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Nigeria Loses $5bn To Discrepancies In Data Between NNPC, Others

The House of Representatives said that the country has lost about $5 billion to discrepancies in crude oil production data between the Nigeria National Petroleum Corporation (NNPC) and other agencies of government, especially the Department of Petroleum Resources.

But the Group Managing Director of the NNPC, Mele Kyari who admitted the discrepancies said these discrepancies in data have always existed between NNPC and other agencies of government as well as between them and their partners.

Chairman of the Ad-hoc Committee investigating Crude Oil theft in the country, Hon. Peter Akpatason said at the resumed hearing by the committee that the discrepancies in the various documents submitted by NNPC and other agencies of government was worrisome.

Akpatason said the Ad-hoc committee was set up by the House to identify and proffer lasting solutions to the various challenges of crude oil losses in the country, adding that the issue of crude oil theft in the country “has lasted too long”.

The Lawmaker who is also a former General Secretary of the National Union of Petroleum and Natural Gas (NUPENG) said “as responsible citizens it is our collective responsibilities to see to the end of the economic crisis in the oil sector.”

He expressed disappointment over the failure of stakeholders in the sector to provide relevant documents that will aid the committee’s investigation.

He said “It is very worrisome that the Ad-hoc Committee requested for some specific information particularly the certified true copies of oil royalty, entitlement of proceeds of production sharing contract for 2005 and 2019 and after a long delay, the submission received was from 2003 to 2009, leaving out the chunk of the years that we are supposed to be looking at.

“I will like to bring to your notice that in the cause of this investigation, the Ad-hoc Committee through forensic analysis of whatsoever submission from various stakeholders in the sector observed huge discrepancies in the submissions made by various agencies of government, particularly DPR and NNPC.

“These variances range from figures on offshore processing of crude oil, DSDP swap, processed crude oil by the three refineries, conversion of crude oil to export, FIRS borrowing crude oil to non-remittance of funds amounting to about $5 billion into the Federation account.”

He said that apart from the crude oil that is unaccounted for, the Committee also observed that there are other sources of crude oil losses that directly affect revenue generation, especially in the area of joint venture, crude under-lifting of the nation’s share of crude oil.

“Records have it that under-lifted between 2005 and 2019 is averaged loss of about 604,000 barrels per day. The aforementioned are some of the areas the Ad-hoc Committee will like to request for some clarification as the proceedings proceeds,” he said.

Group Managing Director of the NNPC, Mele Kyari told the Committee that there has been significant decline in the volume of loses in the sector.

He said “from where it was in 2015 till today, there’s significant decline in the losses that we suffer in terms of other things or vandals in the country. And this didn’t come from the blues, but as a result of concerted efforts by the industry, by NNPC and also I must commend the security agencies to curtail the excesses but they still do occur.”

Kyari said the Corporation was ready to share relevant data with the Committee regarding its transactions, including those that are yet to be submitted, saying “I take responsibility for whatever gaps, we will provide them so that the House will be properly provides with the information that are required for further action and analysis that you will like to take.

“There are always discrepancies in the data between NNPC and other agencies of government, even between us and our partners. And this is also not surprising because typical practice in the industry is the point of recording, audit, the timing of recording always determines what numbers that you return with because it’s a very mobile environment because the data you have today is not the same thing tomorrow.”

The NNPC boss stressed that there are platforms today on the Japan petroleum resources database that provides actual data on time and on real time so that we are all looking at set of data.

On the allegation of under-lifting of crude oil, Kyari said “this may not be far from the very fact that even though you have average of 57% equity in all our JVs, belonging to the NNPC, you do not have the right to lift 57% of the that equity or almost 60% as the case may be. In some assets we have 60%, in some we have 55.

“In all cases, you cannot lift that equity level because there are a number of financing arrangements that are on ground which mandate you to cede some of your production to your partners so that you can pay up for their own contribution to those loans. So to that extent, you see it as under-lift but when the details are brought on the table, you will discover that those are unavoidable and you so have to pay back for loans that you have taken.”

He said the corporation was aware of cases of reporting for under-lifting for production sharing contract, because under the PSC environment, the lifting right was based on taxation and royalty, which varies from month to month and from year to year, hence the need for reconciliation in dollar not in volume.

On shortfall in the revenue remitted into the Federation Account, he said: “When you have multiple accounts of government on taxes and for royalties, and for-profit oil, all of them end up in the consolidated crude revenue account. So when you look at them in isolation, it will appear as if there’s an underpayment or short payment on many of these accounts but in reality, when the consolidated accounts are looked at they will turn out to be correct.

“Very often we also expect 100% payment of these values of the crude oil and that is all not possible because of the existing fiscal arrangement that is in place which mandates or out the burden on NNPC to carry out certain projects of Government or on behalf of all of us and ultimately the net value you deliver to the Federation will be less than the value of the crude oil that you see.

“So every often auditors pick it up as under-remittance forgetting also the responsibilities that are there for you to bear all your cost before delivering to the Federation Account.”

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