The just released audit report on Federal Government?s Consolidated Financial Statement for the year ended 31st December 2021 has indicted the Nigeria National Petroleum Company Limited (NNPCL), the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) and the Nigeria Downstream, Midstream Regulatory Authority for huge financial infractions and non-remittance of revenue to the federation account during the year under review.

The report, prepared by the Office of the Auditor General of the Federation and submitted to the Clerk to the National Assembly ,cited cases of unauthorised deduction from the federation revenue, irregular deduction from domestic crude sale, warehousing of the federation?s miscellaneous income, unsubstantiated payment of shortfall from the sale of MT Cargo of PMS, outstanding royalties due from NNPC-COMD/MCA/PSC, and unjustified deductions from Joint venture royalty by NNPC before remitting to DPR.

Also mentioned as financial irregularities in the report are outstanding royalties on oil concession rentals and gas flaring payable by operators to the federation?s account, outstanding bridging allowance from NNPC Retail, outstanding bridging claims from other major oil marketers, irregular balance in marketers? indebtedness and non-payment of indebtedness by some DAPPMAN marketers.

The Auditor General for the Federation, Shaakaa Kanyitor China, who signed the report said the actions of the three state owned agencies were in violation of paragraph 213(ii) of the Financial Regulations (FR) and paragraph 217 of the FR 2009.

While Paragraph 213 (ii) precludes withdrawal from the revenue account other than for the purpose of transfer to the consolidated account, Paragraph 217 stipulates that it is the duty of the Accounting Officer responsible for the collection of revenue or other monies due to government are correctly and promptly brought to account, whether such collections are payable direct to him or to a Sub-Accounting Officer or through any other channel.

In the case of NNPCL, the report said the company?s payment records for the period 2020 and 2021 revealed that N82,951,595,510.47 was deducted by it from the sale of Crude Oil and Gas (Federation Revenue) for ?purported Refineries Rehabilitation?

It said there was no evidence of authorization and approvals before the deductions were made. The Auditor General attributed this kind of action to weaknesses in the internal control system at NNPC which could leave room for possible misappropriation of funds, diversion of revenue meant for the Federation or loss of Revenue.

It also reported that the management of the agency did not respond to audit query, adding that ?since the Management failed to respond to the issue raised, the findings remain valid until the Management implements the recommendations.?

It recommended that the Group Chief Executive Officer of NNPCL be requested to provide reasons to the National Assembly for the deductions being proceeds from the sale of Crude Oil and Gas.

Besides, it said that henceforth, the management of the NNPCL should avoid making any deduction from monies due to go into the federation account and violation should attract punishment as specified in paragraphs 3106 and 3129 of the Financial Regulations 2009.

It also cited the deduction of N343,642,598,726.51 from the gross domestic crude sales in the name of NNPC Value shortfall, Strategic Stock Holding Cost, Crude Oil and Products Pipeline Losses, as well as the pipelines maintenance and management costs.

The report said since details of each of the cost components deducted were not provided for audit review, the Auditor General could not understand the justification for the deduction.

The OAuGF also said that N83,659,813,739.99 being miscellaneous income from the NNPC joint venture operations from year 2016 to 2020 went into the CBN/NNPC sinking fund account instead of the Federation Account, adding that warehousing of the miscellaneous income of 2016 to 2020 meant for the Federation Account in the CBN/NNPC Sinking Fund Account led the government to resort to borrowing to fund public activities.

It said the shortfall should be recovered and remitted to government treasury and evidence forwarded to the Public Accounts Committees of the National Assembly.

In another instance, a sum of N3,748,581,281.27 was said to have been paid to a company as shortfall on the sale of MT cargo of PMS, adding that details of the transaction between the NNPC, PPMC and the company were not provided for audit.

It said whereas the sum of US$1,655,352,328.14 was supposed to have been paid by NNPC to the CBN account of the Department of Petroleum Resources (DPR) in respect of Production Sharing Contracts (PSC), Repayment Agreement (RA) and Modified Carry Arrangement (MCA) liftings as at 31st December, 2021, the DPR received only US$1,401,399,635.07, leaving a shortfall of US$253,952,693.07.

It said further that records obtained from NNPC JV schedules and other documents showed that the NNPC deducted N204,853,744,047.39 from the Oil Royalty assessed by the Department of Petroleum Resources (DPR) for 2021 for alleged priority project, strategic holding cost, crude oil and product losses without any justifiable reasons.

It quoted the NUPRC as saying ?the NNPC makes deductions for Government priority projects at source before remittance of royalty to NUPRC with the latter having no control over this. Thus, NNPC is in better position to provide necessary approvals to justify these deductions.

?The office of the Accountant General of the Federation has been duly written on the payment of 4% Cost of Revenue Collection to NUPRC for money deducted at source by NNPC for Government priority projects.?

The Auditor General said the Management failed to address the issue raised and therefore should provide reasons why the sum of N204,853,744,047.39 was deducted by NNPC from Federation Account revenue proceeds, while recovering the said amount and remit same into the Federation Account.

It said that a review of revenue ledgers for 2021 revealed that oil royalty amounting to US$1,742,280,008.32 remained unpaid by some oil companies as at the end of December, 2021, while an additional US$13,805,135.46 for revenue relating to Royalty on Gas Sales (Foreign) remained unsettled as at 31% December, 2021 in addition to N48,218,163, 192.67 for Gas Royalty (Local) for the same period. (The Nation)

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