Nigeria Extractive Industries Transparency Initiative (NEITI) has again raised alarm that the country lost $N10.9 billion, about N1.722 trillion to crude oil theft between 2009 and 2011.
This significant amount according to the Chairman of NEITI, Mr. Ledum Mitee was 7.7% of $143.5 billion, the total revenue that accrued to the Federation account from oil and gas during the same periods.
Mr. Ledum was speaking in Abuja on Monday during the formal presentation of NEITI’s audit report for oil and gas industry, covering the periods 2009-2011. A local audit firm, Sada Idris & Co carried out the assignment.
While lamenting the huge revenue loss, NEITI chairman said they also discovered that the Petroleum Pricing Regulatory Agency (PPPRA) is yet to remit N4.423 billion being recovery from fuel subsidy claims to the Federation account.
The reports touched on key areas such as mapping of hydrocarbon flows, volumetric analysis, and technical assessment of hydrocarbon streams and examination of procedural systems.
It also involves data collection, aggregate reporting of hydrocarbon produced and computation of financial implications as well as value analysis during the period under review.
Mr. Mitee said “Nigeria recorded a total crude oil production of over 2.5 billion barrels, an increase of 4.8% over 2006-2008 periods. This is made up of 780.9 million barrels in 2009
“This figure rose to 894.5 million barrels in 2010 and slightly declined to 866.2 million barrels in 2011. From this production, the Federation earned total revenue of $143.5 billion from equity crude sales, royalty, signature bonuses and taxes”.
According to the report, Nigeria made total subsidy payments of N3 trillion to importers of refined petroleum products. It shows N1.4 trillion fuel subsidy claims by the Nigeria National Petroleum Corporation (NNPC) for the period 2009-2011 and a total of N1.60 trillion paid to other marketers during the same period.
The Transparency Body also discovered disparity between subsidy claims paid from the Federation account and that made by the Petroleum Pricing Regulatory Agency (PPPRA) was N175.9 billion during the same period. It cited a particular instance where a marketer claimed N2.56 billion as fuel subsidy but the PPPRA recorded just N1.5 billion thus, leaving an un-reconciled difference of N1.04 billion.
Further breakdown shows that the subsidy payments made through NNPC increased from N198 billion in 2009 to N416 billion in 2010and rose significantly to N786 billion in 2011. Also, subsidy paid through PPPRA increased from N208 billion in 2009to N278 billion in 2010 and skyrocketed to N1.12 trillion in 2011.
On the money recovered from marketers involved in the fuel subsidy scam, NEITI noted that N4.423 billion being over-recovery collected from some marketers is yet to be remitted to the Federation account while the NNPC and two other companies are yet to refund N3.715 billion being over-recovery for the period under review.
NEITI said during the period under review, over 136 million barrels estimated at $10.9 billion was lost to crude oil theft, lamenting “this amount which was 7.7% of the total revenue accrued to the Federation in the audit report is considered significant.
“This was in addition to a loss of about 10 million barrels valued at $894 million as a result of pipeline vandalism in downstream operations”.
Other key highlights of the reports are: decline of government crude oil productions, crude lifting and revenues accruable to the Federation; refineries operating below capacities resulting in a situation where 80% of crude oil allocated to local refineries is exported fpr off-shore processing, crude oil and product exchange.
Mr. Mitee said the report also examined the payments on OPL 245 and established that Shell made a payment of $207 million which the company (Shell) claimed was a balance of payment as Signature Bonus on the said oil block OPL 245. He however, said NEITI could not get additional information from the Department of Petroleum Resources (DPR) on the level of transparency over the actual value of OPL 245.
The chairman said far-reaching recommendations have been made on how to remedy the situation. NEITI urged the Federal government to urgently put in place machinery for the review of existing agreements in the industry with the companies.
Also, the report recommended that the PPPRA should remit all funds amounting to N4.423 billion arising from the “over-recovery” collected to the Federation account.
Other recommendations include the need to install inlet metering devices to measure production from the flow stations to the tank farms. It also urged the federal government to set up a committee to review and agree on a new fiscal regime and governance framework for the oil and gas industry and define clear roadmap for implementation while pushing for the passage of the Petroleum Industry Bill (PIB).
In 2003, Nigeria signed up to the global Extractive Industries Transparency International (EITI). Member States are required to publish on a regular basis audit reports to acquaint the citizens with current information and data on what extractive companies paid to governments in terms of royalties, taxes, levies, signature bonuses, rents etc.
Mrs. Zainab Ahmed, the Executive Secretary of NEITI, assured the media, civil societies, National Assembly members, government and other stakeholders that the data presented was comprehensive and reliable and could serve as reference materials.
