The Nigeria Extractive Industries Transparency Initiative (NEITI) has once more raised questions over the handling of the federation’s proceeds from the Nigeria Liquefied Natural Gas (NLNG) company.
In its latest report covering 2020, the Dr. Ogbonnaya Orji-led organisation called for more transparency in the handling of the funds, stating that the monies were lodged in accounts belonging to the Nigerian National Petroleum Company (NNPC) Limited, instead of being lodged in the Federation Account.
Making 16 recommendations in the just-released 2020 oil and gas industry report, the organisation stated that while the funds should be paid into the joint account, it should be fully accounted for in the national oil company’s financial statements.
“NLNG dividend and other related payments remain an issue in 2020 as payments are being warehoused in NNPC designated bank accounts and not Federation accounts.
“NNPC Ltd. should transparently disclose and account for NLNG payments in the corporation’s financial statements while future dividends should be paid to the federal government as the investor,” the report stated.
In 2017 NEITI had raised similar posers, calling on the federal government to institute an independent investigation into the status and utilisation of all dividends and loan repayments by the NLNG Limited to the NNPC.
However, in the latest report, NEITI stated that issues concerning the warehousing of the funds remained unresolved and called for a quick resolution of all associated matters.
On the operatorship of Oil Mining Lease (OML) 116, NEITI stated that although the operatorship was transferred to the Nigerian Petroleum Development Company (NPDC), the proceeds from production was treated as if the ownership of the license was reassigned to NPDC.
It added that there was no consideration paid to show that it was reassigned.
“Transfer of operatorship does not mean transfer of assets or ownership rights. NPDC should pay considerations if the OML has been reassigned,” the organisation recommended.
NEITI further put the total volume of crude losses reported by 22 companies at 53,056,772bbls, valued at about $2.21billion, at the annual average selling price of Federation Equity crude oil reported in the audit.
“The NNPC should ensure proper pipeline security surveillance using satellite imagery and other sophisticated Information and Communication Technology (ICT) tools to ensure real time monitoring and decisive actions on pipeline vandalism.
“The companies should also work with the federal government to ensure the implementation of fiscal provisions in the PIA for the welfare of host communities and thus strengthening responsibility for communal ownership of crude oil pipelines,” it said.
On pre-export financing and Project Eagle , NEITI stated that a total volume of 1.799 mmbbls crude oil (valued at $59.225 million) and 2.847 mmbbls crude oil (valued at $116.980 million) was lifted from OML 119 (Okono fields) and sold for pre-export financing and project eagle agreement.
“These amounts are for repayment of loans taken in the past to settle marketers under the petroleum subsidy scheme, which are being recovered from monthly federation revenue proceeds. The circumstances under which the subsidies were incurred and the beneficiaries are not clear,” it added.
NEITI therefore recommended that the NNPC should transparently disclose details of the subsidy and the beneficiaries of the payments, in addition to render accounts on the loan transactions. “The transaction should be extensively reviewed and investigated,” NEITI noted.
On refineries, the initiative stressed that zero allocation was made to the nation’s refineries due to lack of capacity to process refined products and advised that the federal government should fully deregulate the downstream sector and savings made from the removal of subsidy regime should be used to improve the lives of the citizens.
Pertaining to under-recoveries and value loss, NEITI pointed out that the total amount of subsidy claim by NNPC in 2020 was N133.74 billion ($375.22million), out of which N106.99billion ($300.19million) was recovered from the federation in 2020, leaving an outstanding balance of N26.74 billion.
“The federal government should fully deregulate the downstream sector and savings made , from the stoppage of the subsidy regime should be used to improve the life of citizens. The PIA is expected to address this issue,” it noted.
It reiterated that the total outstanding company taxes payable to the Federal Inland Revenue Service (FIRS) as at 30th September, 2021 was $79.20 million while the total amount of outstanding federation revenue payable to at 31st December, 2020 was $3.10 billion.
“The responsible government agencies should recover debt owed by the stated companies,” NEITI said.