NNPC Owes Federation Account N5trn – FAAC

Share the joy

The Federation Accounts Allocation Committee (FAAC) has disclosed that the Nigerian National Petroleum Corporation (NNPC) is indebted to it to the tune of N5 trillion over the last five years.

The debt, according to FAAC, was incurred between January 2011 and April 2016 and represents the outstanding gross revenue from the sales of domestic crude, which were not remitted to the federation account, but withheld by the national oil corporation.

The latest figure on NNPC’s indebtedness to FAAC is contained in the special report prepared by FAAC’s post mortemsub-committee, a copy of which was obtained over the weekend.

In the report, the committee noted that, while it had consistently directed NNPC to remit all revenues realised from domestic crude oil sales into the federation account, the corporation had always withheld part of the sales proceeds.

The post mortem subcommittee expressed concern about the lingering issue of unremitted crude oil sales to federation account by NNPC and demanded that a fresh forensic audit should be conducted on the accounts of the NNPC.

The new forensic audit, it said, should cover the period between January 2011 and December 2015.

The committee urged the Minister of Finance, Mrs. Kemi Adeosun, to initiate the proposed forensic audit to ascertain the true state of the unremitted revenue.

In the report presented to FAAC at its recent session, the sub-committee noted that: “Since the issue of outstanding (remittances) had lingered for so long and the need to ensure that all accrued revenues are paid into the federation account, the sub- committee resolved that a new forensic audit on the NNPC covering the period of January 2011 and December 2015 should be initiated and, if already in place, the Hon. Minister of Finance/ chairman of FAAC should help to facilitate the speedy completion of the audit so as to ascertain the actual amounts owed by the NNPC.”

A peep into the report showed details of NNPC’s indebtedness to the federation account as follows: Between January and December 2011, NNPC was allocated crude volume in barrels totalling 170,632,246 valued at N2.7 trillion, while it made payment in the sum of N1.8 trillion, leaving a gross outstanding revenue of N844.9 billion.

Similarly, between January and December 2012, the corporation was allocated a total of 160,173,448 barrels of crude oil at a purchase price of N2.5 trillion and it made a payment of N1.6 trillion into federation account, leaving an outstanding debt of N1.1 trillion.

Also, between January and December 2013, NNPC got 156,192,175 barrels of crude oil valued at N2.6 trillion and made payment of N1.5 trillion leaving an outstanding of N1.1trillion. Between January and December of 2014, the corporation was allocated crude volume of 158,206,819 translating to N2.6 trillion, while it paid N1.4 trillion to federation account, leaving an outstanding balance of N1.1 trillion; between January and December 2015, NNPC got crude oil volume of 157,889,648 amounting to N1.6 trillion, while it remitted N987.5 billion into the federation account, leaving an outstanding balance of N689.1 billion.

It was observed that in summary, the total debt, which the NNPC owes the federation within the period under review, amounted to N4.9 trillion. The second tranche of the corporation’s debt to the federation account covers transaction made in 2016. According to the debt analysis report, in January 2016, a total of 12, 074,800 barrels of crude was allocated to the NNPC at the cost of N112.2 billion, but the corporation made a net payment of N85 billion, leaving an outstanding of N27.2 billion.

In February 2016, the corporation got 11,321,080 barrels of crude valued at N93.3 billion, but it only paid the sum of N75.6 billion into federation account, leaving N17.6 billion as outstanding balance and in the month of March 2016, 13,037,358 crude volume was allocated to NNPC, amounting to N87 billion, while it paid N67 billion leaving a balance of N20 billion. In April 2016, crude volume allocated to NNPC was 11,302,861 amounting to N62.8 billion, while it paid N52.5 billion, leaving an outstanding balance of N10.3 billion.

“Members may also recall that the sub-committee had been carrying forward accounts withheld by the NNPC from domestic crude sales since 2011. The NNPC had explained over time that, the outstanding amounts include subsidy claims, pipeline maintenance, pipeline crude and product losses. The subcommittee had consistently insisted that the NNPC should provide details of how much claims were expended as necessary condition for it to accept such claims, but the NNPC till date is yet to come up with such details.

“The NNPC had also insisted that the outcome of the forensic audit on the NNPC would reveal if the corporation owed the federation or vice versa. However, the just-concluded forensic audit covered a period up to December 2010 while the outstanding period covered by the subcommittee is from January 2011 to April 2016,” a member of the FAAC post mortem sub-committee was quoted to have said. Efforts by our correspondent to get the official position of the NNPC on the report was futile.

The corporation and its top management were, in similar manner, indicted in 2015 by a forensic audit conducted by audit firm – PriceWaterHouseCoopers.

The firm was commissioned by the Federal Government to x-ray transactions of the state oil firm, following years of complain of non-transparent transactions in businesses of NNPC.

Part of the recommendations of the audit firm include that the Nigerian Petroleum Development Company (NPDC), the upstream subsidiary of the NNPC, should refund about $1.48 billion to the Federation Account for various un-reconciled transactions.

The forensic audit was commissioned following allegation by the immediate past Governor of the CBN, Lamido Sanusi that about $20 billion oil money was missing from the NNPC.

FAAC, which is the custodian of the federation account, is a body chaired by the Minister of Finance. Membership of the body includes the Commissioners for Finance, Accountants-General and Auditors-General from the 36 states of the federation and the Federal Capital Territory.

Other members are representatives of the Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS), NNPC, Revenue Mobilisation Allocation and Fiscal Commission, as well as representatives of other revenue generating agencies of the government.

The body meets every month to consider revenue flows into the federation account and approve the available revenue for sharing to the three tiers of government namely federal, states and local government councils.

Additional revenues are allocated to oil mineral producing states based on the approved 13 per cent derivation formula.



Please follow and like us for more news:

Be the first to comment

Leave a Reply

Your email address will not be published.


%d bloggers like this: