The Federal Government finally released the Forensic report conducted by PWC over the alleged missing $20billion from the accounts of the NNPC. The audit covered the period between January 2012 to July 2013.
The report just released is a follow up to the initial report submitted by PWC in November 2014. They were called again in January 2015 by the Auditor General and were handed over significant amount of additional information which significantly changed the November report and has now led to the report now released.
We have summarized the key highlights below and also included a full copy of the report for your download .
- How the missing $20billion was arrived at – The initial report says $67billion was generated and only $27billion was remitted to the FG thus the missing $20b. However, the revised report shows total gross revenues generated from FGN crude oil lifting’s was $69.34billion. Total cash remitted into the Federation accounts in relation to crude oil lifting’s was $50.81bn. Information for the difference was provided in the report.
- Overpaid Government – The forensic report also said the company, accused of corruption, actually overpaid the state by almost $0.74 billion.The Corporation represented that the potential excess remittance of $0.74 billion was funded from proceeds of PMS sales for which the suppliers of the PMS are yet to be paid in cash or crude oil.
- Amount to refund to FG is not $20billion– They also recommend that the NNPC and NPDC should refund to the Federation Account a minimum of $1.48billion and not $20billion
- Unsustainable model – The Corporation operates an unsustainable model. Forty six percent (46%) of proceeds of domestic crude oil revenues for the review period was spent on operations and subsidies.
- Unable to Funding Government adequately – The Corporation is unable to sustain monthly remittances to the Federation Account Allocation Committee (FAAC), and also meet its operational costs entirely from the proceeds of domestic crude oil revenues, and have had to incur third party liabilities to bridge the funding gap
- Technically broke – If the NNPC overhead costs and subsidies are maintained (assuming crude oil production volumes are maintained), the corporation may have to exhaust all the proceeds of domestic crude oil sales, and may still require third party liabilities to meet costs of operations and subsidies, and may not be able to make any remittances to FAAC.
- Needs major restructuring – PWC recommend that the NNPC model of operation must be urgently reviewed and restructured, as the current model which has been in operation since the creation of the Corporation cannot be sustained.
- Current NNPC Act gives it a blank cheque – They also recommend that the NNPC act be reviewed as the content contradicts the requirement for NNPC to be run as a commercially viable entity. It appears the act has given the Corporation a “Blank” cheque to spend money without limit or control. This is untenable and unsustainable and must be addressed immediately.
- Weak accounting system – The accounting and reconciliation system for crude oil revenues used by Government agencies appear to be inaccurate and weak. They noted significant discrepancies in data from different sources. The lack of independent audit and reconciliation led to over reliance on data produced from NNPC. This matter is further compounded by the lack of independence within NNPC as the business has conflicting interests of being a stand-alone self-funding entity and also the main source of revenue to the Federation account.
- Kerosene Subsidy – Despite several directives and pronouncements that kerosene subsidy has been removed, there is no official gazette to make this instruction legal. As such, kerosene subsidy continues till date. NNPC sells DPK to bulk DPK marketers in Nigeria at N40.90 per litre. The expected/official regulated retail price of DPK in Nigeria is N50 per litre
Get the full PWC NNPC Forensic Report.