The attention of the Nigeria Extractive Industries Transparency Initiative (NEITI) has once again been drawn to sustained media campaign by the management of Petroleum Products Price Regulatory Agency (PPPRA) in a futile effort to discredit the content of the recently released NEITI independent Audit Reports of the oil and gas industry as it affects the agency.
The NEITI Reports had recommended among others, that the PPPRA remits over N4.4 Billion naira which the Agency recovered from independent marketers to the Federation Account as required by law.
But the PPPRA instead of availing itself of the remedial measures outlined in the report, choose to contest the findings in the media through various newspaper publications especially on the major national dailies of Wednesday August 8, 2013. In the publications, apart from denying its involvement in the audit process, the PPPRA challenged NEITI on two fundamental issues.
The first issue is that NEITI should explain the basis for its recommendations that the Agency should refund to the Federation Account the sum of N4.423Billion. The PPPRA also challenged NEITI to provide proof that it actually participated in the audit process and indeed “signed- off” on the report before it was released to the public.
While thanking the PPPRA for inviting NEITI to this interesting media debate, NEITI will like to state that the PPPRA remains an important agency to our work and will continue to enjoy our respect and cooperation. However, the following clarifications have become necessary in the overriding public interest and the global extractive industries transparency initiative where Nigeria not only enjoys the highest ranking position as a compliant member but best as the implementing country in the world.
- The NEITI Audit of the oil and gas industry in question which was for the period 2009 to 2011 began in February,2012 and was to be concluded within nine months (December,2012). The project was conducted by SADA IDRIS & Co, a reputable indigenous firm independently on behalf of NEITI .
- All the relevant government agencies covered by the Audit including the PPPRA were aware that the exercise is built on methods, processes, procedure and time lines for compliance in conformity with the standards of the global Extractive Industries Transparency Initiative which Nigeria is a signatory. This was why NEITI took the initiative to commence the project with a workshop held on 7th and 8th of March 2012 at the Oriental Hotel, Victoria Island, Lagos.
- The objective of the Workshop was to expose all the agencies and companies involved in the audit on the scope of the exercise, templates for information and data required, how to provide the information, the need for supporting evidence where necessary, process of making submissions, data validation and reconciliation among others. The Workshop also provided clear information on the roles of each of the Agencies and that of NEITI and its auditors. It is important to state that the PPPRA participated actively in this enlightenment programme.
- During the Audit proper, the Audit Templates were dispatched to all the Agencies and Companies between 16th -30th April 2012, with specific guidelines on the information and data required as well as deadline to submit such information. All the Agencies including the PPPRA received the templates and were given three Months to provide comprehensive information and data and return same to NEITI on or before 31st August 2012. All the companies and government agencies including the PPPRA, complied.
- In line with the process, NEITI Auditors carried out painstaking procedure of data and information verification, reconciliation and validation held at the Best Western Hotel, Victoria Island Lagos for a period of two weeks (from 19th to 28th of September 2012). This was to be sure that what the agencies and companies provided was correct. In the particular case of the PPPRA, the agency’s submissions went beyond the two – week exercise in Lagos. NEITI Auditors held series of consultations, meetings and visits all in efforts to lay to rest gaps in the submissions by the Agency. When it was clear that some agencies like the PPPRA still had issue to sort out in their submissions, the NEITI Board in its wisdom further extended the deadline by another two months, from April to 30th June, 2013.
- When the draft report was finally ready, it was made available to all Agencies for their vetting, and more inputs where necessary. I wish to state that the PPPRA received the draft report, reviewed it, and participated in the final reconciliatory meeting. After that meeting from where all other agencies and companies signed-off, the PPPRA still came up with additional information on the 28th of June; clearly two days before the final deadline vide a letter ref A4/4/735/c.288/1/687/10. In that letter the PPPRA specifically requested NEITI to consider same as “superseding all earlier correspondences on the issues”. In the EITI/NEITI process that was “a sign-off.” A copy of the letter is attached.
