NEITI to release damning 1999-2021 audit report exposing mismanagement, non-remittance of revenue, losses in NNPC operations

Oredola Adeola

The Nigeria Extractive Industries Transparency Initiative (NEITI) is set to release audit reports in the oil and gas sector, covering the period from 1999 to 2021, expected to reveal the extent of non-remittance of government revenue majorly perpetrated by Nigerian National Petroleum Company (NNPC) Limited and a few of other oil, gas and extractive companies in Nigeria.

Part of the damning report waiting for the final approval of the stakeholders before being officially released to the public was seen EnergyDay on Wednesday during a review of the audited document by relevant stakeholders’ including Civil Society Organisations, Government Ministries, Departments, and Agencies as well as the members of the press, at NEITI’s headquarters, in Abuja.

The yet-to-be-published report reviewed by EnergyDay also tracked the government’s subsidy payment and other remittances including liabilities. It also evaluates the quantities of oil and gas utilized locally and exported, as well as the revenues paid by oil and gas companies during the period.

It also reflected the process that underpinned the remittances of these transactions and competing for the remittances such as taxes, royalties, and rents.

EnergyDay’s further review of the unapproved NEITI report, confirmed shocking findings regarding the disbursements from the NNPC Cash Call account for the Federation equity contribution to JV operations funding in 2021.

The total value of these disbursements is estimated to be around US $3.087 billion. However, it is important to note that not all of the cash call payments are related to the funding of the 12 Federation Joint Ventures.

Included in the total amount is a sum of US $148.154 million, representing other payments from the JVCC accounts that are not associated with current Federation JVs.

The report, according to NAPIMS schedules, the outstanding cash-call liabilities by the Federation amount to approximately N120.439 billion and US $507.949 million, totaling N330.007 billion.

In addition, the report indicated that NNPC incurred significant quasi-fiscal expenditures in 2021, amounting to US $6.931 billion (equivalent to N2.651 trillion).

These expenditures are incurred by the NNPC and its subsidiaries on behalf of the Federation but are outside the national budget.

Furthermore, the report highlighted outstanding tax payable to the Federal Inland Revenue Service (FIRS) amounting to 413.59 million as of July 31, 2023.

Additionally, the total amount of outstanding Federation revenue payable to the Nigerian Upstream Petroleum Regulatory Commission as of December 31, 2022, is $8.251 billion.

The unapproved report reveals that NNPC and its subsidiary, NPDC, account for over 70 percent of the total liabilities mentioned above. This has resulted in a constraint on revenue flow to the Federation.

The report also exposes NNPC’s failure to remit the Naira receipt of revenue earned from JV operations to the Federation and the lack of proper accounting for it in NEITI’s audit.

Furthermore, NNPC has failed to remit revenue of approximately $280 million earned from the trial marketing period crude lifting in 2021.

The report also highlights NNPC’s failure to remit revenue received from Nigeria Liquified Natural Gas (NLNG) as dividend and interest earned by the Federation in 2021, with no proper accounting for it.

The report also reveals staggering losses for Nigeria, with 617.7 million barrels of crude oil, valued at $46.16 billion (equivalent to N16.25 trillion), lost between 2009 and 2020.

This translates to approximately 140,000 barrels of crude oil valued at $10.7 million lost every single day during that period.

Additionally, the report discloses that Nigeria has spent a staggering $74.39 billion (equivalent to N13.7 trillion) on fuel importation between 2005 and 2021.

While the official release of the entire report by NEITI is pending, EnergyDay has learned that the major issues raised by NEITI in previous audited reports remain largely unresolved under the current management of NNPC, led by Mallam Mele Kyari, the Group Chief Executive Officer.

This suggests the need for a thorough and conditional probe into the operations of NNPC.

EnergyDay, therefore, established that the losses incurred by Nigeria are significant and calls for immediate action by the Federal Government to address the mismanagement and ensure the proper utilization of the country’s resources.

NEITI Executive Secretary, Dr. Ogbonnaya Orji, in his remark at the Civil Society Consultative Forum on Wednesday, revealed that the yet-to-be-released audited reports in the oil and gas sector, covering the period 1999 to 2021, cover a total of 69 companies in the oil and gas sector and 12 government agencies, as well as one state-owned enterprise in the oil and gas sector.

NEITI Executive Secretary announced that the oil, gas, and mining report, which began over two years ago, is now complete and ready for approval, adding that it was commissioned by two independent Nigerian companies.

He said, “NEITI has concluded a total of thirteen cycles of reconciliatory reports in the oil and gas sector. These reports have disclosed a total revenue earning to the government of $741.48 billion from the oil and gas sector between 1999 and 2020.

“NEITI has reported subsidy payments on petroleum products from the year 2005 to 2021 and their huge negative consequences to the nation.

This report revealed that Nigeria spent $74.39 bn which translated to N13.7 trillion, with an average of N805.7 bn annually, N67.1 billion monthly, or N2.2 bn daily.

He said, “However, due to the disbandment of all government department boards, parastatals, and agencies by the Federal Government in June, the approval process will be carried out by national stakeholders including civil society organizations, government agencies, and the media after a thorough review and input.

Once the stakeholders have reviewed and approved the report, it will be released at a later date.

Dr. Orji therefore called on the government to take swift action in mitigating the impact of subsidy removal. He emphasized the organization’s commitment to independent data gathering and the implementation of the Extractive Industries Transparency Initiative (EITI) report.

Orji explained that the data included in the report was voluntarily provided by agencies and companies, detailing their collections and reconciling the information. Reconciliation meetings were held to ensure agreement on the data provided.

Over the past two years, numerous validation meetings have taken place, and all collected information remains unchallenged. NEITI has enormous data that can help the government put in place stringent measures to close these gaps and mitigate the level of revenue loss.

He emphasized that NEITI does not fabricate data but rather benchmarks the information provided by companies against their transaction records.

Orji concluded by highlighting that the process is driven by agencies and companies themselves, who have signed off on the accuracy of the data they have provided.