NNPC Withheld 66% Of Oil Revenues Last Year

NNPC
In a week the Nigerian National Petroleum Corporation, NNPC, opened bid for new refineries to be co-located in existing four refineries to boost its refining capacity, a new report suggesting continuing corruption in the management of oil revenue by the corporation was released last Friday.

An International watchdog, Natural Resources Governance Institute, NRGI, revealed that NNPC generated $6.3 billion from sales of export and domestic crude in the second quarter of 2015 but paid only $2.1 billion into the federation account.

The balance of $4.2 billion, representing 66 percent of proceeds from crude oil sales for the last six month in 2015, was unremitted. The report must come as a shock to industry observers who expected more transparent oil revenue administration under President Muhammadu Buhari who is the substantive Minister of Petroleum.

Moreover, since coming to power last May, his administration has embarked upon sweeping reforms in NNPC to make it more efficiency and more transparent.

The unremitted figures show a 14 percent increase in the corporation’s withholding in the first half of 2015 under former President Goodluck Jonathan.

NRGI had earlier questioned the corporation’s revenue accounting model in a report released in 2015 entitled “Inside NNPC Oil Sales: A Case for Reform” and advised the government to take steps to curb the oil giant’s “discretionary, unaccountable use of much-needed public funds.”

The Act establishing the NNPC allows it to defray its operating cost from revenue generated before remittance to the federation account. But this proviso in the law has been abused and has given the management of the corporation room for mismanagement of oil revenue.

In 2004, PricewaterhouseCooper, which reviewed the corporation’s sales system, wrote: “[NNPC has a] ‘blank’ cheque to spend money without limit or control. This is untenable and unsustainable and must be addressed immediately.”

According to the NRGI report, “no agreed rules govern how much money the NNPC can keep, and how it can spend those funds.”






     

     

    “As a result,” it said, “NNPC under President Buhari’s administration still retains a major share of oil sale earnings and spends them at will. Until the government instates clear rules for NNPC financing, both the controversies and the underlying revenue leakages will persist.”

    The latest report is the second time in two months the corporation’s finances have come under public scrutiny. Last month the Auditor General of the Federation stated in a report submitted to the Clerk of the National Assembly that NNPC failed to remit $16 billion oil revenue to the federation account in 2014. The figure was increased when the Revenue Mobilisation Allocation and Fiscal Commission, RMAC, said the corporation owed the federation account $25 billion, being unremitted oil revenue between 2011 and 2014.

    The NRGI posted on its website last Friday that the NNPC had invited it to a meeting to “clarify its position’ on the unremitted revenue, an invitation the watchdog said it would honour.

    Read the full NRGI report here

     

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