oil block, in addition to $2.004 million paid earlier, the Department of Petroleum Resources (DPR) was unable to provide additional information to contradict the claims.
The Report demanded the urgent review of the existing agreements in the industry with the JV companies to reverse the loss of over $1.7 billion between 2009-2011 as a result of relying on an Memorandum of Understanding that expired in 2008 in transactions with Nigeria, resulting in a difference between NNPC and covered entities positions reported by the auditors as revenue losses to the Federation. Other recommendations included the need to set up a committee to review and agree on a new fiscal regime and governance framework for the oil and gas industry and define clear roadmap for the implementation, while pushing for urgent passage of the Petroleum Industry Bill (PIB) currently before the National Assembly.
Ms, Okonjo-Iweala, who presented the reports, reiterated the commitment of President Goodluck Jonathan administration to uphold transparency and accountability in the extractive industry, adding that the value of the reports was not in their presentation, but in the implementation of their recommendations. In her presentation, NEITI Executive Secretary, Zainab Ahmed, said the quality of the two reports by two indigenous consultancy firms, Sada Idris & Co, for oil and gas, and Haruna Yahaya & Co. for solid minerals, was a confirmation of the capacity of indigenous firms to compete favourably given the right environment and level playing ground.
The Minister of Mines and Solid Minerals, Sada Mohammed, expressed delight at the report, saying his ministry had already constituted a standing committee to review the issues about revenue generation from the sector and ensure that the recommendations were understood and adequately implemented.