‘NNPC, NPDC have violated due process’

According to a new report by the Nigeria Extractive Industries Transparency Initiative, (NEITI) the State Oil Company and its subsidiary, the NDPC, owe the federation more than 20 billion dollars. CNBC Africa’s Wole Famurewa spoke to Waziri Adio, the Executive Secretary, Nigeria Extractive Industries Transparency Initiative (NEITI) about the details of the report.

We calculated that NPDC and NNPC are owing the federation or withholding from the federation the total sum of $21 billion and N316 billion. This is money that should have been remitted to the federation’s account but which was not remitted. The moneys fall in different categories. The first one is the NLNG dividends that amounts to $15.8 billion from 2000- 2014. NLNG paid dividends on the 49% stake that the country owns to NNPC, and NNPC acknowledged the receipt of the money, but year in year out, the money was not remitted to the federation account. That’s a total of $15.8 billion over 15 years. Another tranche is the legacy liabilities of NPDC. Until we did the 2014 audit report the NPDC did not tell us that they had payments due to the federation and this amounted to $1.4 billion and N70 billion. Until 2014 we didn’t know about this, because they just refused to disclose this.

The other thing is you remember that assets were divested to NPDC by NNPC. There were 8 assets under the Shell Joint Venture and these are OMLs 4, 26, 30, 34, 38, 40, 41 and 42. The country owns 55 per cent in these assets. They were divested to NPDC by NNPC between 2019 and 2011 and they were valued at $ 1.8 billion by DPR.

This is something very significant that we need to note. PWC did a study that showed that Shell got $2.7 billion for its own 45 per cent stake, whereas our own 55 per cent stake was valued at $ 1.8 billion. But that isn’t the end of the story. Out of that sum NPDC only paid $ 100 million leaving an outstanding of $ 1.7 billion and they continued to enjoy all the benefits that should accrue for full ownership of those assets. Four assets under another JV were also divested to the NPDC in 2012 when they were divested they weren’t even valued at all and no consideration was made for them. These were OMLs 60,61,62, and 63. They weren’t valued until the third quarter of 2016 and they were valued at $2.2 billion dollars. So these are also outstanding.

Also, on those 12 Assets NAPINS paid cash calls on some of them amounting to $ 572 million and at some point they realised that the cash calls shouldn’t have been paid, and part of this has not been refunded. More than $400 million was refunded to NAPINS but NAPINS did not sweep that into the federation account, the outstanding $148 million has also not been paid by NPDC.

Also, on the domestic crude allocated to NNPC for 2014, there’s an outstanding payment of N 243 billion. So on the whole NNPC and its upstream arm NPDC are owing or withholding money that should have paid or should not be withholding to the tune of $21.7 billioin and N316 billion naira.

There are a number of reasons why we’ve decided to focus on this. As you know the country ran into bad weather and we entered into an economic recession. One of the reasons why we needed to do this was because of all these bad practices, government agencies and individuals dipping their hands and fingers into places where they shouldn’t have been dipping their hands. The second problem is that you know the country is in a bad place now and we need all the money that we can get. And the country is making efforts to borrow money by raising bonds and going to development banks and other similar institutions, and we’re also considering selling some assets. But we believe that there’s some money on the table owed by these two government agencies, NNPC and NPDC, that should be recovered, and that should be used to revitalise the economy. Also, the system that allowed government agencies to wilfully withhold money that is owed to the federation should be completely reformed.

What NNPC and NPDC have done are clearly against due process and the principles of transparency and accountability and they are also at odds with the spirit and letter of the Nigerian constitution. Section 80 and section 162 of the Nigerian constitution stipulate clearly what should happen to money that is owed to the federation.

Mr Adio, you have made some serious points in this report and the big question is what happens next. What actions can we anticipate now that this report has been completed, where will it be going?
We have made five recommendations. The first thing is that we believe that government should recover this money and inject it into the economy. The second thing is that we believe that the 12 OMLs that have been divested to the NPDC that have not been fully paid for or paid for at all should be retrieved, revalued and auctioned, so that the country can get better value for these assets especially at a time like this. We also believe that the relationship between the country and NPDC should be clarified. We also believe that we should have investigations into the status and use of NLNG dividends. If any of the money has been spent we need to find out who authorised the spending, how much was spent, what it was meant for, and how much of it was spent for that purpose. The last thing is that there is a need for thorough reform. I had the privilege of briefing the Economic Management team this week and this is one of the issues that we flagged.

So the Economic Management Team is aware of this report but how about the Presidency?
Yes. We gave them an advanced copy and briefed them about it. They said they would look into it.