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NNPC, DPR, Shell others embezzled N2.8 trillion – Ribadu report

By on November 1, 2012

The report of Nuhu Ribadu-led Petroleum Revenues Task Force has shown that government agencies and major oil companies will be asked to refund about $17.8 billion to the Federation account.

President Goodluck Jonathan on Monday asked the committee to submit the report tomorrow.

The report which was last week published by an international news agency, Reuters, has generated anxiety within the oil sector.

The indicted agencies and companies include; Nigerian National Petroleum Corporation (NNPC), Department of Petroleum Resources (DPR), Shell Nigeria, Addax oil company and Nigeria Liquefied Natural Gas (NLNG).

If the recommendations of the report are implemented, NNPC will be made to refund $13 billion (about N2.19 trillion) being the total outstanding amount due to the Federation Account in the past 10 years.

The report said, “The review revealed that over a 10 year period (2002 -2011), the state may have been short paid by an estimated sum of US$5 billion, although it was understood from discussions with NNPC officials that the pricing of domestic crude oil was based on international prices.”

“Enquiries from NNPC revealed that up until October 2003, NNPC was granted fixed price regimes which explain the wide disparity in prices in the earlier years.”

The Task Force also found out that the exchange rates used in arriving at the Naira equivalent of the amounts payable differed from the CBN rates for six of the ten years reviewed.

It added that “The potential underpayment of amounts payable to the Federation Account over the 10- year period is estimated at N86.6 billion.”
The report said NNPC is owed N27billion including current debt, total overdue, disputed debt and total debt outstanding by the major marketers of petroleum products.

“We also found that amounts payable to suppliers of petroleum products, as at 31 December 2011 amounts to approximately US$3.6 billion, of which US$2.7 billion represents amounts outstanding for over 365 days,” it said.

The Task Force recommended that henceforth no deductions should be made from the amounts payable to the Federation Account by the NNPC and that the domestic crude oil should be sold at international competitive prices.

The total outstanding for DPR and Addax Petroleum Company, according to the report, is $3.35 billion.

“The Task Force found out that $3.027billion was outstanding from the operators for crude oil royalties as at 31 December 2011 per the DPR’s records. Out of this amount, the DPR had stipulated that ADDAX is liable
to pay $1.5billion royalties under the 2003 fiscal regime and there is currently a dispute between Addax and NNPC on one hand, and the DPR on the other,” it said.

The Ribadu’s report recommended that DPR should take action and enforce collections of the amounts due of $3.027 billion from relevant operators within the remit of the law.

For Shell, the task force identified a total of $946.878 million due to the Federation Account from SNEPCO representing the proceeds of gas sales from the Bonga oil field.

“For Liquefied Natural Gas, the price observed at which the feedstock gas is sold to NLNG seems too generous, compared to prices obtainable on the international market. The estimated cumulative of the deficit between value obtainable in the international market and what is currently being obtained from NLNG, over the 10 year period, amounts to approximately US$29 billion,” the report said.

One Comment

  1. Nura Mohamed Kamfut

    November 1, 2012 at 6:57 pm

    Hope. Something gud will come out 4rm d recommendation of d committee dis time around