NNPC: a tale of endless investigations, multiple indictments

The revelation by the Auditor General of the Federation last week, of unremitted sum of N3.3tr by the Nigerian National Petroleum Corporation (NNPC) and other agencies in the 2014 fiscal year, has added to the endless allegations and probe of the corporation. It appears as if the more the NNPC is probed, the more revelations are unearthed of an endless tape of financial discrepancies.

This seems to confirm what the Berne-Declaration, Chatham House said in a report, that the Nigeria’s crude oil trade appears consistently dogged by official discretion, opacity, downright fraud and of course theft on a mind blowing scale.

The 2014 Annual Audit Report presented to the National Assembly by the office of the Auditor General, indicted the NNPC of not remitting N3.3 trillion to the Federation Account Allocation Committee in 2014.

The corporation in 2014 was accused by former governor of Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, of shipping $67b worth of crude oil, but what came to the apex bank after all reconciliation was $47 billion.

He had said: “Let us know what happened to the remaining $20b. We have confirmed that the Federal Inland Revenue Services (FIRS) received $16b, which was paid by International Oil Companies (IOCs). CBN has accepted that. We have accounted that out of $67b that NNPC shipped, $47b has come to CBN. NNPC must show where it got the authority to buy kerosene at N150 and sell at N40, and then put the burden of loss on the federation account,” Sanusi said.

Also, last year, the National Assembly conducted 18 legislative probes into sundry cases of misappropriation, Joint Venture agreements, missing crude revenue in Nigeria’s corruption-ridden oil and gas sector from 1999 to 2014 and discovered that about $15b was lost to fraud, while a whopping $6.8b subsidy was unaccounted for.

The legislatures also discovered an alleged missing N500b SURE-P claims for oil subsidy for a period of time.
Indeed, NNPC has for long been enmeshed in series of indictment and investigations. In 2008, the House of Representatives investigated former NNPC group managing director, Gaius Obaseki, over mismanagement of funds of the Corporation. Obaseki was indicted for wasting over N2b in less than four years on hotel accommodation.

Also in 2008, the House probed operations of the NNPC and its subsidiaries from 1999 to 2007. The probe uncovered “deliberate and unaccounted” increase in the daily quota of petroleum production against OPEC allocation. It also uncovered that funds budgeted for Turn-Around Maintenance (TAM) of the country’s refineries were “misappropriated”.

Nigeria also lost $5.74b crude revenue as a result of NNPC’s shady deals with marketers and “manipulation of prices” of crude allocation to its refineries.

In 2011, the Senate probed oil subsidy expenditure. The Senator Magnus Abe-chaired joint committee found that the NNPC paid itself N847.94b, after it had been paid N844.94b by the Petroleum Products Pricing and Regulatory Agency in 2011, suggesting that the NNPC had been making double withdrawals for years from the public treasury.

In 2012, the Senate investigated the contentious Malabu Oil Field transaction. The Upper House re-opened investigation into an allegation of $1.1b round-tripping involving the federal government and two international oil companies – Shell and Eni (Agip) – over the sale of a contentious OPL 245 oil block.

Also in 2012, a petroleum subsidy probe conducted by the Farouk Lawan-led House Adhoc committee was rocked by a bribery scandal. The probe, however, revealed that $6.8b oil revenue was unaccounted for.

The House in 2013 investigated the propriety of contracting the protection of Nigeria’s waterways and pipelines to private firms reportedly owned by ex-militants.

In 2013, a Senate Committee that investigated a “missing” N500b SURE-P fund reported that the NNPC could not account for the N32 removed as subsidy on each litre of petrol sold from January 2012 to September 2013.

Also in 2013, the House launched a forensic inquest into NNPC’s Joint Venture agreements with some multi-nationals. No report was submitted.

Apart from the series of probes against the national oil company, many foreign agencies have at different occasion accused the corporation of misappropriation of funds.

For example, in 2013, Berne-Declaration, Chatham House said in a report that proceeds from stolen Nigerian crude oil sold each year on international markets were being laundered in world financial centres.

Specifically, it stated that a conservative estimate of 100,000 barrels a day is believed to be the minimum amount stolen – lost revenues to the Nigerian government in 2013 would be $3.6b.

Unfortunately, co-author of the report – Nigeria’s Criminal Crude: International Options to Combat the Export of Stolen Oil, Christina Katsouris, said: “We tried to find cases of prosecution for money-laundering linked to crude oil theft and couldn’t find one”.

Also, an independent investigative analysis by the Natural Resource Governance Institute (NRGI) has revealed that over $32b oil revenue was lost to NNPC’s mismanagement of Domestic Crude Allocation (DCA), opaque revenue retention practices and corruption-ridden oil-for-product swap agreements.

The report offered a deep, independent analysis of how NNPC sells its oil, and found that the national oil company’s discretionary spending from domestic crude oil sale revenues has skyrocketed, exceeding $6b a year for the 2011 to 2013 period.

The in-depth research found no evidence that NNPC, between 2004 and 2014, forwarded to the treasury any revenues from sales of Okono crude with volumes of over 100 million barrels, with an estimated value of $12.3b.

In the near-term, to fix urgent sources of revenue loss in the country, NRGI stressed the need to eliminate Nigeria’s Domestic Crude Allocation; stop the discretionary retention of revenues by NNPC and its subsidiaries; fix the oil-for-product swap agreements; rid oil sales of unnecessary middlemen and improve NNPC’s transparency and corporate governance.