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NNPC Diverted N 3 trillion from Federation Account – Reps

By on June 7, 2012

The Nigerian National Petroleum Corporation (NNPC) has been accused of diverting N 3 trillion from the Federation Account by the House of Representatives Joint Committee on Finance, Petroleum Upstream, Petroleum Downstream and Gas Resources. The Committee recommended NNPC refund the entire amount back to the country.

The committee’s investigation into the financial activities of NNPC began in September 2011 and covered the period between 2004 to 2011.

According to a report recently released by the committee, the NNPC engaged in several illegal financial activities that shortchanged the Federation Account by several billions of dollars. Such activities included application of wrong foreign exchange rates, under-invoicing domestic crude sales, under-remitting domestic crude revenue, improper subsidy liability claims, and fraudulent Carry Agreements with oil majors.

The report stated, “In 2005, NNPC short-changed the federation by $193.645m through domestic crude sale at a discount of $1.211 per barrel on the 159,898,543 barrels of crude taken in 2005. The loss of $193.645m was an equivalent of N25.473bn based on the prevailing exchange rate then.

“NNPC further compounded the federation’s woes by under-remitting the under-invoiced domestic crude revenue by N289bn in 2005. Out of the total revenue of N1.145tn accruable to the federation from domestic crude oil sales to NNPC in 2005, NNPC remitted only N0.856tn.”

At the end of 2005, NNPC claimed a liability of  N354 billion against the Federal Government, the Committee said that was false and NNPC actually owed government N 678 billion due to under-remittances.

It stated, “Between 2006 and 2008, NNPC short-changed the federation by N1.214tn through unauthorised discount and under-remittance of under-invoiced domestic crude revenue.”

“NNPC in 2009 to June 2011 followed the same trend of taking unauthorised discount on domestic crude it allocated to itself and continued to underpay the under-invoiced domestic crude sales.

“While the federation lost N67bn on unauthorised discount between 2009 and June 2011, the loss through under-payment of under-invoiced value is N1.388tn, resulting in total loss to the federation of N1.455tn on domestic crude supplies to NNPC between 2009 and June 2011.”

The report also stated that fraudulent Carry Agreements designed by NNPC to milk the treasury in collaboration with oil majors Shell, Elf, Mobil and Chevron cost Nigeria $ 3.675 billion. The committee recommended that the money be refunded.