NPDC owes federation $5.531bn, N72.435bn, says NEITI

The Nigerian Petroleum Development Company owes the federation the sum of $5.531bn and N72.435bn, the Nigeria Extractive Industries Transparency Initiative has said.

The NPDC is the upstream arm of the Nigerian National Petroleum Corporation and has the mandate of exploration and production of crude oil.

NEITI stated that the unremitted funds from the NPDC fell under three categories, adding that the first was the full payment for the 12 Oil Mining Leases divested from the Shell and Agip joint ventures.

Explaining how the debt of the NPDC to the federation came about in its latest policy brief, which focused on unremitted funds, economic recovery and oil sector reforms, the agency stated that the NNPC’s divestment of 55 per cent of its stake in the Shell JV was valued at $1.8bn by the Department of Petroleum Resources.

“However, considering the figure from Shell’s divestment of between 30 and 45 per cent of its own share in the same joint venture, the PwC arrived at an alternative commercial valuation of these assets of $3.4bn. This means the eight OMLs were undervalued by, or valued at a discount of 47 per cent.

“Despite this, the NPDC has paid only $100m on these OMLs divested between 2010 and 2011, leaving an outstanding of $1.7bn of the discounted valuation. The four assets divested in 2012 by the NNPC to the NPDC under the Agip JV were not valued until four years later. In the third quarter of 2016, the DPR valued these four OMLs at $2.225bn. The NPDC has asked for clarification of the basis of the valuation. Therefore, the NPDC owes the federation $3.925bn for these 12 divested assets.”

NEITI said its audits also revealed that cash calls amounting to $552m were erroneously paid on these divested assets by the National Petroleum Investment Management Services, the investment arm of the NNPC.

It observed that although the NPDC refunded $424m to NAPIMS, which was not refunded to the Federation Account, the NPDC had yet to refund $148.278m and N2.42bn from the cash-calls mistakenly paid to it.

The agency further stated that the third element of unremitted revenues in this category related to arrears of liabilities of taxes, royalties and levies.

NEITI said its 2014 audits revealed that as of December 2014, the NPDC had failed to remit $1.458bn for royalty oil and royalty gas, among others.

Also, it stated that the NPDC had failed to remit N70.014bn for the pay-as-you-earn, gas flare penalty, Niger Delta Development Commission levy, and a few others.

“In summary, the NPDC owes the federation $5.531bn and N72.435bn. It should be noted that this is without factoring the interests that should have accrued, over time, on these funds,” NEITI said.

The Executive Secretary of NEITI, Mr. Waziri Adio, frowned at the situation where agencies of the Federal Government would withhold money meant for the Federation Account, instead of making the required remittances as stipulated by law.

“It is not right for government agencies to withhold funds meant for everybody no matter the excuse they provide,” he said.

On whether the NNPC was aware of this huge indebtedness to the federation, Adio responded in the affirmative, noting that the national oil firm had a member representing the corporation on the board of NEITI.

According to him, the NNPC and the NPDC signed off the audit reports published by NEITI, which contained the figures.

Advertisements