Wednesday, December 11, 2013

by Joe Brock
ABUJA — Nigeria’s NNPC state energy company has not accounted for nearly $50bn in revenue from the sale of crude oil which should have been paid into government accounts under law, the central bank has said.
Central bank governor Lamido Sanusi said in a letter to President Goodluck Jonathan, dated September 25, that NNPC earned $65.3bn from crude oil sales between January 2012 and July 2013 but remitted only 24% of this to the federation account and $49.8bn was still outstanding.
"I am constrained to formally write your Excellency, documenting serious concerns of the Central Bank of Nigeria on the continued failure of the NNPC to repatriate significant proportions of the proceeds of crude oil shipments it made in gross violation of the law," the letter seen by Reuters said.
NNPC has been criticised for lacking transparency and for diverting funds in several investigations in recent years but the central bank governor appears to be one of the most high-profile figures to have brought up the issue with Jonathan.
Central bank sources confirmed the letter was genuine. The central bank spokesman said he could not comment on private correspondence and Mr Sanusi did not respond when contacted for comment.
A senior source at the presidency told Reuters Mr Jonathan had received the letter and had asked the head of NNPC to give him an explanation. The presidency spokesman did not respond.
"The allegation is borne out of misunderstanding of the workings of the oil and gas industry and the modality for remitting crude oil sales revenue into the Federation Account," NNPC said in a statement issued in response on Tuesday.
NNPC said it had remitted its oil sale proceeds but the missing funds should come from other government departments that are responsible for petroleum tax and royalties, while other funds will have been spent on field development.
Missing funds
Mr Sanusi’s letter says the missing $49.8bn is from the value of oil NNPC sold and makes a distinction with taxes. It says under law NNPC must submit all oil export proceeds.
"As an indicator of how bad this situation has become, please note that in 2012 alone, the Federation Account received $28.51bn in petroleum profits and related taxes but only $10.31bn from crude oil proceeds," the letter said.
NNPC sold 46% of Nigeria’s oil between January 2012 and July 2013 but its remittance amounted to only one-third of the taxes paid by oil companies that exported the other 54%, the letter claimed.
NNPC exports Nigeria’s share of about 2-million to 2.5-million barrels a day of oil the country produces, mostly in joint ventures with oil majors such as Royal Dutch Shell, Exxon Mobil, Italy’s Eni and Chevron.
Crude exports and taxes earned from these oil majors account for about 80% of government revenue in Africa’s second-largest economy and top oil producer.
A probe last year by the former head of Nigeria’s anticorruption body, Nuhu Ribadu, recommended an overhaul of NNPC because it lacked transparency in the way it sold oil, wielded too much power and was a vehicle for corruption.
Mr Jonathan set up a committee to investigate the findings of the probe but the panel’s report was never made public. Oil Minister Diezani Alison-Madueke denied at the time that there was a problem with corruption within NNPC.
A report in 2011 by Transparency International and Revenue Watch found NNPC to have the poorest transparency record out of 44 national and international energy companies it evaluated.

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