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NNRC backs forensic audit of NNPC

By on April 11, 2014

The Nigerian Natural Resource Charter has supported the idea of subjecting the Nigerian National Petroleum Corporation to a forensic audit.

 This was contained in a communiqué issued by the charter after a roundtable on transparency in the oil and gas industry recently held in Lagos.

 The NNRC, which decried the $12bn unremitted oil revenue, suggested that a financial audit of the NNPC was required in order to gain a comprehensive understanding of the failures in the system that had resulted in continued haemorrhage of resources.

The NNRC is member of a global initiative, Natural Resource Charter, which aims to support governments and societies of resource-rich countries to harness the economic opportunities of extractive resources. The charter has developed a set of 12 precepts for the effective management of natural resources.

The NNRC also recommended that industry insiders and experts should be invited to review the terms of reference for the audit   and suggest areas where the auditors should pay particular attention.

In view of this, the charter advised that the selected auditors should be world-class firms with global franchises and deep knowledge about the inner workings of the NNPC.

The communiqué said, “For unfettered access, the NNRC roundtable recommended that the Minister of Petroleum Resources, Mrs. Dieziani Alison-Madueke, and the Group Managing Director of the NNPC, Mr. Andrew Yakubu, should be asked to proceed on leave for the period of the audit.

“The current administration needs to win back the confidence of Nigerians in its integrity and that of the proposed audit.

‘The NNRC roundtable recommends that the government should immediately publish the report of the previous audits of the petroleum industry; for instance, the 2009 KPMG Audit Report, as well as the 1994 Okigbo Report.”

The group urged the National Assembly to proactive in its oversight function of the petroleum sector, adding that there was the need to pass the Petroleum Industry Bill to commence the reform of the sector.

“The National Assembly should ensure it has the technical competence to oversee the sector. There are a number of independent agencies that are willing to offer the support, pro bono or for a fee. The National Assembly should aggressively seek support for its oversight function,” the NNRC said.

The group recalled that both the Central Bank of Nigeria and the NNPC had agreed that $67bn was realised from crude oil sales between January 2012 and July 2013.

“Of this amount, $31bn was fully accounted for and agreed to by both parties. The CBN does not agree with the details provided by the NNPC on $24bn of the revenue and has requested for further documentation,” it said

The NNRC also said, “The main contention is $12bn of the revenue that the NNPC agreed that it did not remit to the government. Rather, it claimed to have spent the money on kerosene subsidy ($8.49bn); 2011 fuel subsidy ($1.2bn); repair of vandalised pipelines ($1.22bn); product and crude oil losses ($0.72bn); and payment to strategic alliance agreements ($0.37bn).”

 “The suspended CBN governor (Lamido Sanusi) stated categorically that kerosene was not a subsidised product in Nigeria. He challenged the NNPC to provide the government’s approval authorising it to make any deductions towards 2011 fuel subsidy arrears and show how it spent $1.22bn in repairing vandalised pipelines. Furthermore, the CBN governor raised concerns about the crude oil swaps and the strategic alliance agreements.”

[Punch]