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NEITI clarifies alleged NNPC unremitted $22.8bn

By BusinessNews Staff on March 19, 2014

THE Nigerian Extractive Industries Transparency Initiative, NEITI, has recanted its earlier position that it uncovered $22.8 billion unremitted oil revenue by the Nigerian National Petroleum Corporation, NNPC.
NEITI’s Director of Communication, Dr. Orji Ogbonnaya Orji, said also that media reports from the presentation attributed to NEITI that the nation loses $8 billion annually through crude oil swap were not only wrong but misleading.

He said, “The media report from that presentation attributed to NEITI that the nation losses $8 billion annually through crude oil Swap. This is not only wrong but misleading. What NEITI presented and explained at that hearing was that there is no cost efficiency in the transactions with the offshore processing organisations.

“By this we mean that the total cost of offshore processing when compared with the reported price of PMS, DPK, AGO and other retained products proceeds paid to NNPC is not economically beneficial to the country. This is as a result of the under deliveries of petroleum products to the tune of $866 million by the companies involved in the swap.”

Furthermore, Orji also noted that reports that the Agency uncovered $22.8 billion unremitted funds to the Federation Account, carried by several newspapers were equally inaccurate.

According to him, “What NEITI presented and explained at the public hearing was that “the Federal Government, through the NNPC entered into alternative funding/financing arrangements with its JV partners in the form of third party financing from external financial markets, i.e. banks, and Modified Carry Arrangements (MCA) which are loans from existing JV partners, IOCs.

“NNPC’s share in the third party financing is paid to CBN/NNPC crude oil and gas Dollar revenue account and subsequently swept to the federation accounts while under the MCA an escrow account is opened at the lenders’ bank into which buyers pay proceeds from the crude oil and gas sales.

“NEITI observed that these transactions which sum up to $22.8billion are off balance sheet items, not disclosed in NNPC’s audited financial statements. The implication is that there may be significant contingent liabilities to the federation that is not being disclosed.

“We need to state further that it does not mean that NEITI has discovered some funds hidden somewhere or monies that were unaccounted for by the NNPC. That was why NEITI recommended that all alternative funding arrangements should be disclosed in the audited financial statements of NNPC for clarity and openness in line with the EITI principles.”

He, however, expressed NEITI’s concerned that the contents of its presentation to the legislative Committee “have been largely misconceived, misinterpreted and misrepresented by some sections of the media,” even as he thanked them for their continued support for the agency.

Consequently, he said that “As an Agency with principles, methods, procedures and mandate firmly rooted in transparency, accountability and integrity, we are constrained to make some clarifications on key issues that were certainly not correctly reported by the media following that presentation.

“This clarification has become necessary in the overriding public interest, NEITI stakeholders, our international partners and the global Extractive Industries Transparency Initiative.
Orji explained that, “NEITI’s presentation to the Committee was based on the findings and recommendations of its 2009 – 2011 independent Oil and Gas Industry Audit Report, is in the public domain and on the NEITI website.”

He added that “All relevant government agencies, relevant committees of the National Assembly, companies, the media and civil society have copies of the Report which was also made public since last year.”

[Vanguard]

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