- However, in efforts to reflect the additional information provided by PPPRA, NEITI independent Auditors discovered that PPPRA failed to back up some of the claims contained in this last submission with verifiable evidence. NEITI immediately went outside this final deadline and contacted the PPPRA through a letter dated 1/7/13 requesting PPPRA to urgently provide evidence. The evidence requested include bank statements of Petroleum Support Fund (PSF) payments for the period covered by the audit, schedule of collection of “over-recovery’’ from marketers and rationale for determination of national demands for petroleum products to drive home the Agency’s claims on these issues. NEITI Auditors followed up with phone calls but never got any other information or any form of response from the Agency.
- However, for the fact that PPPRA had earlier signed –off on the Audit as already clearly indicated in its letter of 28/6/13, the audit process was brought to end. The Public Presentation took place on July 30th 2013 in Abuja. Against this background, NEITI finds it is ridiculous for the management of PPPRA to insinuate that it was not part of the Audit from beginning till the end and that it never signed –off during the exercise. This was why in our initial general response; we certainly expressed doubt if the Executive Secretary of PPPRA ever received adequate briefing from his team on the audit process.
- On the second challenge that NEITI should explain the basis for its recommendations that PPPRA should refund over N4.4 Billion to the Federation Account, We wish to put on record that NEITI Audit Report discovered that the determined total over-recovery from ten (10) marketers between 2008-2009 amounted to N14.073billion. From this determined collection, the Federal Ministry of Finance deducted at source the sum of N3.127 billion while the amount of N4.423billion was paid by independent marketers into the PSF account managed and controlled then by PPPRA during the period. The PPPRA further netted off over-recovery due from the subsidy of marketers to the tune of N2.809billion and remitted this to the Federation account. Therefore, actual payments made by marketers amounted to N7.232billion (which is N4.423billion + N2.809billion).
- However, the NEITI reports further disclosed that the PPPRA could not account for the amount of N4.423 billion which was paid by the marketers to the Agency. The position of NEITI remains that this sum should have been and should be remitted to the Federation Account by PPPRA. As at the time of this Audit there was no evidence (bank statements etc) that this remittance was made to the Federation account. NEITI wants to see proof that these remittances ever happened. This is the crux of the matter.
- Beyond these, there was also an important issue ‘‘over subsidy funds disbursement’’. NEITI Audit Report on page 146 to 170 disclosed that ‘prior to 2009, the Office of the Accountant General of the Federation (OAGF) disbursed funds to the PSF account’’. This account as at this period covered by the report was managed and controlled by PPPRA who processes Oil Marketers’ subsidy payment applications and issues cheques to marketers. From our audit findings, these transactions which involved huge financial flows weighed very low on the scale of transparency and accountability.
- Besides, another important revelation of the report is that PPPRA provided contradictory information during the audit process. For instance the Agency stated in its audited financial statement, that it paid the sum of N297.11billion as subsidy in 2009. But in the information PPPRA supplied through the templates used for the Audit which it voluntarily populated and returned to NEITI Auditors, the Agency claimed it paid N207.80billion. In addition, the PPPRA template data still has a difference of N1.11billion outstanding (see page 157 of NEITI report available on NEITI Website-www.neiti.org.ng). We are wondering why the management of PPPRA chooses to keep silent over these weighty observations or does it mean they are not also important?
- Furthermore, PPPRA was unable to make available its unaudited accounts for the period 2010 and 2011 for review during the audit process. Of note is also the issue of records relating to transactions during the audit period which remained uncompleted. These are some of the unanswered questions from the NEITI Audit Report still hanging on the neck of PPPRA.
- It is important to state that Nigeria’s voluntary membership of the global Extractive Industries Transparency Initiative (EITI) is informed by the Federal Government’s desire for transparency and accountability in the management of Nigeria’s extractive industry revenues. This is to ensure that these resources are prudently managed to support national development and reduce poverty in our country and reverse the syndrome of resource curse where nations like Nigeria blessed with abundant resources find majority of their citizens wallowing in abject poverty. NEITI’s intervention in the oil and gas sector that funds our economy and its Audit process in the Oil & Gas sector is to enthrone and deepen the principle of transparency, accountability and good governance. It is not a witch hunting or fault finding exercise as the PPPRA has chosen to portray it. That is why NEITI is always ready and available to work with agencies and companies to address remedial issues arising from the report under the framework of the Inter-Ministerial Task Team deliberately set up by the Federal Government for this purpose. The PPPRA should take advantage of this platform to address issues affecting the agency as contained in NEITI reports. This is the best and only way forward.