The Nigeria Extractive Industries Transparency Initiative (NEITI) has called on the Federal Government to institute an independent investigation into the status and utilization of all dividends and loan repayments by the NLNG to NNPC from 2000-2014.
The call was contained in NEITI’s policy brief that examined unremitted funds, economic recovery and oil sector reforms.
‘’ Since the Federation’s shareholding in NLNG is held through NNPC, dividends are paid to NNPC, which should remit same to the Federation. However, NEITI’s audits have revealed that until 2015, NNPC failed to remit the interests and dividends from NLNG to the Federation Account.’’
The report noted that the total outstanding dividends and loan repayments by NLNG to NNPC not remitted to the Federation account stands at over $15.8billion. The breakdown of the payments from 2000 to 2014 is below:
Payment of NLNG dividends, interests and loan repayments to NNPC from 2000 to 2014
NEITI in the policy brief noted that these payments were traced to NNPC accounts by its independent auditors but observed that there was no trace of NNPC’s remittance of the money to the Federation Account as required by sections 80(1) & 162 (1) of the constitution.
On domestic crude allocation and management, the policy brief raised concerns that earnings from daily allocation of 445,000bbls for domestic use have not been properly accounted for.
‘‘First, the refineries have been operating at below full capacity for a long time and currently process less than 100,000 barrels per day. Between January 2015 and September 2016, NNPC lifted a total of 245.4 million barrels of crude oil for domestic use. Out of this total, only 24.7 million barrels were delivered to the refineries. This represents a mere 10.06% of the total crude oil lifted for domestic use for that period. The remainder of this allocation was exported through a variety of channels: 64.8 million barrels or 26.4% were exported directly; 97.6 million barrels or 39.77% were sold under the Offshore Processing Agreements (OPA); and 58.29 million barrels or 23.75% were sold under the Direct Sales- Direct Purchase (DSDP) scheme. These reflect the dire condition the nation’s refineries are in.
Concerns raised in NEITI’s audits and by other stakeholders about the inefficiency of these arrangements, especially the Offshore Processing Agreement (OPA), led to the discontinuation of the OPA in April 2016. However, NEITI audits have shown that earnings from transactions arising from domestic crude allocation have not been fully remitted to the country’s treasury. Between January 2012 and July 2013, total revenue for domestic crude sales was $28,215,731,691 but NNPC only remitted $14,542,654,329.’’
While calling for measures to recover over $14.5 million dollars so far disclosed in its reports, NEITI stated that an urgent review of this arrangement to avoid huge revenue loss and leakages has become necessary.